Schlumberger Ltd. (NYSE:SLB)

The analysis of the financial ratios over the five-year period reveals significant improvement in the company's profitability and a gradual reduction in financial leverage.

Return on Assets (ROA)

The ROA demonstrates a substantial recovery and positive trend. Initially, in 2020, the company experienced a negative ROA of -24.79%, indicating operating losses relative to assets. However, from 2021 onwards, the ROA turned positive and steadily increased each year, reaching 9.12% by the end of 2024. This pattern suggests an improving efficiency in utilizing assets to generate profit over the observed time frame.

Financial Leverage

Financial leverage shows a consistent downward trend from 3.52 in 2020 to 2.32 in 2024. This decline indicates the company has progressively reduced its reliance on debt financing relative to equity, potentially lowering financial risk and interest obligations over time.

Return on Equity (ROE)

The ROE exhibits a pronounced recovery and growth trajectory similar to ROA. Starting from a significant negative return of -87.13% in 2020, it reversed direction the next year to 12.54%, followed by steady increases, reaching 21.11% in 2024. The improving ROE reflects enhanced profitability from the shareholders' perspective and suggests better value creation for equity investors.

Overall, these trends reflect a company moving from a period of financial distress in 2020 toward improved operational performance and stronger financial health. The reduction in financial leverage combined with rising returns on assets and equity is indicative of effective management strategies aimed at strengthening profitability while managing financial risks.

The financial performance indicates a notable improvement in profitability and efficiency over the examined periods. Initially, there is a significant negative net profit margin of -44.57% at the end of 2020, which turns positive and increases steadily to a peak of 12.68% in 2023, with a slight decline to 12.29% in 2024. This shift suggests a strong recovery and stabilization in profitability.

Asset turnover demonstrates a consistent upward trend, increasing from 0.56 in 2020 to 0.74 by the end of 2024. This indicates improved efficiency in utilizing assets to generate revenue. The increasing ratio shows that the company is better leveraging its asset base to support its operational performance.

Financial leverage exhibits a declining trend from 3.52 in 2020 to 2.32 in 2024. This reduction in leverage implies a decrease in the use of debt relative to equity, which may reflect a strategic shift toward a more conservative capital structure or an improvement in equity financing.

Return on equity (ROE) reflects a dramatic turnaround from a negative figure of -87.13% in 2020 to a robust 21.11% in 2024. The upward trajectory over the period highlights enhanced profitability relative to shareholder equity and suggests that the company's investments are generating increasingly positive returns. This upward trend in ROE aligns with improvements seen in both net profit margin and asset turnover, despite the declining financial leverage.

Overall, the data reveals a company transitioning from significant losses to sustained profitability, improving operational efficiency, and adopting a less leveraged financial position. These trends collectively point to a strengthening financial condition and enhanced value creation for shareholders over the five years analyzed.

Tax Burden

The tax burden ratio shows a relatively stable trend from 2021 to 2024, maintaining values close to 0.80 to 0.82. This stability suggests consistency in the company's tax expense relative to its pre-tax income during these years.

Interest Burden

The interest burden ratio exhibits a gradual increase from 0.81 in 2021 to 0.92 in 2024, indicating a progressive reduction in interest expenses relative to operating income. This improvement points to better management of interest costs or reduced debt expenses over the period.

EBIT Margin

The EBIT margin experienced a significant turnaround from a negative figure of -45.62% in 2020 to positive and improving values thereafter. From 2021 onwards, the margin increased from 12.5% to a peak of 17.24% in 2023, followed by a slight decrease to 16.72% in 2024. This trend reflects a strong recovery in operating profitability and operational efficiency over the observed period.

Asset Turnover

Asset turnover improved steadily from 0.56 in 2020 to 0.74 in 2024, indicating enhanced efficiency in utilizing assets to generate sales. The gradual increase each year reveals a positive development in asset utilization.

Financial Leverage

Financial leverage shows a declining trend, from 3.52 in 2020 to 2.32 in 2024. This reduction suggests a deliberate decrease in reliance on debt financing, leading to a lower risk profile and potentially reduced financial costs.

Return on Equity (ROE)

ROE follows a significant recovery pattern, moving from a negative -87.13% in 2020 to positive results starting in 2021. From 2021 through 2024, ROE increased consistently from 12.54% to 21.11%. This indicates a marked improvement in the company’s ability to generate returns for shareholders, supported by improved profitability, lower leverage, and operational efficiency.

Net Profit Margin

The net profit margin exhibited a significant recovery over the period analyzed. In 2020, the margin was deeply negative at -44.57%, indicating substantial losses. However, from 2021 onwards, there was a notable positive turnaround, with the margin improving to 8.2%. This upward trajectory continued mildly but steadily, reaching 12.29% by 2024, suggesting enhanced profitability and operational efficiency.

