Palo Alto Networks Inc. (NASDAQ:PANW) 

Return on Assets (ROA)

The ROA experienced negative values from 2020 through 2022, indicating inefficient use of assets during these years, with the lowest point in 2021 at -4.87%. In 2023, a marked improvement occurred as ROA shifted to a positive 3.03%, followed by significant growth reaching 12.89% in 2024, suggesting enhanced operational efficiency and asset utilization. However, in 2025, a decline to 4.81% was observed, representing a reduction in asset profitability compared to the prior year but still remaining in positive territory.

Financial Leverage

Financial leverage ratios showed considerable volatility over the period. Starting at 8.23 in 2020, leverage more than doubled to 16.14 in 2021 and then spiked dramatically to 58.35 in 2022. This sharp increase indicates a substantial rise in debt or other liabilities relative to equity, which could signal increased financial risk. However, leverage decreased substantially to 8.29 in 2023 and continued a downward trend through 2024 (3.87) and 2025 (3.01), implying a strategy of deleveraging and reduction of financial risk over the latter years.

Return on Equity (ROE)

ROE reflected a highly negative and volatile performance from 2020 to 2022, with increasing negative values reaching a trough at -127.14% in 2022. This highlights significant losses and poor returns to shareholders during this early part of the period. Conversely, beginning in 2023, ROE rebounded strongly to a positive 25.15%, followed by a further rise to 49.86% in 2024, indicating strong profitability relative to equity. In 2025, ROE decreased to 14.49%, still positive but representing a contraction in profitability compared to the peak year.

Net Profit Margin

The net profit margin exhibited significant fluctuations over the periods analyzed. Initially, it was negative at -7.83% and further declined to -11.72%. Thereafter, it improved steadily, turning positive by the July 31, 2023 period at 6.38%, followed by a sharp increase to 32.11% in the subsequent period. However, there was a decrease to 12.3% in the most recent period, indicating some erosion in profitability after a peak.

Asset Turnover

Asset turnover demonstrated a generally upward trend from 0.38 to 0.48 over the first four periods, suggesting an improvement in the efficiency with which assets generate revenue. However, in the last two periods, this ratio declined somewhat to 0.40 and 0.39, indicating a slight reduction in asset utilization efficiency recently.

Financial Leverage

Financial leverage showed pronounced volatility, starting at 8.23 and doubling to 16.14 by July 31, 2021. It then spiked dramatically to 58.35, indicating a significant increase in the company’s debt relative to equity. This high leverage was sharply reduced to 8.29 and then continued to decrease steadily to 3.87 and 3.01 in the final periods, reflecting a substantial deleveraging or equity base increase.

Return on Equity (ROE)

ROE followed a highly volatile path, starting negative at -24.23% and worsening to -78.63% and -127.14%, indicating substantial losses and negative returns for shareholders in the early periods. It then experienced a strong turnaround, achieving positive returns of 25.15%, followed by a further increase to 49.86%. The last period saw a decrease to 14.49%, reflecting some moderation in shareholder returns after a period of significant improvement.

Overall Analysis

The financial data indicate a company that experienced initial financial distress, characterized by negative profitability and equity returns, as well as high financial leverage. Over time, the firm improved operational efficiency as observed in asset turnover and reduced its financial leverage markedly. Profitability and returns on equity likewise recovered significantly, although recent periods show some reductions from peak levels. This pattern points to a recovery phase after a period of high leverage and losses, with stabilization efforts ongoing.

Tax Burden

The tax burden ratio was not available for the initial years but shows variability in the later periods, with a peak at 2.61 for the year ending July 31, 2024, followed by a notable decline to 0.71 in the subsequent year. This suggests fluctuating tax impacts on profitability during these years.

Interest Burden

Interest burden remained close to unity in the reported years, increasing slightly from 0.95 in 2024 to a full 1.00 in 2025. This indicates a stable interest expense impact relative to earnings before interest and taxes (EBIT) during this timeframe.

EBIT Margin

The EBIT margin exhibited a consistent upward trend over the six-year span, starting from negative values (-4.2% in 2020 to -7.09% in 2021), improving significantly to positive territory at 8.61% by 2023, and continuing to increase to 17.34% in 2025. This reflects a strengthening operational profitability and improved efficiency in managing operating costs.

Asset Turnover

Asset turnover steadily increased from 0.38 in 2020 to a peak of 0.48 in 2023, indicating improved utilization of assets to generate revenues. However, a decline was observed in the last two years, dipping to 0.39 in 2025, which may suggest a reduction in asset efficiency or changing business dynamics.

Financial Leverage

Financial leverage experienced significant fluctuation, rising sharply from 8.23 in 2020 to an extreme 58.35 in 2022, then rapidly decreasing to 3.01 by 2025. This volatility points to major changes in the company's capital structure, possibly related to debt levels or equity changes, impacting financial risk exposure.

Return on Equity (ROE)

Return on equity showed considerable variability and eventual improvement. It began with negative returns of -24.23% in 2020, worsening to -127.14% in 2022, then reversing dramatically to a positive 25.15% in 2023 and peaking at 49.86% in 2024 before declining to 14.49% in 2025. This pattern signifies recovery from losses to strong profitability, though the drop in the final year warrants attention to factors influencing returns to shareholders.

The financial data reveals important trends relating to profitability and efficiency over the analyzed periods.

