Paramount Global (NASDAQ:PARA)

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Paramount Global, effective income tax rate (EITR) reconciliation

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	U.S. federal statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
	Effective income tax rate	17.93%	12.41%	17.00%	-0.27%	11.93%

Based on: 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), 10-K (reporting date: 2018-12-31).

The income tax profile from 2018 through 2022 is characterized by a consistent divergence between the U.S. federal statutory income tax rate and the effective income tax rate. While the statutory rate remained constant at 21.00% throughout the period, the effective rate exhibited significant volatility, remaining below the statutory benchmark in every reported year.

Statutory Rate Stability: The U.S. federal statutory income tax rate maintained a fixed position at 21.00% for all five years of the analysis, providing a stable baseline for evaluating tax efficiency and deviations.
Effective Tax Rate Volatility: The effective income tax rate demonstrated substantial fluctuations, starting at 11.93% in 2018 before dropping to a negative value of -0.27% in 2019. Following this low, the rate recovered to 17.00% in 2020, dipped slightly to 12.41% in 2021, and eventually climbed to its period peak of 17.93% in 2022.
Analysis of the 2019 Anomaly: The shift to a negative effective tax rate in 2019 represents a significant departure from the overall trend. This suggests the realization of substantial tax benefits, the recognition of deferred tax assets, or the impact of significant losses that resulted in a net tax credit rather than a tax liability.
Recent Convergence Trends: From 2020 to 2022, a general trend toward the statutory rate is observable, despite a moderate decline in 2021. The increase to 17.93% by the end of 2022 indicates a narrowing gap between the effective and statutory rates compared to the 2018-2021 period.

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Paramount Global, components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Reserves and other accrued liabilities	430)	369)	476)	540)	339)
Pension, postretirement and other employee benefits	534)	679)	772)	761)	492)
Lease liability	425)	465)	466)	531)	—)
Tax credit and loss carryforwards	397)	428)	448)	394)	723)
Interest limitation carryforward	93)	—)	—)	—)	—)
Capitalized costs	49)	—)	—)	—)	—)
Other	11)	23)	56)	85)	80)
Deferred income tax assets	1,939)	1,964)	2,218)	2,311)	1,634)
Valuation allowance	(488)	(581)	(593)	(550)	(719)
Deferred income tax assets, net	1,451)	1,383)	1,625)	1,761)	915)
Intangible assets	(643)	(523)	(460)	(241)	(844)
Unbilled licensing receivables	—)	(76)	(237)	(390)	(401)
Lease asset	(344)	(391)	(400)	(467)	—)
Property, equipment and other assets	(180)	(171)	(198)	(152)	(40)
Financing obligations	(69)	(65)	(71)	(72)	—)
Other	(50)	(14)	(44)	—)	—)
Deferred income tax liabilities	(1,286)	(1,240)	(1,410)	(1,322)	(1,285)
Deferred income tax assets (liabilities), net	165)	143)	215)	439)	(370)

Based on: 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), 10-K (reporting date: 2018-12-31).

The net deferred tax position shifted from a liability of 370 million USD in 2018 to a net asset position in 2019, peaking at 439 million USD before settling at 165 million USD by December 31, 2022. This indicates a fundamental transition in the balance of temporary tax differences over the five-year period.

Analysis of Deferred Tax Assets: Gross deferred tax assets experienced an initial surge from 1.63 billion USD in 2018 to 2.31 billion USD in 2019, followed by a gradual contraction to 1.94 billion USD in 2022. A significant driver of this volatility was the pension, postretirement, and other employee benefits component, which rose from 492 million USD in 2018 to a peak of 772 million USD in 2020 before declining to 534 million USD in 2022. Simultaneously, tax credit and loss carryforwards saw a marked decrease from 723 million USD in 2018 to 397 million USD in 2022, suggesting the utilization of these tax benefits over time.
Valuation Allowance Trends: The valuation allowance, used to offset deferred tax assets that may not be realized, trended downward from 719 million USD in 2018 to 488 million USD in 2022. The narrowing of this allowance relative to gross assets implies an increase in management's confidence regarding the recoverability of the deferred tax assets.
Analysis of Deferred Tax Liabilities: Total deferred tax liabilities remained relatively consistent, fluctuating within a range of 1.24 billion USD to 1.41 billion USD. The most significant volatility occurred within intangible assets, where the liability dropped sharply from 844 million USD in 2018 to 241 million USD in 2019, before climbing back to 643 million USD by 2022. Conversely, liabilities related to property, equipment, and other assets exhibited a steady upward trend, increasing from 40 million USD in 2018 to 180 million USD in 2022.
Specific Balance Sheet Adjustments: Lease-related tax impacts became prominent starting in 2019, with lease liability assets and lease asset liabilities appearing at 531 million USD and 467 million USD, respectively; both items gradually decreased through 2022. Additionally, unbilled licensing receivables, which represented a 401 million USD liability in 2018, were progressively reduced until they were no longer a factor by the end of the analysis period. New components emerged in 2022, including interest limitation carryforwards of 93 million USD and capitalized costs of 49 million USD.

