Kraft Foods Group Inc. (NASDAQ:KRFT)

The financial data reveals a consistent decrease in reported total assets over the three years, from 23,329 million US dollars in 2012 to 22,947 million US dollars in 2014. A similar downward trend is observed in adjusted total assets, though on a smaller scale, declining from 11,983 million to 11,543 million US dollars during the same period.

Reported equity shows a different pattern, with a significant increase from 3,572 million US dollars in 2012 to 5,187 million US dollars in 2013, followed by a decrease to 4,365 million US dollars in 2014. This fluctuation suggests variability in factors affecting shareholders' equity within the period.

Adjusted equity figures are negative across all years, indicating a substantial adjustment related to goodwill or other intangible assets. Although the negative adjusted equity improves from -7,774 million US dollars in 2012 to -6,318 million in 2013, it worsens again in 2014 to -7,039 million US dollars. This volatility points to ongoing challenges in asset valuation or the implications of goodwill adjustments on the equity base.

Total Assets

Both reported and adjusted total assets show a mild but steady decline over the three-year span, indicating a contraction or asset base reduction.

Equity

Reported equity initially increases substantially before decreasing, whereas adjusted equity remains negative, highlighting the impact of intangible asset adjustments on the company’s net worth.

Goodwill Adjustment Impact

The considerable difference between reported and adjusted figures, especially the negative adjusted equity, suggests the company carries significant goodwill or intangible asset adjustments that substantially affect its adjusted financial standing.

The data presented reveals several important trends related to asset utilization, leverage, and profitability over the three-year period examined.

Total Asset Turnover

The reported total asset turnover remained constant at 0.79 across all three years, indicating stable efficiency in using assets to generate sales from a reported perspective. However, the adjusted total asset turnover, which presumably accounts for goodwill adjustments, shows a consistent upward trend increasing from 1.53 in 2012 to 1.58 in 2014. This suggests improved operational efficiency when excluding or adjusting for goodwill.

Financial Leverage

Reported financial leverage showed notable fluctuations, declining from a high of 6.53 in 2012 to 4.46 in 2013 before rising again to 5.26 in 2014. This variability indicates changes in the company's financing structure, possibly reflecting efforts to reduce debt or adjustments in equity levels before a partial increase in leverage again in 2014. There is no adjusted financial leverage data available for analysis.

Return on Equity (ROE)

The reported ROE peaked at 52.34% in 2013, up from 45.97% in 2012, before sharply decreasing to 23.89% in 2014. This significant drop in 2014 may reflect lower profitability, increased equity base, or other factors reducing shareholder returns. No adjusted ROE data is provided, limiting understanding of the impact of goodwill adjustments on this metric.

Return on Assets (ROA)

Reported ROA increased substantially from 7.04% in 2012 to 11.73% in 2013, then declined sharply to 4.55% in 2014. This pattern follows a similar trend to ROE, pointing to fluctuating efficiency in asset profitability. The adjusted ROA figures are consistently higher than the reported ones, with 13.7% in 2012 increasing markedly to 23.32% in 2013 before dropping to 9.04% in 2014. The adjustment for goodwill appears to significantly improve the perceived return on assets, though the downward movement in 2014 remains evident even after adjustment.

Overall, the company exhibited relatively stable asset turnover and fluctuating financial leverage, with profitability metrics demonstrating a strong increase in 2013 followed by a pronounced decrease in 2014. The goodwill-adjusted data generally suggests stronger asset efficiency and returns compared to the reported figures, though the declining trend in 2014 highlights potential challenges affecting overall performance.

The financial data reveals the following trends over the three-year period from 2012 to 2014:

Total Assets

Reported total assets experienced a gradual decrease, declining from $23,329 million in 2012 to $22,947 million in 2014. This represents a reduction of approximately 1.6% over the period. Adjusted total assets, which exclude goodwill, also followed a downward trajectory, falling from $11,983 million in 2012 to $11,543 million in 2014, a decrease of about 3.7%. This suggests a consistent contraction in asset base under both reported and adjusted measures, with the adjusted asset base showing a slightly more pronounced decline.

Total Asset Turnover

Reported total asset turnover remained steady, holding constant at a ratio of 0.79 across all three years. This indicates that the efficiency with which the company generated revenue from its reported asset base did not change during this period. Conversely, the adjusted total asset turnover, which factors out goodwill from the asset base, showed a positive trend, increasing from 1.53 in 2012 to 1.58 in 2014. This incremental improvement suggests enhanced utilization of tangible and other adjusted assets in generating revenues.

In summary, while the company's total assets declined slightly, asset utilization when adjusted for goodwill improved modestly. The constant reported asset turnover indicates stable operational efficiency on a reported basis, whereas improvements in adjusted turnover may reflect better management of core, non-goodwill assets.

The data reflects several key financial metrics over the three-year period ending in 2014, providing insights into asset base, equity, and leverage from both reported and goodwill-adjusted perspectives.

