DuPont de Nemours Inc. (NYSE:DD)

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DuPont de Nemours Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Statutory U.S. federal income tax rate	21.00%	21.00%	35.00%	35.00%	35.00%
Equity earnings effect	1.30%	-2.50%	-11.00%	-1.20%	-1.80%
Foreign income taxed at rates other than the statutory U.S. federal income tax rate	3.40%	6.10%	-26.70%	-7.00%	-4.00%
U.S. tax effect of foreign earnings and dividends	-4.30%	-0.20%	-2.50%	-4.60%	1.30%
Unrecognized tax benefits	-10.00%	0.00%	2.90%	-0.80%	0.80%
Acquisitions, divestitures and ownership restructuring activities	30.30%	1.70%	6.50%	-21.20%	-9.50%
Exchange gains/losses	-4.40%	0.50%	2.40%	0.00%	0.00%
State and local income taxes	-33.20%	0.00%	6.10%	0.20%	0.60%
Change in valuation allowance	-6.80%	0.00%	0.00%	0.00%	0.00%
Goodwill impairment	-51.20%	0.00%	44.90%	0.00%	0.00%
Excess tax benefits from stock-based compensation	0.10%	-1.00%	-8.50%	0.00%	0.00%
Other, net	13.50%	1.60%	1.90%	-0.20%	-0.80%
Effective tax rate, before SAB 118 Impact of Enactment of U.S. Tax Reform	-40.30%	27.20%	51.00%	0.20%	21.60%
Impact of Enactment of U.S. Tax Reform	10.80%	-0.10%	-90.90%	0.00%	0.00%
Effective tax rate	-29.50%	27.10%	-39.90%	0.20%	21.60%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The effective income tax rate (EITR) exhibited extreme volatility between 2015 and 2019, fluctuating from a high of 27.1% in 2018 to a low of -39.9% in 2017. This instability is primarily attributed to significant non-recurring items, including corporate restructuring, substantial goodwill impairments, and the enactment of U.S. tax reform.

Statutory Rate Transition: The statutory U.S. federal income tax rate remained constant at 35.00% from 2015 through 2017, followed by a reduction to 21.00% in 2018 and 2019, reflecting changes in federal tax legislation.
Impact of U.S. Tax Reform: The enactment of U.S. Tax Reform created a massive distortion in 2017, contributing a negative 90.90% adjustment. This single factor was the primary driver in pushing the 2017 effective tax rate to -39.90%, despite a pre-reform rate of 51.00% for that same period.
Corporate Restructuring and Asset Adjustments: Acquisitions, divestitures, and ownership restructuring activities caused significant variance, notably contributing -21.20% in 2016 and 30.30% in 2019. Goodwill impairment also introduced severe volatility, with a positive impact of 44.90% in 2017 and a negative impact of -51.20% in 2019.
Operational and Regional Tax Drivers: Foreign income taxed at rates other than the U.S. statutory rate generally provided a downward pressure on the EITR from 2015 to 2017, though this trend reversed in 2018 and 2019. State and local income taxes remained negligible until 2019, where they provided a substantial tax benefit of -33.20%.
Summary of EITR Trend: The EITR moved from 21.60% in 2015 to 0.20% in 2016, plummeted to -39.90% in 2017, recovered to 27.10% in 2018, and finally declined again to -29.50% in 2019. This pattern indicates that the company's tax burden was driven more by discrete accounting adjustments and legislative changes than by consistent operational profitability.

