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)

Synopsys Inc., balance sheet: goodwill and intangible assets

US$ in thousands

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Goodwill	4,070,336)	3,842,234)	3,575,785)	3,365,114)	3,171,179)	3,143,249)
Core/developed technology	1,135,347)	1,083,703)	911,903)	827,232)	791,647)	773,147)
Customer relationships	463,371)	426,242)	404,571)	380,838)	358,661)	358,524)
Contract rights intangible	194,930)	190,666)	193,317)	192,812)	184,304)	183,953)
Trademarks and trade names	52,825)	52,795)	43,095)	43,096)	42,929)	42,929)
In-process research and development (IPR&D)	—)	—)	—)	1,214)	1,200)	1,200)
Capitalized software development costs	50,795)	48,591)	46,098)	44,122)	40,077)	35,818)
Intangible assets, gross carrying amount	1,897,268)	1,801,997)	1,598,984)	1,489,314)	1,418,818)	1,395,571)
Accumulated amortization	(1,523,074)	(1,415,551)	(1,319,852)	(1,234,992)	(1,139,444)	(1,035,167)
Intangible assets, net amount	374,194)	386,446)	279,132)	254,322)	279,374)	360,404)
Goodwill and intangible assets	4,444,530)	4,228,680)	3,854,917)	3,619,436)	3,450,553)	3,503,653)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

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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.	Synopsys Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Intangible assets, net amount	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Synopsys Inc. intangible assets, net amount 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.	Synopsys Inc. goodwill and intangible assets increased from 2021 to 2022 and from 2022 to 2023.

Synopsys Inc., adjustments to financial statements

US$ in thousands

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Adjustment to Total Assets
Total assets (as reported)	10,333,131)	9,418,087)	8,752,260)	8,030,062)	6,405,160)	6,145,974)
Less: Goodwill	4,070,336)	3,842,234)	3,575,785)	3,365,114)	3,171,179)	3,143,249)
Total assets (adjusted)	6,262,795)	5,575,853)	5,176,475)	4,664,948)	3,233,981)	3,002,725)
Adjustment to Total Synopsys Stockholders’ Equity
Total Synopsys stockholders’ equity (as reported)	6,147,308)	5,515,725)	5,295,137)	4,907,404)	4,083,013)	3,479,152)
Less: Goodwill	4,070,336)	3,842,234)	3,575,785)	3,365,114)	3,171,179)	3,143,249)
Total Synopsys stockholders’ equity (adjusted)	2,076,972)	1,673,491)	1,719,352)	1,542,290)	911,834)	335,903)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

Synopsys Inc., Financial Data: Reported vs. Adjusted

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Synopsys Inc., adjusted financial ratios

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Total Asset Turnover
Reported total asset turnover	0.57	0.54	0.48	0.46	0.52	0.51
Adjusted total asset turnover	0.93	0.91	0.81	0.79	1.04	1.04
Financial Leverage
Reported financial leverage	1.68	1.71	1.65	1.64	1.57	1.77
Adjusted financial leverage	3.02	3.33	3.01	3.02	3.55	8.94
Return on Equity (ROE)
Reported ROE	20.01%	17.85%	14.31%	13.54%	13.04%	12.43%
Adjusted ROE	59.22%	58.83%	44.06%	43.08%	58.38%	128.76%
Return on Assets (ROA)
Reported ROA	11.90%	10.45%	8.66%	8.27%	8.31%	7.04%
Adjusted ROA	19.64%	17.66%	14.63%	14.24%	16.46%	14.40%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Synopsys Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and 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.	Synopsys Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Synopsys Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Synopsys Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Synopsys Inc., Financial Ratios: Reported vs. Adjusted

