Monster Beverage Corp. (NASDAQ:MNST)

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Monster Beverage Corp., effective income tax rate (EITR) reconciliation

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	U.S. federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
	Effective income tax rate	21.15%	24.20%	23.53%	13.32%	21.76%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The effective income tax rate has exhibited significant volatility between 2019 and 2023, contrasting with a constant U.S. federal statutory tax rate of 21.00% throughout the same period.

Tax Rate Variance and Minimums: A substantial deviation from the statutory benchmark occurred in 2020, when the effective income tax rate declined to 13.32%. This represents the lowest tax burden within the analyzed timeframe, indicating a period of significant tax efficiency or the utilization of specific tax credits and deductions.
Period of Upward Adjustment: Following the 2020 minimum, a sharp upward trend is observed. The effective rate increased to 23.53% in 2021 and reached a five-year peak of 24.20% in 2022. During these years, the effective tax rate exceeded the statutory rate, suggesting a higher relative tax burden.
Normalization Trend: By the end of 2023, the effective income tax rate converged toward the statutory baseline, settling at 21.15%. This movement indicates a return to a tax position that aligns closely with the federal statutory requirements after several years of fluctuation.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Monster Beverage Corp., components of deferred tax assets and liabilities

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Reserve for sales returns	1,438)	2,262)	889)	275)	140)
Reserve for inventory obsolescence	4,022)	4,651)	3,643)	2,366)	2,066)
Reserve for marketing development fund	8,358)	7,487)	8,951)	9,629)	8,469)
Capitalization of inventory costs	12,159)	6,537)	2,533)	3,365)	2,310)
State franchise tax, current	2,511)	2,339)	2,493)	4,229)	2,346)
Accrued compensation	12,413)	10,499)	2,854)	1,284)	1,944)
Accrued other liabilities	1,729)	1,820)	4,634)	7,464)	5,674)
Deferred revenue	58,156)	63,196)	68,557)	75,592)	81,903)
Stock-based compensation	19,093)	25,526)	24,635)	23,370)	22,665)
Foreign net operating loss carryforward	27,000)	19,896)	14,507)	21,626)	30,187)
Prepaid supplies	10,567)	7,901)	6,317)	5,551)	5,799)
Termination payments	46,810)	52,466)	58,042)	63,009)	69,467)
Operating lease liabilities	5,739)	5,739)	4,711)	4,434)	6,155)
Intangibles	30,952)	33,603)	72,666)	87,687)	—)
Impairment-trademarks and others	12,715)	2,567)	2,047)	2,055)	—)
Other deferred tax assets	64,955)	33,209)	33,013)	27,164)	17,615)
Gross deferred tax assets	318,617)	279,698)	310,492)	339,100)	256,740)
Valuation allowance	(30,007)	(29,742)	(27,013)	(35,116)	(40,503)
Net deferred tax assets	288,610)	249,956)	283,479)	303,984)	216,237)
Amortization of trademarks	(76,536)	(39,237)	(41,517)	(42,161)	(35,227)
Intangibles	—)	—)	—)	—)	(76,047)
State franchise tax, deferred	(5,038)	(5,503)	(5,505)	(6,318)	(7,173)
Operating lease ROU assets	(5,739)	(5,739)	(4,711)	(4,434)	(6,155)
Bang transaction gain	(10,698)	—)	—)	—)	—)
Other deferred tax liabilities	(8,784)	(5)	(618)	(58)	(93)
Depreciation	(35,708)	(22,433)	(5,907)	(9,363)	(6,765)
Gross deferred tax liabilities	(142,503)	(72,917)	(58,258)	(62,334)	(131,460)
Net deferred tax assets (liabilities)	146,107)	177,039)	225,221)	241,650)	84,777)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The net deferred tax asset position experienced a significant increase in 2020, rising from 84.8 million US dollars in 2019 to a peak of 241.7 million US dollars. Following this peak, a consistent downward trajectory was observed through 2023, ending at 146.1 million US dollars. This overall movement is the result of fluctuating gross deferred tax assets and a substantial expansion of deferred tax liabilities in the most recent fiscal year.