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DuPont de Nemours Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Property	—)	460)	508)	307)	48)
Tax loss and credit carryforwards	776)	3,634)	3,425)	2,450)	1,647)
Pension and postretirement benefit obligations	245)	3,845)	4,227)	3,715)	4,199)
Other accruals and reserves	65)	1,639)	1,661)	1,964)	1,191)
Intangibles	—)	471)	460)	128)	208)
Inventory	—)	197)	165)	50)	306)
Long-term debt	—)	24)	109)	—)	—)
Investments	—)	295)	295)	179)	204)
Other, net	169)	984)	806)	737)	1,114)
Gross deferred tax assets	1,255)	11,549)	11,656)	9,530)	8,917)
Valuation allowances	(634)	(2,407)	(2,749)	(1,061)	(1,000)
Deferred tax assets	621)	9,142)	8,907)	8,469)	7,917)
Unrealized exchange gains (losses), net	(1)	(141)	(71)	—)	—)
Inventory	(9)	(534)	(768)	(197)	(218)
Investments	(341)	(641)	(611)	(119)	(242)
Property	(796)	(3,593)	(3,634)	(2,860)	(2,015)
Postretirement benefit obligations	—)	(376)	(199)	(75)	(1,344)
Other accruals and reserves	—)	(168)	(190)	(883)	(684)
Intangibles	(2,752)	(6,818)	(7,296)	(1,536)	(692)
Long-term debt	—)	—)	—)	—)	(440)
Other, net	—)	(582)	(535)	(643)	(436)
Deferred tax liabilities	(3,899)	(12,853)	(13,304)	(6,313)	(6,071)
Net deferred tax asset (liability)	(3,278)	(3,711)	(4,397)	2,156)	1,846)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The company experienced a significant shift in its deferred tax position between 2015 and 2019, transitioning from a net deferred tax asset position to a substantial net deferred tax liability. This transition was most pronounced in 2017, marking a pivotal change in the balance of temporary differences between book and tax accounting.

Gross Deferred Tax Asset Trends: Gross deferred tax assets grew steadily from US$ 8,917 million in 2015 to a peak of US$ 11,656 million in 2017. This growth was largely supported by increases in tax loss and credit carryforwards, which rose from US$ 1,647 million to US$ 3,425 million during that period, and pension and postretirement benefit obligations, which peaked at US$ 4,227 million in 2017. However, 2019 saw a precipitous decline in gross deferred tax assets to US$ 1,255 million, suggesting a major restructuring or a significant realization of previously deferred items.
Deferred Tax Liability Drivers: Deferred tax liabilities remained relatively stable between 2015 and 2016 before more than doubling in 2017 to US$ 13,304 million. The primary driver for this spike was a dramatic increase in liabilities related to intangibles, which surged from US$ 1,536 million in 2016 to US$ 7,296 million in 2017. Property-related liabilities also contributed significantly, increasing from US$ 2,860 million in 2016 to US$ 3,634 million in 2017. By 2019, these liabilities contracted to US$ 3,899 million, mirroring the decline seen in the assets.
Valuation Allowance Volatility: Valuation allowances increased from US$ 1,000 million in 2015 to a peak of US$ 2,749 million in 2017, indicating a more conservative assessment of the realizability of deferred tax assets during that period. In 2019, the valuation allowance decreased to US$ 634 million, correlating with the overall reduction in gross deferred tax assets.
Net Deferred Tax Position: The net position moved from a net asset of US$ 1,846 million in 2015 and US$ 2,156 million in 2016 to a net liability of US$ 4,397 million in 2017. While the net liability narrowed slightly in 2018 and 2019 to US$ 3,711 million and US$ 3,278 million respectively, the company remained in a net liability position for the final three years of the analyzed period.

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DuPont de Nemours Inc., deferred tax assets and liabilities, classification

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Current deferred tax assets	—)	—)	—)	—)	827)
Noncurrent deferred tax assets	236)	1,724)	1,869)	3,079)	1,694)
Current deferred tax liabilities	—)	—)	—)	—)	100)
Noncurrent deferred tax liabilities	3,514)	5,435)	6,266)	923)	575)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The deferred tax position transitioned from a net asset position to a substantial net liability position between 2015 and 2019. This shift is primarily driven by a dramatic escalation in noncurrent deferred tax liabilities and a subsequent sharp decline in noncurrent deferred tax assets.

