Broadcom Inc. (AVGO) — FY2024 Financial Deep Dive

Income-statement trends: revenue surge and earnings volatility#

Broadcom Inc. ([AVGO]) reported $51.57B in FY2024 revenue, a dramatic +43.99% year-over-year rise, while reported net income dropped to $5.89B, a -58.14% decline. That divergence — very large top-line growth alongside a material fall in reported profit — is the defining financial signal of the year and creates an immediate tension between scale and reported earnings quality.

Quick take: FY2024 shows robust cash-generating revenue growth but headline earnings were pulled lower by non-operational and non-cash items. Free cash flow remained strong even as reported net income fell sharply, indicating the need to separate cash-based performance from accounting-driven profit swings.

On the detail, the revenue jump from $35.82B in FY2023 to $51.57B in FY2024 was accompanied by rising cost and expense lines and a very large increase in depreciation & amortization. Gross profit increased to $32.51B but gross margin compressed to 63.03% from 68.93% in the prior year. Operating income fell to $13.46B (from $16.21B), reducing operating margin to 26.10% from 45.25%. Net income compression was steeper because pre-tax and below-the-line items shifted: income before tax was $9.92B in FY2024 versus $15.10B a year earlier, and depreciation & amortization rose sharply to $10.01B (FY2024) from $3.83B (FY2023). These figures are drawn from Broadcom’s FY financials (FY2021–FY2024 filings).

Income-statement trend table (FY2021–FY2024)#

All income-statement line items above are taken from Broadcom’s FY financial statements (FY2021–FY2024). Calculations shown (margins and simple YoY comparisons) are derived directly from those line items.

Cash-flow quality: strong operating cash but acquisition-driven investing#

Cash generation in FY2024 tells a different story than the net income line. Broadcom reported $19.96B of net cash provided by operating activities and $19.41B of free cash flow in FY2024. Those cash figures contrast with the $5.89B reported net income and illustrate heavy non-cash charges and working-capital timing effects. Free cash flow of $19.41B against net income of $5.89B gives a free-cash-flow conversion ratio of +329.47% (19.41 / 5.89 = 3.2947 → +329.47%), and operating cash to net income is +338.80% (19.96 / 5.89 = 3.3880 → +338.80%).

The composition matters: capital expenditure remained low at $0.55B (capex ≈ 1.06% of revenue), while depreciation & amortization jumped to $10.01B in FY2024 from $3.83B the prior year. That ++161.44% increase in D&A (10.01 / 3.83 − 1 = 1.6144 → +161.44%) is the primary non-cash driver widening the gap between EBITDA/cash flow and net income. At the same time, investing cash flow included - $25.98B of acquisitions cash paid in FY2024, a one‑time but very large use of cash that reshaped the balance sheet.

Despite heavy acquisition spending, Broadcom’s free cash flow yield on its market capitalization is modest. Using the reported market capitalization of $1,463.86B, FY2024 free cash flow of $19.41B implies a free cash flow yield of +1.33% (19.41 / 1463.86 = 0.01326 → +1.33%). Cash returned to shareholders (dividends $9.81B + repurchases $12.39B = $22.20B) exceeded free cash flow by +14.37% (22.20 / 19.41 − 1 = 0.1437 → +14.37%), meaning distributions were funded in part by other financing sources and balance-sheet moves in the year.

Cash-flow & balance-sheet summary (FY2021–FY2024)#

Source: Broadcom FY cash-flow statements. The FY2024 year features a very large acquisition cash outflow and a D&A step‑up relative to prior years.

Balance-sheet changes: acquisition-fueled expansion and rising leverage#

Broadcom’s balance sheet expanded sharply in FY2024. Total assets rose from $72.86B (FY2023) to $165.65B (FY2024) — a change of +$92.79B or +127.36%. The most visible line-item movement is goodwill & intangible assets, which increased from $47.52B to $138.46B, a +$90.94B rise. Long-term debt increased to $66.31B (from $37.98B), and total debt moved to $67.57B. Net debt (total debt minus cash) rose to $58.22B from $25.46B, an increase of +$32.76B or +128.66%.

Liquidity metrics moved in the other direction. Current assets ended FY2024 at $19.59B against current liabilities of $16.70B, producing a current ratio of 1.17x (19.59 / 16.70 = 1.1737 → 1.17x). That is a marked contraction from FY2023’s current ratio of 2.81x (20.85 / 7.41 = 2.8146 → 2.81x). The compression reflects material increases in current liabilities tied to the acquisition and integration activity; cash on the balance sheet also fell to $9.35B at year end vs $14.19B a year earlier.

The balance-sheet reconfiguration warrants attention because the acquired intangible pool is large and amortization increased accordingly. The jump in goodwill & intangibles plus the elevated amortization and D&A explain much of the net income decline even as operating cash flow remained strong.

Key ratio calculations (independently computed)#

Below are the principal ratios calculated from the raw FY2021–FY2024 line items and the market-capitalization reported alongside the quote. All formulas and arithmetic are shown so each ratio is traceable to the stated figures.

Revenue growth (YoY): FY2024 vs FY2023 = (51.57 − 35.82) / 35.82 = +43.99%.

Net income growth (YoY): FY2024 vs FY2023 = (5.89 − 14.08) / 14.08 = -58.14%.

EBITDA margin (FY2024) = EBITDA / Revenue = 23.88 / 51.57 = 46.31%.

Free-cash-flow conversion = Free Cash Flow / Net Income = 19.41 / 5.89 = +329.47%.

Net debt / EBITDA (FY2024) = Net Debt / EBITDA = 58.22 / 23.88 = 2.44x.

Total debt / equity (FY2024) = Total Debt / Total Stockholders' Equity = 67.57 / 67.68 = 1.00x.