Gross Deferred Tax Asset Trends: Gross deferred tax assets peaked in 2020 at 339.1 million US dollars before declining and then recovering to 318.6 million US dollars by 2023. Several contrasting drivers influenced this movement. Deferred revenue and termination payments showed steady declines throughout the period, with deferred revenue falling from 81.9 million US dollars in 2019 to 58.2 million US dollars in 2023, and termination payments decreasing from 69.5 million US dollars to 46.8 million US dollars. These declines were partially offset by a substantial increase in other deferred tax assets, which grew from 17.6 million US dollars in 2019 to 65.0 million US dollars in 2023. Additionally, accrued compensation saw a sharp rise from 1.9 million US dollars in 2019 to 12.4 million US dollars in 2023.
Gross Deferred Tax Liability Trends: Deferred tax liabilities remained relatively stable between 2020 and 2022, fluctuating between 58.3 million and 72.9 million US dollars, after a sharp drop from 131.5 million US dollars in 2019. However, a significant expansion occurred in 2023, with liabilities increasing to 142.5 million US dollars. This spike was primarily driven by two factors: a sharp increase in the amortization of trademarks, which rose to 76.5 million US dollars from 39.2 million US dollars in 2022, and a steady climb in depreciation liabilities, which reached 35.7 million US dollars in 2023 compared to 6.8 million US dollars in 2019. The emergence of a Bang transaction gain of 10.7 million US dollars in 2023 further contributed to the growth of liabilities.
Valuation Allowance and Net Position: The valuation allowance has remained relatively stable, ranging between 27.0 million and 40.5 million US dollars over the five-year period. Because the valuation allowance did not fluctuate significantly, the volatility in the net deferred tax asset position is primarily attributable to the operational timing differences in the gross assets and liabilities. The transition from a high net asset position in 2020 to a lower position in 2023 reflects a shift toward larger future taxable temporary differences, particularly regarding asset amortization and depreciation.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Monster Beverage Corp., deferred tax assets and liabilities, classification

US$ in thousands

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred tax assets	175,003)	177,039)	225,221)	241,650)	84,777)
	Deferred tax liabilities	28,896)	—)	—)	—)	—)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The analysis of deferred tax accounts reveals a volatile trend in assets paired with the recent emergence of liabilities. The company's tax position shifted from a period of rapid asset accumulation to a phase of gradual reduction and the recognition of new obligations.

Deferred Tax Assets Trend: A substantial increase in deferred tax assets occurred between 2019 and 2020, where the balance rose from $84.78 million to a peak of $241.65 million. Following this spike, a steady downward trend is observed, with assets declining to $175.00 million by December 31, 2023. This pattern suggests a significant recognition of temporary differences in 2020, followed by a multi-year period of realization or reversal.
Deferred Tax Liabilities Emergence: No deferred tax liabilities were recorded for the period spanning 2019 through 2022. However, as of December 31, 2023, a liability of $28.90 million was recognized, indicating the development of taxable temporary differences in the final year of the observed period.
Net Deferred Tax Position: Despite the introduction of liabilities in 2023 and the general erosion of asset balances since 2020, a net deferred tax asset position is maintained. The value of deferred tax assets continues to exceed deferred tax liabilities, though the net margin has narrowed compared to previous years.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Monster Beverage Corp., Financial Data: Reported vs. Adjusted

Monster Beverage Corp., adjustments to financial statements

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	9,686,522)	8,293,105)	7,804,784)	6,202,716)	5,150,352)
Less: Noncurrent deferred tax assets, net	175,003)	177,039)	225,221)	241,650)	84,777)
Total assets (adjusted)	9,511,519)	8,116,066)	7,579,563)	5,961,066)	5,065,575)
Adjustment to Total Liabilities
Total liabilities (as reported)	1,457,778)	1,268,064)	1,237,833)	1,041,856)	979,071)
Less: Noncurrent deferred tax liabilities, net	28,896)	—)	—)	—)	—)
Total liabilities (adjusted)	1,428,882)	1,268,064)	1,237,833)	1,041,856)	979,071)
Adjustment to Stockholders’ Equity
Stockholders’ equity (as reported)	8,228,744)	7,025,041)	6,566,951)	5,160,860)	4,171,281)
Less: Net deferred tax assets (liabilities)	146,107)	177,039)	225,221)	241,650)	84,777)
Stockholders’ equity (adjusted)	8,082,637)	6,848,002)	6,341,730)	4,919,210)	4,086,504)
Adjustment to Net Income
Net income (as reported)	1,630,988)	1,191,624)	1,377,475)	1,409,594)	1,107,835)
Add: Deferred income tax expense (benefit)	30,677)	45,453)	24,531)	(151,485)	(2,777)
Net income (adjusted)	1,661,665)	1,237,077)	1,402,006)	1,258,109)	1,105,058)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

