Analysis of Income Taxes
- Income Tax Expense (Benefit)
- Effective Income Tax Rate (EITR)
- Components of Deferred Tax Assets and Liabilities
- Deferred Tax Assets and Liabilities, Classification
- Adjustments to Financial Statements: Removal of Deferred Taxes
- Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
- Adjusted Current Ratio
- Adjusted Net Profit Margin
- Adjusted Total Asset Turnover
- Adjusted Financial Leverage
- Adjusted Return on Equity (ROE)
- Adjusted Return on Assets (ROA)
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Income Tax Expense (Benefit)
Reynolds American Inc., income tax expense (benefit), continuing operations
US$ in millions
| 12 months ended: | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
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| State and other | |||||||||||
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| Federal | |||||||||||
| State and other | |||||||||||
| Deferred | |||||||||||
| Provision for income taxes |
Based on: 10-K (reporting date: 2016-12-31), 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).
- Current Income Tax Expense
- The current income tax expense remained relatively stable at the beginning of the period, with values of $725 million in 2012 and $711 million in 2013. Thereafter, a notable increase is observed in 2014, reaching $997 million. This is followed by a significant surge in 2015 to $3,790 million, before decreasing slightly to $3,231 million in 2016. Overall, the current tax expense demonstrates a pronounced upward trend, particularly from 2014 onward.
- Deferred Income Tax Expense
- The deferred income tax expense showed considerable volatility over the years. Initially, a negative deferred tax expense of -$44 million was recorded in 2012, indicating a deferred tax benefit. In 2013, this shifted sharply to a positive deferred tax expense of $312 million, followed by a reversal back to a negative amount of -$180 million in 2014. The downward trend continued more sharply in 2015, with deferred taxes recorded at -$659 million. However, in 2016, the figure reversed again to a positive $387 million. This alternating pattern suggests fluctuations in the timing differences of taxable income and deductions or changes in tax rates or estimates.
- Provision for Income Taxes
- The overall provision for income taxes, which combines current and deferred components, reflected a rising trend over the period. Starting at $681 million in 2012, it increased significantly to $1,023 million in 2013. A decrease to $817 million was observed in 2014, followed by a major jump to $3,131 million in 2015. The upward trajectory continued in 2016, reaching $3,618 million. The pattern closely aligns with the fluctuations in current tax expense, which dominates the provision, while the deferred tax component adds volatility but with lesser magnitude.
Effective Income Tax Rate (EITR)
Reynolds American Inc., effective income tax rate (EITR) reconciliation
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| U.S. federal income tax rate | ||||||
| Effective tax rate |
Based on: 10-K (reporting date: 2016-12-31), 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).
The financial data reveals key trends concerning the tax rates over the period from 2012 to 2016.
- U.S. Federal Income Tax Rate
- The statutory federal income tax rate remained constant at 35% throughout the entire five-year period. This indicates no legislative changes in the statutory tax rate affecting the company's tax expense calculation during these years.
- Effective Tax Rate
- The effective tax rate exhibited variability across the years, diverging from the stable federal rate. Starting at 34.9% in 2012, it increased to 37.3% in 2013, followed by a slight decrease to 36.1% in 2014. In 2015, there was a significant spike to 49%, representing the highest effective tax rate in the period analyzed, before decreasing again to 37.3% in 2016.
Overall, while the statutory tax rate was stable, the effective tax rate fluctuated, peaking sharply in 2015. This suggests changes in the company's tax position due to factors such as variations in taxable income composition, utilization of tax credits or deductions, or other tax planning strategies. The spike in 2015 may reflect unique or non-recurring items affecting taxable income or differences in deferred tax assets/liabilities recognition for that year. The return to a rate closer to the statutory rate in 2016 indicates normalization following the elevated 2015 effective tax rate.
Components of Deferred Tax Assets and Liabilities
Reynolds American Inc., components of deferred tax assets and liabilities
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 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).
The analysis of the financial data reveals several notable trends and fluctuations in various liabilities, assets, and tax positions over the period from 2012 to 2016.
- Pension and Other Postretirement Liabilities
- These liabilities declined from $726 million in 2012 to $522 million in 2013, then increased steadily to reach $916 million in 2015 before decreasing to $759 million in 2016. This indicates some volatility but overall an upward trend until 2015, followed by a reduction in the last year.
