Analysis of Goodwill and Intangible Assets
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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Goodwill and Intangible Asset Disclosure
Anadarko Petroleum Corp., balance sheet: goodwill and intangible assets
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Other Intangible Assets, Gross Carrying Amount
- The gross carrying amount of other intangible assets remained stable at 229 million US dollars in 2012 and 2013, followed by a significant increase to 1037 million in 2014. This elevated level was sustained in 2015 and 2016, with marginal decreases to 1013 million in those years.
- Accumulated Amortization
- Accumulated amortization values showed fluctuations over the period. It increased from -41 million in 2012 to -59 million in 2013, then decreased to -44 million in 2014. Afterwards, the amortization increased again, reaching -77 million in 2015 and further to -109 million by 2016, indicating increasing amortization expenses in the latter years.
- Other Intangible Assets, Net Carrying Amount
- The net carrying amount of other intangible assets followed a trend consistent with gross amounts and amortization. Starting at 188 million in 2012, it slightly declined to 170 million in 2013, then dramatically increased to 993 million in 2014. It then gradually decreased to 936 million in 2015 and further to 904 million in 2016, reflecting the impact of higher amortization on the increased gross asset base.
- Goodwill
- Goodwill remained relatively stable during the period, with a value of 5492 million in both 2012 and 2013. It saw a slight increase to 5576 million in 2014, followed by a decline to 5395 million in 2015 and a more pronounced decrease to 5000 million in 2016. This suggests potential impairments or adjustments impacting goodwill in the later years.
- Goodwill and Other Intangible Assets Combined
- The total carrying amount of goodwill and other intangible assets rose from 5680 million in 2012 to a peak of 6569 million in 2014. Subsequently, it declined to 6331 million in 2015 and further to 5904 million in 2016. The combined trend reflects the increases in other intangible assets in 2014 and the decreasing goodwill values afterward.
Adjustments to Financial Statements: Removal of Goodwill
Anadarko Petroleum Corp., adjustments to financial statements
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Total Assets
- Reported total assets showed an overall increasing trend from 52,589 million US dollars at the end of 2012 to a peak of 61,689 million US dollars in 2014, followed by a significant decline to 45,564 million US dollars by the end of 2016. This suggests that the company expanded its asset base initially but faced a contraction or divestiture phase in the latter years.
- Adjusted total assets, which exclude goodwill, followed a similar pattern, increasing from 47,097 million US dollars in 2012 to 56,113 million US dollars in 2014, and then dropping sharply to 40,564 million US dollars in 2016. The adjustment indicates a consistent reduction compared to reported figures, highlighting the impact of goodwill on the asset base.
- Stockholders' Equity
- Reported stockholders' equity rose slightly from 20,629 million US dollars in 2012 to 21,857 million US dollars in 2013, but then declined progressively to 12,212 million US dollars by 2016. This decline suggests eroding shareholder value or possible loss recognition during the period.
- Adjusted stockholders' equity, net of goodwill, shows a more pronounced decline from 15,137 million US dollars in 2012 to 7,212 million US dollars in 2016. The sharper decrease compared to reported equity indicates that goodwill impairment or removal had a substantial negative effect on the equity position.
- Comparative Insights
- The gap between reported and adjusted figures for both assets and equity reflects the significance of goodwill on the company's reported financial position. The steady reduction in both reported and adjusted figures from 2014 onwards highlights a period of contraction and possible asset write-downs or impairments. The adjusted data paints a more conservative picture of the company's financial health, emphasizing the importance of considering goodwill adjustments when evaluating trends.
Anadarko Petroleum Corp., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Anadarko Petroleum Corp., adjusted financial ratios
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
- Total Asset Turnover
- The reported total asset turnover exhibited a slight increase from 0.25 in 2012 to 0.27 in 2013 and 2014, followed by a decline in subsequent years reaching 0.19 in 2016. The adjusted total asset turnover followed a similar pattern but consistently showed slightly higher values than the reported figures, peaking at 0.30 in 2013 before declining to 0.21 in 2016. This indicates a decrease over time in the efficiency with which the company utilized its assets to generate revenue, with the adjusted data suggesting somewhat better asset utilization once goodwill adjustments are considered.
- Financial Leverage
- Reported financial leverage increased steadily from 2.55 in 2012 and 2013 to 3.13 in 2014, then rising further to 3.73 by 2016. Adjusted financial leverage presented higher values each year relative to the reported figures, with a notably sharper upward trajectory from 3.11 in 2012 to 5.62 in 2016. This trend indicates a growing reliance on debt financing or other leverage sources, with goodwill adjustments amplifying the perceived leverage level significantly, suggesting elevated financial risk over the analyzed period.
