.Analysis of Investments
Difficulty: Advanced
Investment Accounting Policy
Booking Holdings has classified its investments in debt securities and equity securities with readily determinable fair value as available-for-sale securities. These securities are recognized based on trade date and carried at estimated fair value with the aggregate unrealized gains and losses related to these investments, net of taxes, reflected as a part of "Accumulated other comprehensive income (loss)" within stockholders' equity.
The fair value of the investments is based on the specific quoted market price of the securities or comparable securities at the balance sheet dates. Investments in debt securities are considered to be impaired when a decline in fair value is judged to be other than temporary because Booking Holdings either intends to sell or it is more-likely-than not that it will have to sell the impaired security before recovery. Once a decline in fair value is determined to be other than temporary, an impairment charge is recorded and a new cost basis in the investment is established. If Booking Holdings does not intend to sell the debt security, but it is probable that Booking Holdings will not collect all amounts due, then only the impairment due to the credit risk would be recognized in earnings and the remaining amount of the impairment would be recognized in "Accumulated other comprehensive income (loss)" within stockholders' equity. Marketable debt securities are classified as short-term or long-term investments in Booking Holdings' Consolidated Balance Sheets based on the maturity date of the debt security.
Equity investments without readily determinable fair values in companies over which Booking Holdings does not have the ability to exercise significant influence are accounted for using the cost method of accounting and classified within "Other assets" in the Consolidated Balance Sheets. Under the cost method, investments are carried at cost and are adjusted to fair value only for other-than-temporary declines in fair value.
Source: Booking Holdings Inc., Annual Report
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Booking Holdings Inc., adjustment to Net Income Applicable To Common Stockholders
USD $ in thousands
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
Booking Holdings Inc., adjusted ratios
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Net Profit Margin | ||||||
| | Reported net profit margin | % | % | % | % | % |
| | Adjusted net profit margin | % | % | % | % | % |
| Return on Equity (ROE) | ||||||
| | Reported ROE | % | % | % | % | % |
| | Adjusted ROE | % | % | % | % | % |
| Return on Assets (ROA) | ||||||
| | Reported ROA | % | % | % | % | % |
| | Adjusted ROA | % | % | % | % | % |
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Booking Holdings Inc.'s adjusted net profit margin deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders' equity. | Booking Holdings Inc.'s adjusted ROE deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Booking Holdings Inc.'s adjusted ROA deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Adjusted Net Profit Margin
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net income applicable to common stockholders (USD $ in thousands) | |||||
| | Revenues (USD $ in thousands) | |||||
| | Net profit margin1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net income applicable to common stockholders (USD $ in thousands) | |||||
| | Revenues (USD $ in thousands) | |||||
| | Adjusted net profit margin2 | % | % | % | % | % |
2017 Calculations
1 Net profit margin = 100 × Net income applicable to common stockholders ÷ Revenues
= 100 × ÷ = %
2 Adjusted net profit margin = 100 × Adjusted net income applicable to common stockholders ÷ Revenues
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Booking Holdings Inc.'s adjusted net profit margin deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Adjusted Return on Equity (ROE)
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net income applicable to common stockholders (USD $ in thousands) | |||||
| | Stockholders' equity (USD $ in thousands) | |||||
| | ROE1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net income applicable to common stockholders (USD $ in thousands) | |||||
| | Stockholders' equity (USD $ in thousands) | |||||
| | Adjusted ROE2 | % | % | % | % | % |
2017 Calculations
1 ROE = 100 × Net income applicable to common stockholders ÷ Stockholders' equity
= 100 × ÷ = %
2 Adjusted ROE = 100 × Adjusted net income applicable to common stockholders ÷ Stockholders' equity
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders' equity. | Booking Holdings Inc.'s adjusted ROE deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Adjusted Return on Assets (ROA)
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net income applicable to common stockholders (USD $ in thousands) | |||||
| | Total assets (USD $ in thousands) | |||||
| | ROA1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net income applicable to common stockholders (USD $ in thousands) | |||||
| | Total assets (USD $ in thousands) | |||||
| | Adjusted ROA2 | % | % | % | % | % |
2017 Calculations
1 ROA = 100 × Net income applicable to common stockholders ÷ Total assets
= 100 × ÷ = %
2 Adjusted ROA = 100 × Adjusted net income applicable to common stockholders ÷ Total assets
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Booking Holdings Inc.'s adjusted ROA deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