Asset Turnover

The asset turnover ratio demonstrated a gradual improvement throughout the timeframe. Starting at 0.56 in 2020, it experienced a slight decline in 2021 to 0.55 but then increased consistently for the following years. By 2024, the asset turnover had risen to 0.74, reflecting an increasingly effective utilization of assets to generate sales or revenues.

Return on Assets (ROA)

The return on assets followed a pattern similar to the net profit margin, indicating recovery and strengthening profitability. In 2020, ROA was deeply negative at -24.79%, conveying losses relative to assets. From 2021 forward, ROA improved notably from 4.53% to 9.12% in 2024. This progressive increase indicates enhanced efficiency in generating profit from the company’s asset base over time.

Overall Trends and Insights

The data reveal an overall positive trend in key profitability and efficiency metrics after a challenging fiscal year in 2020. Both profitability indicators (net profit margin and ROA) moved from substantial negative values to consistent positive levels by 2021, maintaining growth through to 2024. Simultaneously, the company improved its asset utilization, as indicated by the rising asset turnover ratio. Collectively, these metrics suggest a period of recovery followed by steady improvement in operational performance and financial health.

The analysis of the financial ratios over the period from December 31, 2020, to December 31, 2024, reveals several notable trends in profitability, efficiency, and operational burdens.

Tax Burden

The tax burden ratio displayed a relatively stable pattern across the years, fluctuating slightly within a narrow range from 0.81 in 2021 to 0.8 in 2024. This stability suggests consistent tax policies or effective tax management during the period.

Interest Burden

The interest burden ratio showed a gradual upward trend, increasing from 0.81 in 2021 to 0.92 in 2024. This indicates a rising proportion of operating income retained after interest expenses, implying improved management of interest costs or a change in the financial structure favoring reduced financial expenses relative to earnings.

EBIT Margin

A marked improvement is evident in the EBIT margin, which transitioned from a significant negative figure of -45.62% in 2020 to positive margins exceeding 16% from 2022 onwards. This recovery and subsequent stabilization in EBIT margin demonstrate enhanced operational profitability and effective cost control measures.

Asset Turnover

Asset turnover exhibited a consistent upward trajectory, increasing from 0.56 in 2020 to 0.74 in 2024. This trend reflects improved efficiency in utilizing assets to generate revenue, indicating better asset management and possibly growth in sales relative to asset base.

Return on Assets (ROA)

Return on Assets followed a recovery path, moving from a negative -24.79% in 2020 to a positive 9.12% by 2024. This positive trend signifies an overall enhancement in the company’s ability to generate profits from its assets, correlating with the improvements in both profitability and asset utilization observed.

Overall, the financial indicators suggest a significant turnaround from 2020, with progressive improvements in operational profitability, efficient asset usage, and management of financial burdens through 2024.

The analyzed financial data reveals several notable trends over the period from 2020 to 2024.

Tax Burden

The tax burden ratio, beginning from 2021, remains relatively stable, fluctuating slightly between 0.8 and 0.82. This suggests a consistent effective tax rate over the recent years, indicating no significant changes in the company's tax obligations relative to its pre-tax income.

Interest Burden

The interest burden ratio shows a clear upward trend, increasing steadily from 0.81 in 2021 to 0.92 by 2024. This progression implies an increasing proportion of income retained after interest expenses, which could be reflective of improved interest expense management or a reduction in debt service costs over time.

EBIT Margin

The EBIT margin exhibits a significant recovery and growth pattern. Initially, there was a substantial negative margin of -45.62% in 2020, shifting to positive territory at 12.5% in 2021. This margin then increases further, peaking at 17.24% in 2023 before a minor decline to 16.72% in 2024. This trajectory indicates a strong recovery and operational improvement, suggesting enhanced core profitability and cost control since 2020.

Net Profit Margin

The net profit margin follows a similar recovery trend as the EBIT margin. From a deeply negative margin of -44.57% in 2020, it rises to 8.2% in 2021 and continues to grow, reaching a high of 12.68% in 2023, then marginally decreasing to 12.29% in 2024. This pattern reinforces the indication of improved profitability at the net income level, although the slight decline in the most recent year may warrant further observation.

Overall, the data suggests marked improvement in profitability metrics since the negative results in 2020, accompanied by relatively stable tax influences and a trend of increasing income retention post-interest expenses. The company appears to be managing its financial burden more efficiently while enhancing operational profits, though recent minor declines in profit margins could signal emerging challenges or market conditions to monitor.