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Intuit Inc. (INTU)
Analysis of Investments
Difficulty: Advanced
Investment Accounting Policy
Intuit considers highly liquid investments with maturities of three months or less at the date of purchase to be cash equivalents. In all periods presented, cash equivalents consist primarily of money market funds and saving deposit accounts, and investments consist primarily of available-for-sale investment-grade debt securities. Except for direct obligations of the United States government, securities issued by agencies of the United States government, and money market funds, Intuit diversifies the investments by limiting the holdings with any individual issuer.
Intuit uses the specific identification method to compute gains and losses on investments. Intuit records unrealized gains and losses on investments, net of tax, in accumulated other comprehensive income in the stockholders’ equity section of the balance sheets and reflects unrealized gain and loss activity in other comprehensive income on the statement of comprehensive income. Intuit generally classifies available-for-sale debt securities as current assets based upon the ability and intent to use any and all of these securities as necessary to satisfy the significant short-term liquidity requirements that may arise from the highly seasonal nature of Intuit’s businesses. Because of the significant business seasonality, stock repurchase programs, and acquisition opportunities, cash flow requirements may fluctuate dramatically from quarter to quarter and require Intuit to use a significant amount of the investments Intuit holds as available-for-sale securities.
Source: 10-K (filing date: 2018-08-31).
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Intuit Inc., adjustment to Net Income
USD $ in millions
| 12 months ended | Jul 31, 2018 | Jul 31, 2017 | Jul 31, 2016 | Jul 31, 2015 | Jul 31, 2014 | |
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| Add: Unrealized gain (loss) on available-for-sale debt securities | |
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| Net income (adjusted) | |
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Based on: 10-K (filing date: 2018-08-31), 10-K (filing date: 2017-09-01), 10-K (filing date: 2016-09-01), 10-K (filing date: 2015-09-01), 10-K (filing date: 2014-09-12).
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
Intuit Inc., adjusted ratios
Based on: 10-K (filing date: 2018-08-31), 10-K (filing date: 2017-09-01), 10-K (filing date: 2016-09-01), 10-K (filing date: 2015-09-01), 10-K (filing date: 2014-09-12).
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Intuit Inc.’s adjusted net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Intuit Inc.’s adjusted ROE deteriorated from 2016 to 2017 and from 2017 to 2018. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Intuit Inc.’s adjusted ROA improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018 not reaching 2016 level. |
Intuit Inc., Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2018-08-31), 10-K (filing date: 2017-09-01), 10-K (filing date: 2016-09-01), 10-K (filing date: 2015-09-01), 10-K (filing date: 2014-09-12).
2018 Calculations
1 Net profit margin = 100 × Net income ÷ Net revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net revenue
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Intuit Inc.’s adjusted net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 not reaching 2016 level. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2018-08-31), 10-K (filing date: 2017-09-01), 10-K (filing date: 2016-09-01), 10-K (filing date: 2015-09-01), 10-K (filing date: 2014-09-12).
2018 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders’ equity. | Intuit Inc.’s adjusted ROE deteriorated from 2016 to 2017 and from 2017 to 2018. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2018-08-31), 10-K (filing date: 2017-09-01), 10-K (filing date: 2016-09-01), 10-K (filing date: 2015-09-01), 10-K (filing date: 2014-09-12).
2018 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Intuit Inc.’s adjusted ROA improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018 not reaching 2016 level. |