- Return on Equity (ROE)
- Reported ROE showed a marked decline from a positive 11.59% in 2012 down to negative values starting in 2014, reaching a low of -52.20% in 2015 before improving slightly to -25.15% in 2016. Adjusted ROE followed a similar trajectory but recorded more pronounced negative returns in the later years, notably -90.14% in 2015 and -42.58% in 2016. This decline in equity profitability reflects significant challenges in generating returns for shareholders, especially when considering adjustments for goodwill.
- Return on Assets (ROA)
- Both reported and adjusted ROA mirrored the downward pattern seen in ROE, starting from moderate positive values (4.55% and 5.08% respectively in 2012) and transitioning into negative returns by 2014 onward. The lowest point occurred in 2015 with adjusted ROA falling to -16.31%, slightly worse than the reported figure of -14.42%. By 2016, the returns improved marginally but remained negative. The decline indicates deteriorating overall asset profitability over time, with the adjusted figures suggesting an even more adverse impact when accounting for goodwill.
Anadarko Petroleum Corp., Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
2016 Calculations
1 Total asset turnover = Sales revenues ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Sales revenues ÷ Adjusted total assets
= ÷ =
- Total Assets
- Reported total assets exhibited an increasing trend from 2012 to 2014, growing from 52,589 million US dollars to 61,689 million US dollars. However, a decline is observed in the subsequent two years, reaching 45,564 million US dollars by the end of 2016. Similarly, adjusted total assets followed the same pattern, increasing from 47,097 million US dollars in 2012 to 56,113 million US dollars in 2014, before decreasing to 40,564 million US dollars in 2016. Overall, the asset base peaked in 2014 and then contracted notably over the following two years.
- Total Asset Turnover
- The reported total asset turnover ratio increased slightly from 0.25 in 2012 to 0.27 in 2013 and remained stable at 0.27 in 2014, indicating relatively consistent efficiency in generating revenues relative to assets during this period. From 2015 onwards, a decline is evident as the ratio decreased to 0.20 in 2015 and further to 0.19 in 2016. The adjusted total asset turnover follows a similar trend with marginally higher values, starting at 0.28 in 2012, peaking at 0.30 in 2013, then gradually decreasing to 0.21 by 2016. This pattern highlights a reduction in asset utilization efficiency in the latter years under review.
- Summary
- There is a clear pattern of asset growth until 2014 followed by a significant reversal in total asset values through 2016. Concurrently, the efficiency of asset usage, as measured by total asset turnover ratios, improved slightly in the earlier years but declined materially after 2014. The adjusted figures consistently show lower total assets but slightly higher turnover ratios compared to reported data, suggesting that goodwill adjustments reduce asset base size but do not drastically alter observed asset efficiency trends. The overall data indicates a period of asset expansion followed by contraction, accompanied by diminishing operational efficiency in asset utilization in the latter years.
Adjusted Financial Leverage
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
2016 Calculations
1 Financial leverage = Total assets ÷ Stockholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= ÷ =
- Total Assets
- The reported total assets increased steadily from 52,589 million US dollars in 2012 to a peak of 61,689 million in 2014. This growth trend reversed sharply in 2015, with assets declining to 46,414 million and continuing to decrease slightly to 45,564 million in 2016. The adjusted total assets, which presumably exclude goodwill or intangible assets, display a similar pattern but at consistently lower levels. They rose from 47,097 million in 2012 to 56,113 million in 2014, then decreased noticeably to 41,019 million in 2015 and further to 40,564 million in 2016.
- Stockholders’ Equity
- Reported stockholders’ equity showed a moderate increase from 20,629 million in 2012 to 21,857 million in 2013 but then experienced a decline over the subsequent years, falling to 19,725 million in 2014 and sharply decreasing to 12,819 million in 2015, with a slight further decrease to 12,212 million in 2016. The adjusted stockholders’ equity demonstrated a corresponding trend but at lower absolute values, starting at 15,137 million in 2012, rising to 16,365 million in 2013, then declining to 14,149 million in 2014, and falling steeply thereafter to 7,424 million in 2015 and 7,212 million in 2016.
