Inventory Disclosure
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusted Financial Ratios: LIFO vs. FIFO (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)

McKesson Corp., balance sheet: inventory

US$ in millions

		Mar 31, 2016		Mar 31, 2015		Mar 31, 2014		Mar 31, 2013		Mar 31, 2012		Mar 31, 2011
	Inventories, net	15,335)		14,296)		13,308)		10,335)		10,073)		9,225)

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

Download chart

Item	Description	The company
Inventories, net	Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer.	McKesson Corp. inventories, net increased from 2014 to 2015 and from 2015 to 2016.

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in millions

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
Adjustment to Inventories, Net
Inventories, net at LIFO (as reported)	15,335)	14,296)	13,308)	10,335)	10,073)	9,225)
Add: Inventory LIFO reserve	1,012)	768)	431)	120)	107)	96)
Inventories, net at FIFO (adjusted)	16,347)	15,064)	13,739)	10,455)	10,180)	9,321)
Adjustment to Current Assets
Current assets (as reported)	38,437)	36,670)	32,573)	23,170)	23,603)	22,357)
Add: Inventory LIFO reserve	1,012)	768)	431)	120)	107)	96)
Current assets (adjusted)	39,449)	37,438)	33,004)	23,290)	23,710)	22,453)
Adjustment to Total Assets
Total assets (as reported)	56,563)	53,870)	51,759)	34,786)	33,093)	30,886)
Add: Inventory LIFO reserve	1,012)	768)	431)	120)	107)	96)
Total assets (adjusted)	57,575)	54,638)	52,190)	34,906)	33,200)	30,982)
Adjustment to Total McKesson Corporation Stockholders’ Equity
Total McKesson Corporation stockholders’ equity (as reported)	8,924)	8,001)	8,522)	7,070)	6,831)	7,220)
Add: Inventory LIFO reserve	1,012)	768)	431)	120)	107)	96)
Total McKesson Corporation stockholders’ equity (adjusted)	9,936)	8,769)	8,953)	7,190)	6,938)	7,316)
Adjustment to Net Income Attributable To McKesson Corporation
Net income attributable to McKesson Corporation (as reported)	2,258)	1,476)	1,263)	1,338)	1,403)	1,202)
Add: Increase (decrease) in inventory LIFO reserve	244)	337)	311)	13)	11)	3)
Net income attributable to McKesson Corporation (adjusted)	2,502)	1,813)	1,574)	1,351)	1,414)	1,205)

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

McKesson Corp. inventory value on Mar 31, 2016 would be $16,347) (in millions) if the FIFO inventory method was used instead of LIFO. McKesson Corp. inventories, valued on a LIFO basis, on Mar 31, 2016 were $15,335). McKesson Corp. inventories would have been $1,012) higher than reported on Mar 31, 2016 if the FIFO method had been used instead.

McKesson Corp., Financial Data: Reported vs. Adjusted

Download chart

McKesson Corp., adjusted financial ratios

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
Current Ratio
Reported current ratio (LIFO)	1.10	1.09	1.10	1.08	1.09	1.19
Adjusted current ratio (FIFO)	1.12	1.12	1.12	1.09	1.09	1.20
Net Profit Margin
Reported net profit margin (LIFO)	1.18%	0.82%	0.92%	1.09%	1.14%	1.07%
Adjusted net profit margin (FIFO)	1.31%	1.01%	1.14%	1.10%	1.15%	1.08%
Total Asset Turnover
Reported total asset turnover (LIFO)	3.37	3.32	2.66	3.52	3.71	3.63
Adjusted total asset turnover (FIFO)	3.32	3.28	2.64	3.51	3.70	3.62
Financial Leverage
Reported financial leverage (LIFO)	6.34	6.73	6.07	4.92	4.84	4.28
Adjusted financial leverage (FIFO)	5.79	6.23	5.83	4.85	4.79	4.23
Return on Equity (ROE)
Reported ROE (LIFO)	25.30%	18.45%	14.82%	18.93%	20.54%	16.65%
Adjusted ROE (FIFO)	25.18%	20.68%	17.58%	18.79%	20.38%	16.47%
Return on Assets (ROA)
Reported ROA (LIFO)	3.99%	2.74%	2.44%	3.85%	4.24%	3.89%
Adjusted ROA (FIFO)	4.35%	3.32%	3.02%	3.87%	4.26%	3.89%

