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Broadcom Inc. (AVGO)


Analysis of Investments

Difficulty: Advanced


Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Broadcom Inc., adjustment to Net Income (loss) Attributable To Common Stock

US$ in millions

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12 months ended Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013
Net income (loss) attributable to common stock (as reported) 12,259  1,692  (1,739) 1,364  263  552 
Add: Change in net unrealized gain (loss) on available-for-sale securities —  —  —  —  —  (3)
Net income (loss) attributable to common stock (adjusted) 12,259  1,692  (1,739) 1,364  263  549 

Based on: 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), 10-K (filing date: 2013-12-20).


Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

Broadcom Inc., adjusted ratios

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Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013
Net Profit Margin
Reported net profit margin 58.80% 9.59% -13.13% 19.99% 6.16% 21.90%
Adjusted net profit margin 58.80% 9.59% -13.13% 19.99% 6.16% 21.79%
Return on Equity (ROE)
Reported ROE 45.99% 8.34% -9.20% 28.94% 8.11% 19.13%
Adjusted ROE 45.99% 8.34% -9.20% 28.94% 8.11% 19.02%
Return on Assets (ROA)
Reported ROA 24.46% 3.11% -3.48% 12.88% 2.51% 16.16%
Adjusted ROA 24.46% 3.11% -3.48% 12.88% 2.51% 16.08%

Based on: 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), 10-K (filing date: 2013-12-20).

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Broadcom Inc.’s adjusted net profit margin improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Broadcom Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Broadcom Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.

Broadcom Inc., Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

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Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  552 
Net revenue 20,848  17,636  13,240  6,824  4,269  2,520 
Ratio
Net profit margin1 58.80% 9.59% -13.13% 19.99% 6.16% 21.90%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  549 
Net revenue 20,848  17,636  13,240  6,824  4,269  2,520 
Ratio
Adjusted net profit margin2 58.80% 9.59% -13.13% 19.99% 6.16% 21.79%

Based on: 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), 10-K (filing date: 2013-12-20).

2018 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to common stock ÷ Net revenue
= 100 × 12,259 ÷ 20,848 = 58.80%

2 Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to common stock ÷ Net revenue
= 100 × 12,259 ÷ 20,848 = 58.80%

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Broadcom Inc.’s adjusted net profit margin improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Equity (ROE)

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Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  552 
Total Broadcom Inc. stockholders’ equity 26,657  20,285  18,892  4,714  3,243  2,886 
Ratio
ROE1 45.99% 8.34% -9.20% 28.94% 8.11% 19.13%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  549 
Total Broadcom Inc. stockholders’ equity 26,657  20,285  18,892  4,714  3,243  2,886 
Ratio
Adjusted ROE2 45.99% 8.34% -9.20% 28.94% 8.11% 19.02%

Based on: 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), 10-K (filing date: 2013-12-20).

2018 Calculations

1 ROE = 100 × Net income (loss) attributable to common stock ÷ Total Broadcom Inc. stockholders’ equity
= 100 × 12,259 ÷ 26,657 = 45.99%

2 Adjusted ROE = 100 × Adjusted net income (loss) attributable to common stock ÷ Total Broadcom Inc. stockholders’ equity
= 100 × 12,259 ÷ 26,657 = 45.99%

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Broadcom Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Assets (ROA)

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Nov 4, 2018 Oct 29, 2017 Oct 30, 2016 Nov 1, 2015 Nov 2, 2014 Nov 3, 2013
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  552 
Total assets 50,124  54,418  49,966  10,592  10,491  3,415 
Ratio
ROA1 24.46% 3.11% -3.48% 12.88% 2.51% 16.16%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to common stock 12,259  1,692  (1,739) 1,364  263  549 
Total assets 50,124  54,418  49,966  10,592  10,491  3,415 
Ratio
Adjusted ROA2 24.46% 3.11% -3.48% 12.88% 2.51% 16.08%

Based on: 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), 10-K (filing date: 2013-12-20).

2018 Calculations

1 ROA = 100 × Net income (loss) attributable to common stock ÷ Total assets
= 100 × 12,259 ÷ 50,124 = 24.46%

2 Adjusted ROA = 100 × Adjusted net income (loss) attributable to common stock ÷ Total assets
= 100 × 12,259 ÷ 50,124 = 24.46%

Ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Broadcom Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018.