- Tobacco Settlement Accruals
- There is a general pattern of fluctuation, with amounts decreasing from $990 million in 2012 to $677 million in 2013, rising slightly in 2014, peaking at $1,088 million in 2015, and then declining to $955 million in 2016. The peak in 2015 may suggest a specific event or reassessment of obligations during that year.
- Other Accrued Liabilities
- These liabilities show a consistent and significant upward trend, increasing from $62 million in 2012 to $169 million in 2016, almost tripling over the five-year period. This growth may indicate rising short-term obligations or accrued expenses.
- Other Noncurrent Liabilities
- This category remained relatively stable around $150 million from 2012 to 2014 but then experienced a sharp increase to $283 million in 2015 before dropping to $210 million in 2016. This spike and subsequent decline suggest a temporary increase in long-term obligations during 2015.
- Deferred Tax Assets
- Deferred tax assets declined from $1,931 million in 2012 to $1,420 million in 2013, then rose substantially to $2,462 million in 2015, followed by a decrease to $2,093 million in 2016. After adjusting for the valuation allowance (which remained minimal), the net deferred tax assets follow a similar pattern, indicating fluctuating expectations of future tax benefits.
- Valuation Allowance on Deferred Tax Assets
- The valuation allowance was relatively small and stable until 2014, then sharply reduced in 2015 (to -$8 million), and was not reported for 2016, suggesting changes in the assessment of realizability of deferred tax assets.
- LIFO Inventories
- LIFO inventories are represented as negative values and remained fairly consistent from 2012 to 2014, but saw a notable increase in the negative amount to -$266 million in 2015 and slightly less negative at -$257 million in 2016. This increasing negative balance implies higher inventory costs or valuation under the LIFO method.
- Property and Equipment
- These assets show a relatively stable negative balance fluctuating slightly, with a gradual increase in magnitude from -$242 million in 2012 to -$290 million in 2016, indicating an increase in capital assets or related accumulated depreciation.
- Trademarks and Other Intangibles
- This line exhibits an extraordinary change with values plummeting drastically from approximately -$900 million in earlier years to over -$11,000 million in 2015 and 2016. This large drop suggests a major event such as an impairment loss or reclassification impacting intangible assets substantially in those years.
- Other
- Other liabilities or assets classified in this residual category gradually increased in negative value from -$115 million in 2012 to -$181 million in 2016, indicating a steady rise in miscellaneous balances.
- Deferred Tax Liabilities
- Deferred tax liabilities remained stable around -$1,450 million from 2012 to 2014 but experienced a massive jump to approximately -$11,658 million in 2015 and -$11,700 million in 2016. This is aligned with the sharp changes seen in intangible assets and suggests a significant tax impact associated with asset revaluation or impairment.
- Net Deferred Tax Asset (Liability)
- The net deferred tax position moved from a positive $447 million in 2012 to a negative balance of -$40 million in 2013, rebounded to $329 million in 2014, and then sharply deteriorated to substantial negative amounts of -$9,204 million in 2015 and -$9,607 million in 2016. This trend reflects the sizable deferred tax liabilities overshadowing deferred tax assets, likely driven by the aforementioned large intangible asset adjustments.
Overall, the data indicate periods of relative stability interrupted by significant adjustments, particularly in 2015 and 2016. The considerable fluctuations in trademarks and other intangibles, deferred tax liabilities, and the net deferred tax position suggest notable financial events impacting asset valuation and associated tax balances. Additionally, rising accrued liabilities and other noncurrent liabilities signal growing obligations, while deferred tax assets and allowances reveal changing expectations about future tax benefits.
Deferred Tax Assets and Liabilities, Classification
Reynolds American Inc., deferred tax assets and liabilities, classification
US$ in millions
| Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|---|---|
| Current deferred tax assets | ||||||
| Noncurrent deferred tax assets | ||||||
| Noncurrent deferred tax liabilities |
Based on: 10-K (reporting date: 2016-12-31), 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).