Noncurrent Deferred Tax Assets: Noncurrent deferred tax assets exhibited significant volatility, peaking at 3,079 million USD in 2016. Following this peak, a consistent downward trend occurred, culminating in a sharp decrease to 236 million USD by December 31, 2019. This represents a near-total erosion of long-term deferred tax benefits over the analyzed period.
Noncurrent Deferred Tax Liabilities: A substantial increase in noncurrent deferred tax liabilities was observed in 2017, where the balance rose to 6,266 million USD from 923 million USD in the prior year. Although these liabilities decreased in 2018 and 2019, ending at 3,514 million USD, the levels remained significantly elevated compared to the 2015 and 2016 baselines.
Net Deferred Tax Position and Classification: The reporting of current deferred tax assets and liabilities ceased after 2015, indicating a shift toward noncurrent classification for all deferred tax items. The net deferred tax balance moved from a net asset position of approximately 2.16 billion USD in 2016 to a net liability position of approximately 4.40 billion USD in 2017, remaining a net liability through 2019.

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DuPont de Nemours Inc., Financial Data: Reported vs. Adjusted

DuPont de Nemours Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Adjustment to Current Assets
Current assets (as reported)	9,999)	49,603)	49,893)	23,659)	24,475)
Less: Current deferred tax assets, net	—)	—)	—)	—)	827)
Current assets (adjusted)	9,999)	49,603)	49,893)	23,659)	23,648)
Adjustment to Total Assets
Total assets (as reported)	69,396)	188,030)	192,164)	79,511)	68,026)
Less: Current deferred tax assets, net	—)	—)	—)	—)	827)
Less: Noncurrent deferred tax assets, net	236)	1,724)	1,869)	3,079)	1,694)
Total assets (adjusted)	69,160)	186,306)	190,295)	76,432)	65,505)
Adjustment to Current Liabilities
Current liabilities (as reported)	8,346)	24,715)	26,128)	12,604)	11,215)
Less: Current deferred tax liabilities, net	—)	—)	—)	—)	100)
Current liabilities (adjusted)	8,346)	24,715)	26,128)	12,604)	11,115)
Adjustment to Total Liabilities
Total liabilities (as reported)	27,840)	91,851)	90,237)	52,282)	41,843)
Less: Current deferred tax liabilities, net	—)	—)	—)	—)	100)
Less: Noncurrent deferred tax liabilities, net	3,514)	5,435)	6,266)	923)	575)
Total liabilities (adjusted)	24,326)	86,416)	83,971)	51,359)	41,168)
Adjustment to Total DuPont Stockholders’ Equity
Total DuPont stockholders’ equity (as reported)	40,987)	94,571)	100,330)	25,987)	25,374)
Less: Net deferred tax assets (liabilities)	(3,278)	(3,711)	(4,397)	2,156)	1,846)
Total DuPont stockholders’ equity (adjusted)	44,265)	98,282)	104,727)	23,831)	23,528)
Adjustment to Net Income Attributable To DuPont
Net income attributable to DuPont (as reported)	498)	3,844)	1,460)	4,318)	7,685)
Add: Deferred income tax expense (benefit)	(478)	(434)	(2,166)	(1,259)	305)
Net income attributable to DuPont (adjusted)	20)	3,410)	(706)	3,059)	7,990)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

The removal of deferred taxes results in consistent discrepancies between reported and adjusted financial metrics from 2015 to 2019. This adjustment generally reduces the valuation of total assets and total liabilities, although the magnitude and direction of the impact on equity and net income vary across the period.

Asset and Liability Adjustments: A systemic reduction in total assets is observed across all analyzed years upon removing deferred taxes. The impact on liabilities is more volatile; while the reduction was relatively small in 2015 and 2016, it increased substantially starting in 2017. In 2017, reported total liabilities were 6,266 million US$ higher than adjusted liabilities, indicating a significant concentration of deferred tax liabilities on the balance sheet during this timeframe.
Impact on Stockholders' Equity: The relationship between reported and adjusted stockholders' equity underwent a reversal after 2016. In 2015 and 2016, the removal of deferred taxes resulted in lower adjusted equity. Conversely, from 2017 through 2019, adjusted equity consistently exceeded reported equity. This shift suggests that the reduction in liabilities outweighed the reduction in assets in the latter part of the period, thereby increasing the adjusted net book value.
Net Income Divergence: Adjustments for deferred taxes led to a general decrease in net income from 2016 onward. The most significant divergence occurred in 2017, where a reported net income of 1,460 million US$ was adjusted to a net loss of 706 million US$. Similarly, in 2019, reported net income of 498 million US$ was reduced to 20 million US$ on an adjusted basis. This indicates that the inclusion of deferred tax accounting may have positively influenced reported profitability during these years.

