Stock Analysis on Net
Stock Analysis on Net

Eaton Corp. plc (NYSE:ETN)

$24.99

Analysis of Income Taxes

Microsoft Excel

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Income Tax Expense (Benefit)

Eaton Corp. plc, income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Ireland
Foreign
Current income tax expense
Ireland
Foreign
Deferred income tax benefit
Income tax expense

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Current income tax expense Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Eaton Corp. plc current income tax expense decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Deferred income tax benefit Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Eaton Corp. plc deferred income tax benefit decreased from 2021 to 2022 and from 2022 to 2023.
Income tax expense Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Eaton Corp. plc income tax expense decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Effective Income Tax Rate (EITR)

Eaton Corp. plc, effective income tax rate (EITR) reconciliation

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Income taxes at the applicable statutory rate
Ireland tax on trading income
Nondeductible interest expense
Ireland Other, net
Ireland operations
Tax impact on sale of businesses
Earnings taxed at other than the applicable statutory tax rate
Other items
Foreign operations
Adjustments to tax liabilities
Adjustments to valuation allowances
Worldwide operations
Effective income tax expense rate

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Effective income tax expense rate Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Eaton Corp. plc effective income tax expense rate decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Components of Deferred Tax Assets and Liabilities

Eaton Corp. plc, components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Employee benefits
Depreciation and amortization
Other accruals and adjustments
Accruals and other adjustments
Ireland income tax loss carryforwards
Foreign income tax loss carryforwards
Foreign income tax credit carryforwards
Valuation allowance for income tax loss and income tax credit carryforwards
Other valuation allowances
Deferred income taxes, noncurrent assets and liabilities

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred income taxes, noncurrent assets and liabilities Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Eaton Corp. plc deferred income taxes, noncurrent assets and liabilities decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Deferred Tax Assets and Liabilities, Classification

Eaton Corp. plc, deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Deferred income taxes, noncurrent assets
Deferred income taxes, noncurrent liabilities

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Item Description The company
Deferred income taxes, noncurrent assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Eaton Corp. plc deferred income taxes, noncurrent assets decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Deferred income taxes, noncurrent liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Eaton Corp. plc deferred income taxes, noncurrent liabilities decreased from 2021 to 2022 and from 2022 to 2023.

Adjustments to Financial Statements: Removal of Deferred Taxes

Eaton Corp. plc, adjustments to financial statements

US$ in millions

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Eaton Shareholders’ Equity
Total Eaton shareholders’ equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Eaton shareholders’ equity (adjusted)
Adjustment to Net Income Attributable To Eaton Ordinary Shareholders
Net income attributable to Eaton ordinary shareholders (as reported)
Add: Deferred income tax expense (benefit)
Net income attributable to Eaton ordinary shareholders (adjusted)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Eaton Corp. plc, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Eaton Corp. plc, adjusted financial ratios

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Eaton Corp. plc adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Eaton Corp. plc 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.		 Eaton Corp. plc adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Eaton Corp. plc adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Eaton Corp. plc adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Eaton Corp. plc, Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders
Net sales
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Eaton ordinary shareholders
Net sales
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Net profit margin = 100 × Net income attributable to Eaton ordinary shareholders ÷ Net sales
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Eaton ordinary shareholders ÷ Net sales
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Eaton Corp. plc adjusted net profit margin ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 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. Eaton Corp. plc adjusted total asset turnover ratio improved from 2021 to 2022 and from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets
Total Eaton shareholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted total Eaton shareholders’ equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 Financial leverage = Total assets ÷ Total Eaton shareholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Eaton shareholders’ equity
= ÷ =

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.		 Eaton Corp. plc adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders
Total Eaton shareholders’ equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Eaton ordinary shareholders
Adjusted total Eaton shareholders’ equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROE = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total Eaton shareholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income attributable to Eaton ordinary shareholders ÷ Adjusted total Eaton shareholders’ equity
= 100 × ÷ =

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

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Eaton ordinary shareholders
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

1 ROA = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income attributable to Eaton ordinary shareholders ÷ Adjusted total assets
= 100 × ÷ =

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