Stock Analysis on Net

Accenture PLC (NYSE:ACN)

Analysis of Goodwill and Intangible Assets

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Goodwill and Intangible Asset Disclosure

Accenture PLC, balance sheet: goodwill and intangible assets

US$ in thousands

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Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
Goodwill 11,125,861  7,709,820  6,205,550  5,383,012  5,002,352  3,609,437 
Customer-related 2,068,156  1,319,332  1,013,976  862,418  809,683  532,753 
Technology 250,481  150,765  119,686  94,844  108,929  100,363 
Patents 126,202  129,295  127,796  128,179  124,669  118,906 
Other 70,407  82,676  78,344  50,490  52,342  43,804 
Definite-lived intangible assets, gross carrying amount 2,515,246  1,682,068  1,339,802  1,135,931  1,095,623  795,826 
Accumulated amortization (804,308) (652,850) (499,023) (448,821) (385,241) (285,675)
Definite-lived intangible assets, net carrying amount 1,710,938  1,029,218  840,779  687,110  710,382  510,151 
Goodwill and intangible assets 12,836,799  8,739,038  7,046,329  6,070,122  5,712,734  4,119,588 

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

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. Accenture PLC goodwill increased from 2019 to 2020 and from 2020 to 2021.
Definite-lived intangible assets, net carrying amount Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges. Accenture PLC definite-lived intangible assets, net carrying amount increased from 2019 to 2020 and from 2020 to 2021.
Goodwill and 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. Accenture PLC goodwill and intangible assets increased from 2019 to 2020 and from 2020 to 2021.

Adjustments to Financial Statements: Removal of Goodwill

Accenture PLC, adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
Adjustment to Total Assets
Total assets (as reported) 43,175,843  37,078,593  29,789,880  24,449,083  22,689,890  20,609,004 
Less: Goodwill 11,125,861  7,709,820  6,205,550  5,383,012  5,002,352  3,609,437 
Total assets (adjusted) 32,049,982  29,368,773  23,584,330  19,066,071  17,687,538  16,999,567 
Adjustment to Total Accenture Plc Shareholders’ Equity
Total Accenture plc shareholders’ equity (as reported) 19,529,454  17,000,536  14,409,008  10,364,753  8,949,477  7,555,262 
Less: Goodwill 11,125,861  7,709,820  6,205,550  5,383,012  5,002,352  3,609,437 
Total Accenture plc shareholders’ equity (adjusted) 8,403,593  9,290,716  8,203,458  4,981,741  3,947,125  3,945,825 

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).


Accenture PLC, Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Goodwill (Summary)

Accenture PLC, adjusted financial ratios

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Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
Total Asset Turnover
Reported total asset turnover 1.17 1.20 1.45 1.70 1.62 1.69
Adjusted total asset turnover 1.58 1.51 1.83 2.18 2.08 2.05
Financial Leverage
Reported financial leverage 2.21 2.18 2.07 2.36 2.54 2.73
Adjusted financial leverage 3.81 3.16 2.87 3.83 4.48 4.31
Return on Equity (ROE)
Reported ROE 30.25% 30.05% 33.17% 39.17% 38.50% 54.42%
Adjusted ROE 70.29% 54.98% 58.26% 81.50% 87.28% 104.21%
Return on Assets (ROA)
Reported ROA 13.68% 13.78% 16.04% 16.61% 15.18% 19.95%
Adjusted ROA 18.43% 17.39% 20.26% 21.29% 19.48% 24.19%

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

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

Accenture PLC, Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Revenues 50,533,389  44,327,039  43,215,013  41,603,428  36,765,478  34,797,661 
Total assets 43,175,843  37,078,593  29,789,880  24,449,083  22,689,890  20,609,004 
Activity Ratio
Total asset turnover1 1.17 1.20 1.45 1.70 1.62 1.69
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Revenues 50,533,389  44,327,039  43,215,013  41,603,428  36,765,478  34,797,661 
Adjusted total assets 32,049,982  29,368,773  23,584,330  19,066,071  17,687,538  16,999,567 
Activity Ratio
Adjusted total asset turnover2 1.58 1.51 1.83 2.18 2.08 2.05

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

2021 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 50,533,389 ÷ 43,175,843 = 1.17

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 50,533,389 ÷ 32,049,982 = 1.58

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

Adjusted Financial Leverage

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Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets 43,175,843  37,078,593  29,789,880  24,449,083  22,689,890  20,609,004 
Total Accenture plc shareholders’ equity 19,529,454  17,000,536  14,409,008  10,364,753  8,949,477  7,555,262 
Solvency Ratio
Financial leverage1 2.21 2.18 2.07 2.36 2.54 2.73
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets 32,049,982  29,368,773  23,584,330  19,066,071  17,687,538  16,999,567 
Adjusted total Accenture plc shareholders’ equity 8,403,593  9,290,716  8,203,458  4,981,741  3,947,125  3,945,825 
Solvency Ratio
Adjusted financial leverage2 3.81 3.16 2.87 3.83 4.48 4.31

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

2021 Calculations

1 Financial leverage = Total assets ÷ Total Accenture plc shareholders’ equity
= 43,175,843 ÷ 19,529,454 = 2.21

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Accenture plc shareholders’ equity
= 32,049,982 ÷ 8,403,593 = 3.81

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.
Accenture PLC adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Accenture plc 5,906,809  5,107,839  4,779,112  4,059,907  3,445,149  4,111,892 
Total Accenture plc shareholders’ equity 19,529,454  17,000,536  14,409,008  10,364,753  8,949,477  7,555,262 
Profitability Ratio
ROE1 30.25% 30.05% 33.17% 39.17% 38.50% 54.42%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income attributable to Accenture plc 5,906,809  5,107,839  4,779,112  4,059,907  3,445,149  4,111,892 
Adjusted total Accenture plc shareholders’ equity 8,403,593  9,290,716  8,203,458  4,981,741  3,947,125  3,945,825 
Profitability Ratio
Adjusted ROE2 70.29% 54.98% 58.26% 81.50% 87.28% 104.21%

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

2021 Calculations

1 ROE = 100 × Net income attributable to Accenture plc ÷ Total Accenture plc shareholders’ equity
= 100 × 5,906,809 ÷ 19,529,454 = 30.25%

2 Adjusted ROE = 100 × Net income attributable to Accenture plc ÷ Adjusted total Accenture plc shareholders’ equity
= 100 × 5,906,809 ÷ 8,403,593 = 70.29%

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

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Aug 31, 2021 Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Accenture plc 5,906,809  5,107,839  4,779,112  4,059,907  3,445,149  4,111,892 
Total assets 43,175,843  37,078,593  29,789,880  24,449,083  22,689,890  20,609,004 
Profitability Ratio
ROA1 13.68% 13.78% 16.04% 16.61% 15.18% 19.95%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net income attributable to Accenture plc 5,906,809  5,107,839  4,779,112  4,059,907  3,445,149  4,111,892 
Adjusted total assets 32,049,982  29,368,773  23,584,330  19,066,071  17,687,538  16,999,567 
Profitability Ratio
Adjusted ROA2 18.43% 17.39% 20.26% 21.29% 19.48% 24.19%

Based on: 10-K (reporting date: 2021-08-31), 10-K (reporting date: 2020-08-31), 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31).

2021 Calculations

1 ROA = 100 × Net income attributable to Accenture plc ÷ Total assets
= 100 × 5,906,809 ÷ 43,175,843 = 13.68%

2 Adjusted ROA = 100 × Net income attributable to Accenture plc ÷ Adjusted total assets
= 100 × 5,906,809 ÷ 32,049,982 = 18.43%

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