Current ratio (FY2024) = Current Assets / Current Liabilities = 19.59 / 16.70 = 1.17x.

EV / EBITDA (using market cap of $1,463.86B): EV = Market Cap + Total Debt − Cash = 1463.86 + 67.57 − 9.35 = 1522.08 → EV/EBITDA = 1522.08 / 23.88 = 63.73x.

Price / Sales (FY2024) = Market Cap / Revenue = 1463.86 / 51.57 = 28.38x.

Return on equity (FY2024, using average equity) = Net Income / Average Equity = 5.89 / ((67.68 + 23.99) / 2) = 5.89 / 45.835 = 12.86%.

Return on invested capital (ROIC, simplified) — NOPAT / Average invested capital. NOPAT approximated as Operating Income × (1 − Effective tax rate). Effective tax rate = (Income before tax − Net income) / Income before tax = (9.92 − 5.89) / 9.92 = 40.65%. NOPAT ≈ 13.46 × (1 − 0.4065) = 13.46 × 0.5935 = $7.99B. Invested capital (simplified) = Total Debt + Total Equity − Cash = 67.57 + 67.68 − 9.35 = $125.90B. Average invested capital (2023–2024) = (125.90 + 49.45) / 2 = $87.68B. ROIC ≈ 7.99 / 87.68 = 9.11%.

Notes on method: the ROIC above uses a simplified invested-capital definition to keep all inputs traceable to the balance sheet numbers provided. Alternative invested-capital definitions (e.g., excluding goodwill or using operating leases) will change the denominator and the percentage.

Reconciling the headline story: what the numbers reveal (not the narrative)#

1. The revenue base materially expanded in FY2024, and cash from operations remained robust. The company converted revenue growth into cash: operating cash was $19.96B and free cash flow $19.41B even after modest capex. That suggests the business, on a cash basis, continued to generate strong operating cash despite acquisition activity and higher non-cash charges.

2. Reported net income fell sharply because of large non-cash amortization and a higher effective tax rate. Depreciation & amortization rose to $10.01B (FY2024) versus $3.83B a year earlier; the effective tax rate moved to +40.65% (FY2024) from ~6.75% (FY2023). Those two items, taken together, explain the bulk of the decline from $14.08B to $5.89B in reported net income.

3. The balance sheet expansion was acquisition‑driven and financed with a mix of cash, new debt and equity items (equity rose materially). Goodwill & intangible assets jumped by about $90.94B and total assets increased +127.36% year-over-year. At the same time, net debt rose to $58.22B and leverage (net debt / EBITDA) is now roughly 2.44x, a moderate leverage level but one that moved materially during the year.

4. Working-capital and liquidity metrics tightened. Current ratio fell from 2.81x to 1.17x, and cash at period end declined to $9.35B. That change largely reflects higher current liabilities associated with the acquisition(s) and integration timing rather than an operational cash shortfall, but it does reduce short-term liquidity cushions.

5. Shareholder distributions remained large. Total cash returned (dividends + repurchases) was $22.20B, which exceeded free cash flow for the year. That gap was financed in part by financing activity and the balance-sheet reshaping that accompanied acquisitions.

What to watch next — data-driven indicators (no recommendations)#

Investors and analysts seeking to monitor Broadcom from a numbers perspective should track a small set of observable metrics in upcoming quarters. First, watch amortization and depreciation trends: FY2024’s D&A step-up ($10.01B) materially depresses reported earnings; any subsequent guidance on the amortization profile or carve-outs will alter EPS comparability. Second, monitor free cash flow and operating cash conversion: FY2024 produced strong cash, and whether FCF can sustain near‑term shareholder returns without incremental leverage is critical. Third, follow leverage and covenant metrics: net debt / EBITDA moved to ~2.44x post‑transaction; further acquisition spending, changes in EBITDA or large buybacks will change that ratio quickly.

Another essential datapoint is the effective tax rate. FY2024’s move to ~40.65% from very low levels in FY2023 materially impacted net income. If the higher tax rate persists (or if one-time tax effects reverse), reported earnings will oscillate independently of operating performance. Also track goodwill & intangible asset balances and related amortization schedules; a large intangible base increases the probability of future impairment testing and non-cash charges that will depress GAAP earnings.

Finally, working-capital dynamics matter. The current ratio compression (from 2.81x to 1.17x) reflects acquisition-related liabilities and timing; if receivables or payables normalize, liquidity metrics could recover, but the year-end picture signals tighter short-term coverage than prior years.

Conclusions#

Broadcom’s FY2024 financials present a clear, numbers-driven narrative: the company materially expanded scale — revenue +43.99% — and retained very strong cash generation ($19.96B operating cash, $19.41B FCF). However, reported earnings were heavily affected by acquisition-related accounting and tax items: depreciation & amortization rose to $10.01B, and the effective tax rate jumped to ~40.65%, together driving net income down -58.14% to $5.89B. The balance sheet reflects the acquisition strategy in a large goodwill & intangible balance and higher debt, with net debt / EBITDA around 2.44x.

Separating cash-based performance from GAAP earnings is essential when interpreting FY2024. Cash flows show underlying business strength; GAAP net income reflects the accounting consequences of large acquisitions and a higher tax burden. The year therefore creates two simultaneous truths: robust operating cash generation and materially different reported profit dynamics because of non‑cash and tax items.

Objectively, the most important numeric signals to monitor going forward are D&A/amortization trends, the effective tax rate, free cash flow coverage of shareholder distributions, and net debt / EBITDA. Those metrics will determine whether FY2024 is a one‑off re‑shaping year (heavy acquisition accounting) or the beginning of a new structural profile for Broadcom’s financials.