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

Financial ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	McKesson Corp. adjusted current ratio deteriorated from 2014 to 2015 but then improved from 2015 to 2016 exceeding 2014 level.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	McKesson Corp. adjusted net profit margin ratio deteriorated from 2014 to 2015 but then improved from 2015 to 2016 exceeding 2014 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	McKesson Corp. adjusted total asset turnover ratio improved from 2014 to 2015 and from 2015 to 2016.
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.	McKesson Corp. adjusted financial leverage ratio increased from 2014 to 2015 but then decreased significantly from 2015 to 2016.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	McKesson Corp. adjusted ROE improved from 2014 to 2015 and from 2015 to 2016.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	McKesson Corp. adjusted ROA improved from 2014 to 2015 and from 2015 to 2016.

McKesson Corp., Financial Ratios: Reported vs. Adjusted

Download chart

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Current assets	38,437)	36,670)	32,573)	23,170)	23,603)	22,357)
Current liabilities	35,071)	33,497)	29,501)	21,357)	21,686)	18,726)
Liquidity Ratio
Current ratio¹	1.10	1.09	1.10	1.08	1.09	1.19
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted current assets	39,449)	37,438)	33,004)	23,290)	23,710)	22,453)
Current liabilities	35,071)	33,497)	29,501)	21,357)	21,686)	18,726)
Liquidity Ratio
Adjusted current ratio²	1.12	1.12	1.12	1.09	1.09	1.20

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 38,437 ÷ 35,071 = 1.10

² Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 39,449 ÷ 35,071 = 1.12

Download chart

Liquidity ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by current liabilities.	McKesson Corp. adjusted current ratio deteriorated from 2014 to 2015 but then improved from 2015 to 2016 exceeding 2014 level.

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to McKesson Corporation	2,258)	1,476)	1,263)	1,338)	1,403)	1,202)
Revenues	190,884)	179,045)	137,609)	122,455)	122,734)	112,084)
Profitability Ratio
Net profit margin¹	1.18%	0.82%	0.92%	1.09%	1.14%	1.07%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to McKesson Corporation	2,502)	1,813)	1,574)	1,351)	1,414)	1,205)
Revenues	190,884)	179,045)	137,609)	122,455)	122,734)	112,084)
Profitability Ratio
Adjusted net profit margin²	1.31%	1.01%	1.14%	1.10%	1.15%	1.08%

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ Net profit margin = 100 × Net income attributable to McKesson Corporation ÷ Revenues
= 100 × 2,258 ÷ 190,884 = 1.18%

² Adjusted net profit margin = 100 × Adjusted net income attributable to McKesson Corporation ÷ Revenues
= 100 × 2,502 ÷ 190,884 = 1.31%

Download chart

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	McKesson Corp. adjusted net profit margin ratio deteriorated from 2014 to 2015 but then improved from 2015 to 2016 exceeding 2014 level.

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Revenues	190,884)	179,045)	137,609)	122,455)	122,734)	112,084)
Total assets	56,563)	53,870)	51,759)	34,786)	33,093)	30,886)
Activity Ratio
Total asset turnover¹	3.37	3.32	2.66	3.52	3.71	3.63
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Revenues	190,884)	179,045)	137,609)	122,455)	122,734)	112,084)
Adjusted total assets	57,575)	54,638)	52,190)	34,906)	33,200)	30,982)
Activity Ratio
Adjusted total asset turnover²	3.32	3.28	2.64	3.51	3.70	3.62

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 190,884 ÷ 56,563 = 3.37

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 190,884 ÷ 57,575 = 3.32

Download chart

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	McKesson Corp. adjusted total asset turnover ratio improved from 2014 to 2015 and from 2015 to 2016.

