Yahoo! Inc. (NASDAQ:YHOO)

Return on Assets (ROA)

The ROA initially exhibited high values in early 2013, peaking around 25.6% in the second quarter of that year. Subsequently, there was a notable decline throughout 2013, dropping to around 7.45% by mid-2014. Following this period, ROA showed some recovery, rising to over 14% by the first quarter of 2015.

However, from late 2015 onwards, ROA deteriorated sharply, entering negative territory by the fourth quarter of 2015 and reaching lows exceeding -11% around the third quarter of 2016. It then slightly improved but remained close to zero by the first quarter of 2017. This pattern indicates a significant loss in asset profitability starting in late 2015 and persisting into early 2017.

Financial Leverage

The financial leverage ratio showed a gradual but steady increase over the observed period. Beginning at approximately 1.17 in early 2013, it rose modestly through 2013 and 2014, reaching around 1.6 by the end of 2014. It then fluctuated slightly around the 1.5 to 1.57 range through 2015 to early 2017.

This steady rise suggests a growing reliance on debt or liabilities relative to equity. The relative stability in leverage after 2014 suggests a maintained capital structure after initial increases.

Return on Equity (ROE)

ROE followed a trend similar to ROA, starting with strong profitability in early 2013, reaching over 30% in the second quarter. Subsequently, ROE decreased sharply across 2013 and reached lower positive values around 9-10% by mid-2014.

There was a recovery in ROE during late 2014 and early 2015, exceeding 20%. However, starting in late 2015, ROE declined dramatically, turning negative and reaching a low of approximately -17% in 2016. The rate then improved somewhat but remained slightly negative or close to zero by the first quarter of 2017.

The pattern indicates significant challenges in generating equity returns after 2015, consistent with declining asset returns and ongoing financial leverage.

Summary

Both ROA and ROE experienced a sharp decline starting in late 2015, moving from strong positive returns to sustained negative levels through 2016 into early 2017. This deterioration in profitability suggests operational or market challenges impacting asset and equity profitability.

Meanwhile, financial leverage showed a steady increase over the period, stabilizing at moderately higher levels. The rising leverage combined with declining returns indicates potential increased financial risk and pressure on the company's capital structure.

Overall, the observed financial trends denote weakening profitability metrics despite steady leverage ratios, highlighting critical financial performance issues during the later periods of the analyzed timeframe.

The analysis of the quarterly financial metrics reveals distinct trends and fluctuations over the observed periods.

Net Profit Margin (%)

The net profit margin exhibited significant volatility. It started at a high level exceeding 80% in early 2013, maintaining above 80% through mid-2013 before sharply decreasing to around 27-29% towards the end of 2013 and early 2014. A notable spike occurred in late 2014, with values soaring above 160%, followed by a gradual decline through 2015. The margin turned negative in the latter part of 2015 and remained substantially negative through 2016, approaching near zero by early 2017. This pattern indicates periods of extraordinary profitability, particularly in 2014, succeeded by severe declines indicating operational or extraordinary losses towards the end of the timeline.

Asset Turnover (ratio)

The asset turnover ratio remained relatively stable and low across all quarters, consistently fluctuating between 0.07 and 0.32. Early 2013 figures hovered around 0.3 but dropped sharply in late 2014 to levels as low as 0.07-0.09, with a mild recovery to approximately 0.10-0.12 in certain quarters. Overall, this suggests limited growth in generating revenue from assets, with occasional minor improvements but no sustained increase.

Financial Leverage (ratio)

Financial leverage showed a gradual increasing trend over the period. Starting just above 1.17 in early 2013, it rose steadily to about 1.6 by late 2014 and remained around this elevated level through to early 2017. The increment indicates a progressive increase in the use of debt or other liabilities to finance assets, which could heighten financial risk.

Return on Equity (ROE) (%)

Return on equity closely mirrors the net profit margin trend but with less extreme fluctuations. Initially, ROE was strong at around 28-30% in early 2013, then declined to approximately 10% toward the end of 2013 and early 2014. It briefly increased to near 21% during 2014 and early 2015 but fell sharply to negative territory in late 2015 through 2016, reaching lows of around -17%. By early 2017, ROE was nearly zero. This signifies deteriorating profitability affecting shareholders' returns, aligning with periods of reported losses or reduced margins.

Net Profit Margin

The net profit margin exhibited significant volatility throughout the periods. Initially, the margin remained high, starting above 80% and peaking at over 160% during late 2014. This unusual increase suggests extraordinary gains or accounting anomalies during that timeframe. However, from early 2015 onwards, there was a sharp and continuous decline, turning negative from the fourth quarter of 2015 through early 2017. This downward trend indicates substantial operating difficulties or increased costs relative to revenues, resulting in losses approaching breakeven levels by the first quarter of 2017.

Asset Turnover

The asset turnover ratio showed a generally low level with minor fluctuations over the analyzed periods. It started around 0.3, slowly diminishing to values around 0.07 to 0.1 during 2014 and onward. This suggests a consistent but modest efficiency in generating sales from assets, with no significant improvement or deterioration. The low values imply that the company’s asset utilization to produce revenue remained limited throughout the timeframe.

Return on Assets (ROA)

ROA followed a pattern similar to the net profit margin, initially maintaining relatively positive values in the double digits early in the period. Starting around 24-25% in 2013, ROA sharply declined by the third quarter of 2015, reaching near zero or negative figures afterwards. This downward trend continued through subsequent quarters, with ROA dipping to approximately -11% at the end of 2016 before recovering slightly near zero in early 2017. The decline highlights worsened profitability relative to asset base, reflecting inefficient use of asset investments to generate earnings during the later periods.

Overall Analysis

The trends suggest an early period of strong profitability and asset use efficiency, followed by a marked deterioration starting in mid-2015. The drastic decrease in net profit margin and ROA, alongside persistently low asset turnover, may indicate operational challenges, increased costs, or restructuring impacts. The negative profitability ratios towards the end of the period signal losses and constrained financial performance. Asset utilization remained consistently modest, indicating no significant scaling or improved effectiveness over time.