A consistent upward trajectory is observed in the financial position from 2019 through 2023. Reported total assets grew from US$ 5,150,352 thousand to US$ 9,686,522 thousand, while reported stockholders' equity increased from US$ 4,171,281 thousand to US$ 8,228,744 thousand over the same period. The removal of deferred tax elements results in a systematic reduction of the adjusted balance sheet values compared to the reported figures.

Asset and Liability Adjustments: A persistent gap exists between reported and adjusted total assets, indicating the continuous presence of deferred tax assets. This divergence peaked in 2020 with a difference of US$ 241,650 thousand and moderated to US$ 175,003 thousand by 2023. Regarding liabilities, reported and adjusted values remained identical from 2019 to 2022, suggesting an absence of significant deferred tax liabilities during those years. However, a divergence emerged in 2023, where adjusted total liabilities were reduced by US$ 28,896 thousand compared to reported figures.
Impact on Stockholders' Equity: Adjusted stockholders' equity is consistently lower than reported equity, reflecting the net effect of removing deferred tax assets and liabilities. The magnitude of this adjustment mirrored the asset reduction in 2019 (US$ 84,777 thousand) and 2020 (US$ 241,650 thousand). By 2023, the equity adjustment was US$ 146,107 thousand, which is lower than the asset adjustment for that year due to the simultaneous removal of deferred tax liabilities.
Net Income Variance: The relationship between reported and adjusted net income shifted over the five-year period. In 2019 and 2020, reported net income exceeded adjusted net income, with the largest variance occurring in 2020 (a difference of US$ 151,485 thousand). Starting in 2021, the trend reversed; adjusted net income became consistently higher than reported net income, with increases of US$ 24,531 thousand in 2021, US$ 45,453 thousand in 2022, and US$ 30,677 thousand in 2023. This shift suggests a change in the nature of tax adjustments, moving from a reduction of earnings to an augmentation of earnings upon the removal of deferred tax impacts.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

Monster Beverage Corp., Financial Ratios: Reported vs. Adjusted

Monster Beverage Corp., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net Profit Margin
Reported net profit margin	22.84%	18.88%	24.86%	30.65%	26.37%
Adjusted net profit margin	23.27%	19.60%	25.30%	27.36%	26.31%
Total Asset Turnover
Reported total asset turnover	0.74	0.76	0.71	0.74	0.82
Adjusted total asset turnover	0.75	0.78	0.73	0.77	0.83
Financial Leverage
Reported financial leverage	1.18	1.18	1.19	1.20	1.23
Adjusted financial leverage	1.18	1.19	1.20	1.21	1.24
Return on Equity (ROE)
Reported ROE	19.82%	16.96%	20.98%	27.31%	26.56%
Adjusted ROE	20.56%	18.06%	22.11%	25.58%	27.04%
Return on Assets (ROA)
Reported ROA	16.84%	14.37%	17.65%	22.73%	21.51%
Adjusted ROA	17.47%	15.24%	18.50%	21.11%	21.82%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

An analysis of the financial performance from 2019 to 2023 reveals a period of volatility in profitability and a steady stability in capital structure, with the removal of deferred taxes providing a more normalized view of operational efficiency.

