Marathon Petroleum Corp. (NYSE:MPC)

The analysis of the annual current and deferred income tax expenses reveals notable fluctuations over the five-year period under review. The data indicates significant volatility in both current and deferred tax components, impacting the overall income tax provision of the entity.

Current Income Tax Expense

The current income tax expense exhibited considerable variability. Starting from a positive amount of 51 million US dollars at the end of 2019, it shifted dramatically to a substantial negative figure of -2,189 million US dollars in 2020, indicating a tax benefit or credit for that year. This was followed by a recovery to 433 million US dollars in 2021, then a sharp increase to 4,201 million US dollars in 2022, and a subsequent decrease to 2,845 million US dollars in 2023. This pattern suggests an erratic taxable income or changes in tax laws or adjustments significantly affecting current tax liabilities.

Deferred Income Tax Expense

Deferred income tax expense mirrored some of this variability but with less magnitude. It began at 1,023 million US dollars in 2019, decreased sharply to -241 million US dollars in 2020, and remained negative in 2021 at -169 million US dollars. There was a rebound to a positive 290 million US dollars in 2022, followed by a slight negative value of -28 million US dollars in 2023. These fluctuations indicate changes in temporary differences between accounting income and taxable income, possibly driven by asset revaluations, timing differences, or tax rate changes.

Total Income Tax Provision (Benefit)

The combined effect of current and deferred tax amounts results in a highly volatile income tax provision. The total income tax provision started at 1,074 million US dollars in 2019, swung to a considerable tax benefit of -2,430 million US dollars in 2020, then moved to a moderate tax provision of 264 million US dollars in 2021. A significant increase was observed in 2022, reaching 4,491 million US dollars, followed by a decrease to 2,817 million US dollars in 2023. This volatility underscores the complexity and variability in the company's taxable income and deferred tax recognition.

Overall, the data reflects substantial fluctuations and irregularities in both current and deferred tax expenses across the reported periods, with a pronounced tax benefit realized in 2020 and peak tax expenses occurring in 2022. The patterns suggest that the company experienced significant changes in taxable income, tax positions, or accounting estimates for taxes, which warrant further investigation to understand the underlying causes fully.

Federal Statutory Income Tax Rate

The federal statutory income tax rate remained stable at 21% throughout the five-year period, indicating no changes in the federal tax legislation impacting the company during this time frame.

State and Local Income Taxes, Net of Federal Income Tax Effects

This tax component fluctuated modestly between 2% and 3%. It started at 3% in 2019, decreased to 2% in 2020 and 2021, increased back to 3% in 2022, and returned to 2% in 2023, showing slight variability possibly due to changes in state and local tax regulations or the company's geographic earnings distribution.

Goodwill Impairment

Goodwill impairment showed significant changes in the early years of the period. In 2019, it accounted for 3% but turned negative to -8% in 2020, suggesting a reversal or recovery from prior impairment. Thereafter, goodwill impairment data were not reported for subsequent years, implying that no further impairments or recoveries were recorded or disclosed.

Noncontrolling Interests

Noncontrolling interests displayed variability and were present in select years only. Starting at -3% in 2019, the figure was absent in 2020, then recorded a more substantial negative impact of -9% in 2021, followed by smaller negative amounts of -2% in both 2022 and 2023. This pattern indicates fluctuating influence or stakes from minority shareholders over the period.

Legislation

The legislative impact showed intermittent effect on the tax rate, with a positive impact of 4% in 2020, a negative impact of -3% in 2021, and no entries for other years. This implies legislative changes or updates that temporarily affected tax calculations, possibly due to tax reform or regulatory adjustments.

Other

The "Other" category experienced small fluctuations, starting at a positive 1% in 2019, dipping to -1% in 2020, further to -2% in 2021, no effect in 2022, and slight negative impact at -1% in 2023. These minor variations suggest miscellaneous tax-related influences or adjustments not classified under other categories.