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DuPont de Nemours Inc., Financial Ratios: Reported vs. Adjusted

DuPont de Nemours Inc., adjusted financial ratios

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Current Ratio
Reported current ratio	1.20	2.01	1.91	1.88	2.18
Adjusted current ratio	1.20	2.01	1.91	1.88	2.13
Net Profit Margin
Reported net profit margin	2.31%	4.47%	2.34%	8.97%	15.76%
Adjusted net profit margin	0.09%	3.97%	-1.13%	6.35%	16.38%
Total Asset Turnover
Reported total asset turnover	0.31	0.46	0.33	0.61	0.72
Adjusted total asset turnover	0.31	0.46	0.33	0.63	0.74
Financial Leverage
Reported financial leverage	1.69	1.99	1.92	3.06	2.68
Adjusted financial leverage	1.56	1.90	1.82	3.21	2.78
Return on Equity (ROE)
Reported ROE	1.22%	4.06%	1.46%	16.62%	30.29%
Adjusted ROE	0.05%	3.47%	-0.67%	12.84%	33.96%
Return on Assets (ROA)
Reported ROA	0.72%	2.04%	0.76%	5.43%	11.30%
Adjusted ROA	0.03%	1.83%	-0.37%	4.00%	12.20%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

Between 2015 and 2019, a consistent deterioration in profitability and operational efficiency is observed. The removal of deferred taxes reveals a more volatile underlying financial performance than the reported figures suggest, particularly during the middle of the period.

Liquidity and Asset Management: The current ratio remained relatively stable between 2015 and 2018, fluctuating between 1.88 and 2.18. However, a significant contraction occurred in 2019, with the ratio dropping to 1.20. The minimal variance between reported and adjusted current ratios indicates that deferred tax adjustments have negligible impact on short-term liquidity assessments.
Profitability and Tax Impact: A sharp downward trend in net profit margins is evident. Reported net profit margin fell from 15.76% in 2015 to 2.31% in 2019. The adjusted net profit margin highlights a greater sensitivity to tax adjustments, dropping into negative territory in 2017 (-1.13%) and nearly reaching zero in 2019 (0.09%). This divergence suggests that deferred tax benefits provided a buffer for reported earnings during periods of operational weakness.
Operational Efficiency and Leverage: Total asset turnover experienced a steady decline, falling from a reported 0.72 in 2015 to 0.31 in 2019, indicating a reduction in the efficiency of assets in generating revenue. Simultaneously, financial leverage peaked in 2016 at 3.06 before trending downward to 1.69 by 2019. Adjusted financial leverage consistently mirrors this trend, though it remains slightly lower than reported figures from 2017 onward.
Return Metrics: Both Return on Equity (ROE) and Return on Assets (ROA) show severe degradation over the five-year period. Reported ROE plummeted from 30.29% in 2015 to 1.22% in 2019. When adjusted for deferred taxes, the ROE volatility is amplified, falling to -0.67% in 2017 and ending at 0.05% in 2019. A parallel collapse is observed in ROA, which declined from a reported 11.30% in 2015 to 0.72% in 2019, with the adjusted ROA nearly erasing all gains by the end of the period.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Current assets	9,999)	49,603)	49,893)	23,659)	24,475)
Current liabilities	8,346)	24,715)	26,128)	12,604)	11,215)
Liquidity Ratio
Current ratio¹	1.20	2.01	1.91	1.88	2.18
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets	9,999)	49,603)	49,893)	23,659)	23,648)
Adjusted current liabilities	8,346)	24,715)	26,128)	12,604)	11,115)
Liquidity Ratio
Adjusted current ratio²	1.20	2.01	1.91	1.88	2.13

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 9,999 ÷ 8,346 = 1.20

² Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 9,999 ÷ 8,346 = 1.20

An analysis of the liquidity position from 2015 to 2019 reveals significant fluctuations in current assets and liabilities, culminating in a notable reduction in the liquidity buffer by the end of the period. The adjustments made to current assets and liabilities were only present in 2015, after which the reported and adjusted figures converged entirely through 2019.