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Paramount Global, deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
	Deferred income tax assets, net	1,242)	1,206)	993)	939)	29)
	Deferred income tax liabilities	1,077)	1,063)	778)	500)	399)

Based on: 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), 10-K (reporting date: 2018-12-31).

A consistent upward trajectory is observed in both deferred income tax assets and liabilities from 2018 through 2022. The expansion of these balances suggests a growing volume of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and their respective tax bases.

Deferred Income Tax Assets, Net: A substantial increase is evident, starting from 29 million US dollars in 2018 and rising to 1,242 million US dollars by 2022. The most significant growth occurred between 2018 and 2019, where the balance increased by approximately 3,138%, followed by a steady climb over the subsequent three years.
Deferred Income Tax Liabilities: Liabilities grew steadily from 399 million US dollars in 2018 to 1,077 million US dollars in 2022. This represents a total increase of approximately 170% over the five-year period, with the most rapid growth occurring between 2019 and 2021.
Net Deferred Tax Position: The net position shifted from a net deferred tax liability of 370 million US dollars in 2018 to a net deferred tax asset position beginning in 2019. While the net asset position reached 439 million US dollars in 2019, it moderately contracted and stabilized between 143 million and 215 million US dollars from 2020 to 2022, as the growth in liabilities partially offset the gains in assets.

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Paramount Global, Financial Data: Reported vs. Adjusted

Paramount Global, adjustments to financial statements

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Adjustment to Total Assets
Total assets (as reported)	58,393)	58,620)	52,663)	49,519)	21,859)
Less: Noncurrent deferred tax assets, net	1,242)	1,206)	993)	939)	29)
Total assets (adjusted)	57,151)	57,414)	51,670)	48,580)	21,830)
Adjustment to Total Liabilities
Total liabilities (as reported)	34,787)	35,543)	36,410)	35,976)	19,055)
Less: Noncurrent deferred tax liabilities, net	1,077)	1,063)	778)	500)	399)
Total liabilities (adjusted)	33,710)	34,480)	35,632)	35,476)	18,656)
Adjustment to Total Paramount Stockholders’ Equity
Total Paramount stockholders’ equity (as reported)	23,036)	22,402)	15,371)	13,207)	2,804)
Less: Net deferred tax assets (liabilities)	165)	143)	215)	439)	(370)
Total Paramount stockholders’ equity (adjusted)	22,871)	22,259)	15,156)	12,768)	3,174)
Adjustment to Net Earnings Attributable To Paramount
Net earnings attributable to Paramount (as reported)	1,104)	4,543)	2,422)	3,308)	1,960)
Add: Deferred income tax expense (benefit)	(106)	90)	122)	(769)	44)
Net earnings attributable to Paramount (adjusted)	998)	4,633)	2,544)	2,539)	2,004)

Based on: 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), 10-K (reporting date: 2018-12-31).

A comprehensive analysis of the financial position between 2018 and 2022 reveals a significant expansion in the balance sheet, followed by a period of stabilization. Total assets experienced substantial growth, increasing from 21,859 million US dollars in 2018 to a peak of 58,620 million US dollars in 2021, before slightly declining in 2022. This growth is mirrored in the reported stockholders' equity, which rose from 2,804 million US dollars to 23,036 million US dollars over the same period.