Effective Tax Rate Applied to Income (Loss) from Continuing Operations Before Income Taxes

The effective tax rate applied to income from continuing operations showed notable variability. It began at 25% in 2019, decreased sharply to 18% in 2020, then further down to 9% in 2021. In 2022, it rebounded substantially to 22% before declining slightly to 20% in 2023. The downward trend from 2019 to 2021 may reflect beneficial tax treatments or lower taxable income, while the increase in 2022 and 2023 suggests a normalization or partial reversal of these effects.

The financial data over the five-year period presents several notable trends in the company's key financial items. Employee benefits exhibit a declining trend from 2019 to 2022, decreasing from 693 million US dollars to 481 million, followed by a moderate rebound to 549 million in 2023. Environmental remediation costs steadily decrease from 99 million in 2019 to a low of 84 million in 2022, with a slight uptick to 89 million in 2023.

Obligations under finance leases show a substantial increase between 2020 and 2021, rising sharply from 103 million to 339 million, continuing upward to 371 million in 2022 before a marginal decline to 365 million in 2023. This contrasts with operating lease liabilities, which follow a clear downward trajectory from 498 million in 2019 to 224 million in 2022, then a minor increase to 229 million in 2023.

Net operating loss carryforwards peak at 232 million in 2020, after which they decline significantly to 44 million in 2022 and remain stable thereafter. Tax credit carryforwards maintain relative stability with an increase from 14 million in 2019 to 20 million in 2022 but then drop sharply to 10 million in 2023. Goodwill and other intangibles, reported in positive amounts from 2021 onward, demonstrate growth, rising from 35 million in 2021 to 71 million in 2023.

Deferred tax assets generally decrease after peaking at 1629 million in 2020, falling to 1324 million in 2022 before recovering slightly to 1425 million in 2023. Property, plant, and equipment display a negative balance with a lesser negative magnitude over the years, moving from -3301 million in 2019 to about -2684 million in 2023, indicating possible disposals or asset impairments. Similar improvements are observed in inventories, which become less negative from -652 million in 2019 to -627 million in 2023.

Investments in subsidiaries and affiliates also hold negative balances and show a deterioration trend, worsening from -3114 million in 2019 to -3706 million in 2023. Goodwill and other intangibles have a large negative balance in 2019 and 2020 but are no longer reported as negatives beyond 2020. Right of use assets align with operating lease liabilities and decrease substantially, from -498 million in 2019 to -230 million in 2023, reflecting changes in lease-related asset recognition.

Deferred tax liabilities, significant in magnitude, exhibit a marginal decrease from -7888 million in 2019 to -7258 million in 2023, contributing to a slight improvement in net deferred tax liabilities from -6372 million to -5833 million over the same period. Other minor items fluctuate without a clear trend but remain relatively small in scale compared to the main entries.

Overall, the data points to reductions in certain liabilities and operating lease exposures, a notable increase in finance lease obligations, and some improvement in asset categories such as goodwill, property, plant, and inventories. Deferred tax positions remain substantial but show a trend towards improvement. The fluctuations in tax-related carryforwards suggest changing expectations regarding future taxable income and tax planning outcomes.

Deferred tax assets (classified in Other noncurrent assets)

The deferred tax assets show a notable declining trend over the five-year period. Starting at 20 million USD in 2019, the balance decreased sharply to 3 million USD in 2020, followed by a gradual decline to 2 million USD in 2021, and then stabilizing at 1 million USD in both 2022 and 2023. This pattern suggests diminishing recognized future tax benefits classified in other noncurrent assets.

Deferred tax liabilities

Deferred tax liabilities exhibit a downward trend overall, albeit less pronounced than the deferred tax assets. The balance decreased from 6,392 million USD at the end of 2019 to 6,203 million USD in 2020. This declining trend continued into 2021 with liabilities reducing to 5,638 million USD. However, in 2022 there was a slight increase to 5,904 million USD, before a marginal decrease to 5,834 million USD in 2023. The overall movement implies a gradual reduction of deferred tax obligations over the period, with a minor rebound in 2022.

