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Microsoft Excel LibreOffice Calc

Qualcomm Inc. (QCOM)

Analysis of Income Taxes

Advanced level

Accounting Policy on Income Taxes

The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Tax law and rate changes are reflected in income in the period such changes are enacted. Qualcomm records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. Qualcomm includes interest and penalties related to income taxes, including unrecognized tax benefits, within income tax expense. Qualcomm classifies all deferred tax assets and liabilities as noncurrent in the consolidated balance sheets.

Qualcomm’s income tax returns are based on calculations and assumptions that are subject to examination by the Internal Revenue Service and other tax authorities. In addition, the calculation of Qualcomm’s tax liabilities involves dealing with uncertainties in the application of complex tax regulations. Qualcomm recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. While Qualcomm believes Qualcomm has appropriate support for the positions taken on the tax returns, Qualcomm regularly assesses the potential outcomes of examinations by tax authorities in determining the adequacy of the provision for income taxes. Qualcomm continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provision, income taxes payable and deferred taxes in the period in which the facts that give rise to a revision become known.

Qualcomm recognizes excess tax benefits and shortfall tax detriments associated with share-based awards in the consolidated statements of operations, as a component of income tax expense, when realized.

Source: 10-K (filing date: 2019-11-06).

Income Tax Expense (Benefit)

Qualcomm Inc., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Federal
State
Foreign
Current provision
Federal
State
Foreign
Deferred provision (benefit)
Income tax provision

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Item Description The company
Current provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Qualcomm Inc.’s current provision increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Deferred provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Qualcomm Inc.’s deferred provision (benefit) increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.
Income tax provision Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Qualcomm Inc.’s income tax provision increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Effective Income Tax Rate (EITR)

Qualcomm Inc., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Federal statutory tax rate
Effective income tax rate, excluding U.S. tax reform
Effective income tax rate

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Item Description The company
Effective income tax rate, excluding U.S. tax reform Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Qualcomm Inc.’s effective income tax rate, excluding U.S. tax reform increased from 2017 to 2018 and from 2018 to 2019.

Components of Deferred Tax Assets and Liabilities

Qualcomm Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Unused tax credits
Accrued liabilities and reserves
Unused net operating losses
Unearned revenues
Unrealized losses on other investments and marketable securities
Share-based compensation
Other
Gross deferred tax assets
Valuation allowance
Net deferred tax assets
Intangible assets
Property, plant and equipment
Unrealized gains on other investments and marketable securities
Accrued withholding taxes
Accrued revenues
Other
Deferred tax liabilities
Net deferred tax assets (liabilities)

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Item Description The company
Gross deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Qualcomm Inc.’s gross deferred tax assets decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Net deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Qualcomm Inc.’s net deferred tax assets decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Qualcomm Inc.’s net deferred tax assets (liabilities) decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Deferred Tax Assets and Liabilities, Classification

Qualcomm Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Current deferred tax assets
Non-current deferred tax assets
Current deferred tax liabilities (included in Other current liabilities)
Non-current deferred tax liabilities (included in Other liabilities)

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Item Description The company
Non-current deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. Qualcomm Inc.’s non-current deferred tax assets decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Non-current deferred tax liabilities (included in Other liabilities) Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Qualcomm Inc.’s non-current deferred tax liabilities (included in Other liabilities) increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Qualcomm Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Adjustment to Current Assets
Current assets (as reported)
Less: Current deferred tax assets, net
Current assets (adjusted)
Adjustment to Total Assets
Total assets (as reported)
Less: Current deferred tax assets, net
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Current Liabilities
Current liabilities (as reported)
Less: Current deferred tax liabilities, net
Current liabilities (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Current deferred tax liabilities, net
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Qualcomm Stockholders’ Equity
Total Qualcomm stockholders’ equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Qualcomm stockholders’ equity (adjusted)
Adjustment to Net Income (loss) Attributable To Qualcomm
Net income (loss) attributable to Qualcomm (as reported)
Add: Deferred income tax expense (benefit)
Net income (loss) attributable to Qualcomm (adjusted)

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Qualcomm Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Qualcomm Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
Current Ratio
Reported current ratio
Adjusted current ratio
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Qualcomm Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Qualcomm Inc.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Qualcomm Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
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.		 Qualcomm Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Qualcomm Inc.’s adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Qualcomm Inc.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Qualcomm Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Current assets
Current liabilities
Liquidity Ratio
Current ratio1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets
Adjusted current liabilities
Liquidity Ratio
Adjusted current ratio2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= ÷ =

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= ÷ =

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Qualcomm Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Qualcomm
Revenues
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Qualcomm
Revenues
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to Qualcomm ÷ Revenues
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Qualcomm ÷ Revenues
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Qualcomm Inc.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Revenues
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= ÷ =

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Qualcomm Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Total assets
Total Qualcomm stockholders’ equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted total Qualcomm stockholders’ equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Qualcomm stockholders’ equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Qualcomm stockholders’ equity
= ÷ =

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.		 Qualcomm Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Qualcomm
Total Qualcomm stockholders’ equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Qualcomm
Adjusted total Qualcomm stockholders’ equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 ROE = 100 × Net income (loss) attributable to Qualcomm ÷ Total Qualcomm stockholders’ equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income (loss) attributable to Qualcomm ÷ Adjusted total Qualcomm stockholders’ equity
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Qualcomm Inc.’s adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Sep 29, 2019 Sep 30, 2018 Sep 24, 2017 Sep 25, 2016 Sep 27, 2015 Sep 28, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Qualcomm
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income (loss) attributable to Qualcomm
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (filing date: 2019-11-06), 10-K (filing date: 2018-11-07), 10-K (filing date: 2017-11-01), 10-K (filing date: 2016-11-02), 10-K (filing date: 2015-11-04), 10-K (filing date: 2014-11-05).

2019 Calculations

1 ROA = 100 × Net income (loss) attributable to Qualcomm ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income (loss) attributable to Qualcomm ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Qualcomm Inc.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.