Accenture PLC (NYSE:ACN)

The analysis of the presented financial data reveals significant growth trends in the intangible assets of the company over the six-year period ending August 31, 2024. The goodwill component demonstrated a consistent and substantial increase, nearly tripling from approximately 6.2 billion US dollars in 2019 to over 21.1 billion US dollars in 2024. This suggests a series of acquisitions or revaluations contributing to the company's intangible asset base.

Customer-related Intangible Assets

These assets exhibited strong growth, rising from about 1 billion US dollars to nearly 4 billion US dollars, with especially notable increases from 2022 onward, indicating expanding customer relationships or increased valuation of customer-related intangibles.

Technology Intangible Assets

The technology category showed a steady upward trend, growing from approximately 120 million US dollars to over 330 million US dollars. This growth indicates ongoing investments or enhancements in technology-related intangible assets.

Patents

The value of patents remained relatively stable, with a slight decline from around 128 million US dollars to approximately 120 million US dollars by 2024. This stability suggests limited changes in patent holdings or amortization effects over the analyzed period.

Other Intangible Assets

The 'Other' category fluctuated but exhibited a marked increase in the latest year, surging from about 65 million to 150 million US dollars, which may indicate reclassification or acquisition of various intangible assets not captured in other categories.

Definite-lived Intangible Assets

The gross carrying amount of definite-lived intangible assets experienced significant growth from nearly 1.34 billion US dollars in 2019 to over 4.53 billion US dollars in 2024. Concurrently, accumulated amortization increased steadily in absolute terms, reflecting ongoing amortization expenses.

Net Carrying Amount of Definite-lived Intangible Assets

After accounting for amortization, the net carrying amount increased substantially, from around 841 million US dollars in 2019 to approximately 2.9 billion US dollars in 2024, highlighting both the growing asset base and the amortization impact over time.

Total Goodwill and Intangible Assets

The aggregated figure for goodwill and intangible assets rose markedly from about 7 billion US dollars to over 24 billion US dollars, a more than threefold increase over the six-year span. This indicates a strategic accumulation or revaluation of intangible assets that could be linked to business expansion, acquisitions, or changes in accounting estimates.

Overall, the data indicates a robust and consistent expansion in the intangible assets portfolio, primarily driven by goodwill and customer-related intangibles, alongside significant additions to definite-lived intangible assets. The steady amortization levels reflect ongoing utilization or expiration of these assets. The company's intangible asset growth profile suggests active acquisition strategies and investment in intangible resources, which may enhance its competitive advantage and long-term value.

The data reveals distinct trends in both the reported and goodwill adjusted financial metrics over the six-year period ending in August 2024.

Total Assets

Reported total assets consistently increased each year, growing from approximately 29.79 billion US dollars in 2019 to 55.93 billion US dollars in 2024. This represents a near doubling of reported asset size, indicating substantial expansion or asset acquisition activities.

In contrast, the adjusted total assets—presumably net of goodwill and other adjustments—also rose from around 23.58 billion US dollars in 2019 to a peak of approximately 35.67 billion US dollars in 2023, but then declined to about 34.81 billion US dollars in 2024. This plateau and slight decrease in adjusted assets in the final period suggests devaluation or write-downs of intangible assets or a reduction in recognized asset values after adjustment.

Shareholders' Equity

Reported total shareholders’ equity showed steady growth throughout the entire period, increasing from roughly 14.41 billion US dollars in 2019 to 28.29 billion US dollars in 2024. This signifies consistent accumulation of equity, likely driven by retained earnings and capital increases.

In contrast, the adjusted shareholders’ equity figures are notably lower and exhibit a more volatile trend. Starting near 8.20 billion US dollars in 2019, equity slightly increased until 2020, followed by a decrease in 2021, a moderate recovery through 2023, and then a sharp decline to approximately 7.17 billion US dollars in 2024. This volatility may reflect the impact of goodwill impairments or other adjustments reducing the book value of equity on an adjusted basis.

Overall, the divergence between reported and adjusted figures underlines the significance of intangible assets in the reported metric composition. The reported metrics indicate robust growth in asset base and equity, while the adjusted metrics imply more cautious valuation, highlighting potential risks related to asset quality and sustainability of equity levels after removing goodwill and similar adjustments.

The data reveals distinct trends and variations between reported and goodwill adjusted financial metrics over the six-year period ending in 2024.

