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Intuitive Surgical Inc. (ISRG)
Analysis of Goodwill and Intangible Assets
Difficulty: Advanced
- Goodwill and Intangible Assets Accounting Policy
- Goodwill and Intangible Assets Disclosure
- Analyst Adjustments: Removal of Goodwill
- Adjusted Ratios: Removal of Goodwill (Summary)
- Adjusted Total Asset Turnover
- Adjusted Financial Leverage
- Adjusted Return on Equity (ROE)
- Adjusted Return on Assets (ROA)
Goodwill and Intangible Assets Accounting Policy
Goodwill and intangible assets with indefinite useful lives are not amortized, but are tested for impairment at least annually during the fourth fiscal quarter, or if circumstances indicate their value may no longer be recoverable. Goodwill represents the excess of the purchase price over the fair value of net identifiable assets and liabilities. Intuitive Surgical continues to operate in one segment, which is considered to be the sole reporting unit and, therefore, goodwill was tested for impairment at the enterprise level. As of December 31, 2018, there has been no impairment of goodwill.
Intangible assets are carried at cost, net of accumulated amortization. Intuitive Surgical does not have intangible assets with indefinite useful lives other than goodwill. Amortization is recorded on a straight-line basis over the intangible assets’ useful lives, which range from approximately 1 to 9 years.
Source: 10-K (filing date: 2019-02-04).
Goodwill and Intangible Assets Disclosure
Intuitive Surgical Inc., Statement of Financial Position, Goodwill and Intangible Assets
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Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
| Item | Description | The company |
|---|---|---|
| Intangible assets, net carrying amount | Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. | Intuitive Surgical Inc.’s intangible assets, net carrying amount declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
| 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. | |
| Intangible assets and goodwill | Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. | Intuitive Surgical Inc.’s intangible assets and goodwill declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |
Analyst Adjustments: Removal of Goodwill
Intuitive Surgical Inc., adjustments to financial data
USD $ in thousands
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
Intuitive Surgical Inc., Financial Data: Reported vs. Adjusted
Adjusted Ratios: Removal of Goodwill (Summary)
Intuitive Surgical Inc., adjusted ratios
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Intuitive Surgical Inc.’s adjusted total asset turnover improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018 not reaching 2016 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. |
Intuitive Surgical Inc.’s adjusted financial leverage increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
| Adjusted ROE | A profitability ratio calculated as net income divided by adjusted shareholders’ equity. | Intuitive Surgical Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018. |
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Intuitive Surgical Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018. |
Intuitive Surgical Inc., Ratios: Reported vs. Adjusted
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
2018 Calculations
1 Total asset turnover = Revenue ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Intuitive Surgical Inc.’s adjusted total asset turnover improved from 2016 to 2017 but then slightly deteriorated from 2017 to 2018 not reaching 2016 level. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
2018 Calculations
1 Financial leverage = Total assets ÷ Total Intuitive Surgical, Inc. stockholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Intuitive Surgical, Inc. stockholders’ equity
= ÷ =
| 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. |
Intuitive Surgical Inc.’s adjusted financial leverage increased from 2016 to 2017 but then slightly declined from 2017 to 2018. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
2018 Calculations
1 ROE = 100 × Net income attributable to Intuitive Surgical, Inc. ÷ Total Intuitive Surgical, Inc. stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Net income attributable to Intuitive Surgical, Inc. ÷ Adjusted total Intuitive Surgical, Inc. stockholders’ equity
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as net income divided by adjusted shareholders’ equity. | Intuitive Surgical Inc.’s adjusted ROE improved from 2016 to 2017 and from 2017 to 2018. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02), 10-K (filing date: 2015-02-06).
2018 Calculations
1 ROA = 100 × Net income attributable to Intuitive Surgical, Inc. ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Net income attributable to Intuitive Surgical, Inc. ÷ Adjusted total assets
= 100 × ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as net income divided by adjusted total assets. | Intuitive Surgical Inc.’s adjusted ROA improved from 2016 to 2017 and from 2017 to 2018. |