- Current Deferred Tax Assets
- There is a fluctuating trend observed in current deferred tax assets over the periods analyzed. The value starts relatively high at 908 million US dollars in 2012, decreases notably to 606 million in 2013, then slightly rises to 703 million in 2014. A significant increase to 1032 million is noted in 2015, before data becomes unavailable for 2016.
- Noncurrent Deferred Tax Assets
- Noncurrent deferred tax assets values are largely incomplete, but the available data shows very low and somewhat decreasing values. From 12 million in 2013, the figure decreases slightly to 9 million in 2014, with no reported values for the other years.
- Noncurrent Deferred Tax Liabilities
- The noncurrent deferred tax liabilities display considerable variability over the period. Starting from 461 million in 2012, the liabilities increase to 658 million in 2013, then sharply decrease to 383 million in 2014. However, there is an abrupt and dramatic rise in 2015, reaching 10,236 million, followed by a slight decrease to 9,607 million in 2016, indicating a significant change in long-term tax obligation structure or related accounting treatments in the last two years.
Adjustments to Financial Statements: Removal of Deferred Taxes
Reynolds American Inc., adjustments to financial statements
US$ in millions
Based on: 10-K (reporting date: 2016-12-31), 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).
The data reveals notable fluctuations and trends in the financial position and performance over the five-year period under review.
- Current Assets
- Reported current assets declined from 4,812 million US$ in 2012 to 3,323 million US$ in 2014, then surged to 6,187 million US$ in 2015 before dropping again to 4,238 million US$ in 2016. The adjusted current assets follow a similar pattern, showing a general decrease from 3,904 million US$ in 2012 to 2,620 million US$ in 2014, a sharp increase in 2015 to 5,155 million US$, and stabilizing at 4,238 million US$ in 2016. This indicates volatility in short-term asset levels, with a significant increase in 2015.
- Total Assets
- Reported total assets exhibit a declining trend from 16,557 million US$ in 2012 down to 15,196 million US$ in 2014, followed by a dramatic increase to 53,224 million US$ in 2015, and a slight decrease to 51,095 million US$ in 2016. Adjusted total assets mirror this trend closely, declining from 15,649 million US$ to 14,484 million US$ in 2014, before rising sharply to 52,192 million US$ in 2015 and stabilizing thereafter. The substantial increase in 2015 suggests a major corporate event or restructuring impacting asset base.
- Total Liabilities
- Reported total liabilities decreased steadily from 11,300 million US$ in 2012 to 10,235 million US$ in 2013, before slightly increasing to 10,674 million US$ in 2014. In 2015, liabilities surged to 34,972 million US$ then declined to 29,384 million US$ in 2016. Adjusted total liabilities also show a steady decline from 10,839 million US$ in 2012 to 9,577 million US$ in 2013, followed by a mild increase to 10,291 million US$ in 2014. Thereafter, they rise significantly to 24,736 million US$ in 2015 and decrease to 19,777 million US$ in 2016. The pronounced rise in 2015 indicates a considerable increase in obligations, likely connected to the changes in total assets.
- Shareholders’ Equity
- Reported shareholders’ equity remains relatively stable from 5,257 million US$ in 2012 to 5,167 million US$ in 2013, then decreases to 4,522 million US$ in 2014. A sharp increase occurs in 2015 to 18,252 million US$, followed by a further rise to 21,711 million US$ in 2016. Adjusted shareholders’ equity presents a somewhat different trajectory: a slight increase in 2013 to 5,207 million US$, a decline to 4,193 million US$ in 2014, but significantly increasing to 27,456 million US$ in 2015 and to 31,318 million US$ by 2016. This disparity between reported and adjusted equity highlights the impact of deferred income tax and other adjustments on the company's net asset position.
- Net Income
- Reported net income increases from 1,272 million US$ in 2012 to 1,718 million US$ in 2013, then dips to 1,470 million US$ in 2014. A notable jump occurs in 2015 to 3,253 million US$, and again in 2016 to 6,073 million US$. Adjusted net income fluctuates more, starting at 1,228 million US$ in 2012, rising sharply to 2,030 million US$ in 2013, then falling to 1,290 million US$ in 2014. It increases to 2,594 million US$ in 2015 and peaks at 6,460 million US$ in 2016. These variations suggest significant effects from tax adjustments and possibly one-time income or expense items influencing profitability trends.