Profitability Margins: The reported net profit margin experienced significant fluctuations, peaking at 30.65% in 2020 before declining to a low of 18.88% in 2022 and recovering to 22.84% in 2023. The adjusted net profit margin exhibits a similar trend but reduces the peak observed in 2020 to 27.36%, suggesting that deferred tax benefits artificially inflated reported profitability during that period. Conversely, in 2022 and 2023, the adjusted margins were higher than reported, indicating that deferred tax expenses weighed on the reported bottom line.
Asset Utilization and Efficiency: Total asset turnover shows a general downward trend, moving from a reported 0.82 in 2019 to 0.74 in 2023. However, the adjusted asset turnover consistently remains higher than the reported figure across all five years. This discrepancy indicates that the removal of deferred tax liabilities results in a more favorable asset turnover ratio, suggesting that these tax obligations were inflating the balance sheet without contributing to revenue generation.
Financial Leverage: Financial leverage remained remarkably stable throughout the analyzed period. Reported leverage decreased slightly from 1.23 in 2019 to 1.18 in 2023. The variance between reported and adjusted leverage is minimal, demonstrating that deferred taxes have a negligible impact on the overall capital structure and the company's reliance on debt relative to equity.
Returns on Equity and Assets: Both Return on Equity (ROE) and Return on Assets (ROA) followed a cyclical pattern, with a peak in 2020 and a trough in 2022. From 2021 through 2023, the adjusted ROE and ROA were consistently higher than the reported figures. For instance, by 2023, the adjusted ROE of 20.56% surpassed the reported 19.82%, and the adjusted ROA of 17.47% exceeded the reported 16.84%. This suggests that when deferred tax distortions are removed, the actual earning power of the company's equity and asset base is higher than what is traditionally reported.

Overall, the adjustment process reveals that deferred taxes have historically introduced volatility into the reported margins and understated the company's efficiency and return ratios in the latter half of the period. While the reported figures show a decline in performance from 2020 to 2022, the adjusted metrics suggest a slightly more resilient operational core.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,630,988)	1,191,624)	1,377,475)	1,409,594)	1,107,835)
Net sales	7,140,027)	6,311,050)	5,541,352)	4,598,638)	4,200,819)
Profitability Ratio
Net profit margin¹	22.84%	18.88%	24.86%	30.65%	26.37%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,661,665)	1,237,077)	1,402,006)	1,258,109)	1,105,058)
Net sales	7,140,027)	6,311,050)	5,541,352)	4,598,638)	4,200,819)
Profitability Ratio
Adjusted net profit margin²	23.27%	19.60%	25.30%	27.36%	26.31%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,630,988 ÷ 7,140,027 = 22.84%

² Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 1,661,665 ÷ 7,140,027 = 23.27%

Analysis of financial performance from 2019 to 2023 indicates a period of volatility in both net income and profitability margins. While the period concluded with a five-year high in net income, the overall trend in profit margins suggests increased pressure on earnings relative to revenue during the latter half of the analyzed period.

Net Income Trajectory: Adjusted net income experienced overall growth, increasing from US$ 1,105,058 thousand in 2019 to US$ 1,661,665 thousand in 2023. This progression was non-linear, as a notable contraction occurred in 2022, when adjusted net income dropped to US$ 1,237,077 thousand, representing a decline from the 2021 peak of US$ 1,402,006 thousand.
Net Profit Margin Analysis: The adjusted net profit margin reached a peak of 27.36% in 2020 before entering a period of decline, reaching a low of 19.60% in 2022. Although the margin recovered to 23.27% by December 31, 2023, it remains below the levels observed in 2019 (26.31%) and 2021 (25.30%).
Comparison of Reported and Adjusted Metrics: A comparison between reported and adjusted figures highlights the impact of non-recurring items on financial outcomes. In 2020, the reported net profit margin (30.65%) significantly exceeded the adjusted margin (27.36%), indicating a one-time positive impact on earnings. Conversely, in 2022, the reported margin (18.88%) fell below the adjusted margin (19.60%), suggesting that non-recurring expenses negatively influenced the reported results.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net sales	7,140,027)	6,311,050)	5,541,352)	4,598,638)	4,200,819)
Total assets	9,686,522)	8,293,105)	7,804,784)	6,202,716)	5,150,352)
Activity Ratio
Total asset turnover¹	0.74	0.76	0.71	0.74	0.82
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales	7,140,027)	6,311,050)	5,541,352)	4,598,638)	4,200,819)
Adjusted total assets	9,511,519)	8,116,066)	7,579,563)	5,961,066)	5,065,575)
Activity Ratio
Adjusted total asset turnover²	0.75	0.78	0.73	0.77	0.83

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 7,140,027 ÷ 9,686,522 = 0.74

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 7,140,027 ÷ 9,511,519 = 0.75

A consistent upward trajectory is observed in the growth of the asset base between 2019 and 2023. Reported total assets increased from 5,150,352 thousand USD to 9,686,522 thousand USD over the five-year period, representing a significant expansion of the balance sheet. Adjusted total assets followed a nearly identical growth pattern, rising from 5,065,575 thousand USD in 2019 to 9,511,519 thousand USD by the end of 2023.

