National Oilwell Varco Inc. (NYSE:NOV)

Return on Assets (ROA)

The Return on Assets exhibited a relatively stable trend from 2011 to 2014, fluctuating modestly between 6.68% and 7.91%. However, there was a significant decline in 2015, where ROA turned negative to -2.88%, indicating a deterioration in the company's ability to generate profit from its assets during that year.

Financial Leverage

The Financial Leverage ratio showed a continuous, gradual increase over the entire period from 1.45 in 2011 to 1.63 in 2015. This consistent upward trend suggests a modest increase in the use of debt relative to equity, implying a rising reliance on leverage in the company's capital structure.

Return on Equity (ROE)

The Return on Equity mirrored the pattern observed in ROA with steady values between 11.32% and 12.31% from 2011 through 2014. In 2015, a sharp decline occurred resulting in a negative ROE of -4.69%, which points to a significant reduction in profitability for shareholders, potentially linked to the negative operational returns and increased financial risks.

Net Profit Margin

The net profit margin demonstrated a declining trend from 13.6% in 2011 to 10.18% in 2013, indicating a reduction in profitability relative to revenue. There was a slight rebound to 11.67% in 2014, however, the margin significantly deteriorated to -5.21% in 2015, reflecting a loss-making position in that year.

Asset Turnover

Asset turnover improved from 0.57 in 2011 to 0.66 in 2013, showing increased efficiency in generating sales from assets. It slightly decreased to 0.64 in 2014 and further declined to 0.55 in 2015, suggesting a decrease in asset utilization efficiency during the last two years.

Financial Leverage

Financial leverage steadily increased over the period, rising from 1.45 in 2011 to 1.63 in 2015. This upward trend indicates a growing reliance on debt financing or greater use of borrowed capital relative to equity.

Return on Equity (ROE)

ROE followed a similar pattern to net profit margin, decreasing from 11.32% in 2011 to 10.47% in 2013, then recovering somewhat to 12.09% in 2014. In 2015, ROE dropped sharply to -4.69%, reflecting the negative profitability experienced and indicating losses for shareholders in that year.

Tax Burden

The tax burden ratio showed a moderate increase from 0.68 in 2011 to 0.71 in 2012 and stabilized around 0.70 to 0.71 through 2014, indicating consistency in tax expenses as a proportion of pre-tax earnings over that period. Data for 2015 is missing, preventing further trend analysis for that year.

Interest Burden

The interest burden ratio remained relatively stable, with values close to 0.99 in 2011 and 2012, and a slight decrease to 0.97 in both 2013 and 2014. This stability implies a consistent cost of debt relative to EBIT during these years, with a marginal increase in interest expenses or financing costs reflected by the small decline.

EBIT Margin

EBIT margin displayed a downward trend, declining from 20.27% in 2011 to 15.11% in 2013, followed by a slight recovery to 17.01% in 2014. However, the margin sharply deteriorated to a negative -3.31% in 2015. This indicates profitability challenges beginning from 2013 and culminating in operating losses by 2015.

Asset Turnover

Asset turnover improved gradually from 0.57 in 2011 to a peak of 0.66 in 2013, suggesting enhanced efficiency in utilizing assets to generate revenue. It slightly declined to 0.64 in 2014 and further decreased to 0.55 in 2015, indicating a reduction in operational efficiency or asset utilization in the latter years.

Financial Leverage

Financial leverage steadily increased over the period, from 1.45 in 2011 to 1.63 in 2015. The upward trajectory suggests growing reliance on debt or greater use of borrowed funds to finance assets, which could increase financial risk.

Return on Equity (ROE)

ROE showed some fluctuations, increasing from 11.32% in 2011 to 12.31% in 2012, then declining to 10.47% in 2013 before rising again to 12.09% in 2014. In 2015, however, ROE dropped sharply to -4.69%, reflecting a significant decline in profitability and negative returns for equity holders, likely linked to deteriorating operating performance and margin decline.

Net Profit Margin

Over the five-year period, the net profit margin exhibits a declining trend. It decreased from 13.6% in 2011 to 10.18% in 2013, followed by a slight recovery to 11.67% in 2014. However, a significant deterioration is evident in 2015, where the margin turns negative to -5.21%, indicating a loss relative to revenue.

