Oracle Corp. (NYSE:ORCL)

The analysis of the financial performance over the periods reveals distinct trends in return on assets (ROA), financial leverage, and return on equity (ROE).

Return on Assets (ROA)

ROA data begins from May 31, 2020, and initially shows an upward trajectory from 8.78% to a peak of 11.35% on November 30, 2021. Following this peak, ROA exhibits a declining trend through early 2023, reaching a low of 4.46% in February 2023. Subsequently, it demonstrates moderate recovery, stabilizing around 7.3% to 7.8% in the latest quarters up to May 31, 2025. Overall, this reflects variability with a significant dip followed by a gradual recovery toward a stable performance level.

Financial Leverage

Financial leverage increased consistently from August 31, 2019 (5.76 ratio) through May 31, 2021, reaching a high of 25.03. Data gaps appear thereafter until November 30, 2022, where leverage spikes sharply to 125.24, indicating a substantial increase in debt or equity structure changes. This extreme peak is followed by a steady decrease in leverage over the subsequent quarters, declining to 8.23 by May 31, 2025. The pattern suggests aggressive leveraging followed by a strategic deleveraging process.

Return on Equity (ROE)

ROE exhibits strong volatility starting from May 31, 2020, with a rapid increase from 83.94% to a record 262.43% on August 31, 2021. Data gaps appear afterward, with a new value peaking dramatically at 792.45% on November 30, 2022. This extreme return rapidly decreases in following quarters but remains elevated relative to the earlier periods, settling at 60.84% by May 31, 2025. The ROE fluctuations appear correlated with changes in financial leverage, suggesting that leverage significantly impacts equity returns.

In summary, the data indicates a period of aggressive leveraging that corresponded with significant increases in both ROE and ROA early in the timeline, followed by a period of high volatility and leverage reduction. The company’s profitability measured by ROA experienced a notable dip before stabilizing, while ROE reflected strong returns but with pronounced fluctuations likely influenced by leverage dynamics. The deleveraging trend in recent periods implies a shift towards risk reduction and financial stabilization.

The quarterly financial metrics exhibit notable fluctuations and trends over the observed periods. The data reveals patterns in profitability, efficiency, leverage, and overall return, which provide insights into the company's financial dynamics.

Net Profit Margin (%)

The Net Profit Margin demonstrates an initial stable period around the mid-20s percentile from August 2020 through November 2021. Following this, a decline is observed reaching a low near 13.15% by May 2022. Subsequently, the margin recovers moderately, fluctuating around 17% to 21.8% from late 2022 through mid-2025. This suggests cyclical variations in profitability, with periods of contraction and recovery but no sustained upward trajectory beyond early peak levels.

Asset Turnover (ratio)

Asset Turnover remains relatively stable, oscillating between approximately 0.31 and 0.39 through the timeline. Early measurements show a slight decline from 0.34 to 0.31 by late 2021, followed by a rebound and minor fluctuations in the 0.34 to 0.38 range into 2025. This stability indicates consistent asset utilization efficiency without significant expansion or deterioration in how effectively assets generate revenue.

Financial Leverage (ratio)

Financial Leverage experiences dramatic variation. Starting moderately near the 5.76 to 13.9 range pre-2021, it then spikes sharply to 25.03 by mid-2021. The dataset shows a substantial jump later reaching an exceptionally high level of 125.24 at an unspecified point after 2021, followed by a progressive reduction over subsequent quarters. Despite this reduction, leverage remains elevated relative to early periods, settling around 8.23 by mid-2025. This pattern reflects significant changes in capital structure, possibly induced by increased debt or equity fluctuations, with a gradual deleveraging trend more recently.

Return on Equity (ROE) (%)

The ROE metric aligns closely with the leverage trend, showing pronounced growth from approximately 83.94% in mid-2020 to an extraordinarily high 262.43% and beyond. Later figures reveal peaks reaching 792.45%, which is unusually high, implying potential data artifacts or extraordinary financial events affecting equity returns. Following this peak, ROE declines steadily but remains elevated, trading in a range from approximately 60.84% to over 120% through 2025. This indicates overall strong shareholder returns driven likely by leverage effects, though the volatility also underscores financial risk exposure and variability in profitability drivers.