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Total assets	56,563)	53,870)	51,759)	34,786)	33,093)	30,886)
Total McKesson Corporation stockholders’ equity	8,924)	8,001)	8,522)	7,070)	6,831)	7,220)
Solvency Ratio
Financial leverage¹	6.34	6.73	6.07	4.92	4.84	4.28
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted total assets	57,575)	54,638)	52,190)	34,906)	33,200)	30,982)
Adjusted total McKesson Corporation stockholders’ equity	9,936)	8,769)	8,953)	7,190)	6,938)	7,316)
Solvency Ratio
Adjusted financial leverage²	5.79	6.23	5.83	4.85	4.79	4.23

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ Financial leverage = Total assets ÷ Total McKesson Corporation stockholders’ equity
= 56,563 ÷ 8,924 = 6.34

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total McKesson Corporation stockholders’ equity
= 57,575 ÷ 9,936 = 5.79

Download chart

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.	McKesson Corp. adjusted financial leverage ratio increased from 2014 to 2015 but then decreased significantly from 2015 to 2016.

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to McKesson Corporation	2,258)	1,476)	1,263)	1,338)	1,403)	1,202)
Total McKesson Corporation stockholders’ equity	8,924)	8,001)	8,522)	7,070)	6,831)	7,220)
Profitability Ratio
ROE¹	25.30%	18.45%	14.82%	18.93%	20.54%	16.65%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to McKesson Corporation	2,502)	1,813)	1,574)	1,351)	1,414)	1,205)
Adjusted total McKesson Corporation stockholders’ equity	9,936)	8,769)	8,953)	7,190)	6,938)	7,316)
Profitability Ratio
Adjusted ROE²	25.18%	20.68%	17.58%	18.79%	20.38%	16.47%

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ ROE = 100 × Net income attributable to McKesson Corporation ÷ Total McKesson Corporation stockholders’ equity
= 100 × 2,258 ÷ 8,924 = 25.30%

² Adjusted ROE = 100 × Adjusted net income attributable to McKesson Corporation ÷ Adjusted total McKesson Corporation stockholders’ equity
= 100 × 2,502 ÷ 9,936 = 25.18%

Download chart

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	McKesson Corp. adjusted ROE improved from 2014 to 2015 and from 2015 to 2016.

	Mar 31, 2016	Mar 31, 2015	Mar 31, 2014	Mar 31, 2013	Mar 31, 2012	Mar 31, 2011
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to McKesson Corporation	2,258)	1,476)	1,263)	1,338)	1,403)	1,202)
Total assets	56,563)	53,870)	51,759)	34,786)	33,093)	30,886)
Profitability Ratio
ROA¹	3.99%	2.74%	2.44%	3.85%	4.24%	3.89%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in millions)
Adjusted net income attributable to McKesson Corporation	2,502)	1,813)	1,574)	1,351)	1,414)	1,205)
Adjusted total assets	57,575)	54,638)	52,190)	34,906)	33,200)	30,982)
Profitability Ratio
Adjusted ROA²	4.35%	3.32%	3.02%	3.87%	4.26%	3.89%

Based on: 10-K (reporting date: 2016-03-31), 10-K (reporting date: 2015-03-31), 10-K (reporting date: 2014-03-31), 10-K (reporting date: 2013-03-31), 10-K (reporting date: 2012-03-31), 10-K (reporting date: 2011-03-31).

2016 Calculations

¹ ROA = 100 × Net income attributable to McKesson Corporation ÷ Total assets
= 100 × 2,258 ÷ 56,563 = 3.99%

² Adjusted ROA = 100 × Adjusted net income attributable to McKesson Corporation ÷ Adjusted total assets
= 100 × 2,502 ÷ 57,575 = 4.35%

Download chart

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	McKesson Corp. adjusted ROA improved from 2014 to 2015 and from 2015 to 2016.

McKesson Corp. (NYSE:MCK)

Analysis of Inventory

Inventory Disclosure

Adjustment to Inventory: Conversion from LIFO to FIFO

McKesson Corp., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

McKesson Corp., Financial Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)