Asset Turnover

The asset turnover ratio shows moderate fluctuations but remains within a relatively narrow range. Starting at 0.57 in 2011, it increased steadily to 0.66 by 2013, suggesting improved efficiency in generating sales from assets. This level is mostly maintained in 2014 at 0.64, but then the ratio declines to 0.55 in 2015, reflecting a reduced capacity to utilize assets effectively for revenue generation.

Return on Assets (ROA)

The return on assets parallels the trends seen in net profit margin, albeit with somewhat less volatility until 2014. ROA remained slightly above 7% in 2011 and 2012, declined to 6.68% in 2013, then marginally recovered to 7.45% in 2014. In 2015, ROA experienced a marked decline to -2.88%, signaling a negative return on the company's asset base and impacting overall profitability significantly.

Summary

The data indicates that while the company showed stable operational efficiency in asset utilization until 2014, profitability measures started to weaken starting that year, culminating in a sharp downturn in 2015. The simultaneous decline in net profit margin and ROA during 2015, along with a drop in asset turnover, suggests challenges in both cost management and asset efficiency, negatively affecting the company's returns and profitability.

The analysis of the financial ratios from 2011 to 2015 reveals several noteworthy trends in operational efficiency and profitability.

Tax Burden

The tax burden ratio remained relatively stable from 2011 through 2014, fluctuating slightly between 0.68 and 0.71. Data for 2015 is missing, preventing analysis for that year.

Interest Burden

The interest burden ratio showed high stability across the four years with data available, consistently close to 0.99 in 2011 and 2012 and slightly declining to 0.97 in 2013 and 2014. There is no data for 2015. The slight decrease suggests minor changes in interest expenses burden relative to earnings before interest and taxes.

EBIT Margin

The EBIT margin demonstrated a clear downward trend over the observed period until 2015. Starting at 20.27% in 2011, it decreased steadily to 15.11% by 2013, saw a slight recovery to 17.01% in 2014, and then dropped sharply to a negative margin of -3.31% in 2015, indicating operational losses before interest and taxes in that year.

Asset Turnover

The asset turnover ratio increased from 0.57 in 2011 to a peak of 0.66 in 2013, suggesting improved efficiency in using assets to generate revenue. However, it declined to 0.64 in 2014 and further to 0.55 in 2015, possibly indicating reduced utilization of assets or declining sales efficiency in the latest year.

Return on Assets (ROA)

ROA followed a trend similar to the EBIT margin. It started at 7.82% in 2011 and remained fairly steady, slightly fluctuating through 2014 (7.45%). In 2015, ROA turned negative to -2.88%, reflecting overall diminished profitability and possibly losses after accounting for taxes and interest relative to total assets.

Overall, the data highlights a period of declining profitability and efficiency, culminating in a significant deterioration in 2015, marked by negative EBIT margin and ROA, as well as a reduction in asset turnover. The stable tax and interest burden ratios suggest that changes in profitability were primarily driven by operational performance rather than financing or tax effects.

Tax Burden

The tax burden ratio exhibited a relatively stable trend from 2011 to 2014, with values fluctuating slightly between 0.68 and 0.71. This indicates a consistent proportion of pre-tax income retained after taxes during the period. Data for 2015 is unavailable, preventing assessment for that year.

Interest Burden

The interest burden ratio remained steady at 0.99 in 2011 and 2012 and experienced a minor decline to 0.97 in 2013 and 2014. This suggests a slight increase in interest expenses relative to earnings before interest and taxes (EBIT) in later years, albeit the overall interest impact remained minimal.

EBIT Margin

EBIT margin demonstrated a downward trajectory over the four years with available data, starting at 20.27% in 2011 and declining to 15.11% in 2013, before a modest recovery to 17.01% in 2014. The margin turned negative in 2015, registering -3.31%, indicating operating losses relative to revenue for that year.

Net Profit Margin

Net profit margin followed a similar declining pattern, decreasing from 13.6% in 2011 to 10.18% in 2013, with a subsequent slight improvement to 11.67% in 2014. In 2015, the net profit margin fell sharply to -5.21%, reflecting net losses and a significant deterioration in profitability.