Overall, the data indicates a period of relative stability in the early years, followed by a significant transformation in 2015 characterized by substantial increases in assets, liabilities, equity, and profitability. The adjusted figures consistently show the influence of deferred income tax and other accounting adjustments, often amplifying equity and net income compared to the reported amounts. This pattern suggests important corporate transactions or restructuring events impacting financial metrics and highlights the necessity of considering both reported and adjusted figures for a comprehensive financial analysis.
Reynolds American Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Reynolds American Inc., adjusted financial ratios
Based on: 10-K (reporting date: 2016-12-31), 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).
- Liquidity Ratios
- The reported current ratio exhibited a general downward trend over the observed period, declining from 1.28 in 2012 to 0.85 in 2016, with minor fluctuations. The adjusted current ratio, which accounts for deferred income tax effects, followed a similar trajectory, decreasing from 1.04 to 0.85, with the most pronounced drop occurring between 2013 and 2014. Both ratios indicate a tightening liquidity position over time, with values approaching or falling below the benchmark of 1.0, suggesting potential challenges in covering short-term liabilities.
- Profitability Margins
- Reported net profit margin showed a strong upward trend, increasing from 10.4% in 2012 to a peak of 36.05% in 2016. The adjusted net profit margin reflected similar growth but with more volatility, beginning at 10.04%, dipping notably in 2014 to 10.66%, and ultimately reaching an even higher 38.35% in 2016. This pattern suggests improvements in operational efficiency and profitability, particularly in the latter years, with adjustments for income tax effects amplifying the apparent profitability.
- Asset Efficiency
- Reported total asset turnover ratios were relatively stable from 2012 through 2014, ranging between 0.74 and 0.80, before dropping sharply to 0.28 in 2015 and remaining low at 0.33 in 2016. Adjusted total asset turnover mirrored this pattern, with a slight increase over the early years and a marked decline after 2014. The significant decrease in asset turnover indicates reduced efficiency in utilizing assets to generate revenue in the most recent years analyzed.
- Financial Leverage
- Reported financial leverage values fluctuated, beginning at 3.15 in 2012, peaking at 3.36 in 2014, and then declining steadily to 2.35 by 2016. Adjusted leverage showed a similar initial increase, reaching 3.45 in 2014, but then decreased more sharply to 1.63 in 2016. The lower adjusted leverage suggests that when accounting for deferred income taxes, the company's reliance on debt relative to equity decreased significantly in the later years, indicating a potential reduction in financial risk.
- Return on Equity (ROE)
- Reported ROE climbed from 24.2% in 2012 to a high of 33.25% in 2013, then slightly declined to 27.97% in 2016 after a dip in 2015. The adjusted ROE showed greater volatility, peaking at 38.99% in 2013, decreasing sharply to 9.45% in 2015, and partially recovering to 20.63% by 2016. The variations imply fluctuations in shareholder returns, with tax adjustments revealing more pronounced swings in equity profitability.
- Return on Assets (ROA)
- Reported ROA improved from 7.68% in 2012 to a peak of 11.89% in 2016, despite a mid-period decline in 2015. Adjusted ROA followed a similar path but started higher at 7.85% and peaked at 13.73% in 2013, experiencing a dip in 2015 before rising again. The trends indicate overall enhanced asset profitability, with deferred tax considerations highlighting somewhat stronger returns on assets throughout the timeframe.
Reynolds American Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Current Ratio
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =
The data presents financial measures related to current assets and current ratio for a five-year span. Both reported and adjusted figures are shown, allowing an assessment of trends and adjustments over time.
- Reported Current Assets
- The reported current assets show a decline from 2012 to 2014, decreasing from 4,812 million USD to 3,323 million USD. In 2015, there is a substantial rebound to 6,187 million USD, followed by another decrease to 4,238 million USD in 2016. Overall, this indicates volatility with a notable peak in the penultimate year.
- Adjusted Current Assets
- Adjusted current assets, presumably accounting for deferred income tax effects or other adjustments, follow a similar pattern but at consistently lower levels. The values decrease from 3,904 million USD in 2012 to 2,620 million USD in 2014, then increase markedly to 5,155 million USD in 2015 before stabilizing at 4,238 million USD in 2016. The range of adjustment impacts the asset figures substantially, reducing the count by approximately 800 to 1,100 million USD in earlier years.
