Stock Analysis on Net
Stock Analysis on Net

Applied Materials Inc. (NASDAQ:AMAT)

Analysis of Goodwill and Intangible Assets

Microsoft Excel

Goodwill and Intangible Asset Disclosure

Applied Materials Inc., balance sheet: goodwill and intangible assets

US$ in millions

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
Goodwill 3,732 3,700 3,479 3,466 3,399 3,368
Intangible assets with finite lives, gross carrying amount 2,310 2,294 2,041 2,041 1,988 1,988
Accumulated amortization (2,016) (1,972) (1,937) (1,888) (1,832) (1,775)
Intangible assets with finite lives, net carrying amount 294 322 104 153 156 213
Intangible assets with infinite lives — 17 — — — —
Intangible assets 294 339 104 153 156 213
Goodwill and intangible assets 4,026 4,039 3,583 3,619 3,555 3,581

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

Item Description The company
Goodwill Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized. Applied Materials Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Intangible assets Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Applied Materials Inc. intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.
Goodwill and intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Applied Materials Inc. goodwill and intangible assets increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Adjustments to Financial Statements: Removal of Goodwill

Applied Materials Inc., adjustments to financial statements

US$ in millions

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
Adjustment to Total Assets
Total assets (as reported) 30,729 26,726 25,825 22,353 19,024 17,773
Less: Goodwill 3,732 3,700 3,479 3,466 3,399 3,368
Total assets (adjusted) 26,997 23,026 22,346 18,887 15,625 14,405
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported) 16,349 12,194 12,247 10,578 8,214 6,839
Less: Goodwill 3,732 3,700 3,479 3,466 3,399 3,368
Stockholders’ equity (adjusted) 12,617 8,494 8,768 7,112 4,815 3,471

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

Applied Materials Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Applied Materials Inc., adjusted financial ratios

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
Total Asset Turnover
Reported total asset turnover 0.86 0.96 0.89 0.77 0.77 0.97
Adjusted total asset turnover 0.98 1.12 1.03 0.91 0.93 1.20
Financial Leverage
Reported financial leverage 1.88 2.19 2.11 2.11 2.32 2.60
Adjusted financial leverage 2.14 2.71 2.55 2.66 3.25 4.15
Return on Equity (ROE)
Reported ROE 41.94% 53.51% 48.08% 34.21% 32.94% 48.44%
Adjusted ROE 54.34% 76.82% 67.15% 50.89% 56.20% 95.45%
Return on Assets (ROA)
Reported ROA 22.31% 24.41% 22.80% 16.19% 14.22% 18.64%
Adjusted ROA 25.40% 28.34% 26.35% 19.16% 17.32% 23.00%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Applied Materials Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
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.		 Applied Materials Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Applied Materials Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Applied Materials Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Applied Materials Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net sales 26,517 25,785 23,063 17,202 14,608 17,253
Total assets 30,729 26,726 25,825 22,353 19,024 17,773
Activity Ratio
Total asset turnover1 0.86 0.96 0.89 0.77 0.77 0.97
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales 26,517 25,785 23,063 17,202 14,608 17,253
Adjusted total assets 26,997 23,026 22,346 18,887 15,625 14,405
Activity Ratio
Adjusted total asset turnover2 0.98 1.12 1.03 0.91 0.93 1.20

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 26,517 ÷ 30,729 = 0.86

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 26,517 ÷ 26,997 = 0.98

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Applied Materials Inc. adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adjusted Financial Leverage

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets 30,729 26,726 25,825 22,353 19,024 17,773
Stockholders’ equity 16,349 12,194 12,247 10,578 8,214 6,839
Solvency Ratio
Financial leverage1 1.88 2.19 2.11 2.11 2.32 2.60
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 26,997 23,026 22,346 18,887 15,625 14,405
Adjusted stockholders’ equity 12,617 8,494 8,768 7,112 4,815 3,471
Solvency Ratio
Adjusted financial leverage2 2.14 2.71 2.55 2.66 3.25 4.15

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

1 Financial leverage = Total assets ÷ Stockholders’ equity
= 30,729 ÷ 16,349 = 1.88

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 26,997 ÷ 12,617 = 2.14

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.		 Applied Materials Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Adjusted Return on Equity (ROE)

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income 6,856 6,525 5,888 3,619 2,706 3,313
Stockholders’ equity 16,349 12,194 12,247 10,578 8,214 6,839
Profitability Ratio
ROE1 41.94% 53.51% 48.08% 34.21% 32.94% 48.44%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 6,856 6,525 5,888 3,619 2,706 3,313
Adjusted stockholders’ equity 12,617 8,494 8,768 7,112 4,815 3,471
Profitability Ratio
Adjusted ROE2 54.34% 76.82% 67.15% 50.89% 56.20% 95.45%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 6,856 ÷ 16,349 = 41.94%

2 Adjusted ROE = 100 × Net income ÷ Adjusted stockholders’ equity
= 100 × 6,856 ÷ 12,617 = 54.34%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. Applied Materials Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Adjusted Return on Assets (ROA)

Microsoft Excel
Oct 29, 2023 Oct 30, 2022 Oct 31, 2021 Oct 25, 2020 Oct 27, 2019 Oct 28, 2018
As Reported
Selected Financial Data (US$ in millions)
Net income 6,856 6,525 5,888 3,619 2,706 3,313
Total assets 30,729 26,726 25,825 22,353 19,024 17,773
Profitability Ratio
ROA1 22.31% 24.41% 22.80% 16.19% 14.22% 18.64%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 6,856 6,525 5,888 3,619 2,706 3,313
Adjusted total assets 26,997 23,026 22,346 18,887 15,625 14,405
Profitability Ratio
Adjusted ROA2 25.40% 28.34% 26.35% 19.16% 17.32% 23.00%

Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).

2023 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 6,856 ÷ 30,729 = 22.31%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 6,856 ÷ 26,997 = 25.40%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Applied Materials Inc. adjusted ROA improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.