Analysis of Operating Leases
An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.
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Baxter International Inc. pages available for free this week:
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Baxter International Inc., future operating lease payments (before adoption of FASB Topic 842)
US$ in millions
| Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | Dec 31, 2011 | ||
|---|---|---|---|---|---|---|
| Total undiscounted future operating lease payments | ||||||
| Discount rate1 | ||||||
| Total present value of future operating lease payments | ||||||
Based on: 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), 10-K (reporting date: 2011-12-31).
1 Weighted-average interest rate for Baxter International Inc. debt
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 | 2020 | |||
| 2021 and thereafter | 2021 | |||
| 2022 | ||||
| 2023 | ||||
| Total: |
Based on: 10-K (reporting date: 2015-12-31).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 | 2019 | |||
| 2020 and thereafter | 2020 | |||
| 2021 | ||||
| 2022 | ||||
| Total: |
Based on: 10-K (reporting date: 2014-12-31).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2014 | 2014 | |||
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 | 2018 | |||
| 2019 and thereafter | 2019 | |||
| 2020 | ||||
| 2021 | ||||
| Total: |
Based on: 10-K (reporting date: 2013-12-31).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2013 | 2013 | |||
| 2014 | 2014 | |||
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 | 2017 | |||
| 2018 and thereafter | 2018 | |||
| 2019 | ||||
| Total: |
Based on: 10-K (reporting date: 2012-12-31).
| Year | Future operating lease payments (as reported) | Year | Future operating lease payments (estimated) | Present value at |
|---|---|---|---|---|
| 2012 | 2012 | |||
| 2013 | 2013 | |||
| 2014 | 2014 | |||
| 2015 | 2015 | |||
| 2016 | 2016 | |||
| 2017 and thereafter | 2017 | |||
| 2018 | ||||
| Total: |
Based on: 10-K (reporting date: 2011-12-31).
Adjustments to Financial Statements for Operating Leases
Baxter International Inc., adjustments to financial statements
US$ in millions
Based on: 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), 10-K (reporting date: 2011-12-31).
1, 2 Equal to total present value of future operating lease payments.
Baxter International Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios for Operating Leases (Summary)
Baxter International Inc., adjusted financial ratios
Based on: 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), 10-K (reporting date: 2011-12-31).
| Financial ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Baxter International Inc. adjusted total asset turnover ratio improved from 2013 to 2014 but then deteriorated significantly from 2014 to 2015. |
| Adjusted debt to equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Baxter International Inc. adjusted debt to equity ratio deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Baxter International Inc. adjusted ROA improved from 2013 to 2014 but then deteriorated significantly from 2014 to 2015. |
Baxter International Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 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), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =
| Activity ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Baxter International Inc. adjusted total asset turnover ratio improved from 2013 to 2014 but then deteriorated significantly from 2014 to 2015. |
Adjusted Debt to Equity
Based on: 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), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 Debt to equity = Total debt ÷ Total Baxter shareholders’ equity
= ÷ =
2 Adjusted debt to equity = Adjusted total debt ÷ Total Baxter shareholders’ equity
= ÷ =
| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Baxter International Inc. adjusted debt-to-equity ratio deteriorated from 2013 to 2014 but then improved from 2014 to 2015 exceeding 2013 level. |
Adjusted Return on Assets (ROA)
Based on: 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), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 ROA = 100 × Net income attributable to Baxter ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income attributable to Baxter ÷ Adjusted total assets
= 100 × ÷ =
| Profitability ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Baxter International Inc. adjusted ROA improved from 2013 to 2014 but then deteriorated significantly from 2014 to 2015. |