Total Assets

The reported total assets show a gradual decline, decreasing from $23,329 million in 2012 to $22,947 million in 2014. Similarly, the adjusted total assets, which presumably exclude goodwill or intangible assets, also declined from $11,983 million in 2012 to $11,543 million in 2014. This trend suggests a contraction in the asset base over the observed period, with the adjusted values approximately half the size of the reported values, indicating a significant portion of reported assets may be goodwill or intangible assets.

Equity

Reported equity increased substantially from $3,572 million in 2012 to $5,187 million in 2013, followed by a notable decline to $4,365 million in 2014. In contrast, adjusted equity values are negative throughout the period, starting at -$7,774 million in 2012 and fluctuating to -$6,318 million in 2013 before decreasing again to -$7,039 million in 2014. The negative adjusted equity suggests that after removing goodwill or intangible assets, liabilities exceed tangible net assets, indicating potential solvency concerns from a tangible accounting standpoint.

Financial Leverage

The reported financial leverage ratio, calculated as total assets divided by equity, shows a significant decrease from 6.53 in 2012 to 4.46 in 2013, suggesting improved capital structure or equity base relative to assets. However, this ratio increased again to 5.26 in 2014, indicating a modest rise in leverage that remains below the 2012 level. Adjusted financial leverage data are not provided, preventing direct analysis of leverage on a goodwill-adjusted basis.

Overall, the data illustrate a company experiencing a slight decrease in total assets and fluctuations in equity during the period, with reported measures indicating somewhat improved leverage in 2013 followed by increased leverage in 2014. The persistent negative adjusted equity highlights the impact of goodwill and intangible assets on financial statements and raises concerns about the underlying tangible equity position.

Reported Equity

The reported equity showed a significant increase from 2012 to 2013, rising from $3,572 million to $5,187 million. However, in 2014, there was a reversal in this trend, with reported equity declining to $4,365 million. This indicates growth followed by a contraction in shareholders' equity over the three-year period.

Adjusted Equity

The adjusted equity values, which likely account for goodwill or other adjustments, were negative throughout the period and demonstrated a fluctuating pattern. In 2012, adjusted equity was -$7,774 million, improved to -$6,318 million in 2013, and then deteriorated again to -$7,039 million in 2014. This persistent negative adjusted equity suggests that when certain intangible assets are removed or adjusted for, the underlying equity position may be substantially weaker than reported figures suggest.

Reported Return on Equity (ROE)

The reported ROE exhibited strong performance in the initial two years, increasing from 45.97% in 2012 to a peak of 52.34% in 2013. However, it fell noticeably in 2014 to 23.89%, which, while still positive, represents a considerable decline in profitability relative to equity. This decline may reflect lower net income, increased equity base, or both.

Adjusted Return on Equity (ROE)

No adjusted ROE values were available across the reported periods, limiting the ability to assess profitability from an adjusted equity perspective.

Overall Analysis

The data indicates that while reported equity and ROE initially improved in 2013, both metrics weakened in 2014. The consistently negative adjusted equity highlights potential concerns regarding intangible assets or goodwill impacting net equity valuations. The lack of adjusted ROE data constrains further analysis on profitability when accounting for these adjustments. The trends suggest a need for further investigation into the causes behind negative adjusted equity and the decline in ROE to better understand the company’s underlying financial health beyond reported figures.

The data reveals several notable trends in the financial position and performance over the three-year period.

Total Assets

The reported total assets show a gradual decline from US$23,329 million in 2012 to US$22,947 million in 2014, indicating a slight contraction in the asset base over the span of three years. When adjusted for goodwill, the total assets also decrease from US$11,983 million in 2012 to US$11,543 million in 2014. This consistent decline in adjusted total assets suggests a reduction in net tangible or operating assets, potentially reflecting asset disposals or amortization effects.

Return on Assets (ROA)

The reported ROA shows significant volatility. It initially rises sharply from 7.04% in 2012 to 11.73% in 2013, then falls markedly to 4.55% in 2014. This pattern suggests an improvement in asset profitability up to 2013 followed by a deterioration in 2014 on a reported basis. The adjusted ROA figures, which exclude goodwill effects, show a similar pattern but at higher levels: starting from 13.7% in 2012, peaking at 23.32% in 2013, and then declining to 9.04% in 2014. The higher adjusted ROAs imply that intangible assets such as goodwill dilute the reported returns on assets, and operating profitability excluding these factors was notably stronger yet still suffered a substantial decrease in the final year reported.

Overall, the data indicates a mild reduction in asset base accompanied by a pronounced fluctuation in asset profitability. The peak in ROA during 2013 across both reported and adjusted bases suggests exceptional performance or possibly non-recurring gains impacting that period. The subsequent decline in 2014 points to challenges in maintaining profitability relative to asset investments. The adjusted figures highlight the significant role of intangible assets in the company's financial structure and the insights gained by evaluating returns excluding goodwill.