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	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Revenue	5,842,619)	5,081,542)	4,204,193)	3,685,281)	3,360,694)	3,121,058)
Total assets	10,333,131)	9,418,087)	8,752,260)	8,030,062)	6,405,160)	6,145,974)
Activity Ratio
Total asset turnover¹	0.57	0.54	0.48	0.46	0.52	0.51
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenue	5,842,619)	5,081,542)	4,204,193)	3,685,281)	3,360,694)	3,121,058)
Adjusted total assets	6,262,795)	5,575,853)	5,176,475)	4,664,948)	3,233,981)	3,002,725)
Activity Ratio
Adjusted total asset turnover²	0.93	0.91	0.81	0.79	1.04	1.04

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 5,842,619 ÷ 10,333,131 = 0.57

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 5,842,619 ÷ 6,262,795 = 0.93

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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.	Synopsys Inc. adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Total assets	10,333,131)	9,418,087)	8,752,260)	8,030,062)	6,405,160)	6,145,974)
Total Synopsys stockholders’ equity	6,147,308)	5,515,725)	5,295,137)	4,907,404)	4,083,013)	3,479,152)
Solvency Ratio
Financial leverage¹	1.68	1.71	1.65	1.64	1.57	1.77
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	6,262,795)	5,575,853)	5,176,475)	4,664,948)	3,233,981)	3,002,725)
Adjusted total Synopsys stockholders’ equity	2,076,972)	1,673,491)	1,719,352)	1,542,290)	911,834)	335,903)
Solvency Ratio
Adjusted financial leverage²	3.02	3.33	3.01	3.02	3.55	8.94

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Synopsys stockholders’ equity
= 10,333,131 ÷ 6,147,308 = 1.68

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Synopsys stockholders’ equity
= 6,262,795 ÷ 2,076,972 = 3.02

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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.	Synopsys Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributed to Synopsys	1,229,888)	984,594)	757,516)	664,347)	532,367)	432,518)
Total Synopsys stockholders’ equity	6,147,308)	5,515,725)	5,295,137)	4,907,404)	4,083,013)	3,479,152)
Profitability Ratio
ROE¹	20.01%	17.85%	14.31%	13.54%	13.04%	12.43%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income attributed to Synopsys	1,229,888)	984,594)	757,516)	664,347)	532,367)	432,518)
Adjusted total Synopsys stockholders’ equity	2,076,972)	1,673,491)	1,719,352)	1,542,290)	911,834)	335,903)
Profitability Ratio
Adjusted ROE²	59.22%	58.83%	44.06%	43.08%	58.38%	128.76%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

2023 Calculations

¹ ROE = 100 × Net income attributed to Synopsys ÷ Total Synopsys stockholders’ equity
= 100 × 1,229,888 ÷ 6,147,308 = 20.01%

² Adjusted ROE = 100 × Net income attributed to Synopsys ÷ Adjusted total Synopsys stockholders’ equity
= 100 × 1,229,888 ÷ 2,076,972 = 59.22%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Synopsys Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
As Reported
Selected Financial Data (US$ in thousands)
Net income attributed to Synopsys	1,229,888)	984,594)	757,516)	664,347)	532,367)	432,518)
Total assets	10,333,131)	9,418,087)	8,752,260)	8,030,062)	6,405,160)	6,145,974)
Profitability Ratio
ROA¹	11.90%	10.45%	8.66%	8.27%	8.31%	7.04%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income attributed to Synopsys	1,229,888)	984,594)	757,516)	664,347)	532,367)	432,518)
Adjusted total assets	6,262,795)	5,575,853)	5,176,475)	4,664,948)	3,233,981)	3,002,725)
Profitability Ratio
Adjusted ROA²	19.64%	17.66%	14.63%	14.24%	16.46%	14.40%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

2023 Calculations

¹ ROA = 100 × Net income attributed to Synopsys ÷ Total assets
= 100 × 1,229,888 ÷ 10,333,131 = 11.90%

² Adjusted ROA = 100 × Net income attributed to Synopsys ÷ Adjusted total assets
= 100 × 1,229,888 ÷ 6,262,795 = 19.64%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Synopsys Inc. adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Synopsys Inc. (NASDAQ:SNPS)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Synopsys Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Synopsys Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)