Asset Utilization Trends: The reported total asset turnover ratio exhibited a declining trend in the early part of the period, falling from 0.82 in 2019 to a low of 0.71 in 2021. A partial recovery occurred in 2022, with the ratio rising to 0.76, before settling at 0.74 in 2023. This suggests a period of decreasing efficiency in generating revenue per unit of asset, followed by a stabilization phase.
Adjusted Asset Turnover Analysis: The adjusted total asset turnover ratio consistently remained higher than the reported ratio across all five years. This metric peaked at 0.83 in 2019, declined to 0.73 in 2021, recovered to 0.78 in 2022, and ended the period at 0.75 in 2023. The correlation between the reported and adjusted turnover ratios indicates that while adjustments improve the perceived efficiency, the underlying trend of volatility remains the same.
Asset Base vs. Efficiency Correlation: The continuous increase in total assets did not result in a linear increase in asset turnover. Instead, the expansion of the asset base was accompanied by a general contraction in the turnover ratio from 2019 to 2021, implying that asset growth initially outpaced revenue growth. The subsequent stabilization of the turnover ratio in 2022 and 2023 suggests a better alignment between the scale of investment and revenue generation.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Total assets	9,686,522)	8,293,105)	7,804,784)	6,202,716)	5,150,352)
Stockholders’ equity	8,228,744)	7,025,041)	6,566,951)	5,160,860)	4,171,281)
Solvency Ratio
Financial leverage¹	1.18	1.18	1.19	1.20	1.23
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets	9,511,519)	8,116,066)	7,579,563)	5,961,066)	5,065,575)
Adjusted stockholders’ equity	8,082,637)	6,848,002)	6,341,730)	4,919,210)	4,086,504)
Solvency Ratio
Adjusted financial leverage²	1.18	1.19	1.20	1.21	1.24

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Stockholders’ equity
= 9,686,522 ÷ 8,228,744 = 1.18

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity
= 9,511,519 ÷ 8,082,637 = 1.18

The financial trajectory from 2019 to 2023 is characterized by consistent growth in the balance sheet's scale and a simultaneous reduction in financial leverage. Both total assets and stockholders' equity have increased substantially over the five-year period, reflecting a strengthening capital base and expanded asset holdings.

Asset and Equity Growth: Reported total assets grew from 5,150,352 thousand US$ in 2019 to 9,686,522 thousand US$ by the end of 2023. This expansion is mirrored in the reported stockholders' equity, which rose from 4,171,281 thousand US$ to 8,228,744 thousand US$. The growth in equity has closely paced the growth in assets, which has contributed to the overall stabilization of the company's solvency profile.
Financial Leverage Trends: A steady downward trend is observed in both reported and adjusted financial leverage ratios. Reported financial leverage declined from 1.23 in 2019 to 1.18 in 2023. Adjusted financial leverage followed a nearly identical path, decreasing from 1.24 in 2019 to 1.18 in 2023. This indicates a gradual reduction in the proportion of assets financed through liabilities relative to equity.
Impact of Adjusted Tax Considerations: Adjusted total assets and adjusted stockholders' equity remained consistently lower than their reported counterparts throughout the period. For instance, in 2023, adjusted stockholders' equity was 8,082,637 thousand US$ compared to the reported 8,228,744 thousand US$. Despite these differences in absolute values, the impact on the leverage ratio was minimal. The gap between reported and adjusted leverage narrowed over time, eventually converging at 1.18 by December 31, 2023, suggesting that tax-related adjustments have a diminishing effect on the leverage ratio as the balance sheet expands.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,630,988)	1,191,624)	1,377,475)	1,409,594)	1,107,835)
Stockholders’ equity	8,228,744)	7,025,041)	6,566,951)	5,160,860)	4,171,281)
Profitability Ratio
ROE¹	19.82%	16.96%	20.98%	27.31%	26.56%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,661,665)	1,237,077)	1,402,006)	1,258,109)	1,105,058)
Adjusted stockholders’ equity	8,082,637)	6,848,002)	6,341,730)	4,919,210)	4,086,504)
Profitability Ratio
Adjusted ROE²	20.56%	18.06%	22.11%	25.58%	27.04%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 1,630,988 ÷ 8,228,744 = 19.82%

² Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity
= 100 × 1,661,665 ÷ 8,082,637 = 20.56%

An analysis of the financial performance from 2019 to 2023 reveals a period of significant equity growth and fluctuating profitability, resulting in a general decline in return on equity despite a recovery in the final year.