Adjusted Current Ratio Trend: The adjusted current ratio exhibited a period of relative stability between 2016 and 2018, fluctuating within a range of 1.88 to 2.01. However, a sharp decline is observed in 2019, where the ratio fell to 1.20, indicating a tightening of short-term liquidity.
Impact of Adjustments: In 2015, adjustments to both current assets and current liabilities resulted in a slight decrease in the current ratio, moving from a reported 2.18 to an adjusted 2.13. From 2016 onward, the absence of differences between reported and adjusted values suggests that the factors requiring adjustment in 2015 were no longer impactful or present.
Asset and Liability Volatility: A substantial expansion of the balance sheet occurred in 2017, with adjusted current assets increasing from 23,659 million to 49,893 million. This expansion was mirrored by a corresponding increase in adjusted current liabilities to 26,128 million. By 2019, both metrics contracted sharply, with assets decreasing to 9,999 million and liabilities to 8,346 million, which directly contributed to the compression of the current ratio.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to DuPont	498)	3,844)	1,460)	4,318)	7,685)
Net sales	21,512)	85,977)	62,484)	48,158)	48,778)
Profitability Ratio
Net profit margin¹	2.31%	4.47%	2.34%	8.97%	15.76%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to DuPont	20)	3,410)	(706)	3,059)	7,990)
Net sales	21,512)	85,977)	62,484)	48,158)	48,778)
Profitability Ratio
Adjusted net profit margin²	0.09%	3.97%	-1.13%	6.35%	16.38%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Net profit margin = 100 × Net income attributable to DuPont ÷ Net sales
= 100 × 498 ÷ 21,512 = 2.31%

² Adjusted net profit margin = 100 × Adjusted net income attributable to DuPont ÷ Net sales
= 100 × 20 ÷ 21,512 = 0.09%

The period between 2015 and 2019 is characterized by significant volatility in profitability and a general downward trajectory in both reported and adjusted net margins. Performance peaked in 2015, followed by a sharp decline, a temporary recovery in 2018, and a near-total erosion of adjusted profitability by the end of 2019.

Reported Profitability Trends: Reported net income experienced a substantial decline, falling from 7,685 million US dollars in 2015 to 498 million US dollars in 2019. This contraction is mirrored in the reported net profit margin, which decreased from 15.76% to 2.31% over the five-year duration, indicating a significant reduction in the company's ability to convert revenue into net earnings.
Adjusted Profitability Trends: Adjusted net income exhibited more extreme fluctuations than reported figures. After starting at 7,990 million US dollars in 2015, the metric plummeted to a loss of 706 million US dollars in 2017. While 2018 showed a recovery to 3,410 million US dollars, the value dropped sharply again to 20 million US dollars by 2019. Accordingly, the adjusted net profit margin shifted from a peak of 16.38% in 2015 to a trough of -1.13% in 2017, ending the period at a marginal 0.09%.
Comparative Margin Analysis: A divergence between reported and adjusted margins is most prominent in 2017, where the reported margin remained positive at 2.34% while the adjusted margin fell into negative territory. By 2019, both metrics converged at low levels, with the adjusted net profit margin nearly reaching zero, suggesting that operational profitability was almost entirely depleted when excluding specific adjustments.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales	21,512)	85,977)	62,484)	48,158)	48,778)
Total assets	69,396)	188,030)	192,164)	79,511)	68,026)
Activity Ratio
Total asset turnover¹	0.31	0.46	0.33	0.61	0.72
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales	21,512)	85,977)	62,484)	48,158)	48,778)
Adjusted total assets	69,160)	186,306)	190,295)	76,432)	65,505)
Activity Ratio
Adjusted total asset turnover²	0.31	0.46	0.33	0.63	0.74

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 21,512 ÷ 69,396 = 0.31

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 21,512 ÷ 69,160 = 0.31

The financial data reveals significant volatility in the asset base and a corresponding decline in asset utilization efficiency between 2015 and 2019. A substantial expansion of total assets occurred mid-period, followed by a sharp contraction, while the total asset turnover ratio exhibited a general downward trajectory.

