Microsoft Excel LibreOffice Calc

Marriott International Inc. (NASDAQ:MAR)


Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Marriott International Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments 2,073  2,292  1,742  962 
Discount rate1 3.51% 3.24% 3.40% 3.36%
 
Total present value of future operating lease payments 1,621  1,819  1,408  806 

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).

1 Weighted-average interest rate for Marriott International Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.51%
2019 171  2019 171  165 
2020 170  2020 170  159 
2021 145  2021 145  131 
2022 153  2022 153  133 
2023 139  2023 139  117 
2024 and thereafter 1,295  2024 139  113 
2025 139  109 
2026 139  105 
2027 139  102 
2028 139  98 
2029 139  95 
2030 139  92 
2031 139  89 
2032 139  86 
2033 44  26 
Total: 2,073  2,073  1,621 

Based on: 10-K (filing date: 2019-03-01).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.24%
2018 187  2018 187  181 
2019 187  2019 187  175 
2020 167  2020 167  152 
2021 143  2021 143  126 
2022 154  2022 154  131 
2023 and thereafter 1,454  2023 154  127 
2024 154  123 
2025 154  119 
2026 154  116 
2027 154  112 
2028 154  108 
2029 154  105 
2030 154  102 
2031 154  99 
2032 68  42 
Total: 2,292  2,292  1,819 

Based on: 10-K (filing date: 2018-02-15).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.40%
2017 183  2017 183  177 
2018 173  2018 173  162 
2019 152  2019 152  137 
2020 130  2020 130  114 
2021 121  2021 121  102 
2022 and thereafter 983  2022 121  99 
2023 121  96 
2024 121  93 
2025 121  90 
2026 121  87 
2027 121  84 
2028 121  81 
2029 121  78 
2030 15 
Total: 1,742  1,742  1,408 

Based on: 10-K (filing date: 2017-02-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 3.36%
2016 126  2016 126  122 
2017 123  2017 123  115 
2018 112  2018 112  101 
2019 87  2019 87  76 
2020 67  2020 67  57 
2021 and thereafter 447  2021 67  55 
2022 67  53 
2023 67  51 
2024 67  50 
2025 67  48 
2026 67  47 
2027 45  30 
Total: 962  962  806 

Based on: 10-K (filing date: 2016-02-18).


Adjustments to Financial Statements for Operating Leases

Marriott International Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 25,051  23,696  23,948  24,140  6,082 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  1,621  1,819  1,408  806 
Total assets (adjusted) 25,051  25,317  25,767  25,548  6,888 
Adjustment to Total Debt
Total debt (as reported) 10,940  9,347  8,238  8,506  4,107 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  1,621  1,819  1,408  806 
Add: Current operating lease liabilities (recorded in Accrued expenses and other) 130  —  —  —  — 
Add: Noncurrent operating lease liabilities 882  —  —  —  — 
Total debt (adjusted) 11,952  10,968  10,057  9,914  4,913 

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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Marriott International Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover1
Reported total asset turnover 0.84 0.88 0.96 0.71 2.38
Adjusted total asset turnover 0.84 0.82 0.89 0.67 2.10
Debt to Equity2
Reported debt to equity 15.56 4.20 2.21 1.59
Adjusted debt to equity 17.00 4.93 2.70 1.85
Return on Assets3 (ROA)
Reported ROA 5.08% 8.05% 5.73% 3.23% 14.12%
Adjusted ROA 5.08% 7.53% 5.32% 3.05% 12.47%

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 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 but then slightly improved from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Marriott International Inc.’s adjusted debt to equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as 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 Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Revenues 20,972  20,758  22,894  17,072  14,486 
Total assets 25,051  23,696  23,948  24,140  6,082 
Activity Ratio
Total asset turnover1 0.84 0.88 0.96 0.71 2.38
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenues 20,972  20,758  22,894  17,072  14,486 
Adjusted total assets 25,051  25,317  25,767  25,548  6,888 
Activity Ratio
Adjusted total asset turnover2 0.84 0.82 0.89 0.67 2.10

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
= 20,972 ÷ 25,051 = 0.84

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 20,972 ÷ 25,051 = 0.84

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 but then slightly improved from 2018 to 2019.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 10,940  9,347  8,238  8,506  4,107 
Shareholders’ equity (deficit) 703  2,225  3,731  5,357  (3,590)
Solvency Ratio
Debt to equity1 15.56 4.20 2.21 1.59
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 11,952  10,968  10,057  9,914  4,913 
Shareholders’ equity (deficit) 703  2,225  3,731  5,357  (3,590)
Solvency Ratio
Adjusted debt to equity2 17.00 4.93 2.70 1.85

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 Debt to equity = Total debt ÷ Shareholders’ equity (deficit)
= 10,940 ÷ 703 = 15.56

2 Adjusted debt to equity = Adjusted total debt ÷ Shareholders’ equity (deficit)
= 11,952 ÷ 703 = 17.00

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Marriott International Inc.’s adjusted debt-to-equity ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
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 1,273  1,907  1,372  780  859 
Total assets 25,051  23,696  23,948  24,140  6,082 
Profitability Ratio
ROA1 5.08% 8.05% 5.73% 3.23% 14.12%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income 1,273  1,907  1,372  780  859 
Adjusted total assets 25,051  25,317  25,767  25,548  6,888 
Profitability Ratio
Adjusted ROA2 5.08% 7.53% 5.32% 3.05% 12.47%

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 × 1,273 ÷ 25,051 = 5.08%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 1,273 ÷ 25,051 = 5.08%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as 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.