The analysis of the financial data reveals several key trends over the five-year period from 2019 to 2023 with respect to the reported and adjusted financial figures.

Total Assets

Total assets showed a decline from 2019 through 2020, dropping from approximately $98.6 billion to $85.2 billion. This was followed by a relatively stable period in 2021, a rebound in 2022 to nearly $90.0 billion, and a slight decline again in 2023 to approximately $86.0 billion. The adjusted total assets follow a similar pattern with minor numerical differences, indicating consistent adjustments but no substantial alterations to the overall asset trend.

Total Liabilities

Reported total liabilities exhibited a gradual decrease over the five-year span, starting at about $55.4 billion in 2019 and declining to roughly $54.6 billion in 2023, with some fluctuation mid-period. Adjusted total liabilities decreased more significantly, from around $49.1 billion in 2019 to $48.8 billion in 2023, showing a more pronounced downward trend than reported figures, suggesting that adjustment factors contributed to lowering the liability figure consistently over time.

Stockholders’ Equity

Reported stockholders’ equity declined sharply from approximately $33.7 billion in 2019 to $22.2 billion in 2020, then gradually recovered to about $24.4 billion by 2023. In contrast, adjusted stockholders’ equity follows the same general direction but at higher values, starting around $40.1 billion in 2019 and decreasing to about $30.2 billion by 2023. This consistent positive adjustment suggests revaluation of equity components or recognition of deferred tax impacts that improve equity position compared to reported figures.

Net Income (Loss) Attributable to MPC

The reported net income fluctuated considerably, with a loss of approximately $9.8 billion in 2020 preceded and followed by significant profits in other years (near $2.6 billion in 2019, $9.7 billion in 2021, peaking at $14.5 billion in 2022, then a decline to $9.7 billion in 2023). Adjusted net income reflects similar volatility but at slightly different levels, with the loss in 2020 a bit larger at $10.1 billion, and adjusted profits consistently above reported figures in most years except 2023 when both align closely. This pattern indicates the important effect of tax adjustments in smoothing the income figures but retaining the overall volatility likely due to operational or market influences.

Overall, the trends indicate that the company experienced a significant financial impact in 2020, likely from extraordinary events affecting income and equity, followed by a recovery phase extending through 2023. Adjusted figures systematically present a stronger financial position than reported data, underscoring the effect of tax-related adjustments on the company's balance sheet and profitability metrics.

Net Profit Margin

The reported net profit margin exhibited significant volatility over the analyzed period. It started modestly at 2.13% in 2019, dropped sharply to a negative margin of -14.08% in 2020, then rebounded to positive territory with 8.12% in 2021. The margin remained relatively stable around 8.18% in 2022 before declining somewhat to 6.52% in 2023. The adjusted net profit margin followed a similar pattern with slightly higher values initially and comparable fluctuations, indicating consistent impacts from adjustments related to reported figures.

Total Asset Turnover

The total asset turnover ratio showed a meaningful recovery after a decline in 2020. The ratio fell from 1.26 in 2019 to 0.82 in 2020, reflecting possibly reduced asset efficiency or operational challenges. Subsequently, it improved substantially to 1.41 in 2021, increased further to a peak of 1.97 in 2022, before slightly declining to 1.73 in 2023. Both reported and adjusted figures were identical, denoting no adjustments affecting this metric.

Financial Leverage

Financial leverage ratios indicated an increasing trend in reported values, rising from 2.93 in 2019 to 3.84 in 2020, then moderating somewhat to 3.26 and 3.24 in 2021 and 2022 respectively, before climbing again to 3.52 in 2023. Adjusted financial leverage remained consistently lower than reported figures but followed a parallel trajectory, increasing from 2.46 in 2019 to 3.00 in 2020, then decreasing slightly over 2021 and 2022, and rising again to 2.84 in 2023. This suggests rising reliance on debt or liabilities but mitigated when adjustments are considered.

