Analysis of Investments
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Synopsys Inc. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Synopsys Inc., adjustment to net income attributed to Synopsys
US$ in thousands
Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).
The analysis of the financial data over the six-year period reveals notable trends in both reported and investment-adjusted net income attributed to Synopsys.
- Reported Net Income
-
The reported net income shows a consistent and strong upward trajectory from October 31, 2019, to October 31, 2024. Starting at $532.4 million in 2019, the figure increases steadily each year, reaching approximately $2.26 billion in 2024. This represents more than a fourfold increase over the six-year span, indicating significant growth in profitability. The year-over-year growth appears robust, with particularly notable acceleration between 2023 and 2024.
- Adjusted Net Income
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The investment-adjusted net income closely parallels the reported net income across all years, with marginal differences noted only in 2021 and 2022. The adjustments are minimal, generally increasing the income figures slightly compared to the reported numbers. This suggests that the adjustments made for investment considerations have a limited impact on the overall profitability presentation and that core earnings performance remains strong when viewed through either lens.
- Overall Patterns and Insights
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The data points to a period of sustained financial improvement and operational efficiency. The steady increase in net income indicates strong revenue growth, effective cost management, or both. The alignment between reported and adjusted net income implies transparency in financial reporting and a stable earnings quality, free from large distorting items or one-time adjustments.
The most substantial growth phase occurs in the final reported year, which could be attributable to strategic initiatives, market expansion, or favorable industry conditions driving profitability upwards. Continued scrutiny into the drivers behind this rapid expansion would be advisable to assess sustainability.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Synopsys Inc., adjusted profitability ratios
Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).
- Net Profit Margin Trends
- The reported net profit margin shows a consistent upward trend from 15.84% in 2019 to 21.05% in 2023, followed by a significant increase to 36.94% in 2024. The adjusted net profit margin closely mirrors this pattern, with a slight variation in the 2021 and 2022 figures but ultimately reaching 36.96% in 2024. This indicates a marked improvement in profitability, particularly notable in the latest year.
- Return on Equity (ROE) Trends
- Reported ROE increases steadily from 13.04% in 2019 to 20.01% in 2023, then jumps markedly to 25.17% in 2024. The adjusted ROE follows a nearly identical pattern, increasing gradually from 13.04% to 20.03%, and then rising to 25.19%. This progression reflects improving effectiveness in generating returns for shareholders, with substantial gains in the most recent period.
- Return on Assets (ROA) Trends
- The reported ROA remains relatively stable from 2019 to 2021, hovering around 8.3% to 8.7%, before increasing to 10.45% in 2022 and 11.90% in 2023. A significant rise is observed in 2024, reaching 17.31%. The adjusted ROA data confirms this trajectory, showing a steady improvement from 8.31% in 2019 to 17.32% in 2024. This pattern suggests enhanced asset utilization and operational efficiency over time, especially in the latest year.
- General Observations
- All key profitability and return metrics—net profit margin, ROE, and ROA—exhibit consistent growth over the six-year period, with particularly notable increases in the final year. The close alignment between reported and adjusted figures suggests minimal impact from extraordinary items or accounting adjustments, reinforcing the reliability of the observed trends. The substantial improvements in 2024 across all metrics may indicate underlying operational enhancements or favorable market conditions driving performance.
Synopsys Inc., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).
2024 Calculations
1 Net profit margin = 100 × Net income attributed to Synopsys ÷ Revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributed to Synopsys ÷ Revenue
= 100 × ÷ =
- Net Income Trends
- The reported net income attributed to the company showed a consistent upward trajectory from 2019 to 2024. It increased from approximately 532 million US dollars in 2019 to over 2.26 billion US dollars in 2024, indicating strong growth in profitability over the six-year period. Similarly, the adjusted net income followed the same pattern, rising steadily each year with values closely mirroring the reported figures, suggesting that the adjustments made had minimal impact on the overall income trend.