Impact of Deferred Tax Adjustments on Assets and Liabilities: A consistent variance is observed between reported and adjusted values. Adjusted total assets remained lower than reported total assets throughout the period, with the gap widening as the company grew. For instance, by December 31, 2022, the difference reached 1,242 million US dollars. Similarly, adjusted total liabilities were consistently lower than reported liabilities, indicating that the removal of deferred tax liabilities reduces the overall debt profile of the organization. This liability adjustment increased from 399 million US dollars in 2018 to 1,077 million US dollars in 2022.
Analysis of Stockholders' Equity Adjustments: The impact of removing deferred taxes on equity shifted over time. In 2018, adjusted equity was higher than reported equity, suggesting that deferred tax liabilities outweighed deferred tax assets. However, from 2019 through 2022, adjusted equity remained lower than reported equity. By 2022, the reported equity of 23,036 million US dollars was adjusted downward to 22,871 million US dollars, reflecting a net reduction in equity once deferred tax elements were excluded.
Net Earnings Volatility and Adjustments: Net earnings attributable to the company exhibited high volatility. A significant peak occurred in 2021 with reported earnings of 4,543 million US dollars, followed by a sharp contraction to 1,104 million US dollars in 2022. The adjustments to net earnings do not follow a uniform pattern; in some years, such as 2020 and 2021, adjusted earnings were higher than reported figures, while in 2019 and 2022, they were lower. This indicates that the impact of deferred taxes on the annual bottom line varied depending on the specific tax events of each fiscal year.

Overall, the removal of deferred taxes results in a leaner balance sheet characterized by lower total assets and lower total liabilities. While the growth trajectory of the company remained intact after these adjustments, the variations in net earnings suggest that deferred tax accounting has a non-linear impact on reported profitability.

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Paramount Global, Financial Ratios: Reported vs. Adjusted

Paramount Global, adjusted financial ratios

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net Profit Margin
Reported net profit margin	3.66%	15.89%	9.58%	11.89%	13.50%
Adjusted net profit margin	3.31%	16.21%	10.06%	9.13%	13.81%
Total Asset Turnover
Reported total asset turnover	0.52	0.49	0.48	0.56	0.66
Adjusted total asset turnover	0.53	0.50	0.49	0.57	0.66
Financial Leverage
Reported financial leverage	2.53	2.62	3.43	3.75	7.80
Adjusted financial leverage	2.50	2.58	3.41	3.80	6.88
Return on Equity (ROE)
Reported ROE	4.79%	20.28%	15.76%	25.05%	69.90%
Adjusted ROE	4.36%	20.81%	16.79%	19.89%	63.14%
Return on Assets (ROA)
Reported ROA	1.89%	7.75%	4.60%	6.68%	8.97%
Adjusted ROA	1.75%	8.07%	4.92%	5.23%	9.18%

Based on: 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), 10-K (reporting date: 2018-12-31).

The financial performance from 2018 to 2022 is characterized by a significant contraction in profitability and a systematic reduction in financial leverage. While there was a temporary recovery in efficiency and returns in 2021, the period ended with a sharp decline across all primary profitability metrics.

Profitability Margins: Reported net profit margins exhibited a volatile downward trajectory, falling from 13.50% in 2018 to 3.66% in 2022. A notable peak occurred in 2021 at 15.89% before the steep decline in the final year. The adjusted net profit margins followed a similar pattern, though they were lower than reported figures in 2019 and 2022, indicating that the removal of deferred taxes highlighted a more pronounced reduction in bottom-line efficiency during those periods.
Return on Equity (ROE) and Return on Assets (ROA): A precipitous decline in ROE is observed, with reported values dropping from 69.90% in 2018 to 4.79% in 2022. Adjusted ROE mirrored this trend, starting at 63.14% and ending at 4.36%. Similarly, ROA decreased from a reported 8.97% in 2018 to 1.89% in 2022. The convergence of reported and adjusted ROA and ROE in later years suggests that the impact of deferred taxes on these returns diminished over the five-year window.
Asset Utilization and Efficiency: Total asset turnover showed a steady decline from 2018 to 2020, moving from 0.66 to 0.48, followed by a marginal recovery to 0.52 by 2022. The variance between reported and adjusted asset turnover is minimal, indicating that deferred tax adjustments have a negligible effect on the measurement of asset efficiency.
Financial Leverage: A consistent and aggressive deleveraging trend is evident. Reported financial leverage decreased from 7.80 in 2018 to 2.53 in 2022. Adjusted leverage followed a nearly identical path, decreasing from 6.88 to 2.50. This suggests a strategic shift toward reducing debt reliance or an increase in the equity base relative to total assets.
Impact of Deferred Tax Adjustments: The discrepancy between reported and adjusted ratios was most prominent in 2018, particularly within ROE and financial leverage, where adjusted figures were notably lower. By 2022, the gap between reported and adjusted metrics narrowed significantly across all categories, suggesting that non-cash tax accounting items played a smaller role in the overall financial profile toward the end of the analyzed period.