In summary, the company displays a stable asset efficiency environment combined with fluctuating profitability margins. The leverage ratio shows significant volatility, which heavily influences the return on equity. Elevated leverage and ROE levels suggest reliance on borrowed capital or equity management strategies to amplify returns, accompanied by considerable risk. Recent trends toward deleveraging and stabilized profit margins may indicate a strategic shift toward financial consolidation and risk mitigation.

The analysis of the financial data reveals several key trends across the periods examined.

Tax Burden

The Tax Burden ratio shows a relatively stable trend with values mostly ranging between 0.84 and 1.19. There is a slight increase from around mid-2020 reaching just above 1.0 in late 2021, followed by a decrease and stabilization around 0.88 towards the latest dates.

Interest Burden

The Interest Burden ratio demonstrates a gradual downward trend from 0.86 in mid-2020 to a trough near 0.7 by early 2022. Subsequent quarters show a modest recovery, with the ratio rising again to around 0.8 by mid-2025.

EBIT Margin

The EBIT Margin starts around 36% in mid-2020, peaks just above 38% in late 2020, and then sharply declines to a low near 21% by mid-2022. Following this, there is a recovery trend, with the margin improving steadily to approximately 31% by mid-2025.

Asset Turnover

Asset Turnover remains fairly stable with minor fluctuations. Initial values hover around 0.34 to 0.36 before dropping to near 0.31 in late 2020. It then climbs back to roughly 0.39 in late 2021 and early 2022, followed by a gradual decrease towards 0.34 by mid-2025.

Financial Leverage

Financial Leverage exhibits significant variability and sharp spikes. Early values range from about 5.76 to 13.9 in mid-2020 to early 2021, then there is an extreme increase to over 25 in mid-2021 and a dramatic surge peaking at 125.24 in late 2022. After this peak, the leverage steadily declines to 8.23 by mid-2025, indicating a large reduction in leverage over the recent periods.

Return on Equity (ROE)

ROE shows pronounced volatility with a general upward trend until mid-2021, reaching exceptionally high values above 260%. The ratio surges enormously to nearly 792% by late 2022. Following this peak, ROE declines sharply but remains elevated, settling around 60.84% by mid-2025. These extreme variations are likely influenced by the fluctuations in financial leverage.

Overall, the data indicates a period of elevated financial leverage and high ROE, especially around late 2021 to late 2022, followed by efforts at deleveraging and normalization into 2025. Profitability metrics such as EBIT Margin and Tax Burden show recovery signs after mid-2022, while operational efficiency as measured by Asset Turnover remains relatively steady. Interest Burden displays a slight weakening followed by gradual improvement. The high degree of leverage and volatile ROE imply significant financial risk during the peak periods, with subsequent stabilization trends appearing in the recent quarters.

The financial performance exhibits fluctuations across the analyzed quarters with distinct trends observable in three key metrics: Net Profit Margin, Asset Turnover, and Return on Assets (ROA).

Net Profit Margin (%)

The Net Profit Margin commences in the data from the period ending May 31, 2020, with a value of 25.94%. It experiences a rising trend, peaking at 34.16% in November 30, 2021. Subsequently, the margin shows a marked decline to a low of 13.15% by May 31, 2022. Post this trough, the margin gradually recovers and stabilizes around the 18% to 21% range through the later periods up to May 31, 2025. This pattern indicates a period of strong profitability followed by a significant contraction and partial recovery.

Asset Turnover (ratio)

Asset Turnover starts at 0.34 (May 31, 2020) and shows minor fluctuations within a narrow band around 0.31 to 0.39 throughout the periods. Notably, there is a mild increase peaking at 0.39 during early 2022, followed by a gradual decrease to 0.34 by May 31, 2025. The relative stability suggests consistent efficiency in utilizing assets to generate revenue, without substantial improvements or declines.

Return on Assets (ROA) (%)

ROA begins at 8.78% (May 31, 2020), increasing to a high of 11.35% by November 30, 2021. Following this peak, ROA declines steadily to a low of 4.46% by August 31, 2022. This decrease corresponds with the reduction in Net Profit Margin recorded in the same timeframe, indicating profitability pressures impacting overall asset returns. Subsequently, ROA modestly improves and stabilizes near the 7% to 8% range through May 31, 2025, suggesting a return to moderate asset efficiency despite not reaching prior peak levels.