Return on Equity (ROE)

Reported ROE demonstrated marked instability, from a positive 7.83% in 2019 to a significant negative result of -44.26% in 2020. This was followed by a strong recovery to 37.16% in 2021, an increase to 52.38% in 2022, then a decline to 39.67% in 2023. Adjusted ROE mirrored this volatility, though with less extreme values, indicating that adjustments softened but did not eliminate the underlying fluctuations in equity returns.

Return on Assets (ROA)

The reported ROA followed a pattern similar to other profitability metrics, dropping to -11.54% in 2020 after starting at 2.68% in 2019, then rising steadily to 11.41% in 2021 and peaking at 16.15% in 2022 before decreasing to 11.26% in 2023. Adjusted ROA values showed a similar trend with slightly higher results at the start and end periods, indicating marginal effect of adjustments on asset profitability.

The financial data reflects significant volatility in the net income attributable to the company over the five-year period ending December 31, 2023. Reported net income showed a sharp decline in 2020, registering a substantial loss, followed by a strong recovery through 2021 and 2022, before decreasing again in 2023. Adjusted net income follows a similar pattern, with negative results in 2020 and positive but fluctuating values in other years, closely paralleling the reported figures in magnitude and direction.

Reported Net Income (Loss) Attributable to MPC

The reported net income started at a positive $2.64 billion in 2019, then fell drastically to a negative $9.83 billion in 2020, indicating a major adverse event or economic condition impacting profitability. From 2021 onwards, profitability rebounded strongly, recording $9.74 billion and $14.52 billion in 2021 and 2022 respectively, before declining to $9.68 billion in 2023. This suggests recovery but with some volatility or external pressures returning in the latest year.

Adjusted Net Income (Loss) Attributable to MPC

Adjusted net income, which accounts for annual reported and deferred income tax effects, also exhibited a large loss in 2020 of approximately $10.07 billion, slightly greater in magnitude than the reported loss, indicating tax-related adjustments amplified the loss. Adjusted income rebounded strongly with $9.57 billion and $14.81 billion in 2021 and 2022, respectively, then decreased to $9.65 billion in 2023. The closely aligned adjusted and reported net income amounts suggest that tax adjustments did not materially alter the underlying profitability trend.

Reported Net Profit Margin

The reported net profit margin mirrors the income volatility, dropping sharply from 2.13% in 2019 to -14.08% in 2020, signaling negative profitability relative to revenue. It then recovered to 8.12% in 2021 and slightly increased to 8.18% in 2022, indicative of strong profit generation relative to sales before declining to 6.52% in 2023. This decline in margin in 2023 suggests decreased efficiency or pricing pressures despite positive net income.

Adjusted Net Profit Margin

Adjusted net profit margin trends similarly, showing a low of -14.43% in 2020, recovering to 7.98% in 2021 and peaking at 8.34% in 2022. The margin fell slightly to 6.51% in 2023. The proximity of adjusted and reported margins reinforces that tax effects have a consistent but not transformative influence on profitability margin trends.

Overall, the data reveals a remarkable impact of the 2020 downturn, likely due to external economic or industry-specific disruptions, followed by a notable recovery period through 2021 and 2022. Despite the positive income and margin figures in these years, the setback experienced in 2023 indicates ongoing challenges. The alignment between reported and adjusted figures suggests that income tax-related impacts on net income and margins are present but do not significantly distort the overall financial performance trends.

The analysis of the adjusted financial data reveals several notable trends in the company's asset base and asset utilization over the five-year period from 2019 to 2023.

Total Assets

The total assets, both reported and adjusted, show a decline from 2019 to 2020, decreasing from approximately 98.5 billion US dollars to about 85.2 billion US dollars, representing a drop of roughly 13.6%. Following this decrease, the asset base remains relatively stable with minimal changes through 2021 and 2022, slightly increasing to around 89.9 billion in 2022 before decreasing again to about 86.0 billion US dollars in 2023. This pattern suggests a contraction followed by a period of moderate stabilization and slight variability in the asset structure.