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Paramount	1,104)	4,543)	2,422)	3,308)	1,960)
Revenues	30,154)	28,586)	25,285)	27,812)	14,514)
Profitability Ratio
Net profit margin¹	3.66%	15.89%	9.58%	11.89%	13.50%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Paramount	998)	4,633)	2,544)	2,539)	2,004)
Revenues	30,154)	28,586)	25,285)	27,812)	14,514)
Profitability Ratio
Adjusted net profit margin²	3.31%	16.21%	10.06%	9.13%	13.81%

Based on: 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), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Net profit margin = 100 × Net earnings attributable to Paramount ÷ Revenues
= 100 × 1,104 ÷ 30,154 = 3.66%

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to Paramount ÷ Revenues
= 100 × 998 ÷ 30,154 = 3.31%

The financial performance from 2018 to 2022 is characterized by significant volatility in both net earnings and profit margins, with a notable peak in 2021 followed by a sharp contraction in 2022.

Adjusted Net Earnings Trends: Adjusted net earnings experienced inconsistent growth, rising from US$ 2,004 million in 2018 to a peak of US$ 4,633 million in 2021. However, this growth was interrupted in 2019 and 2020, where earnings stabilized around the US$ 2,540 million mark. A severe decline occurred in 2022, with adjusted earnings falling to US$ 998 million, representing the lowest point in the five-year period.
Adjusted Net Profit Margin Analysis: The adjusted net profit margin mirrored the volatility of earnings, starting at 13.81% in 2018 and declining to 9.13% in 2019. A recovery trend was observed between 2020 and 2021, with the margin reaching a maximum of 16.21%. This upward trajectory reversed abruptly in 2022, as the margin collapsed to 3.31%, indicating a substantial decrease in operational efficiency or an increase in costs relative to revenue.
Comparison Between Reported and Adjusted Metrics: Variations between reported and adjusted figures suggest the impact of non-recurring items. In 2021, the adjusted net profit margin was slightly higher than the reported margin (16.21% versus 15.89%), whereas in 2019, the adjusted margin was significantly lower (9.13% versus 11.89%). By 2022, both metrics converged toward a low baseline, with the adjusted margin falling slightly below the reported margin at 3.31% compared to 3.66%.

The data indicates a critical downturn in profitability during the 2022 fiscal year. The simultaneous drop in both adjusted net earnings and adjusted net profit margin suggests that the decline was not merely a result of one-time accounting adjustments but reflected a broader erosion of the company's ability to convert revenue into profit.

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Revenues	30,154)	28,586)	25,285)	27,812)	14,514)
Total assets	58,393)	58,620)	52,663)	49,519)	21,859)
Activity Ratio
Total asset turnover¹	0.52	0.49	0.48	0.56	0.66
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues	30,154)	28,586)	25,285)	27,812)	14,514)
Adjusted total assets	57,151)	57,414)	51,670)	48,580)	21,830)
Activity Ratio
Adjusted total asset turnover²	0.53	0.50	0.49	0.57	0.66

Based on: 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), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Total asset turnover = Revenues ÷ Total assets
= 30,154 ÷ 58,393 = 0.52

² Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 30,154 ÷ 57,151 = 0.53

A significant expansion of the asset base is observed between 2018 and 2021, followed by a period of stabilization in 2022. This growth in assets coincided with an initial decline in asset turnover efficiency, which has since begun a gradual recovery.

