HP Inc. (NYSE:HPQ)

The financial data reveals several notable trends in profitability and leverage over the six-year period ending in 2018.

Return on Assets (ROA)

The ROA metric shows a relatively stable performance from 2013 to 2015, with values around 4.8% to 4.3%. From 2016 onwards, a significant increase is observed, peaking at 15.39% in 2018. This suggests a marked improvement in the company’s ability to generate earnings from its asset base in the latter years.

Financial Leverage

Financial leverage ratios remained consistent and stable during the 2013 to 2015 period, holding just below 4. However, no data is available beyond 2015 to determine if this trend continued or changed in subsequent years.

Return on Equity (ROE)

ROE displays a high but slightly declining trend from 18.75% in both 2013 and 2014 down to 16.4% in 2015, indicating somewhat reduced returns generated on shareholders' equity over this period. There is no data available for years after 2015 to assess the continuity of this trend.

Overall, the company showed improving asset profitability particularly after 2015, while maintaining steady leverage levels in the earlier period. The decrease in ROE before 2016 is notable but cannot be further analyzed due to data gaps. The significant rise in ROA in later years suggests operational efficiency or improved asset utilization contributed positively to financial performance.

The financial performance over the analyzed periods reveals several notable trends in profitability, efficiency, and leverage ratios.

Net Profit Margin

The net profit margin shows a generally stable trend from 2013 to 2017, fluctuating slightly between 4.41% and 5.17%. However, there is a significant increase in 2018, where the net profit margin nearly doubles to 9.11%. This suggests an improvement in profitability or cost management in the most recent year observed.

Asset Turnover

Asset turnover remains relatively stable from 2013 to 2015, with ratios close to 1.0, indicating consistent efficiency in using assets to generate sales. A marked improvement is observed from 2016 onward, with asset turnover exceeding 1.5 and reaching 1.69 in 2018. This trend indicates enhanced operational efficiency or increased sales relative to the asset base in recent years.

Financial Leverage

Financial leverage ratios are only available for the first three periods (2013 to 2015) and remain steady at approximately 3.85 to 3.88. The lack of data for subsequent years precludes trend analysis, but the stable leverage level in the early periods indicates a consistent use of debt relative to equity during that timeframe.

Return on Equity (ROE)

ROE was stable at 18.75% in 2013 and 2014 before experiencing a decline to 16.4% in 2015. Data for later years is unavailable, limiting comprehensive analysis. The initial downward trend may reflect the slight reduction in net profit margin and asset turnover noted during 2015.

In summary, the period shows stable profitability and leverage in early years, followed by notable improvements in asset efficiency and profit margins in 2018. The absence of complete data for financial leverage and ROE in later years limits full assessment but the available figures suggest enhanced financial performance towards the end of the observed timeline.

The financial data reveals several notable patterns and changes over the periods analyzed. The tax burden ratio exhibited moderate fluctuations, beginning at 0.79 in 2013, dipping to 0.7 in 2016, and then increasing significantly to 1.77 by 2018. This sharp increase in 2018 suggests a considerable rise in tax expenses relative to pre-tax earnings during that year.

The interest burden ratio remained relatively stable throughout the periods, with a slight downward trend from 0.94 in 2013 to 0.91 in 2018, indicating consistent management of interest expenses relative to operating income over time.

The EBIT margin percentage showed variability, initially around 6.18-6.19% in 2013-2014, declining to 4.89% in 2015, then peaking at 8.01% in 2016, before gradually decreasing again to 5.69% in 2018. This pattern suggests fluctuating operational profitability, with a notable improvement in 2016 followed by a decline in subsequent years.

Asset turnover exhibited an overall upward trend, starting at 1.06 in 2013 and rising to 1.69 in 2018. This indicates enhanced efficiency in utilizing assets to generate revenue over time, with a significant increase observed from 2015 onward.

Financial leverage remained relatively steady from 2013 to 2015, hovering around 3.85-3.88. Data for subsequent years is not available, limiting the ability to analyze leverage trends beyond 2015.

Return on equity (ROE) showed a slight decline from 18.75% in 2013 and 2014 to 16.4% in 2015, with no further data available for later years. The decrease in ROE aligns with the earlier observed dip in EBIT margin, suggesting a potential correlation between operational profitability and shareholder returns during that period.

Summary of key observations:

- Tax burden ratio increased notably in 2018, indicating higher tax expenses.

- Interest burden was stable, reflecting consistent interest expense management.

- EBIT margin fluctuated, peaking in 2016 but declining by 2018.

- Asset turnover improved, demonstrating increased asset utilization efficiency.

- Financial leverage was stable through 2015; data gaps prevent full trend analysis.

- ROE declined slightly by 2015, possibly reflecting operational profitability changes.

Net Profit Margin

The net profit margin demonstrated moderate fluctuations between 2013 and 2017, with values remaining within a narrow range from 4.41% to 5.17%. In 2013, the margin was 4.55%, slightly decreasing to 4.5% in 2014 and further to 4.41% in 2015 before increasing again to 5.17% in 2016 and slightly decreasing to 4.85% in 2017. A significant improvement is observed in 2018, where the net profit margin surged to 9.11%, nearly doubling the margin of the previous year. This indicates a marked enhancement in profitability relative to sales in the most recent period.