- Net Profit Margin Trends
- The reported net profit margin also exhibited sustained improvement, rising from 15.84% in 2019 to 36.94% in 2024. This represents more than a doubling of the profitability ratio, highlighting enhanced efficiency and profitability relative to revenue over time. The adjusted net profit margin closely parallels the reported margin, with marginal differences, confirming that adjustments did not significantly alter the evaluation of profit margins. Notably, the jump between 2023 and 2024 in profit margin is particularly pronounced, suggesting either a substantial increase in profitability or a reduction in costs relative to revenue in that period.
- Comparative Observations Between Reported and Adjusted Figures
- Across all presented years, the differences between reported and adjusted net income and net profit margins are minimal, indicating consistent accounting and adjustment practices. The adjustments appear to maintain the integrity of the reported results, providing reassurance about the reliability of the income figures and the profit margin trends.
- Overall Insights
- The data reflect a positive, robust growth pattern in both earnings and profit margins, suggesting effective operational performance and cost management. The sharp increase in the final year could warrant further investigation to understand the underlying causes, such as extraordinary income or change in accounting policies. However, the overall upward trend reinforces the financial strength and improving profitability outlook of the entity over the observed period.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).
2024 Calculations
1 ROE = 100 × Net income attributed to Synopsys ÷ Total Synopsys stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributed to Synopsys ÷ Total Synopsys stockholders’ equity
= 100 × ÷ =
- Net Income Trends
- The reported net income exhibited a consistent upward trajectory over the six-year period, rising from $532,367 thousand in 2019 to $2,263,380 thousand in 2024. This represents more than a fourfold increase, indicating strong and sustained profitability growth. The adjusted net income closely follows a similar pattern, with only negligible differences compared to reported figures, suggesting minimal adjustments and the reliability of reported earnings.
- Return on Equity (ROE) Trends
- Both reported and adjusted ROE demonstrate a clear positive trend throughout the period analyzed. Reported ROE increased from 13.04% in 2019 to 25.17% in 2024, nearly doubling within five years. The adjusted ROE closely mirrors these values, reinforcing the consistency between reported and adjusted performance metrics. The steady rise in ROE indicates improving efficiency in generating profits from shareholders' equity.
- Overall Insights
- The financial data indicates robust growth in profitability accompanied by increasing efficiency in equity utilization. The close alignment of reported and adjusted figures points to transparency and reliability in financial reporting. The acceleration in net income and ROE, particularly in the later years, suggests that operational or strategic improvements may have contributed significantly to enhanced financial performance.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2024-10-31), 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31).
2024 Calculations
1 ROA = 100 × Net income attributed to Synopsys ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributed to Synopsys ÷ Total assets
= 100 × ÷ =
- Net income trends
- The reported net income attributed to the company demonstrates a consistent upward trajectory over the analyzed periods. Starting from approximately 532 million USD in October 2019, the figure rose steadily each year, reaching over 2.26 billion USD by October 2024. The adjusted net income follows a nearly identical progression, with values closely aligned to the reported figures throughout the timeframe.
- Return on Assets (ROA) trends
- The reported ROA shows gradual improvement from 8.31% in 2019 to 11.9% in 2023, culminating in a marked increase to 17.31% in 2024. The adjusted ROA mirrors this trend closely, indicating consistency between reported and adjusted performance metrics. This steady enhancement in ROA suggests an increase in asset efficiency and profitability over the period.
- Comparative insights between reported and adjusted data
- The minimal differences between reported and adjusted net income and ROA indicate that adjustments made for non-recurring items or other factors do not significantly alter the company's financial performance portrayal. This consistency suggests reliability in the reported figures and stable underlying earnings quality.
- Overall financial performance perspective
- The data reveals strong and accelerating growth in profitability and asset utilization. The sharp increase in income and ROA by 2024 may reflect effective management strategies, operational efficiencies, or favorable market conditions. The alignment of adjusted and reported figures reinforces confidence in the sustainability of these positive trends.