Total Asset Turnover

The reported total asset turnover demonstrates a general decline from 1.45 in 2019 to 1.16 in 2024, with some fluctuations, including a slight recovery to 1.3 in 2022 before decreasing again. In contrast, the adjusted total asset turnover shows a higher level and a more stable or slightly increasing trend, rising from 1.83 in 2019 to 1.86 in 2024, peaking at 1.8 across 2022 and 2023.

Financial Leverage

Reported financial leverage remains relatively stable but slightly decreases over time, moving from 2.07 in 2019 to 1.98 in 2024. By contrast, adjusted financial leverage starts at 2.87 in 2019 and generally increases, with some volatility, reaching a notable high of 4.86 in 2024 after peaking around 3.8 in 2021 and 2022, before dipping and rising sharply again.

Return on Equity (ROE)

Reported ROE displays a decreasing trend, beginning at 33.17% in 2019 and reducing to 25.68% by 2024. Adjusted ROE is significantly higher throughout the period and exhibits more pronounced fluctuations, increasing sharply to 101.34% in 2024 from 58.26% in 2019, with peaks around 70-76% in 2021 and 2022 and a decline in 2023.

Return on Assets (ROA)

The reported ROA declines steadily from 16.04% in 2019 to 12.99% in 2024, indicating a gradual reduction in asset profitability. Adjusted ROA is higher throughout and shows more resilience, ranging from 20.26% in 2019, dipping to 17.39% in 2020, then recovering and stabilizing near 20% through 2024.

Overall, the goodwill adjusted figures consistently indicate stronger operational efficiency and profitability metrics compared to reported figures. The adjusted data suggests improved utilization of assets and equity, especially noticeable in total asset turnover and ROE. The divergence in financial leverage suggests that the adjusted measure accounts for intangible assets affecting leverage calculations, with a marked increase by 2024. The downward trend in reported profitability ratios contrasts with the upward momentum observed in adjusted returns, signaling that goodwill adjustments substantially impact financial performance interpretation.

The analysis of the financial data reveals several noteworthy trends across the reported and goodwill adjusted figures over the examined periods.

Total Assets

Reported total assets exhibit a consistent upward trajectory from approximately $29.8 billion in 2019 to about $55.9 billion in 2024, reflecting substantial growth in asset base over the six years.

Adjusted total assets, which presumably exclude goodwill, also increase from around $23.6 billion in 2019 to approximately $34.8 billion in 2024, but show a slight decline between 2023 and 2024, indicating a possible revaluation or disposal of non-goodwill assets in the most recent period.

Total Asset Turnover

The reported total asset turnover ratio declines from 1.45 in 2019 to a low of 1.16 in 2024 after slight fluctuations, suggesting that overall asset efficiency in generating revenue has decreased when goodwill is included.

In contrast, the adjusted total asset turnover ratio maintains a stronger performance, starting at 1.83 in 2019 and rising to 1.86 in 2024, with a notable dip in 2020 and 2021 but recovering thereafter. This indicates higher operational efficiency based on assets excluding goodwill, with recent improvements in revenue generation relative to adjusted asset levels.

Overall, the growth in reported assets outpaces the growth in adjusted assets, implying an increasing proportion of goodwill or intangible assets. The diverging trends in turnover ratios suggest that excluding goodwill provides a clearer indication of the company's effective use of its tangible and operational assets to generate revenue. The steady increase in adjusted asset turnover by 2024 contrasts with the decline in reported asset turnover, highlighting improved asset utilization efficiency when goodwill is excluded from the asset base.

Total Assets

The reported total assets show a consistent upward trend from 29,789,880 thousand US dollars in 2019 to 55,932,363 thousand US dollars in 2024, indicating steady asset growth over the six-year period. Adjusted total assets, which exclude goodwill, also increase from 23,584,330 thousand US dollars in 2019 to a peak of 35,672,302 thousand US dollars in 2023, but then decline to 34,812,184 thousand US dollars in 2024. This suggests that while the overall asset base is expanding, non-goodwill assets experienced a recent reduction in the final observed year.

Shareholders’ Equity

Reported shareholders’ equity rises steadily each year from 14,409,008 thousand US dollars in 2019 to 28,288,646 thousand US dollars in 2024, reflecting growth in the company's net worth according to reported figures. In contrast, adjusted shareholders’ equity, which excludes goodwill, fluctuates more significantly. After an initial increase from 8,203,458 thousand US dollars in 2019 to 9,290,716 thousand US dollars in 2020, it declines to 8,403,593 thousand US dollars in 2021, then rises to 10,119,836 thousand US dollars by 2023 before falling sharply to 7,168,467 thousand US dollars in 2024. This volatility suggests potential impairments or adjustments impacting non-goodwill equity components in recent years.