- Financial Leverage
- The reported financial leverage ratio remained stable at 2.55 in 2012 and 2013, before increasing to 3.13 in 2014. This ratio continued to rise in the following years, reaching 3.62 in 2015 and 3.73 in 2016, indicating growing reliance on debt relative to equity. The adjusted financial leverage ratio, which excludes goodwill, started higher at 3.11 in 2012 and showed an increasing trend similar to the reported ratio, but more pronounced. It increased from 3.11 in 2012 to 3.07 in 2013, then sharply rose to 3.97 in 2014, followed by a substantial rise to 5.53 in 2015 and 5.62 in 2016. This suggests a significant increase in financial risk after adjusting for goodwill.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
2016 Calculations
1 ROE = 100 × Net income (loss) attributable to common stockholders ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Net income (loss) attributable to common stockholders ÷ Adjusted stockholders’ equity
= 100 × ÷ =
- Stockholders’ Equity Trends
- The reported stockholders’ equity experienced a decline from US$20,629 million in 2012 to US$12,212 million in 2016, representing a substantial decrease over the five-year period. Adjusted stockholders’ equity, which removes goodwill effects, shows a similar downward pattern, falling from US$15,137 million in 2012 to US$7,212 million in 2016. This indicates a significant erosion of equity base even after adjustments, with a sharper relative decline compared to reported figures.
- Return on Equity (ROE) Patterns
- Reported ROE demonstrated a declining trend from a positive 11.59% in 2012 to sharply negative returns, reaching -25.15% in 2016. Adjusted ROE mirrors this progression but shows more pronounced negative values, particularly from 2014 onwards, with -12.37% in 2014 deteriorating drastically to -90.14% in 2015 before slight improvement to -42.58% in 2016. These figures indicate the company faced substantial profitability challenges impacting shareholder returns.
- Comparative Insights
- The adjusted measures highlight more severe financial performance and equity declines relative to reported figures, suggesting that goodwill impairment or related adjustments materially affect interpretations of the company’s financial health. The sharp downturn in adjusted ROE compared to reported ROE especially from 2014 onward implies significant asset impairments or write-downs during this period.
- Overall Financial Condition
- The data reflects deteriorating equity positions and worsening profitability over the five years. The sharp drops in stockholders’ equity and negative ROE trends suggest that the company experienced operational or market difficulties, leading to reduced value for shareholders. Adjusted measures particularly underscore the impact of non-cash adjustments such as goodwill impairments, indicating underlying asset quality issues.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31).
2016 Calculations
1 ROA = 100 × Net income (loss) attributable to common stockholders ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income (loss) attributable to common stockholders ÷ Adjusted total assets
= 100 × ÷ =
- Asset Trends
- The reported total assets increased from 52,589 million US dollars at the end of 2012 to a peak of 61,689 million US dollars at the end of 2014, indicating a period of asset growth. However, a significant decline followed, with assets falling to 46,414 million by the end of 2015 and continuing slightly downward to 45,564 million by the end of 2016. Adjusted total assets, which exclude goodwill, exhibit a similar pattern with growth from 47,097 million in 2012 to 56,113 million in 2014, followed by a sharp decrease to 41,019 million in 2015 and a minor further decline to 40,564 million in 2016. This suggests that the company experienced asset expansion culminating in 2014, succeeded by a contraction phase.
- Return on Assets (ROA) Performance
- The reported return on assets (ROA) shows a declining trend over the observed period. Starting at a positive 4.55% in 2012, ROA sharply reduced to 1.44% in 2013, then dropped further into negative territory, reaching -2.84% in 2014. The decline intensified in 2015 with a substantial negative ROA of -14.42%, and although there was some recovery by 2016, ROA remained negative at -6.74%. When examining the adjusted ROA, which factors out goodwill, a similar downward trend is observed. The adjusted ROA begins at 5.08% in 2012, follows the same declining progression, and falls to -7.57% by 2016. The adjusted figures tend to indicate slightly worse returns, particularly evident during the years with negative returns.
- Overall Observations
- The combined trends in assets and ROA suggest that the company expanded its asset base until 2014 but struggled with profitability and asset utilization starting that year. The pronounced decrease in both reported and adjusted total assets post-2014, alongside the deterioration in ROA, points to potential challenges such as asset impairments, divestitures, or operational difficulties. The more negative adjusted ROA values imply that goodwill adjustments highlight a lower efficiency in generating returns from tangible assets. The partial recovery seen in 2016's ROA, though still negative, may indicate initial steps toward stability or turnaround efforts.