Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Applied Materials Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
Goodwill	3,732)	3,700)	3,479)	3,466)	3,399)	3,368)
Intangible assets with finite lives, gross carrying amount	2,310)	2,294)	2,041)	2,041)	1,988)	1,988)
Accumulated amortization	(2,016)	(1,972)	(1,937)	(1,888)	(1,832)	(1,775)
Intangible assets with finite lives, net carrying amount	294)	322)	104)	153)	156)	213)
Intangible assets with infinite lives	—)	17)	—)	—)	—)	—)
Intangible assets	294)	339)	104)	153)	156)	213)
Goodwill and intangible assets	4,026)	4,039)	3,583)	3,619)	3,555)	3,581)

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Applied Materials Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Applied Materials Inc. intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Goodwill and intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Applied Materials Inc. goodwill and intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Applied Materials Inc., adjustments to financial statements

US$ in millions

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
Adjustment to Total Assets
Total assets (as reported)	30,729)	26,726)	25,825)	22,353)	19,024)	17,773)
Less: Goodwill	3,732)	3,700)	3,479)	3,466)	3,399)	3,368)
Total assets (adjusted)	26,997)	23,026)	22,346)	18,887)	15,625)	14,405)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	16,349)	12,194)	12,247)	10,578)	8,214)	6,839)
Less: Goodwill	3,732)	3,700)	3,479)	3,466)	3,399)	3,368)
Stockholders’ equity (adjusted)	12,617)	8,494)	8,768)	7,112)	4,815)	3,471)

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

Applied Materials Inc., Financial Data: Reported vs. Adjusted

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Applied Materials Inc., adjusted financial ratios

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
Total Asset Turnover
Reported total asset turnover	0.86	0.96	0.89	0.77	0.77	0.97
Adjusted total asset turnover	0.98	1.12	1.03	0.91	0.93	1.20
Financial Leverage
Reported financial leverage	1.88	2.19	2.11	2.11	2.32	2.60
Adjusted financial leverage	2.14	2.71	2.55	2.66	3.25	4.15
Return on Equity (ROE)
Reported ROE	41.94%	53.51%	48.08%	34.21%	32.94%	48.44%
Adjusted ROE	54.34%	76.82%	67.15%	50.89%	56.20%	95.45%
Return on Assets (ROA)
Reported ROA	22.31%	24.41%	22.80%	16.19%	14.22%	18.64%
Adjusted ROA	25.40%	28.34%	26.35%	19.16%	17.32%	23.00%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Applied Materials Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Applied Materials Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Applied Materials Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Applied Materials Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Applied Materials Inc., Financial Ratios: Reported vs. Adjusted

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	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net sales	26,517)	25,785)	23,063)	17,202)	14,608)	17,253)
Total assets	30,729)	26,726)	25,825)	22,353)	19,024)	17,773)
Activity Ratio
Total asset turnover¹	0.86	0.96	0.89	0.77	0.77	0.97
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales	26,517)	25,785)	23,063)	17,202)	14,608)	17,253)
Adjusted total assets	26,997)	23,026)	22,346)	18,887)	15,625)	14,405)
Activity Ratio
Adjusted total asset turnover²	0.98	1.12	1.03	0.91	0.93	1.20

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 26,517 ÷ 30,729 = 0.86

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 26,517 ÷ 26,997 = 0.98

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Applied Materials Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	30,729)	26,726)	25,825)	22,353)	19,024)	17,773)
Stockholders’ equity	16,349)	12,194)	12,247)	10,578)	8,214)	6,839)
Solvency Ratio
Financial leverage¹	1.88	2.19	2.11	2.11	2.32	2.60
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	26,997)	23,026)	22,346)	18,887)	15,625)	14,405)
Adjusted stockholders’ equity	12,617)	8,494)	8,768)	7,112)	4,815)	3,471)
Solvency Ratio
Adjusted financial leverage²	2.14	2.71	2.55	2.66	3.25	4.15

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 30,729 ÷ 16,349 = 1.88

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 26,997 ÷ 12,617 = 2.14

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.	Applied Materials Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	6,856)	6,525)	5,888)	3,619)	2,706)	3,313)
Stockholders’ equity	16,349)	12,194)	12,247)	10,578)	8,214)	6,839)
Profitability Ratio
ROE¹	41.94%	53.51%	48.08%	34.21%	32.94%	48.44%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income	6,856)	6,525)	5,888)	3,619)	2,706)	3,313)
Adjusted stockholders’ equity	12,617)	8,494)	8,768)	7,112)	4,815)	3,471)
Profitability Ratio
Adjusted ROE²	54.34%	76.82%	67.15%	50.89%	56.20%	95.45%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 6,856 ÷ 16,349 = 41.94%

² Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 6,856 ÷ 12,617 = 54.34%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Applied Materials Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019	Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income	6,856)	6,525)	5,888)	3,619)	2,706)	3,313)
Total assets	30,729)	26,726)	25,825)	22,353)	19,024)	17,773)
Profitability Ratio
ROA¹	22.31%	24.41%	22.80%	16.19%	14.22%	18.64%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income	6,856)	6,525)	5,888)	3,619)	2,706)	3,313)
Adjusted total assets	26,997)	23,026)	22,346)	18,887)	15,625)	14,405)
Profitability Ratio
Adjusted ROA²	25.40%	28.34%	26.35%	19.16%	17.32%	23.00%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 6,856 ÷ 30,729 = 22.31%

² Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 6,856 ÷ 26,997 = 25.40%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Applied Materials Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Applied Materials Inc. (NASDAQ:AMAT)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Applied Materials Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Applied Materials Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)