Financial Leverage

Reported financial leverage shows a slight increase from 2.07 in 2019 to 2.21 in 2021, followed by a gradual decrease to 1.98 by 2024, indicating a modest reduction in leverage when measured with reported equity. Conversely, adjusted financial leverage demonstrates a general increasing trend, moving from 2.87 in 2019 to 4.86 in 2024, except for a slight dip in 2023. The rising adjusted financial leverage implies that, excluding goodwill, the company is increasingly leveraged, reflecting a growing reliance on debt or other liabilities relative to tangible equity.

The data reveals distinct patterns in both reported and adjusted shareholders’ equity, along with their corresponding Return on Equity (ROE) values, over the six-year period from 2019 to 2024.

Shareholders’ Equity Trends

The reported total shareholders’ equity consistently increases year over year, growing from approximately US$14.4 billion in 2019 to about US$28.3 billion in 2024. This represents nearly a doubling of reported equity over the period, indicating a sustained accumulation of value on the balance sheet.

In contrast, the adjusted total shareholders’ equity demonstrates more variability. Starting at roughly US$8.2 billion in 2019, adjusted equity increased to a peak near US$10.1 billion in 2023, before dropping substantially to about US$7.2 billion in 2024. This decline in the latest year stands out against the prior trend of general growth and suggests a significant adjustment impacting the equity base, potentially related to goodwill or intangible asset recalibrations.

Return on Equity (ROE) Trends

The reported ROE shows a slight downward trajectory across the timeframe. Beginning at 33.17% in 2019, it fluctuates moderately but trends lower, ending at 25.68% in 2024. This decline, despite the increasing reported equity, may indicate either reduced net income growth relative to equity or a changing capital structure.

Conversely, the adjusted ROE exhibits a markedly different pattern. It starts at a very high level of 58.26% in 2019, remains elevated throughout the years, peaking at 76.64% in 2022, and then increases sharply to an exceptional 101.34% in 2024. This surge suggests a significant improvement in profitability or a reduction of the adjusted equity base, effectively boosting the return metric.

Comparative Insights

The divergence between reported and adjusted figures highlights the impact of goodwill adjustments on financial metrics. While reported equity and ROE present steady growth and moderate decline respectively, adjusted metrics amplify profitability indicators, particularly ROE, to very high levels in recent years.

The substantial decrease in adjusted shareholders’ equity in 2024, coupled with the sharp rise in adjusted ROE, implies that goodwill or intangible assets write-downs or revaluations significantly affect the adjusted equity base and consequently the adjusted profitability ratios.

Analysis of the provided financial data reveals notable trends in both reported and goodwill adjusted measures over the six-year period ending August 31, 2024.

Total Assets Trends

Reported total assets demonstrate consistent year-over-year growth, increasing from approximately 29.79 billion US dollars in 2019 to 55.93 billion US dollars by 2024. This represents an approximate 87.7% growth over the six-year span, indicating substantial asset base expansion.

By contrast, adjusted total assets, which exclude goodwill and possibly other intangible adjustments, grow more moderately from about 23.58 billion US dollars in 2019 to a peak of 35.67 billion in 2023, before declining slightly to 34.81 billion in 2024. The overall growth in adjusted assets is less pronounced than in reported assets, suggesting that goodwill and intangible assets form an increasing portion of the total reported assets over time.

Return on Assets (ROA) Patterns

Reported ROA declines over the period, starting at 16.04% in 2019 and gradually decreasing to 12.99% by 2024. Minor fluctuations occur, such as a slight improvement in 2022, but the overall trend suggests diminishing profitability relative to total reported assets.

In contrast, adjusted ROA remains significantly higher throughout the period and exhibits a different pattern. Adjusted ROA begins at 20.26% in 2019, dips to 17.39% in 2020, then generally improves to reach 20.87% in 2024. This indicates improving operational efficiency and profitability when measured against assets excluding goodwill, implying that the core asset base generates steady or improving returns.

Insights and Implications

The divergence between reported and adjusted total assets suggests increasing intangible asset recognition, likely driven by acquisitions or internal development of goodwill assets. This creates a gap in asset base valuation that impacts the interpretation of profitability.

The declining reported ROA paired with stable or rising adjusted ROA implies that goodwill and intangible assets may not be contributing proportionally to earnings, distorting the overall return metric when included.

Overall, the financial data reflects strong asset growth and improving adjusted profitability, while highlighting the effects of goodwill on reported asset valuation and return measures.