Twitter Inc. (NYSE:TWTR)

The analysis of the financial performance over the five-year period reveals notable fluctuations in profitability and leverage ratios.

Return on Assets (ROA)

ROA exhibited significant volatility throughout the period. It started at a negative value of -1.46% in 2017, improved markedly to peak at 11.86% in 2018 and remained relatively stable at 11.54% in 2019. However, it sharply declined to -8.49% in 2020, followed by a slight recovery to -1.57% in 2021. This indicates fluctuating efficiency in generating profits from assets with considerable downturns in the latter years.

Financial Leverage

Financial leverage showed a gradual increasing trend from 1.47 in 2017 to 1.92 in 2021. This suggests a growing reliance on debt or other liabilities relative to equity over the period, which might have implications on financial risk and interest obligations.

Return on Equity (ROE)

ROE followed a pattern similar to ROA, beginning with a negative return of -2.14% in 2017, rising to a peak of 17.71% in 2018 and remaining high at 16.84% in 2019. Thereafter, it declined substantially to -14.25% in 2020 and marginally improved to -3.03% in 2021. The fluctuations reflect variability in the company's ability to generate returns for shareholders, with notable deterioration post-2019.

Overall, the data indicates an initial period of strong profitability followed by significant declines in 2020 and 2021. The increasing financial leverage over time may have contributed to heightened financial risk during the periods of negative profitability.

Net Profit Margin

The net profit margin exhibited significant fluctuations over the analyzed periods. It started at a negative level of -4.42% in 2017, then increased sharply to positive values above 39% in both 2018 and 2019, indicating a period of strong profitability. However, this trend reversed dramatically in 2020, falling to -30.56%, a substantial decline implying operational or market challenges. By 2021, the margin improved but remained negative at -4.36%, signaling ongoing difficulties in maintaining profitability.

Asset Turnover

The asset turnover ratio showed a generally declining trend from 0.33 in 2017 to a low of 0.27 in 2019, suggesting reduced efficiency in generating sales from assets during that period. There was a modest recovery in 2020 with a slight increase to 0.28, followed by a more marked improvement to 0.36 in 2021, indicating enhanced asset utilization towards the end of the period.

Financial Leverage

Financial leverage exhibited a gradual upward trend through the years, moving from 1.47 in 2017 to 1.92 by the end of 2021. This reflects an increasing reliance on debt or other liabilities relative to equity, which could signal a more aggressive capital structure strategy or increased financial risk.

Return on Equity (ROE)

The return on equity mirrored the trends seen in net profit margin with high volatility. Starting from a negative -2.14% in 2017, it improved significantly to 17.71% in 2018 and slightly dipped to 16.84% in 2019. However, ROE then deteriorated sharply to -14.25% in 2020, corresponding with the notable drop in profitability, and recovered somewhat to -3.03% in 2021, yet remaining negative and indicative of continued challenges in effectively generating shareholder returns.

The financial data presents several noteworthy trends and fluctuations across the periods from the end of 2017 through 2021.

Tax Burden

The tax burden ratio is only available for 2018 and 2019, showing an increase from 2.85 to 3.76. The absence of data for other years limits the ability to evaluate a broader trend, but the upward movement within the available timeframe suggests an increased impact of taxes on earnings during those years.

Interest Burden

The interest burden demonstrates significant volatility. In 2017, the ratio was deeply negative at -9.72, which improved markedly to positive values (0.76 and 0.74) in 2018 and 2019, respectively. However, it then turned negative again in 2020 (-0.5). This inconsistency indicates fluctuating financial costs or interest expenses impacting operating income variably across these years.

EBIT Margin

The EBIT margin showed a positive expansion from a marginal 0.4% in 2017 to a peak of 18.28% in 2018, followed by a gradual decline to 15.27% in 2019 and a sharp fall to 2.74% in 2020. By 2021, the margin turned negative to -7.09%. This pattern reflects a period of profitability peaking around 2018, succeeded by deteriorating operating efficiency and profitability leading into 2021.

Asset Turnover

The asset turnover ratio declined slightly from 0.33 in 2017 to 0.27 in 2019, indicating reduced efficiency in using assets to generate sales. A minor recovery occurred in 2020 (0.28), followed by a stronger increase to 0.36 in 2021, suggesting improved asset utilization in the most recent year.

Financial Leverage

Financial leverage gradually increased during the period, starting at 1.47 in 2017 and rising steadily to 1.92 by 2021. This trend indicates growing reliance on debt financing or increased use of financial instruments to amplify equity returns, which may introduce higher financial risk.

Return on Equity (ROE)

The ROE reflects substantial volatility and a downward trend after 2018. It rose sharply from a negative value of -2.14% in 2017 to a peak of 17.71% in 2018, maintaining a similar level in 2019 (16.84%). However, it plunged to a negative -14.25% in 2020 and remained negative at -3.03% in 2021. This indicates a period of strong profitability followed by significant losses and challenges to generating shareholder returns in the later years.

