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 Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Sherwin-Williams Co., income tax expense (benefit), continuing operations

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Federal	331,200)	457,700)	440,100)	288,755)	269,330)
Foreign	86,500)	92,000)	71,100)	53,155)	53,442)
State and local	46,800)	84,400)	60,400)	52,372)	39,320)
Current	464,500)	634,100)	571,600)	394,282)	362,092)
Federal	(36,500)	(102,700)	(83,700)	(102,149)	(474,889)
Foreign	(40,400)	(19,000)	(32,300)	(35,276)	(42,292)
State and local	(3,400)	(23,600)	(15,100)	(5,953)	(88,954)
Deferred	(80,300)	(145,300)	(131,100)	(143,378)	(606,135)
Provisions (credits) for income taxes	384,200)	488,800)	440,500)	250,904)	(244,043)

Based on: 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), 10-K (reporting date: 2017-12-31).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Sherwin-Williams Co. current increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Sherwin-Williams Co. deferred decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Provisions (credits) for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Sherwin-Williams Co. provisions (credits) for income taxes increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

Sherwin-Williams Co., effective income tax rate (EITR) reconciliation

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Statutory federal income tax rate	21.00%	21.00%	21.00%	21.00%	35.00%
State and local income taxes	2.20%	2.50%	2.30%	3.20%	2.20%
Investment vehicles	-0.80%	-0.80%	-1.30%	-1.20%	-1.40%
Domestic production activities	0.00%	0.00%	0.00%	0.00%	-3.00%
Employee share-based payments	-4.80%	-3.80%	-3.30%	-3.20%	-5.60%
Research and development credits	-0.60%	-0.50%	-1.10%	-1.30%	0.00%
Amended returns and refunds	0.20%	0.30%	0.10%	-1.60%	0.00%
Tax credit reversal	0.00%	0.00%	3.70%	0.00%	0.00%
Other, net	-0.10%	0.70%	0.80%	-0.30%	-2.10%
Reported effective tax rate, before Tax Act	17.10%	19.40%	22.20%	16.60%	25.10%
Tax Act	0.00%	0.00%	0.00%	1.90%	-39.80%
Subsidiary mergers	0.00%	0.00%	0.00%	0.00%	-4.00%
Reported effective tax rate	17.10%	19.40%	22.20%	18.50%	-18.70%

Based on: 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), 10-K (reporting date: 2017-12-31).

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Item	Description	The company
Reported effective tax rate, before Tax Act	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Sherwin-Williams Co. reported effective tax rate, before Tax Act decreased from 2019 to 2020 and from 2020 to 2021.

Sherwin-Williams Co., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Environmental and other similar items	73,200)	82,900)	83,500)	84,517)	50,193)
Employee related and benefit items	170,300)	166,600)	129,300)	96,963)	104,098)
Operating lease liabilities	463,100)	448,900)	430,600)	—)	—)
Other items	192,000)	232,800)	204,000)	161,578)	110,960)
Deferred tax assets	898,600)	931,200)	847,400)	343,058)	265,251)
Intangible assets and Property, plant, and equipment	(1,053,700)	(1,156,400)	(1,232,600)	(1,303,620)	(1,506,650)
LIFO inventories	(68,600)	(87,600)	(80,500)	(64,502)	(78,952)
Operating lease right-of-use assets	(448,400)	(434,000)	(417,800)	—)	—)
Other items	(33,300)	(31,700)	(28,100)	(29,464)	(49,670)
Deferred tax liabilities	(1,604,000)	(1,709,700)	(1,759,000)	(1,397,586)	(1,635,272)
Net deferred tax assets (liabilities)	(705,400)	(778,500)	(911,600)	(1,054,528)	(1,370,021)

Based on: 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), 10-K (reporting date: 2017-12-31).

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Item	Description	The company
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Sherwin-Williams Co. deferred tax assets increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Sherwin-Williams Co. net deferred tax assets (liabilities) increased from 2019 to 2020 and from 2020 to 2021.

Sherwin-Williams Co., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
	Deferred tax assets	62,800)	67,600)	58,300)	76,344)	64,175)
	Deferred tax liabilities	768,200)	846,100)	969,900)	1,130,872)	1,434,196)

Based on: 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), 10-K (reporting date: 2017-12-31).

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Item	Description	The company
Deferred tax 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.	Sherwin-Williams Co. deferred tax assets increased from 2019 to 2020 but then slightly decreased from 2020 to 2021 not reaching 2019 level.
Deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Sherwin-Williams Co. deferred tax liabilities decreased from 2019 to 2020 and from 2020 to 2021.

Sherwin-Williams Co., adjustments to financial statements

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported)	20,666,700)	20,401,600)	20,496,200)	19,134,279)	19,958,427)
Less: Noncurrent deferred tax assets, net	62,800)	67,600)	58,300)	76,344)	64,175)
Total assets (adjusted)	20,603,900)	20,334,000)	20,437,900)	19,057,935)	19,894,252)
Adjustment to Total Liabilities
Total liabilities (as reported)	18,229,500)	16,790,800)	16,372,900)	15,403,534)	16,266,239)
Less: Noncurrent deferred tax liabilities, net	768,200)	846,100)	969,900)	1,130,872)	1,434,196)
Total liabilities (adjusted)	17,461,300)	15,944,700)	15,403,000)	14,272,662)	14,832,043)
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported)	2,437,200)	3,610,800)	4,123,300)	3,730,745)	3,692,188)
Less: Net deferred tax assets (liabilities)	(705,400)	(778,500)	(911,600)	(1,054,528)	(1,370,021)
Shareholders’ equity (adjusted)	3,142,600)	4,389,300)	5,034,900)	4,785,273)	5,062,209)
Adjustment to Net Income
Net income (as reported)	1,864,400)	2,030,400)	1,541,300)	1,108,746)	1,772,262)
Add: Deferred income tax expense (benefit)	(80,300)	(145,300)	(131,100)	(143,378)	(606,135)
Net income (adjusted)	1,784,100)	1,885,100)	1,410,200)	965,368)	1,166,127)

Based on: 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), 10-K (reporting date: 2017-12-31).

