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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Hershey Co. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Adjustments to Financial Statements for Operating Leases
Hershey Co., adjustments to financial statements
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1, 2 Equal to total present value of future operating lease payments.
Hershey Co., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios for Operating Leases (Summary)
Hershey Co., adjusted financial ratios
Based on: 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), 10-K (reporting date: 2018-12-31).
| Financial ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Hershey Co. adjusted total asset turnover ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level. |
| Adjusted debt to equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Hershey Co. adjusted debt to equity ratio improved from 2020 to 2021 and from 2021 to 2022. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Hershey Co. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022. |
Hershey Co., Financial Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 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), 10-K (reporting date: 2018-12-31).
2022 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. | Hershey Co. adjusted total asset turnover ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level. |
Adjusted Debt to Equity
Based on: 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), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 Debt to equity = Total debt ÷ Total The Hershey Company stockholders’ equity
= ÷ =
2 Adjusted debt to equity = Adjusted total debt ÷ Total The Hershey Company stockholders’ equity
= ÷ =
| Solvency ratio | Description | The company |
|---|---|---|
| Adjusted debt-to-equity | A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. | Hershey Co. adjusted debt-to-equity ratio improved from 2020 to 2021 and from 2021 to 2022. |
Adjusted Return on Assets (ROA)
Based on: 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), 10-K (reporting date: 2018-12-31).
2022 Calculations
1 ROA = 100 × Net income attributable to The Hershey Company ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income attributable to The Hershey Company ÷ Adjusted total assets
= 100 × ÷ =
| Profitability ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Hershey Co. adjusted ROA improved from 2020 to 2021 and from 2021 to 2022. |