Total Asset Turnover

The total asset turnover ratio exhibits significant fluctuations over the analyzed period. In 2019, the ratio stood at 1.26, indicating a moderate level of asset utilization efficiency. It drops sharply to 0.82 in 2020, reflecting reduced efficiency in generating revenue relative to assets during that year. However, in the subsequent years, there is a marked improvement with the ratio rising to 1.41 in 2021 and sharply increasing to 1.97 in 2022, indicating enhanced asset productivity and operational performance. In 2023, the turnover decreases slightly to 1.73 but remains substantially higher than the 2019 and 2020 levels. This trend suggests recovery and improved efficiency following the downturn seen in 2020.

Comparison Between Reported and Adjusted Figures

The reported and adjusted numbers for total assets and asset turnover are nearly identical across all periods, indicating that adjustments for income tax effects have minimal impact on these specific financial metrics.

The analysis of the financial data over the five-year period reveals several notable trends and shifts, particularly in asset values, stockholders’ equity, and financial leverage ratios, both in reported and adjusted terms.

Total Assets

Total assets experienced a decline from approximately $98.6 billion at the end of 2019 to about $85.2 billion at the end of 2020. This lower level was relatively stable through 2021, followed by an increase in 2022 nearing $89.9 billion, and then a decrease again to roughly $86.0 billion in 2023. The adjusted total assets closely mirror the reported figures, indicating consistent adjustments without altering the underlying asset trend.

Stockholders’ Equity

Reported stockholders’ equity exhibited a significant drop from $33.7 billion in 2019 to $22.2 billion in 2020, suggesting a substantial reduction in equity possibly due to operational losses, dividends, or other equity impacts during that period. There was a recovery to $26.2 billion in 2021 and a further increase to $27.7 billion in 2022, before decreasing again to $24.4 billion in 2023. The adjusted equity figures are noticeably higher than reported values across all periods, starting at $40.1 billion in 2019, decreasing to $28.4 billion in 2020, and showing a steady rise through 2021 and 2022, followed by a decline in 2023. This adjustment significantly affects the evaluation of the company’s capital base, suggesting material deferred tax or accounting adjustments impacting equity.

Financial Leverage

The reported financial leverage ratio increased considerably from 2.93 times at the end of 2019 to 3.84 times in 2020, indicating higher leverage or debt reliance relative to equity in 2020. It then decreased to around 3.26 in 2021 and stabilized near 3.24 in 2022 before increasing again to 3.52 in 2023. The adjusted financial leverage ratio follows a similar trend but remains consistently lower than the reported leverage, ranging from 2.46 times in 2019 to a peak of 3.00 in 2020, then declining through 2021 and 2022 before rising slightly to 2.84 in 2023. The differences between reported and adjusted leverage highlight the effects of accounting adjustments on the perceived risk and capital structure stability of the company over time.

Overall, the data indicates that the company faced a significant equity reduction and increased leverage in 2020, possibly reflecting the impact of external factors or operational challenges during that year. Subsequent years show partial recovery in equity and moderation in leverage, though 2023 data indicates some renewed pressure. Adjusted figures provide a more conservative and potentially clearer depiction of financial stability, reflecting the implications of deferred income tax and related adjustments on key financial metrics.

The financial data reveals significant fluctuations in the reported and adjusted net income attributable to the company over the five-year period ending December 31, 2023. In 2019, both reported and adjusted net incomes were positive. However, the year 2020 experienced a notable downturn, with both metrics reflecting substantial losses. Recovery began in 2021 with positive net income figures, reaching a peak in 2022, before declining again in 2023.

