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Analysis of Goodwill and Intangible Assets

Difficulty: Advanced


Goodwill and Intangible Assets Disclosure

Comcast Corp., Statement of Financial Position, Goodwill and Intangible Assets

USD $ in millions

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Customer relationships 13,612  13,478  13,396  15,129  15,037 
Software 8,258  7,017  6,008  5,040  4,271 
Cable franchise renewal costs and contractual operating rights 1,492  1,460  1,499  1,418  1,360 
Patents and other technology rights 259  257  409  373  361 
Other agreements and rights 2,724  2,443  1,994  1,456  1,433 
Finite-lived intangible assets, gross carrying amount 26,345  24,655  23,306  23,416  22,462 
Accumulated amortization (12,785) (11,013) (9,868) (10,170) (8,874)
Finite-lived intangible assets, net 13,560  13,642  13,438  13,246  13,588 
Franchise rights 59,364  59,364  59,364  59,364  59,364 
Trade names 2,981  2,981  2,857  3,083  3,089 
FCC licenses 2,238  651  651  651  652 
Indefinite-lived intangible assets 64,583  62,996  62,872  63,098  63,105 
Intangible assets 78,143  76,638  76,310  76,344  76,693 
Goodwill 36,780  35,980  32,945  27,316  27,098 
Goodwill and intangible assets 114,923  112,618  109,255  103,660  103,791 

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

Item Description The company
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. Comcast Corp.'s intangible assets increased from 2015 to 2016 and from 2016 to 2017.
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. Comcast Corp.'s goodwill increased from 2015 to 2016 and from 2016 to 2017.
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. Comcast Corp.'s goodwill and intangible assets increased from 2015 to 2016 and from 2016 to 2017.

Analyst Adjustments: Removal of Goodwill

Comcast Corp., adjustments to financial data

USD $ in millions

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Adjustment to Total Assets
Total assets (as reported) 186,949  180,500  166,574  159,339  158,813 
Less: Goodwill 36,780  35,980  32,945  27,316  27,098 
Total assets (adjusted) 150,169  144,520  133,629  132,023  131,715 
Adjustment to Total Comcast Corporation Shareholders' Equity
Total Comcast Corporation shareholders' equity (as reported) 68,606  53,943  52,269  52,711  50,694 
Less: Goodwill 36,780  35,980  32,945  27,316  27,098 
Total Comcast Corporation shareholders' equity (adjusted) 31,826  17,963  19,324  25,395  23,596 

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).


Comcast Corp., Financial Data: Reported vs. Adjusted


Adjusted Ratios: Removal of Goodwill (Summary)

Comcast Corp., adjusted ratios

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Total Asset Turnover
Reported total asset turnover 0.45 0.45 0.45 0.43 0.41
Adjusted total asset turnover 0.56 0.56 0.56 0.52 0.49
Financial Leverage
Reported financial leverage 2.72 3.35 3.19 3.02 3.13
Adjusted financial leverage 4.72 8.05 6.92 5.20 5.58
Return on Equity (ROE)
Reported ROE 33.11% 16.12% 15.62% 15.90% 13.45%
Adjusted ROE 71.37% 48.41% 42.24% 33.00% 28.89%
Return on Assets (ROA)
Reported ROA 12.15% 4.82% 4.90% 5.26% 4.29%
Adjusted ROA 15.13% 6.02% 6.11% 6.35% 5.17%

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Comcast Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 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.
Comcast Corp.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders' equity. Comcast Corp.'s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Comcast Corp.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Comcast Corp., Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Revenue 84,526  80,403  74,510  68,775  64,657 
Total assets 186,949  180,500  166,574  159,339  158,813 
Ratio
Total asset turnover1 0.45 0.45 0.45 0.43 0.41
Adjusted for Goodwill
Selected Financial Data (USD $ in millions)
Revenue 84,526  80,403  74,510  68,775  64,657 
Adjusted total assets 150,169  144,520  133,629  132,023  131,715 
Ratio
Adjusted total asset turnover2 0.56 0.56 0.56 0.52 0.49

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

2017 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 84,526 ÷ 186,949 = 0.45

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 84,526 ÷ 150,169 = 0.56

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Comcast Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Financial Leverage

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Total assets 186,949  180,500  166,574  159,339  158,813 
Total Comcast Corporation shareholders' equity 68,606  53,943  52,269  52,711  50,694 
Ratio
Financial leverage1 2.72 3.35 3.19 3.02 3.13
Adjusted for Goodwill
Selected Financial Data (USD $ in millions)
Adjusted total assets 150,169  144,520  133,629  132,023  131,715 
Adjusted total Comcast Corporation shareholders' equity 31,826  17,963  19,324  25,395  23,596 
Ratio
Adjusted financial leverage2 4.72 8.05 6.92 5.20 5.58

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

2017 Calculations

1 Financial leverage = Total assets ÷ Total Comcast Corporation shareholders' equity
= 186,949 ÷ 68,606 = 2.72

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Comcast Corporation shareholders' equity
= 150,169 ÷ 31,826 = 4.72

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.
Comcast Corp.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Adjusted Return on Equity (ROE)

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Comcast Corporation 22,714  8,695  8,163  8,380  6,816 
Total Comcast Corporation shareholders' equity 68,606  53,943  52,269  52,711  50,694 
Ratio
ROE1 33.11% 16.12% 15.62% 15.90% 13.45%
Adjusted for Goodwill
Selected Financial Data (USD $ in millions)
Net income attributable to Comcast Corporation 22,714  8,695  8,163  8,380  6,816 
Adjusted total Comcast Corporation shareholders' equity 31,826  17,963  19,324  25,395  23,596 
Ratio
Adjusted ROE2 71.37% 48.41% 42.24% 33.00% 28.89%

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

2017 Calculations

1 ROE = 100 × Net income attributable to Comcast Corporation ÷ Total Comcast Corporation shareholders' equity
= 100 × 22,714 ÷ 68,606 = 33.11%

2 Adjusted ROE = 100 × Net income attributable to Comcast Corporation ÷ Adjusted total Comcast Corporation shareholders' equity
= 100 × 22,714 ÷ 31,826 = 71.37%

Ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders' equity. Comcast Corp.'s adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.

Adjusted Return on Assets (ROA)

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Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Comcast Corporation 22,714  8,695  8,163  8,380  6,816 
Total assets 186,949  180,500  166,574  159,339  158,813 
Ratio
ROA1 12.15% 4.82% 4.90% 5.26% 4.29%
Adjusted for Goodwill
Selected Financial Data (USD $ in millions)
Net income attributable to Comcast Corporation 22,714  8,695  8,163  8,380  6,816 
Adjusted total assets 150,169  144,520  133,629  132,023  131,715 
Ratio
Adjusted ROA2 15.13% 6.02% 6.11% 6.35% 5.17%

Based on: 10-K (filing date: 2018-01-31), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-27), 10-K (filing date: 2014-02-12).

2017 Calculations

1 ROA = 100 × Net income attributable to Comcast Corporation ÷ Total assets
= 100 × 22,714 ÷ 186,949 = 12.15%

2 Adjusted ROA = 100 × Net income attributable to Comcast Corporation ÷ Adjusted total assets
= 100 × 22,714 ÷ 150,169 = 15.13%

Ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Comcast Corp.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.