Net Profit Margin

The net profit margin showed a notable fluctuation throughout the years. Initially, it was negative at -7.83% in 2020 and further declined to -11.72% in 2021, indicating the company was incurring losses relative to revenue during these years. A significant improvement occurred in 2022, with the margin recovering to -4.85%. By 2023, the margin turned positive at 6.38%, rising sharply to a peak of 32.11% in 2024, suggesting a substantial increase in profitability. However, the margin decreased to 12.3% in 2025, indicating some reduction in profit efficiency but remaining positive and significantly stronger compared to the initial years.

Asset Turnover

Asset turnover, reflecting the efficiency in using assets to generate revenue, exhibited a generally upward trend from 0.38 in 2020 to 0.48 in 2023. This increase suggests improving utilization of assets to produce sales. Nonetheless, in the subsequent years, asset turnover declined to 0.40 in 2024 and further to 0.39 in 2025, indicating a slight reduction in asset use efficiency after reaching the peak in 2023.

Return on Assets (ROA)

ROA, indicating overall profitability generated from assets, followed a pattern similar to net profit margin. The metric was negative from 2020 through 2022, starting at -2.95%, declining to -4.87% in 2021 before improving to -2.18% in 2022. Positive ROA values emerged in 2023 with 3.03%, climbing notably to 12.89% in 2024. This indicates enhanced profitability relative to assets held. However, ROA decreased again in 2025 to 4.81%, suggesting some reduction in the return on asset efficiency but maintaining a clear improvement from earlier negative results.

Overall, the data demonstrates a recovery phase transitioning from losses to profitability between 2020 and 2024, accompanied by improvements in asset utilization. The peak performance occurred in 2024 across profitability ratios, followed by a moderate decline in 2025, which could warrant further investigation to understand the underlying causes and to assess sustainability of the profitability levels achieved.

Tax Burden

The tax burden ratio is only available from 2023 onwards, showing a value of 0.78 in 2023, then increasing significantly to 2.61 in 2024, followed by a sharp decrease to 0.71 in 2025. This variability suggests fluctuations in the company's effective tax rate or relative tax impact across these years.

Interest Burden

From 2023 to 2025, the interest burden ratio has remained relatively stable, with values near unity: 0.95 in 2023, increasing slightly to 0.99 in 2024, and reaching 1.00 in 2025. This trend implies consistent management of interest expenses relative to earnings before interest and taxes (EBIT).

EBIT Margin

The EBIT margin experienced negative values from 2020 through 2022, with -4.2% in 2020, deteriorating to -7.09% in 2021, and then improving somewhat to -3.27% in 2022. Starting from 2023, the margin turned positive and showed substantial growth: 8.61% in 2023, rising to 12.41% in 2024, and further to 17.34% in 2025. This trend indicates an improving operational profitability over the period, especially notable from 2023 onward.

Asset Turnover

Asset turnover ratios increased gradually from 0.38 in 2020 to a peak of 0.48 in 2023, demonstrating improved efficiency in using assets to generate revenue. However, in the subsequent years, the ratio declined to 0.40 in 2024 and 0.39 in 2025, suggesting a slight reduction in asset utilization efficiency after 2023.

Return on Assets (ROA)

The ROA mirrored the EBIT margin's trend, starting negative in the early years: -2.95% in 2020, worsening to -4.87% in 2021, then improving to -2.18% in 2022. From 2023 onwards, ROA turned positive and experienced volatility, reaching 3.03% in 2023, sharply increasing to 12.89% in 2024, but then declining to 4.81% in 2025. This pattern reflects enhanced profitability from assets with some instability in the later years.

The financial data reveals significant fluctuations in profitability and financial efficiency ratios over the observed periods. The detailed analysis of the trends is as follows:

Tax Burden

The tax burden ratio shows notable variability, with available data beginning from the fiscal year ending July 31, 2023. It is at 0.78 in 2023, sharply increases to 2.61 in 2024, and then declines to 0.71 in 2025. This irregular pattern suggests fluctuating effective tax rates or tax-related adjustments affecting net earnings differently across these years.

Interest Burden

The interest burden ratio starts at 0.95 in 2023 and improves slightly to 0.99 in 2024, reaching 1 in 2025. This indicates a steady reduction in interest expenses relative to earnings before interest and taxes, implying enhanced operational profitability with less impact from interest obligations in the most recent years.

EBIT Margin

The EBIT margin exhibits a recovery trajectory across the periods. Initially negative at -4.2% in 2020 and worsening to -7.09% in 2021, it improves to -3.27% in 2022. A significant turnaround occurs from 2023 onward, with the EBIT margin climbing into positive territory at 8.61%, then increasing further to 12.41% in 2024 and 17.34% in 2025. This upward trend reflects improving core operating profitability over time.

Net Profit Margin

The net profit margin follows a pattern broadly consistent with EBIT margin improvements but shows more volatility. It is negative across 2020 to 2022, with values of -7.83%, -11.72%, and -4.85% respectively. A strong reversal transpires in 2023 when the net profit margin becomes positive at 6.38%, surging to 32.11% in 2024 before moderating to 12.3% in 2025. The peak in 2024 suggests an exceptional gain or one-time factor positively influencing net profitability that diminishes in the subsequent year.

Overall, the data indicates a company that experienced profitability challenges in the early years, followed by marked improvement in operating and net profit margins starting in 2023. The interest burden reduction supports higher earnings retention, while fluctuations in tax burden and net profit margin in the latest years suggest periodic tax impacts or exceptional items affecting net income volatility. The upward trends in EBIT and net margins imply enhanced operational efficiency and financial health in the recent years examined.