Shareholders' equity, both reported and adjusted, followed a somewhat similar trajectory. The reported equity decreased markedly in 2020 before gradually increasing through 2022, then falling somewhat in 2023. Adjusted equity values were consistently higher than reported values, indicating that adjustments, possibly related to deferred income tax, resulted in a more favorable equity position. The adjusted equity also demonstrated a recovery after the 2020 drop and remained above 30 billion US dollars through most recent periods, albeit with a slight decline in 2023.

The return on equity (ROE), an indicator of profitability relative to shareholders' equity, shows considerable volatility aligned with the net income trends. The reported ROE dipped sharply into negative territory in 2020, reflecting significant losses, then rebounded strongly in 2021 and peaked in 2022 before decreasing in 2023. Adjusted ROE trends are similar but display less extreme negative values in 2020 and lower peaks in subsequent years, suggesting that adjustments moderate the volatility and present a less erratic profitability outlook.

Net Income Trends

The sharp loss in 2020 contrasts with strong positive earnings in other years, highlighting 2020 as an outlier likely due to extraordinary events or operational challenges.

Adjusted net income closely tracks reported net income, but with consistently higher absolute values, indicating the impact of tax or other adjustments on reported figures.

The peak in earnings in 2022 suggests a period of operational strength or favorable market conditions, while the decline in 2023 warrants further analysis for underlying causes.

Stockholders’ Equity Behavior

The equity base contracted heavily in 2020, reflecting the losses incurred, and gradually recovered over the next two years.

The adjusted equity figures remain consistently above reported values, implying that deferred income tax adjustments materially affect the equity calculations.

The slight drop in shareholder equity in 2023, after previous gains, may indicate profit distribution, asset impairments, or other capital adjustments.

Return on Equity Analysis

ROE values mirror net income performance, demonstrating profitability swings, with negative returns in 2020 and strong recoveries afterward.

The adjusted ROE is less volatile than the reported ROE, underscoring the effect of adjustments in smoothing profitability measures.

The gradual decrease in ROE in 2023 compared to 2022, despite remaining positive, suggests a moderation of earnings relative to equity.

An analysis of the financial data over the five-year period reveals several significant trends and fluctuations in the company's performance and asset base.

Net Income

The reported net income attributable to the company exhibited considerable volatility. After a positive result of USD 2,637 million in 2019, there was a substantial loss in 2020 amounting to USD -9,826 million. This loss reversed in the subsequent years with profits of USD 9,738 million in 2021, a peak of USD 14,516 million in 2022, followed by a decline to USD 9,681 million in 2023. The adjusted net income follows a closely similar pattern, with slightly different magnitudes, implying that adjustments for annual reported and deferred income tax effects had marginal impact on the overall net income trend.

Total Assets

The company’s total asset base decreased from approximately USD 98,556 million in 2019 to USD 85,158 million in 2020, reflecting a notable contraction. From 2020 through 2023, total assets remained relatively stable, fluctuating slightly around the USD 85,000 million to USD 89,900 million range. Adjusted total assets closely track the reported total assets, indicating consistency and minimal adjustments affecting asset valuations.

Return on Assets (ROA)

The reported ROA mirrored the net income trend, starting at a positive 2.68% in 2019, drastically falling to a negative depth of -11.54% in 2020. Subsequent years showed a strong recovery, with ROA increasing to 11.41% in 2021, peaking at 16.15% in 2022, then moderating to 11.26% in 2023. The adjusted ROA figures are generally close to the reported ones but demonstrate slightly higher volatility, particularly in 2020 and 2022, reflecting the impact of income tax adjustments on profitability ratios.

Overall, the data indicate that the company experienced a significant downturn in 2020, possibly due to external economic factors or internal challenges, followed by a robust recovery phase in the next two years. Profitability metrics recovered strongly, even exceeding pre-2020 levels before easing in 2023. The asset base saw a notable decline at the start of the period but stabilized thereafter. Adjusted figures for income and assets remain aligned with reported values, suggesting that tax-related adjustments have not materially altered the understanding of the company’s financial health and operational performance.