Stock Analysis on Net

NVIDIA Corp. (NASDAQ:NVDA)

Analysis of Goodwill and Intangible Assets

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Goodwill and Intangible Asset Disclosure

NVIDIA Corp., balance sheet: goodwill and intangible assets

US$ in millions

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Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
Goodwill 4,193  618  618  618  618  618 
Acquisition-related intangible assets 3,280  195  195  195  193  193 
Patents and licensed technology 706  520  491  469  468  462 
Amortizable intangible assets, gross carrying amount 3,986  715  686  664  661  655 
Accumulated amortization (1,249) (666) (641) (612) (557) (489)
Amortizable intangible assets, net carrying amount 2,737  49  45  52  104  166 
Goodwill and amortizable intangible assets 6,930  667  663  670  722  784 

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

Item Description The company
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.
Goodwill and amortizable intangible assets Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. NVIDIA Corp. goodwill and amortizable intangible assets increased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Goodwill

NVIDIA Corp., adjustments to financial statements

US$ in millions

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Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
Adjustment to Total Assets
Total assets (as reported) 28,791  17,315  13,292  11,241  9,841  7,370 
Less: Goodwill 4,193  618  618  618  618  618 
Total assets (adjusted) 24,598  16,697  12,674  10,623  9,223  6,752 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 16,893  12,204  9,342  7,471  5,762  4,469 
Less: Goodwill 4,193  618  618  618  618  618 
Shareholders’ equity (adjusted) 12,700  11,586  8,724  6,853  5,144  3,851 

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).


NVIDIA Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

NVIDIA Corp., adjusted financial ratios

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Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
Total Asset Turnover
Reported total asset turnover 0.58 0.63 0.88 0.86 0.70 0.68
Adjusted total asset turnover 0.68 0.65 0.92 0.91 0.75 0.74
Financial Leverage
Reported financial leverage 1.70 1.42 1.42 1.50 1.71 1.65
Adjusted financial leverage 1.94 1.44 1.45 1.55 1.79 1.75
Return on Equity (ROE)
Reported ROE 25.64% 22.91% 44.33% 40.78% 28.91% 13.74%
Adjusted ROE 34.11% 24.13% 47.47% 44.46% 32.39% 15.94%
Return on Assets (ROA)
Reported ROA 15.05% 16.15% 31.15% 27.11% 16.93% 8.33%
Adjusted ROA 17.61% 16.75% 32.67% 28.68% 18.06% 9.09%

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. NVIDIA Corp. adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.
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.
NVIDIA Corp. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. NVIDIA Corp. adjusted ROE deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. NVIDIA Corp. adjusted ROA deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

NVIDIA Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

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Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Revenue 16,675  10,918  11,716  9,714  6,910  5,010 
Total assets 28,791  17,315  13,292  11,241  9,841  7,370 
Activity Ratio
Total asset turnover1 0.58 0.63 0.88 0.86 0.70 0.68
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue 16,675  10,918  11,716  9,714  6,910  5,010 
Adjusted total assets 24,598  16,697  12,674  10,623  9,223  6,752 
Activity Ratio
Adjusted total asset turnover2 0.68 0.65 0.92 0.91 0.75 0.74

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

2021 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 16,675 ÷ 28,791 = 0.58

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 16,675 ÷ 24,598 = 0.68

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. NVIDIA Corp. adjusted total asset turnover ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 28,791  17,315  13,292  11,241  9,841  7,370 
Shareholders’ equity 16,893  12,204  9,342  7,471  5,762  4,469 
Solvency Ratio
Financial leverage1 1.70 1.42 1.42 1.50 1.71 1.65
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets 24,598  16,697  12,674  10,623  9,223  6,752 
Adjusted shareholders’ equity 12,700  11,586  8,724  6,853  5,144  3,851 
Solvency Ratio
Adjusted financial leverage2 1.94 1.44 1.45 1.55 1.79 1.75

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 28,791 ÷ 16,893 = 1.70

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 24,598 ÷ 12,700 = 1.94

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.
NVIDIA Corp. adjusted financial leverage ratio decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Adjusted Return on Equity (ROE)

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Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 4,332  2,796  4,141  3,047  1,666  614 
Shareholders’ equity 16,893  12,204  9,342  7,471  5,762  4,469 
Profitability Ratio
ROE1 25.64% 22.91% 44.33% 40.78% 28.91% 13.74%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 4,332  2,796  4,141  3,047  1,666  614 
Adjusted shareholders’ equity 12,700  11,586  8,724  6,853  5,144  3,851 
Profitability Ratio
Adjusted ROE2 34.11% 24.13% 47.47% 44.46% 32.39% 15.94%

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

2021 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 4,332 ÷ 16,893 = 25.64%

2 Adjusted ROE = 100 × Net income ÷ Adjusted shareholders’ equity
= 100 × 4,332 ÷ 12,700 = 34.11%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as net income divided by adjusted shareholders’ equity. NVIDIA Corp. adjusted ROE deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Jan 31, 2021 Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 4,332  2,796  4,141  3,047  1,666  614 
Total assets 28,791  17,315  13,292  11,241  9,841  7,370 
Profitability Ratio
ROA1 15.05% 16.15% 31.15% 27.11% 16.93% 8.33%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income 4,332  2,796  4,141  3,047  1,666  614 
Adjusted total assets 24,598  16,697  12,674  10,623  9,223  6,752 
Profitability Ratio
Adjusted ROA2 17.61% 16.75% 32.67% 28.68% 18.06% 9.09%

Based on: 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26), 10-K (reporting date: 2019-01-27), 10-K (reporting date: 2018-01-28), 10-K (reporting date: 2017-01-29), 10-K (reporting date: 2016-01-31).

2021 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 4,332 ÷ 28,791 = 15.05%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 4,332 ÷ 24,598 = 17.61%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. NVIDIA Corp. adjusted ROA deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.