Asset Base Expansion: Reported total assets grew substantially from US$ 21,859 million in 2018 to US$ 58,620 million in 2021. The most pronounced increase occurred between 2018 and 2019, where the asset base more than doubled. Adjusted total assets mirrored this trend, rising from US$ 21,830 million in 2018 to a peak of US$ 57,414 million in 2021, before declining slightly to US$ 57,151 million in 2022.
Adjusted Total Asset Turnover Trends: The adjusted total asset turnover ratio exhibited a downward trend in the early part of the period, falling from 0.66 in 2018 to a minimum of 0.49 in 2020. This indicates that the rapid accumulation of assets initially outpaced the corresponding growth in revenue. A corrective trend emerged after 2020, with the ratio improving to 0.50 in 2021 and reaching 0.53 by 2022.
Comparative Analysis of Reported and Adjusted Metrics: A consistent variance is noted between reported and adjusted figures. Adjusted total assets were systematically lower than reported total assets throughout the period. Consequently, the adjusted total asset turnover ratio remained marginally higher than the reported turnover ratio from 2019 through 2022, suggesting that the adjustments remove asset components that do not contribute directly to revenue generation.

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Total assets	58,393)	58,620)	52,663)	49,519)	21,859)
Total Paramount stockholders’ equity	23,036)	22,402)	15,371)	13,207)	2,804)
Solvency Ratio
Financial leverage¹	2.53	2.62	3.43	3.75	7.80
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	57,151)	57,414)	51,670)	48,580)	21,830)
Adjusted total Paramount stockholders’ equity	22,871)	22,259)	15,156)	12,768)	3,174)
Solvency Ratio
Adjusted financial leverage²	2.50	2.58	3.41	3.80	6.88

Based on: 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), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ Financial leverage = Total assets ÷ Total Paramount stockholders’ equity
= 58,393 ÷ 23,036 = 2.53

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Paramount stockholders’ equity
= 57,151 ÷ 22,871 = 2.50

An analysis of the financial position between 2018 and 2022 reveals a substantial expansion of the balance sheet coupled with a consistent reduction in financial leverage. Total assets experienced a significant increase, particularly between 2018 and 2019, before stabilizing at approximately 58 billion US dollars by the end of the period. This growth in assets was supported by a steady and significant increase in stockholders' equity, which grew from 2.8 billion US dollars in 2018 to over 23 billion US dollars by 2022.

Financial Leverage Trajectory: A pronounced downward trend is observed in both reported and adjusted financial leverage ratios. The reported leverage ratio decreased from 7.80 in 2018 to 2.53 in 2022, while the adjusted ratio fell from 6.88 to 2.50 over the same period. This indicates a systemic shift toward a more conservative capital structure and a reduced reliance on debt relative to equity.
Asset and Equity Expansion: Reported total assets more than doubled between 2018 and 2021, rising from 21.8 billion US dollars to 58.6 billion US dollars. Simultaneously, reported stockholders' equity grew by approximately 725% over the five-year window. The pace of equity growth exceeded the pace of asset growth, which served as the primary driver for the decline in leverage ratios.
Impact of Financial Adjustments: The variance between reported and adjusted figures remains marginal across all metrics. The adjusted financial leverage ratios closely mirror the reported ratios, suggesting that the adjustments applied to total assets and stockholders' equity do not materially alter the interpretation of the company's leverage profile or its overall solvency trend.

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Paramount	1,104)	4,543)	2,422)	3,308)	1,960)
Total Paramount stockholders’ equity	23,036)	22,402)	15,371)	13,207)	2,804)
Profitability Ratio
ROE¹	4.79%	20.28%	15.76%	25.05%	69.90%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Paramount	998)	4,633)	2,544)	2,539)	2,004)
Adjusted total Paramount stockholders’ equity	22,871)	22,259)	15,156)	12,768)	3,174)
Profitability Ratio
Adjusted ROE²	4.36%	20.81%	16.79%	19.89%	63.14%

Based on: 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), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROE = 100 × Net earnings attributable to Paramount ÷ Total Paramount stockholders’ equity
= 100 × 1,104 ÷ 23,036 = 4.79%

² Adjusted ROE = 100 × Adjusted net earnings attributable to Paramount ÷ Adjusted total Paramount stockholders’ equity
= 100 × 998 ÷ 22,871 = 4.36%

A comprehensive analysis of the financial performance from 2018 to 2022 reveals a significant contraction in Return on Equity (ROE), driven primarily by a substantial expansion of the stockholders' equity base and volatile net earnings. While equity increased consistently over the five-year period, profitability failed to maintain a commensurate growth rate, leading to a marked decline in capital efficiency.