Net Income Trends: Both reported and adjusted net income exhibit volatility over the five-year period. Reported net income peaked in 2023 at 1,630,988 thousand US dollars, following a dip in 2022. Adjusted net income demonstrates a similar trajectory, though it consistently diverged from reported figures starting in 2020, ending the period at a higher value of 1,661,665 thousand US dollars in 2023.
Stockholders’ Equity Growth: A consistent and substantial upward trend is observed in stockholders' equity. Reported equity increased from 4,171,281 thousand US dollars in 2019 to 8,228,744 thousand US dollars in 2023, nearly doubling over the timeframe. Adjusted stockholders' equity followed a nearly identical growth pattern, maintaining a slightly lower valuation than the reported figures throughout the period.
Return on Equity (ROE) Analysis: The reported ROE experienced a downward trend, falling from a peak of 27.31% in 2020 to a low of 16.96% in 2022, before recovering to 19.82% in 2023. This decline is primarily attributable to the rate of equity accumulation outpacing the growth of net income.
Reported versus Adjusted ROE Variance: Adjusted ROE provided a more optimistic view of capital efficiency than reported ROE from 2021 onward. While the reported ROE reached its nadir in 2022, the adjusted ROE remained higher at 18.06%. By 2023, the adjusted ROE stood at 20.56%, indicating that the adjustments made to net income and equity positively impact the perceived return on investment.

AI Ask an analyst for more

Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.

How can I help you?

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in thousands)
Net income	1,630,988)	1,191,624)	1,377,475)	1,409,594)	1,107,835)
Total assets	9,686,522)	8,293,105)	7,804,784)	6,202,716)	5,150,352)
Profitability Ratio
ROA¹	16.84%	14.37%	17.65%	22.73%	21.51%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income	1,661,665)	1,237,077)	1,402,006)	1,258,109)	1,105,058)
Adjusted total assets	9,511,519)	8,116,066)	7,579,563)	5,961,066)	5,065,575)
Profitability Ratio
Adjusted ROA²	17.47%	15.24%	18.50%	21.11%	21.82%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income ÷ Total assets
= 100 × 1,630,988 ÷ 9,686,522 = 16.84%

² Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,661,665 ÷ 9,511,519 = 17.47%

The financial trajectory from 2019 to 2023 is characterized by a consistent expansion of the asset base alongside fluctuating net income levels, resulting in a volatile trend for return on assets (ROA).

Net Income Performance: Reported net income exhibited variability, rising from 1,107,835 thousand US$ in 2019 to a peak of 1,630,988 thousand US$ in 2023, despite a notable dip in 2022. Adjusted net income followed a similar trajectory, though it remained more resilient during the 2021 period, reaching its highest point of 1,661,665 thousand US$ in 2023.
Asset Base Expansion: A steady and significant increase in total assets is observed over the five-year period. Reported total assets grew from 5,150,352 thousand US$ in 2019 to 9,686,522 thousand US$ by the end of 2023. This growth pattern is mirrored in the adjusted total assets, which rose from 5,065,575 thousand US$ to 9,511,519 thousand US$ in the same timeframe.
Return on Assets (ROA) Trends: Both reported and adjusted ROA experienced a general downward trend between 2020 and 2022. The reported ROA declined from a peak of 22.73% in 2020 to a low of 14.37% in 2022. Similarly, the adjusted ROA decreased from 21.82% in 2019 to 15.24% in 2022. This decline suggests that asset growth outpaced income growth during this interval. However, a recovery is evident in 2023, with the adjusted ROA rising to 17.47%.
Comparative Analysis of Adjusted vs. Reported Metrics: The adjusted ROA consistently remained higher than the reported ROA from 2021 through 2023, indicating that adjustments to net income and total assets provided a more favorable view of asset utilization efficiency. The gap between reported and adjusted ROA was most pronounced in 2021 and 2022, suggesting that non-recurring items or tax adjustments had a more significant impact on reported figures during those years.

AI Ask an analyst for more