Overall, the data reveals a business experiencing periods of profitable operation and increased efficiency up to 2018-2019, followed by a notable decline in profitability and return measures. The growing financial leverage and fluctuating interest burden suggest increased financial risk, while the asset turnover recovery in 2021 signals potential operational improvements. Nonetheless, the negative EBIT margin and ROE in 2021 highlight continuing financial pressure and challenges in achieving sustainable profitability.

Net Profit Margin

The net profit margin experienced significant fluctuations over the analyzed period. Initially, there was a negative margin of -4.42% in 2017, which improved markedly to reach a peak of 42.37% by the end of 2019. However, this positive trend was not sustained, with the margin sharply declining to -30.56% in 2020, followed by a partial recovery to -4.36% in 2021. This volatility suggests substantial variability in profitability, with a notable loss incident in the year 2020.

Asset Turnover

The asset turnover ratio showed a relatively stable but modest downward trend from 0.33 in 2017 to 0.27 in 2019, indicating a slight decline in the efficiency of asset utilization to generate revenue during this period. There was a minor increase to 0.28 in 2020, followed by a more pronounced improvement to 0.36 in 2021, which is the highest value within the analyzed timeframe. This recent increase may indicate improved operational efficiency or better asset management practices in the most recent year.

Return on Assets (ROA)

Return on assets mirrored the fluctuations observed in net profit margin, beginning with a negative return of -1.46% in 2017, improving significantly to 11.86% in 2018 and maintaining a similar level of 11.54% in 2019. The ROA declined sharply in 2020 to -8.49%, reflecting the difficulties seen in profitability during the same year, before slightly improving to -1.57% in 2021. This pattern highlights challenges in generating returns on the company's assets, especially in the most recent years.

Overall Summary

The data reveals a company experiencing marked volatility in profitability and returns, with particularly adverse results in 2020. While asset turnover initially declined, recent improvements suggest efforts to enhance operational efficiency. The negative financial results in 2020 adversely affected both net profit margin and return on assets, indicating potential external or internal challenges during that period. By 2021, there are signs of recovery in asset utilization efficiency but profitability and returns have not yet returned to earlier positive levels.

Tax Burden

The tax burden ratio was recorded for the years 2018 and 2019, showing an increase from 2.85 to 3.76. The absence of data for other years limits the ability to identify a more comprehensive trend.

Interest Burden

The interest burden exhibited significant volatility. In 2017, it was considerably negative at -9.72, then improved to positive values around 0.76 and 0.74 in 2018 and 2019, respectively. A decline occurred again in 2020 to -0.5. The fluctuating pattern indicates inconsistencies in interest expenses or income relative to earnings before interest and taxes over the observed periods.

EBIT Margin

The EBIT margin showed a generally declining trajectory after peaking in 2018 at 18.28%. It decreased to 15.27% in 2019, then sharply dropped to 2.74% in 2020, followed by a negative margin of -7.09% in 2021. This pattern reflects increasing challenges in operational profitability.

Asset Turnover

The asset turnover ratio exhibited minor fluctuations but generally remained stable with a slight downward trend from 0.33 in 2017 to 0.27 in 2019, followed by a slight recovery to 0.36 in 2021. This suggests relatively consistent effectiveness in asset utilization to generate sales despite some variations.

Return on Assets (ROA)

Return on assets experienced considerable variation, beginning with a negative figure of -1.46% in 2017, improving substantially to 11.86% and 11.54% in 2018 and 2019, respectively. However, ROA declined sharply to -8.49% in 2020 and slightly improved to -1.57% in 2021. This indicates an overall weakening in net profitability relative to asset base during the latter years.

The analysis of the financial ratios over the five-year period reveals several notable trends and fluctuations, highlighting variability in profitability and burden measures.

Tax Burden

The tax burden ratio shows data for 2018 and 2019 only, with values of 2.85 and 3.76 respectively. This indicates a moderate increase in the tax expense relative to earnings during that period. No data is available for other years to assess longer-term trends.

Interest Burden

The interest burden exhibits considerable volatility. In 2017, the ratio was significantly negative at -9.72, transitioning to positive values of 0.76 and 0.74 in 2018 and 2019, followed by a slight negative value of -0.5 in 2020. This inconsistency suggests fluctuations in interest expenses relative to operating income, impacting the company's earnings before taxes.

EBIT Margin

The EBIT margin starts very low at 0.4% in 2017, then rises sharply to 18.28% in 2018 and slightly declines to 15.27% in 2019. However, it then decreases markedly to 2.74% in 2020 and further into negative territory (-7.09%) in 2021, indicating a deterioration in operating profitability in the last two years observed.

Net Profit Margin

The net profit margin demonstrates high variability, beginning with a negative result of -4.42% in 2017. It then improves dramatically to strong positive margins of 39.63% in 2018 and 42.37% in 2019. However, a sharp reversal occurs in 2020, dropping to -30.56%, and slightly improving but remaining negative at -4.36% in 2021. This pattern suggests significant profitability challenges in recent years after a period of robust profits.

Overall, the data points to a period of enhanced profitability and financial health around 2018 and 2019, followed by a pronounced downturn in operating and net profitability starting in 2020. The fluctuating interest burden further complicates the financial position, and limited data on tax burden restricts a full assessment of that component. The trends highlight potential risks and the need for further investigation into the underlying causes of the decline in recent years.