Asset Base Fluctuations: Reported total assets increased steadily from US$ 68,026 million in 2015 to US$ 79,511 million in 2016, before experiencing a surge to US$ 192,164 million in 2017. This peak was maintained relatively consistently into 2018 at US$ 188,030 million, followed by a significant reduction to US$ 69,396 million by December 31, 2019. Adjusted total assets mirrored this pattern, peaking in 2017 at US$ 190,295 million.
Adjusted Total Asset Turnover Trends: The adjusted total asset turnover ratio demonstrates a contraction in operational efficiency over the five-year period. Starting at 0.74 in 2015, the ratio declined to 0.63 in 2016 and dropped sharply to 0.33 in 2017, coinciding with the peak in total assets. While a partial recovery to 0.46 was observed in 2018, the ratio fell to its lowest point of 0.31 by the end of 2019.
Comparison of Reported and Adjusted Metrics: There is a high degree of correlation between reported and adjusted figures. The variance between reported and adjusted total asset turnover is minimal, with the adjusted ratio being slightly higher in 2015 and 2016 before aligning perfectly with the reported ratio from 2017 through 2019. This indicates that the adjustments made to the asset base had a negligible impact on the overall turnover efficiency results during the latter half of the analyzed period.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets	69,396)	188,030)	192,164)	79,511)	68,026)
Total DuPont stockholders’ equity	40,987)	94,571)	100,330)	25,987)	25,374)
Solvency Ratio
Financial leverage¹	1.69	1.99	1.92	3.06	2.68
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	69,160)	186,306)	190,295)	76,432)	65,505)
Adjusted total DuPont stockholders’ equity	44,265)	98,282)	104,727)	23,831)	23,528)
Solvency Ratio
Adjusted financial leverage²	1.56	1.90	1.82	3.21	2.78

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ Financial leverage = Total assets ÷ Total DuPont stockholders’ equity
= 69,396 ÷ 40,987 = 1.69

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total DuPont stockholders’ equity
= 69,160 ÷ 44,265 = 1.56

Between 2015 and 2019, the company experienced substantial volatility in its balance sheet composition, characterized by a period of rapid expansion followed by a significant contraction in total assets and equity.

Asset and Equity Growth Patterns: Adjusted total assets grew from US$ 65,505 million in 2015 to a peak of US$ 190,295 million in 2017. During this same period, adjusted stockholders' equity surged from US$ 23,528 million to US$ 104,727 million. This massive influx of capital and assets in 2017 suggests a major corporate restructuring or acquisition event.
Balance Sheet Contraction: Following the 2017 peak, a sharp decline is observed by December 31, 2019. Adjusted total assets fell to US$ 69,160 million, and adjusted stockholders' equity decreased to US$ 44,265 million. This contraction returned the asset base to levels comparable to those seen in 2015, indicating significant divestitures or spin-offs.
Adjusted Financial Leverage Analysis: The adjusted financial leverage ratio peaked in 2016 at 3.21, reflecting the highest level of relative indebtedness during the period. A sharp reversal occurred in 2017, with the ratio dropping to 1.82, primarily driven by the substantial increase in equity. This downward trajectory continued through 2019, ending at a five-year low of 1.56, which indicates a strengthened equity position and reduced financial risk.
Comparison of Reported and Adjusted Leverage: A divergence exists between reported and adjusted financial leverage. From 2017 to 2019, the adjusted financial leverage remained consistently lower than the reported leverage. For instance, by 2019, the adjusted ratio of 1.56 was lower than the reported ratio of 1.69, suggesting that the adjustments made to assets and equity result in a more favorable interpretation of the company's leverage profile.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to DuPont	498)	3,844)	1,460)	4,318)	7,685)
Total DuPont stockholders’ equity	40,987)	94,571)	100,330)	25,987)	25,374)
Profitability Ratio
ROE¹	1.22%	4.06%	1.46%	16.62%	30.29%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to DuPont	20)	3,410)	(706)	3,059)	7,990)
Adjusted total DuPont stockholders’ equity	44,265)	98,282)	104,727)	23,831)	23,528)
Profitability Ratio
Adjusted ROE²	0.05%	3.47%	-0.67%	12.84%	33.96%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROE = 100 × Net income attributable to DuPont ÷ Total DuPont stockholders’ equity
= 100 × 498 ÷ 40,987 = 1.22%

² Adjusted ROE = 100 × Adjusted net income attributable to DuPont ÷ Adjusted total DuPont stockholders’ equity
= 100 × 20 ÷ 44,265 = 0.05%

The financial performance from 2015 to 2019 is characterized by a substantial decline in return on equity (ROE) and significant volatility in both net income and stockholders' equity.