Asset Turnover

Asset turnover ratios remained relatively stable from 2013 to 2015, fluctuating between 0.97 and 1.08. There was a notable increase starting in 2016, reaching 1.66, followed by a slight decline to 1.58 in 2017 and then an increase again to 1.69 in 2018. This indicates improving efficiency in using assets to generate sales, particularly evident since 2016, reflecting better asset utilization over time.

Return on Assets (ROA)

The return on assets exhibited moderate values below 5% during 2013 to 2015, with 4.84% in 2013 and a decrease to 4.26% in 2015. A significant increase is observed from 2016 onwards, peaking at 8.6% in 2016 and slightly declining to 7.67% in 2017. In 2018, ROA surged dramatically to 15.39%, representing a substantial enhancement in overall asset profitability. This jump aligns with the improvements seen in both net profit margin and asset turnover during this period, reinforcing a trend of increased operational efficiency and profitability.

The analysis of the financial ratios over the period from October 31, 2013, to October 31, 2018, reveals several notable trends in operational efficiency, profitability, and financial burden management.

Tax Burden

The tax burden ratio showed fluctuations across the years, starting at 0.79 in 2013, dipping gradually to a low of 0.70 in 2016, followed by a moderate rebound to 0.77 in 2017, and then increasing sharply to 1.77 in 2018. This sharp increase in the last year suggests either tax benefits were reversed, tax expenses increased significantly, or adjustments were made, potentially impacting net profits adversely.

Interest Burden

The interest burden remained relatively stable, slightly decreasing from 0.94 in 2013 to 0.91 by 2018. This consistency indicates limited changes in interest expense relative to operating income over the period, reflecting stable financial leverage or interest cost management.

EBIT Margin

The EBIT margin percentage exhibited variability, beginning at about 6.18% in 2013, maintaining near that level in 2014, but declining to a low of 4.89% in 2015. It recovered in 2016 to 8.01%, before decreasing gradually to 5.69% by 2018. This variation indicates fluctuating operational profitability, with a peak in 2016 reflecting either improved cost control or revenue growth, followed by a decline that suggests margin pressure in subsequent years.

Asset Turnover

Asset turnover improved from 1.06 in 2013 to 1.08 in 2014, dipped to 0.97 in 2015, then increased substantially to 1.66 in 2016, and remained relatively high through 2017 and 2018 at 1.58 and 1.69 respectively. This pattern reveals enhanced efficiency in using assets to generate sales starting in 2016, indicating better asset utilization and possible operational improvements.

Return on Assets (ROA)

ROA showed a similar pattern of fluctuation; starting at 4.84% in 2013 with a small decline to 4.26% in 2015, then a significant rise to 8.60% in 2016 and 7.67% in 2017, ultimately reaching a notable peak at 15.39% in 2018. This upward trend, particularly the sharp increase in 2018, signals considerable gains in overall asset profitability and effective management, despite the increased tax burden observed that year.

In summary, the data indicates that after a period of moderate performance from 2013 to 2015, operational efficiency and profitability improved markedly from 2016 onward. This improvement is supported by higher asset turnover and ROA figures. However, the significant increase in tax burden in 2018 introduces a cautionary note, potentially affecting net income despite robust returns on assets. The interest burden remained stable throughout, suggesting consistent financial cost management.

The analysis of the annual financial data reveals several notable patterns and shifts in key profitability and burden ratios.

Tax Burden

The tax burden ratio exhibits variability across the observed periods. Initially, it stood at 0.79 in 2013 and decreased slightly to 0.76 in 2014. In 2015, there is a substantial increase to 0.96, followed by a significant drop to 0.7 in 2016. The ratio then exhibits moderate fluctuations, rising to 0.77 in 2017 and experiencing a remarkable spike to 1.77 in 2018. This suggests notable volatility, with a high tax burden in the final year, more than doubling compared to the previous year.

Interest Burden

The interest burden ratio shows relative stability throughout the period, consistently remaining in a narrow band from 0.91 to 0.95. From 2013 to 2014, it increased slightly from 0.94 to 0.95, before gradually declining to 0.91 by 2017 and maintaining that level in 2018. This indicates consistent management of interest expenses relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin demonstrates some fluctuation, beginning at 6.18% in 2013 and holding steady at 6.19% in 2014. A decline is observed in 2015 to 4.89%, but it recovers strongly in 2016 to 8.01%, reaching the highest point in the timeframe. Subsequently, the margin decreases to 6.89% in 2017 and further declines to 5.69% in 2018. These movements indicate a degree of volatility in operating profitability, with a peak in 2016 followed by a downward trend.

Net Profit Margin

The net profit margin depicts a gradual upward trajectory with some variability. Starting at 4.55% in 2013, it remains relatively steady around 4.5% through 2015. A modest increase to 5.17% occurs in 2016, followed by a slight decrease to 4.85% in 2017. A significant jump to 9.11% is observed in 2018, which more than doubles the margin from the previous year, indicating improved profitability after tax and interest expenses.

Overall, the data reflects a consistent interest burden, fluctuating tax burden with a sharp increase in 2018, volatile operating margins peaking in 2016, and a notable surge in net profitability in the final year. These trends suggest shifting tax policies or strategies influencing the tax burden ratio and improved efficiency or other factors enhancing net profit margin despite declining EBIT margins towards 2018.