Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Broadcom Inc. (NASDAQ:AVGO)

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Analysis of Income Taxes

Advanced level


Accounting Policy on Income Taxes

Broadcom accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, deferred tax assets and liabilities are determined based on the differences between the consolidated financial statements and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Broadcom recognizes net deferred tax assets to the extent Broadcom believes these assets will more likely than not be realized. In making such determination, Broadcom considers all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations. If Broadcom determines that Broadcom is able to realize the deferred income tax assets in the future in excess of their net carrying values, Broadcom adjusts the valuation allowance and reduces the provision for income taxes. Likewise, if Broadcom determines that Broadcom is not able to realize all or part of the net deferred tax assets, Broadcom increases the provision for income taxes in the period such determination is made.

Broadcom accounts for uncertainty in income taxes in accordance with the applicable accounting guidance on income taxes. This guidance provides that a tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation processes, based on the technical merits.

Source: 10-K (filing date: 2019-12-20).


Income Tax Expense (Benefit)

Broadcom Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Federal
State
Foreign
Current tax expense
Federal
State
Foreign
Deferred tax expense (benefit)
Provision for (benefit from) income taxes

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

Item Description The company
Current tax expense Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Broadcom Inc.’s current tax expense increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.
Deferred tax expense (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Broadcom Inc.’s deferred tax expense (benefit) decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.
Provision for (benefit from) income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Broadcom Inc.’s provision for (benefit from) income taxes decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Effective Income Tax Rate (EITR)

Broadcom Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Statutory tax rate
State, net of federal benefit
Redomiciliation transaction withholding tax remeasurement
Foreign income taxed at different rates
Excess tax benefits from stock-based compensation
Research and development credit
Deemed inclusion of foreign earnings
Tax holidays and concessions
Other, net
Valuation allowance
Effective tax rate on income (loss) before income taxes, before 2017 Tax reform
2017 Tax reform
Effective tax rate on income (loss) before income taxes

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

Item Description The company
Effective tax rate on income (loss) before income taxes, before 2017 Tax reform Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Broadcom Inc.’s effective tax rate on income (loss) before income taxes, before 2017 Tax reform decreased from 2017 to 2018 and from 2018 to 2019.

Components of Deferred Tax Assets and Liabilities

Broadcom Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Net operating loss, credit and other carryforwards
Deferred revenue
Employee stock awards
Other deferred income tax assets
Gross deferred income tax assets
Valuation allowance
Deferred income tax assets
Depreciation and amortization
Notes receivable
Foreign earnings not indefinitely reinvested
Other deferred income tax liabilities
Deferred income tax liabilities
Net deferred income tax assets (liabilities)

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

Item Description The company
Gross deferred income tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Broadcom Inc.’s gross deferred income tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.
Deferred income tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Broadcom Inc.’s deferred income tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.
Net deferred income 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. Broadcom Inc.’s net deferred income tax assets (liabilities) increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Broadcom Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Current deferred income tax assets (in Other current assets)
Current deferred income tax liabilities (in Other current liabilities)
Non-current deferred income tax assets (in Other long-term assets)
Non-current deferred income tax liabilities (in Other long-term liabilities)

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

Item Description The company
Non-current deferred income tax assets (in Other long-term 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. Broadcom Inc.’s non-current deferred income tax assets (in Other long-term assets) increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.
Non-current deferred income tax liabilities (in Other long-term liabilities) Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Broadcom Inc.’s non-current deferred income tax liabilities (in Other long-term liabilities) decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Broadcom Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Adjustment to Current Assets
Current assets (as reported)
Less: Current deferred tax assets, net
Current assets (adjusted)
Adjustment to Total Assets
Total assets (as reported)
Less: Current deferred tax assets, net
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Current Liabilities
Current liabilities (as reported)
Less: Current deferred tax liabilities, net
Current liabilities (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Current deferred tax liabilities, net
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Broadcom Inc. Stockholders’ Equity
Total Broadcom Inc. stockholders’ equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Broadcom Inc. stockholders’ equity (adjusted)
Adjustment to Net Income (loss) Attributable To Broadcom Inc. Stockholders
Net income (loss) attributable to Broadcom Inc. stockholders (as reported)
Add: Deferred income tax expense (benefit)
Net income (loss) attributable to Broadcom Inc. stockholders (adjusted)

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).


Broadcom Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Broadcom Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
Current Ratio
Reported current ratio
Adjusted current ratio
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Broadcom Inc.’s adjusted current ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Broadcom Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Broadcom Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
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.
Broadcom Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Broadcom Inc.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Broadcom Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Broadcom Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Current assets
Current liabilities
Liquidity Ratio
Current ratio1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets
Adjusted current liabilities
Liquidity Ratio
Adjusted current ratio2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= ÷ =

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Broadcom Inc.’s adjusted current ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Broadcom Inc. stockholders
Net revenue
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Broadcom Inc. stockholders
Net revenue
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to Broadcom Inc. stockholders ÷ Net revenue
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Broadcom Inc. stockholders ÷ Net revenue
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Broadcom Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Net revenue
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net revenue
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 Total asset turnover = Net revenue ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Net revenue ÷ Adjusted total assets
= ÷ =

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Broadcom Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Total assets
Total Broadcom Inc. stockholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted total Broadcom Inc. stockholders’ equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Broadcom Inc. stockholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Broadcom Inc. stockholders’ equity
= ÷ =

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.
Broadcom Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Broadcom Inc. stockholders
Total Broadcom Inc. stockholders’ equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Broadcom Inc. stockholders
Adjusted total Broadcom Inc. stockholders’ equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 ROE = 100 × Net income (loss) attributable to Broadcom Inc. stockholders ÷ Total Broadcom Inc. stockholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income (loss) attributable to Broadcom Inc. stockholders ÷ Adjusted total Broadcom Inc. stockholders’ equity
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Broadcom Inc.’s adjusted ROE improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Nov 3, 2019 Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Broadcom Inc. stockholders
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Broadcom Inc. stockholders
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (filing date: 2019-12-20), 10-K (filing date: 2018-12-21), 10-K (filing date: 2017-12-21), 10-K (filing date: 2016-12-23), 10-K (filing date: 2015-12-17), 10-K (filing date: 2014-12-29).

2019 Calculations

1 ROA = 100 × Net income (loss) attributable to Broadcom Inc. stockholders ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income (loss) attributable to Broadcom Inc. stockholders ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Broadcom Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.