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NVIDIA Corp. (NASDAQ:NVDA)

Analysis of Investments

Advanced level

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

NVIDIA Corp., adjustment to net income

US$ in millions

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12 months ended Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Jan 25, 2015
Net income (as reported) 2,796  4,141  3,047  1,666  614  631 
Add: Net change in unrealized gain (loss) on available-for-sale debt securities 8  11  (4) (16) (8) 3 
Net income (adjusted) 2,804  4,152  3,043  1,650  606  634 

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12).

Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)

NVIDIA Corp., adjusted profitability ratios

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Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Jan 25, 2015
Net Profit Margin
Reported net profit margin 25.61% 35.34% 31.37% 24.11% 12.26% 13.47%
Adjusted net profit margin 25.68% 35.44% 31.33% 23.88% 12.10% 13.53%
Return on Equity (ROE)
Reported ROE 22.91% 44.33% 40.78% 28.91% 13.74% 14.27%
Adjusted ROE 22.98% 44.44% 40.73% 28.64% 13.56% 14.34%
Return on Assets (ROA)
Reported ROA 16.15% 31.15% 27.11% 16.93% 8.33% 8.76%
Adjusted ROA 16.19% 31.24% 27.07% 16.77% 8.22% 8.80%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12).

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. NVIDIA Corp.’s adjusted net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. NVIDIA Corp.’s adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. NVIDIA Corp.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

NVIDIA Corp., Profitability Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

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Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Jan 25, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 2,796  4,141  3,047  1,666  614  631 
Revenue 10,918  11,716  9,714  6,910  5,010  4,682 
Profitability Ratio
Net profit margin1 25.61% 35.34% 31.37% 24.11% 12.26% 13.47%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,804  4,152  3,043  1,650  606  634 
Revenue 10,918  11,716  9,714  6,910  5,010  4,682 
Profitability Ratio
Adjusted net profit margin2 25.68% 35.44% 31.33% 23.88% 12.10% 13.53%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × 2,796 ÷ 10,918 = 25.61%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 2,804 ÷ 10,918 = 25.68%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. NVIDIA Corp.’s adjusted net profit margin ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Equity (ROE)

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Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Jan 25, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 2,796  4,141  3,047  1,666  614  631 
Shareholders’ equity 12,204  9,342  7,471  5,762  4,469  4,418 
Profitability Ratio
ROE1 22.91% 44.33% 40.78% 28.91% 13.74% 14.27%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,804  4,152  3,043  1,650  606  634 
Shareholders’ equity 12,204  9,342  7,471  5,762  4,469  4,418 
Profitability Ratio
Adjusted ROE2 22.98% 44.44% 40.73% 28.64% 13.56% 14.34%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12).

2020 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 2,796 ÷ 12,204 = 22.91%

2 Adjusted ROE = 100 × Adjusted net income ÷ Shareholders’ equity
= 100 × 2,804 ÷ 12,204 = 22.98%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. NVIDIA Corp.’s adjusted ROE improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Assets (ROA)

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Jan 26, 2020 Jan 27, 2019 Jan 28, 2018 Jan 29, 2017 Jan 31, 2016 Jan 25, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 2,796  4,141  3,047  1,666  614  631 
Total assets 17,315  13,292  11,241  9,841  7,370  7,201 
Profitability Ratio
ROA1 16.15% 31.15% 27.11% 16.93% 8.33% 8.76%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,804  4,152  3,043  1,650  606  634 
Total assets 17,315  13,292  11,241  9,841  7,370  7,201 
Profitability Ratio
Adjusted ROA2 16.19% 31.24% 27.07% 16.77% 8.22% 8.80%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01), 10-K (filing date: 2016-03-17), 10-K (filing date: 2015-03-12).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 2,796 ÷ 17,315 = 16.15%

2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 2,804 ÷ 17,315 = 16.19%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. NVIDIA Corp.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.