In summary, while the company experienced a period of strong profitability and asset returns in late 2020 through 2021, there was a notable downturn in these metrics in 2022. The asset turnover remained relatively stable across all quarters, indicating consistent asset utilization. Recovery trends in profitability and return ratios post-2022 suggest stabilization but highlight challenges in regaining previous peak performance levels within the reporting horizon.

Tax Burden

The tax burden ratio shows initial values around 0.84 from May 2020 through February 2021, indicating a consistent level of tax impact on profits during this period. A notable increase occurs starting in May 2021, peaking at 1.19 in February 2022, which suggests a temporary rise in tax expenses relative to earnings. Subsequently, the ratio declines and stabilizes around 0.88 towards the later periods, maintaining a steady trend through May 2025. This indicates a normalization of the tax burden after the spike.

Interest Burden

The interest burden ratio demonstrates a gradual decline from 0.86 in May 2020 to its lowest point at 0.70 in November 2022, suggesting an increasing interest expense relative to operating profit during this timeframe. From November 2022 onward, the ratio steadily improves, rising back to approximately 0.80 by May 2025, indicating reduced interest expenses or improved earnings before interest.

EBIT Margin

EBIT margin exhibits a downward trend from around 38% in the mid-2020 periods to a trough near 21.43% in May 2022. This decline points to a reduction in operating profitability over this interval. Thereafter, the margin shows a consistent recovery, climbing to approximately 31% by May 2025, suggesting enhancements in operational efficiency or cost control measures were implemented after the low point.

Asset Turnover

Asset turnover maintains relative stability with minor fluctuations. Starting at around 0.34 in May 2020, it briefly rises to 0.39 in early 2021, then gradually decreases to approximately 0.34 by May 2025. This pattern suggests a steady pace of asset utilization with no significant shifts in the efficiency of asset use to generate revenue over the analyzed periods.

Return on Assets (ROA)

The ROA reflects considerable variability across the timeframe. It increases from 8.78% in May 2020 to a high of 11.35% in November 2020, implying improved overall profitability. A notable decline follows, falling to a low of 4.46% in May 2022, indicating reduced asset efficiency or profitability during this phase. Afterward, ROA recovers moderately, reaching around 7.39% by May 2025, demonstrating partial restoration of asset returns but not returning to prior peak levels.

The analysis of the financial ratios over the reported quarters reveals several notable trends in the company's performance metrics.

Tax Burden

The Tax Burden ratio initially shows a steady level around 0.84 through early 2020, followed by a marked increase peaking near 1.19 by early 2022. After this peak, the ratio declines and stabilizes in the range of approximately 0.88 to 0.97 from mid-2022 through mid-2025. This pattern suggests a period of higher effective taxation or reduced tax benefits around 2021-2022, followed by a return to more typical tax-related impacts on earnings.

Interest Burden

This ratio demonstrates a gradual downward trend from 0.86 in mid-2020 to a low of around 0.70 in early 2022, indicating an improving interest expense impact relative to earnings before interest and taxes. From early 2022 onward, the ratio exhibits a recovery trend, increasing steadily and reaching about 0.80 by mid-2025. This reflects a variation in interest expense burden over time, initially becoming less burdensome before increasing again.

EBIT Margin

The EBIT Margin (%) was relatively stable and strong from mid-2020 to late 2021, peaking around 38.37%. However, it experienced a significant decline from early 2022 through mid-2022, falling to as low as approximately 21.43%. This drop suggests a period of reduced operating profitability. Following this trough, the margin gradually recovered, climbing back toward the low 30% range by mid-2025, signaling a rebound in core earnings performance.

Net Profit Margin

The Net Profit Margin follows a somewhat similar trajectory to the EBIT Margin but with more pronounced fluctuations. It rose sharply from about 26% in mid-2020 to a high exceeding 34% in late 2020, likely reflecting favorable operating and tax conditions. Subsequently, the margin declined significantly, reaching a low near 13% in mid-2022, indicating diminished overall profitability during this period. Thereafter, the margin improved steadily, stabilizing in the 20-22% range through mid-2025, which indicates recovery and relative stability in net profitability levels.

Overall, the data reflect a period of strong profitability and manageable tax and interest burdens up to late 2021, followed by a phase of considerable margin compression and increased tax burden into mid-2022. Subsequently, easing tax impact and improving interest expense dynamics supported a gradual recovery in both operating and net profit margins through to mid-2025. These trends suggest cyclical variations in profitability influenced by fluctuating tax effects and interest costs over the observed quarterly periods.