Sherwin-Williams Co., Financial Data: Reported vs. Adjusted

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Sherwin-Williams Co., adjusted financial ratios

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net Profit Margin
Reported net profit margin	9.35%	11.06%	8.61%	6.32%	11.83%
Adjusted net profit margin	8.95%	10.27%	7.88%	5.51%	7.78%
Total Asset Turnover
Reported total asset turnover	0.97	0.90	0.87	0.92	0.75
Adjusted total asset turnover	0.97	0.90	0.88	0.92	0.75
Financial Leverage
Reported financial leverage	8.48	5.65	4.97	5.13	5.41
Adjusted financial leverage	6.56	4.63	4.06	3.98	3.93
Return on Equity (ROE)
Reported ROE	76.50%	56.23%	37.38%	29.72%	48.00%
Adjusted ROE	56.77%	42.95%	28.01%	20.17%	23.04%
Return on Assets (ROA)
Reported ROA	9.02%	9.95%	7.52%	5.79%	8.88%
Adjusted ROA	8.66%	9.27%	6.90%	5.07%	5.86%

Based on: 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), 10-K (reporting date: 2017-12-31).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.
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.	Sherwin-Williams Co. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.

Sherwin-Williams Co., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,864,400)	2,030,400)	1,541,300)	1,108,746)	1,772,262)
Net sales	19,944,600)	18,361,700)	17,900,800)	17,534,493)	14,983,788)
Profitability Ratio
Net profit margin¹	9.35%	11.06%	8.61%	6.32%	11.83%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,784,100)	1,885,100)	1,410,200)	965,368)	1,166,127)
Net sales	19,944,600)	18,361,700)	17,900,800)	17,534,493)	14,983,788)
Profitability Ratio
Adjusted net profit margin²	8.95%	10.27%	7.88%	5.51%	7.78%

Based on: 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), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,864,400 ÷ 19,944,600 = 9.35%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 1,784,100 ÷ 19,944,600 = 8.95%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021 not reaching 2019 level.

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales	19,944,600)	18,361,700)	17,900,800)	17,534,493)	14,983,788)
Total assets	20,666,700)	20,401,600)	20,496,200)	19,134,279)	19,958,427)
Activity Ratio
Total asset turnover¹	0.97	0.90	0.87	0.92	0.75
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	19,944,600)	18,361,700)	17,900,800)	17,534,493)	14,983,788)
Adjusted total assets	20,603,900)	20,334,000)	20,437,900)	19,057,935)	19,894,252)
Activity Ratio
Adjusted total asset turnover²	0.97	0.90	0.88	0.92	0.75

Based on: 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), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 19,944,600 ÷ 20,666,700 = 0.97

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 19,944,600 ÷ 20,603,900 = 0.97

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets	20,666,700)	20,401,600)	20,496,200)	19,134,279)	19,958,427)
Shareholders’ equity	2,437,200)	3,610,800)	4,123,300)	3,730,745)	3,692,188)
Solvency Ratio
Financial leverage¹	8.48	5.65	4.97	5.13	5.41
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	20,603,900)	20,334,000)	20,437,900)	19,057,935)	19,894,252)
Adjusted shareholders’ equity	3,142,600)	4,389,300)	5,034,900)	4,785,273)	5,062,209)
Solvency Ratio
Adjusted financial leverage²	6.56	4.63	4.06	3.98	3.93

Based on: 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), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity
= 20,666,700 ÷ 2,437,200 = 8.48

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 20,603,900 ÷ 3,142,600 = 6.56

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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.	Sherwin-Williams Co. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,864,400)	2,030,400)	1,541,300)	1,108,746)	1,772,262)
Shareholders’ equity	2,437,200)	3,610,800)	4,123,300)	3,730,745)	3,692,188)
Profitability Ratio
ROE¹	76.50%	56.23%	37.38%	29.72%	48.00%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,784,100)	1,885,100)	1,410,200)	965,368)	1,166,127)
Adjusted shareholders’ equity	3,142,600)	4,389,300)	5,034,900)	4,785,273)	5,062,209)
Profitability Ratio
Adjusted ROE²	56.77%	42.95%	28.01%	20.17%	23.04%

Based on: 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), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,864,400 ÷ 2,437,200 = 76.50%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 1,784,100 ÷ 3,142,600 = 56.77%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,864,400)	2,030,400)	1,541,300)	1,108,746)	1,772,262)
Total assets	20,666,700)	20,401,600)	20,496,200)	19,134,279)	19,958,427)
Profitability Ratio
ROA¹	9.02%	9.95%	7.52%	5.79%	8.88%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,784,100)	1,885,100)	1,410,200)	965,368)	1,166,127)
Adjusted total assets	20,603,900)	20,334,000)	20,437,900)	19,057,935)	19,894,252)
Profitability Ratio
Adjusted ROA²	8.66%	9.27%	6.90%	5.07%	5.86%

Based on: 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), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 1,864,400 ÷ 20,666,700 = 9.02%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,784,100 ÷ 20,603,900 = 8.66%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.

Sherwin-Williams Co. (NYSE:SHW)

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

Sherwin-Williams Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Sherwin-Williams Co., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)