Return on Equity (ROE) Trends: A sharp downward trajectory is observed in both reported and adjusted ROE. Reported ROE decreased from 30.29% in 2015 to 1.22% by 2019. Similarly, adjusted ROE fell from 33.96% in 2015 to a near-zero value of 0.05% in 2019, reflecting a systemic erosion of profitability relative to equity over the five-year period.
Net Income Volatility: Adjusted net income exhibited extreme fluctuations, moving from 7,990 million USD in 2015 to a loss of 706 million USD in 2017, before recovering to 3,410 million USD in 2018 and falling again to 20 million USD in 2019. Reported net income followed a similar, though slightly less volatile, overall decline, ending the period at 498 million USD.
Stockholders' Equity Fluctuations: Equity levels experienced a dramatic surge in 2017, with reported equity rising from 25,987 million USD in 2016 to 100,330 million USD. This substantial expansion of the equity base served as a primary driver for the compression of ROE. A subsequent contraction occurred by 2019, with reported equity falling to 40,987 million USD.
Analysis of Adjusted vs. Reported Metrics: The divergence between reported and adjusted figures was most pronounced in 2017, where reported net income remained positive at 1,460 million USD while adjusted net income shifted to a loss of 706 million USD. This variance resulted in a reported ROE of 1.46% compared to an adjusted ROE of -0.67% for that year, highlighting the impact of non-recurring or excluded items on the core profitability metrics.

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	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to DuPont	498)	3,844)	1,460)	4,318)	7,685)
Total assets	69,396)	188,030)	192,164)	79,511)	68,026)
Profitability Ratio
ROA¹	0.72%	2.04%	0.76%	5.43%	11.30%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to DuPont	20)	3,410)	(706)	3,059)	7,990)
Adjusted total assets	69,160)	186,306)	190,295)	76,432)	65,505)
Profitability Ratio
Adjusted ROA²	0.03%	1.83%	-0.37%	4.00%	12.20%

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

2019 Calculations

¹ ROA = 100 × Net income attributable to DuPont ÷ Total assets
= 100 × 498 ÷ 69,396 = 0.72%

² Adjusted ROA = 100 × Adjusted net income attributable to DuPont ÷ Adjusted total assets
= 100 × 20 ÷ 69,160 = 0.03%

The financial performance between 2015 and 2019 is characterized by significant volatility in net income and dramatic fluctuations in the asset base, resulting in a sustained decline in asset utilization efficiency. The Return on Assets (ROA), both on a reported and adjusted basis, exhibits a steep downward trajectory over the five-year period.

Net Income Volatility: Reported net income experienced a general decline, falling from US$ 7,685 million in 2015 to US$ 498 million in 2019. Adjusted net income showed more extreme variance, dropping from US$ 7,990 million in 2015 to a deficit of US$ 706 million in 2017, followed by a partial recovery in 2018 before nearly neutralizing at US$ 20 million in 2019.
Asset Base Expansion and Contraction: A substantial increase in total assets occurred in 2017, with reported assets rising to US$ 192,164 million from US$ 79,511 million in the prior year. This elevated asset level persisted through 2018 before a sharp contraction in 2019, where reported assets fell to US$ 69,396 million, returning the balance sheet to a scale similar to that of 2015.
Adjusted Return on Assets (ROA) Trends: The Adjusted ROA transitioned from a high of 12.20% in 2015 to a near-zero value of 0.03% by 2019. A notable divergence is observed in 2017, where the reported ROA remained positive at 0.76% while the adjusted ROA turned negative at -0.37%. Although a modest recovery to 1.83% occurred in 2018, the overall trend indicates a significant erosion of the company's ability to generate adjusted earnings relative to its asset base.

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