- Reported Current Ratio
- The reported current ratio declines from 1.28 in 2012 to below 1.00 in 2014 at 0.94, indicating a weakening liquidity position. It improves to 1.17 in 2015, aligning with the peak in current assets, but drops again to 0.85 in 2016, suggesting potential liquidity concerns.
- Adjusted Current Ratio
- The adjusted current ratio mirrors the trend of the reported ratio but is consistently lower, signifying a more conservative liquidity assessment after adjustments. The ratio falls from 1.04 in 2012 to a low of 0.74 in 2014, recovers to 0.97 in 2015, and then declines to 0.85 in 2016. This pattern underscores a persistent challenge to liquidity when considering adjustments.
In summary, the analysis reveals fluctuating liquidity metrics over the five years, with both reported and adjusted figures showing declines through 2014, a recovery in 2015, and a decline again in 2016. The adjustments consistently lower the reported asset and ratio values, highlighting a more restrained financial position under adjusted accounting measures. The 2015 peak in assets and liquidity ratios may reflect one-off factors or significant operational changes during that period, while the ratios below 1.00 in other years suggest ongoing liquidity risks that merit attention.
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 Net profit margin = 100 × Net income ÷ Net sales, includes excise taxes
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales, includes excise taxes
= 100 × ÷ =
The financial data over the five-year period reveals significant fluctuations and overall growth in both reported and adjusted net income figures, along with corresponding net profit margins.
- Reported Net Income
- The reported net income displayed an upward trend, starting from $1,272 million in 2012, increasing to $1,718 million in 2013, followed by a slight decline to $1,470 million in 2014. Notably, the metric then saw a pronounced surge in 2015 and 2016, reaching $3,253 million and $6,073 million respectively. This suggests periods of robust profitability growth, particularly in the final two years.
- Adjusted Net Income
- Adjusted net income values showed more variability within the same timeframe. It increased from $1,228 million in 2012 to a peak of $2,030 million in 2013, declined sharply to $1,290 million in 2014, and slightly recovered to $2,594 million in 2015 before hitting the highest value of $6,460 million in 2016. The notable dip in 2014 contrasts with the trends in reported net income for that year, indicating possible one-time or deferred tax impacts affecting adjustments.
- Reported Net Profit Margin
- The reported net profit margin mirrored the income growth pattern, beginning at 10.4% in 2012, rising steadily to 14.36% in 2013, and then slightly decreasing to 12.15% in 2014. From 2014 onwards, there was a significant increase reaching 21.86% in 2015 and peaking at 36.05% in 2016. This strong margin expansion reflects improved profitability relative to revenue.
- Adjusted Net Profit Margin
- The adjusted net profit margin exhibited greater volatility. It started at 10.04% in 2012, surged to 16.96% in 2013, then dropped markedly to 10.66% in 2014. Subsequently, it rebounded to 17.43% in 2015 and climbed steeply to 38.35% in 2016. The substantial increase in the final year aligns with the boost in adjusted net income and suggests effective management of tax adjustments contributing to profitability.
Overall, the data indicates a pattern of improving profitability from 2012 through 2016, with a marked acceleration in the latter years. The discrepancies between reported and adjusted figures, particularly in 2014, highlight the influence of tax adjustments on earnings performance. By 2016, both reported and adjusted metrics demonstrate a pronounced enhancement in financial outcomes, reflecting heightened operational earnings and favorable tax-related impacts.
Adjusted Total Asset Turnover
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 Total asset turnover = Net sales, includes excise taxes ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales, includes excise taxes ÷ Adjusted total assets
= ÷ =
The data presents an overview of total assets and asset turnover ratios over a five-year period, reflecting both reported figures and adjusted figures accounting for deferred income tax adjustments.