Net Earnings Performance: Net earnings exhibited significant volatility throughout the analyzed period. Reported net earnings peaked at 4,543 million USD in 2021 before experiencing a sharp decline to 1,104 million USD in 2022. Adjusted net earnings followed a similar trajectory, reaching a high of 4,633 million USD in 2021 and dropping to 998 million USD by the end of 2022, indicating a substantial reduction in bottom-line profitability in the final year.
Stockholders' Equity Expansion: A consistent and aggressive increase in the equity base is observed. Reported total stockholders' equity grew from 2,804 million USD in 2018 to 23,036 million USD in 2022. Adjusted equity mirrored this trend, rising from 3,174 million USD to 22,871 million USD. This expansion represents a nearly eightfold increase in the capital base over five years, which served as the primary denominator in the declining ROE calculations.
Return on Equity (ROE) Trends: The ROE experienced a precipitous decline over the five-year span. Reported ROE fell from 69.90% in 2018 to 4.79% in 2022. Adjusted ROE showed a nearly identical pattern, decreasing from 63.14% to 4.36%. The most significant compression occurred between 2018 and 2019, followed by a period of relative stabilization between 2020 and 2021, and culminating in a severe contraction in 2022.
Comparison of Reported and Adjusted Metrics: The variance between reported and adjusted figures remained minimal. Adjusted ROE tracked the reported ROE closely across all years, suggesting that one-time adjustments or non-recurring items did not fundamentally alter the overarching downward trajectory of the company's return on invested capital.

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	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Paramount	1,104)	4,543)	2,422)	3,308)	1,960)
Total assets	58,393)	58,620)	52,663)	49,519)	21,859)
Profitability Ratio
ROA¹	1.89%	7.75%	4.60%	6.68%	8.97%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Paramount	998)	4,633)	2,544)	2,539)	2,004)
Adjusted total assets	57,151)	57,414)	51,670)	48,580)	21,830)
Profitability Ratio
Adjusted ROA²	1.75%	8.07%	4.92%	5.23%	9.18%

Based on: 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), 10-K (reporting date: 2018-12-31).

2022 Calculations

¹ ROA = 100 × Net earnings attributable to Paramount ÷ Total assets
= 100 × 1,104 ÷ 58,393 = 1.89%

² Adjusted ROA = 100 × Adjusted net earnings attributable to Paramount ÷ Adjusted total assets
= 100 × 998 ÷ 57,151 = 1.75%

The financial performance from 2018 to 2022 is characterized by a substantial expansion of the asset base and significant volatility in net earnings, leading to an overall decline in asset utilization efficiency.

Net Earnings Volatility: Both reported and adjusted net earnings exhibited unstable trends over the five-year period. Adjusted net earnings grew from 2,004 million USD in 2018 to a peak of 4,633 million USD in 2021, before experiencing a sharp contraction to 998 million USD in 2022. This final-year decline represents a significant reduction in profitability.
Asset Base Expansion: A primary shift occurred between 2018 and 2019, where reported total assets increased from 21,859 million USD to 49,519 million USD. The asset base continued to climb, peaking at 58,620 million USD in 2021, and remained relatively stable at 58,393 million USD by the end of 2022.
Return on Assets (ROA) Analysis: The Adjusted ROA followed a generally downward trajectory, starting at 9.18% in 2018 and ending at 1.75% in 2022. Although a recovery was observed in 2021 with an adjusted ROA of 8.07%, the precipitous drop in 2022 indicates a diminished capacity to generate earnings relative to the size of the expanded asset base.
Comparison of Reported and Adjusted Metrics: The variance between reported and adjusted ROA remained narrow throughout the period. In 2022, the reported ROA of 1.89% was slightly higher than the adjusted ROA of 1.75%, suggesting that the adjustments made to earnings and assets had a marginal impact on the overall efficiency assessment.

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