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Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Income Tax Expense (Benefit)

Marriott International Inc., income tax expense (benefit), continuing operations

US$ in millions

	12 months ended:	Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015
	U.S. Federal
	U.S. State
	Non-U.S.
	Current
	U.S. Federal
	U.S. State
	Non-U.S.
	Deferred
	Provision for income taxes

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Marriott International Inc.’s current decreased from 2017 to 2018 and from 2018 to 2019.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Marriott International Inc.’s deferred increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Marriott International Inc.’s provision for income taxes decreased from 2017 to 2018 and from 2018 to 2019.

Effective Income Tax Rate (EITR)

Marriott International Inc., effective income tax rate (EITR) reconciliation

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	U.S. statutory tax rate
	U.S. state income taxes, net of U.S. federal tax benefit
	Non-U.S. income
	Change in valuation allowance
	Change in uncertain tax positions
	Tax on asset dispositions
	Excess tax benefits related to equity awards
	Other, net
	Effective income tax rate, before Tax Cuts and Jobs Act of 2017
	Change in U.S. tax rate
	Transition Tax on foreign earnings
	Effective income tax rate

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Item	Description	The company
Effective income tax rate, before Tax Cuts and Jobs Act of 2017	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Marriott International Inc.’s effective income tax rate, before Tax Cuts and Jobs Act of 2017 decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Components of Deferred Tax Assets and Liabilities

Marriott International Inc., components of deferred tax assets and liabilities

US$ in millions

		Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015
	Employee benefits
	Net operating loss carry-forwards
	Accrued expenses and other reserves
	Receivables, net
	Tax credits
	Loyalty Program
	Deferred income
	Lease liabilities
	Self-insurance
	Other
	Deferred tax assets
	Valuation allowance
	Deferred tax assets after valuation allowance
	Joint venture interests
	Property and equipment
	Intangibles
	Right-of-use assets
	Self-insurance
	Other
	Deferred tax liabilities
	Net deferred taxes

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Item	Description	The company
Deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Marriott International Inc.’s deferred tax assets increased from 2017 to 2018 and from 2018 to 2019.
Deferred tax assets after valuation allowance	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Marriott International Inc.’s deferred tax assets after valuation allowance increased from 2017 to 2018 and from 2018 to 2019.
Net deferred taxes	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Marriott International Inc.’s net deferred taxes increased from 2017 to 2018 and from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Marriott International Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Deferred tax assets
	Deferred tax liabilities

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Item	Description	The company
Deferred tax assets	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Marriott International Inc.’s deferred tax assets increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Marriott International Inc.’s deferred tax liabilities decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Marriott International Inc., adjustments to financial statements

US$ in millions

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Noncurrent deferred tax assets, net
	Total assets (adjusted)
	Adjustment to Total Liabilities
	Total liabilities (as reported)
	Less: Noncurrent deferred tax liabilities, net
	Total liabilities (adjusted)
	Adjustment to Shareholders’ Equity (deficit)
	Shareholders’ equity (deficit) (as reported)
	Less: Net deferred tax assets (liabilities)
	Shareholders’ equity (deficit) (adjusted)
	Adjustment to Net Income
	Net income (as reported)
	Add: Deferred income tax expense (benefit)
	Net income (adjusted)

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Marriott International Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Marriott International Inc., adjusted financial ratios

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Marriott International Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Marriott International Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
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.	Marriott International Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Marriott International Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Marriott International Inc.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Marriott International Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Revenues
	Profitability Ratio
	Net profit margin¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Revenues
	Profitability Ratio
	Adjusted net profit margin²

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

2019 Calculations

¹ Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =

² Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Marriott International Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Total Asset Turnover

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Revenues
	Total assets
	Activity Ratio
	Total asset turnover¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Revenues
	Adjusted total assets
	Activity Ratio
	Adjusted total asset turnover²

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

2019 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= ÷ =

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= ÷ =

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Marriott International Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Total assets
	Shareholders’ equity (deficit)
	Solvency Ratio
	Financial leverage¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted total assets
	Adjusted shareholders’ equity (deficit)
	Solvency Ratio
	Adjusted financial leverage²

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

2019 Calculations

¹ Financial leverage = Total assets ÷ Shareholders’ equity (deficit)
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity (deficit)
= ÷ =

Solvency 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.	Marriott International Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Shareholders’ equity (deficit)
	Profitability Ratio
	ROE¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Adjusted shareholders’ equity (deficit)
	Profitability Ratio
	Adjusted ROE²

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

2019 Calculations

¹ ROE = 100 × Net income ÷ Shareholders’ equity (deficit)
= 100 × ÷ =

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity (deficit)
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Marriott International Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income
	Total assets
	Profitability Ratio
	ROA¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income
	Adjusted total assets
	Profitability Ratio
	Adjusted ROA²

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-03-01), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-18).

2019 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Marriott International Inc.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

	Marriott International Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

Marriott International Inc. (NASDAQ:MAR)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Marriott International Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Marriott International Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)