- Total Assets
- Reported total assets exhibited a gradual decline from 16,557 million US dollars in 2012 to 15,196 million in 2014, followed by a substantial jump to 53,224 million in 2015. This was slightly reduced to 51,095 million in 2016. The adjusted total assets showed a similar pattern, starting at 15,649 million in 2012 and declining steadily to 14,484 million by 2014. Then, there was a sharp increase to 52,192 million in 2015, with a minor decrease to 51,095 million in 2016. The alignment in values by 2016 suggests adjustments converge with reported values over time.
- Total Asset Turnover
- Reported total asset turnover ratios were relatively stable between 2012 and 2014, increasing modestly from 0.74 to 0.80, indicating improving efficiency in asset utilization. However, there was a significant drop to 0.28 in 2015, with a slight increase to 0.33 in 2016. This sharp decrease coincides with the considerable increase in total assets, suggesting assets grew much faster than sales or revenues those years.
- The adjusted total asset turnover follows a comparable trend, starting moderately higher than the reported figures—rising from 0.78 in 2012 to 0.84 in 2014. Similarly, the ratio plunges to 0.29 in 2015, then stabilizes slightly at 0.33 in 2016. The consistency of this pattern between reported and adjusted data indicates that deferred income tax adjustments have minimal effect on turnover ratio trends.
- Overall Observations
- The sudden and large increase in total assets in 2015 suggests there may have been a significant acquisition, revaluation, or other major accounting event affecting asset size. The corresponding fall in asset turnover ratios implies that the increase in assets was not matched by a proportional increase in sales or revenue, reflecting a lower efficiency in asset utilization during that period. By 2016, although the asset base remains elevated compared to prior years, there is a moderate improvement in turnover ratios indicating a gradual adjustment or integration of assets into operational efficiency.
Adjusted Financial Leverage
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 Financial leverage = Total assets ÷ Shareholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= ÷ =
The analysis of the financial data reveals several notable trends in the company's asset base, equity, and financial leverage over the five-year period.
- Total Assets
- Reported total assets decreased slightly from 16,557 million US dollars in 2012 to 15,196 million US dollars in 2014, before experiencing a significant increase to 53,224 million US dollars in 2015, then slightly declining to 51,095 million US dollars in 2016. Adjusted total assets followed a similar pattern, with values marginally lower than reported figures but showing the same substantial jump in 2015, indicating an important event or revaluation affecting asset measurement.
- Shareholders’ Equity
- Reported shareholders' equity showed a declining trend from 5,257 million US dollars in 2012 to 4,522 million US dollars in 2014, then sharply increased to 18,252 million US dollars in 2015 and further to 21,711 million US dollars in 2016. Adjusted equity figures also declined initially, from 4,810 million US dollars in 2012 to 4,193 million US dollars in 2014, followed by a substantial rise to 27,456 million US dollars in 2015 and 31,318 million US dollars in 2016. The adjusted equity being consistently higher than reported equity in the latter years suggests significant deferred tax adjustments impacting equity positively from 2015 onwards.
- Financial Leverage
- The reported financial leverage ratio decreased from 3.15 in 2012 to 2.92 in 2015, with a notable drop to 2.35 in 2016. The adjusted financial leverage presents a slightly different trend: starting higher at 3.25 in 2012, decreasing more sharply over the years to 1.90 in 2015, and further to 1.63 in 2016. This decline reflects a stronger equity base relative to total assets after adjustments, indicating reduced reliance on debt financing over time, especially pronounced in the adjusted data from 2015 onwards.
Overall, the data demonstrates a period of asset contraction until 2014, followed by a significant expansion in total assets and equity starting in 2015. The adjustments for deferred and reported taxes have a pronounced effect, particularly on equity and leverage ratios, suggesting changes in tax accounting or asset revaluation policies that improve the company’s financial position. The decreasing leverage ratios imply a strengthening capital structure with lower financial risk exposure in recent years.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × ÷ =
The financial data reflects both reported and adjusted figures concerning net income, shareholders' equity, and return on equity (ROE) over the five-year period from 2012 to 2016. An analysis of these trends reveals notable fluctuations and variations between reported and adjusted metrics.
- Net Income Trends
- Reported net income shows a general upward trajectory over the period, starting at 1,272 million US dollars in 2012 and increasing significantly to 6,073 million US dollars by 2016. There is a notable peak in 2015 with 3,253 million US dollars, followed by a more than doubling of income in 2016.
- The adjusted net income figures demonstrate more variability. Starting at 1,228 million US dollars in 2012, adjusted net income rises sharply in 2013 to 2,030 million US dollars, then declines in 2014 to 1,290 million US dollars and again falls in 2015 to 2,594 million US dollars before sharply increasing to 6,460 million US dollars in 2016. The adjustments result in disparities particularly in 2013 and 2016, where adjusted values notably exceed reported ones.
- Shareholders’ Equity Patterns
- Reported shareholders' equity exhibits decline from 5,257 million US dollars in 2012 to 4,522 million US dollars in 2014, then rises dramatically to 18,252 million US dollars in 2015 and further to 21,711 million US dollars in 2016. This substantial increase in the latter years suggests significant equity financing or retained earnings during this period.
- Adjusted shareholders' equity follows a similar trend but with lower values in the early years, starting at 4,810 million US dollars in 2012, rising slightly to 5,207 million US dollars in 2013, then decreasing to 4,193 million US dollars in 2014. In 2015 and 2016, there is a substantial increase to 27,456 and 31,318 million US dollars respectively, which is consistently higher compared to reported equity in corresponding years. This may reflect the impact of deferred tax adjustments inflating equity figures.
- Return on Equity (ROE) Movements
- Reported ROE demonstrates strong performance in the early years, starting at 24.2% in 2012, rising to a peak of 33.25% in 2013, and maintaining a high 32.51% in 2014 before dropping to 17.82% in 2015 and partially recovering to 27.97% in 2016. The drop in 2015 corresponds with the large jump in shareholders’ equity, diluting the ROE ratio.
- Adjusted ROE values are generally higher than reported ROE initially, recording 25.53% in 2012 and peaking at 38.99% in 2013. However, adjusted ROE declines sharply after 2013, falling to 30.77% in 2014, then plunging to 9.45% in 2015, and recovering somewhat to 20.63% in 2016. The pronounced decline in 2015 closely tracks with the marked increase in adjusted shareholders’ equity, indicating the effect of accounting adjustments on equity and profitability measurements.
Overall, the data portrays a company experiencing significant growth in net income and shareholders’ equity in 2015 and 2016, accompanied by fluctuations in profitability ratios. The disparities between reported and adjusted figures, especially in ROE and equity values, highlight the considerable impact of tax-related adjustments on financial presentation. The steep increase in equity in the last two years, particularly in adjusted terms, appears to temper return on equity, reflecting the dilution effect despite rising net income.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2016-12-31), 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).
2016 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × ÷ =
The financial data indicates distinct trends in income, asset base, and profitability over the five-year period examined.
- Net Income
- Reported net income showed increases from 2012 to 2013, followed by a decline in 2014, then a substantial rise in 2015 and an even larger increase in 2016. Adjusted net income similarly rose sharply in 2013, dipped noticeably in 2014, rebounded in 2015, and recorded a significant spike in 2016, exceeding reported net income in the final two years, indicating adjustments had an increasingly positive impact on recognized earnings.
- Total Assets
- Reported total assets were relatively stable between 2012 and 2014, with slight decreases each year, before experiencing a dramatic increase in 2015, almost tripling compared to the prior year, and then a minor decline in 2016. Adjusted total assets followed a similar pattern but were consistently lower than reported figures, reflecting valuation adjustments or exclusions in the adjusted figures. The large asset jump in 2015 likely relates to significant corporate activity such as an acquisition or revaluation.
- Return on Assets (ROA)
- Reported ROA increased from 2012 to 2013, then fell in 2014 and 2015 before rebounding sharply in 2016 to the highest level of the period. Adjusted ROA exhibited a more volatile pattern, rising sharply in 2013, declining in 2014 and 2015 to a low point, then surging in 2016 above the reported ROA level. The wider fluctuations in adjusted ROA suggest that the tax adjustments had a significant effect on profitability measures, particularly in the most recent year.
Overall, the data reflects significant variability in net income and asset values over the period, with a striking asset increase in 2015 that substantially affected profitability ratios. Adjusted figures, incorporating deferred tax considerations, highlight different performance dynamics, revealing potentially important impacts of tax-related adjustments on reported financial outcomes.