Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Accenture PLC (NYSE:ACN)

Economic Value Added (EVA)

Advanced level

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.


Economic Profit

Accenture PLC, economic profit calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Net operating profit after taxes (NOPAT)1 6,009,567  4,992,768  4,379,754  3,464,480  4,759,039  2,672,791 
Cost of capital2 11.92% 11.74% 11.69% 11.64% 11.68% 11.71%
Invested capital3 22,846,720  20,110,534  17,518,702  15,863,332  13,925,443  11,386,734 
 
Economic profit4 3,286,931  2,631,872  2,332,441  1,617,397  3,132,776  1,339,707 

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 6,009,56711.92% × 22,846,720 = 3,286,931

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Accenture PLC’s economic profit increased from 2018 to 2019 and from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Accenture PLC, NOPAT calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Net income attributable to Accenture plc 5,107,839  4,779,112  4,059,907  3,445,149  4,111,892  3,053,581 
Deferred income tax expense (benefit)1 170,951  (96,360) 94,000  (364,133) 65,940  (459,109)
Increase (decrease) in allowances for client receivables2 (5,261) (4,375) (24,537) (4,990) 9,275  (12,478)
Increase (decrease) in deferred revenues3 573,613  298,253  123,038  213,228  343,468  (116,793)
Increase (decrease) in equity equivalents4 739,303  197,518  192,501  (155,895) 418,683  (588,380)
Interest expense 33,071  22,963  19,539  15,545  16,258  14,578 
Interest expense, operating lease liability5 143,793  —  —  —  —  — 
Adjusted interest expense 176,864  22,963  19,539  15,545  16,258  14,578 
Tax benefit of interest expense6 (37,141) (4,822) (5,022) (5,441) (5,690) (5,102)
Adjusted interest expense, after taxes7 139,722  18,141  14,517  10,104  10,568  9,476 
Interest income (69,331) (87,508) (56,337) (37,940) (30,484) (33,991)
Investment income, before taxes (69,331) (87,508) (56,337) (37,940) (30,484) (33,991)
Tax expense (benefit) of investment income8 14,560  18,377  14,479  13,279  10,669  11,897 
Investment income, after taxes9 (54,771) (69,131) (41,858) (24,661) (19,815) (22,094)
Net income (loss) attributable to noncontrolling interest 77,474  67,129  154,687  189,783  237,711  220,208 
Net operating profit after taxes (NOPAT) 6,009,567  4,992,768  4,379,754  3,464,480  4,759,039  2,672,791 

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances for client receivables.

3 Addition of increase (decrease) in deferred revenues.

4 Addition of increase (decrease) in equity equivalents to net income attributable to Accenture plc.

5 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,423,641 × 4.20% = 143,793

6 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 176,864 × 21.00% = 37,141

7 Addition of after taxes interest expense to net income attributable to Accenture plc.

8 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 69,331 × 21.00% = 14,560

9 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Accenture PLC’s NOPAT increased from 2018 to 2019 and from 2019 to 2020.

Cash Operating Taxes

Accenture PLC, cash operating taxes calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Income tax expense 1,589,018  1,405,556  1,593,499  981,100  1,253,969  1,136,741 
Less: Deferred income tax expense (benefit) 170,951  (96,360) 94,000  (364,133) 65,940  (459,109)
Add: Tax savings from interest expense 37,141  4,822  5,022  5,441  5,690  5,102 
Less: Tax imposed on investment income 14,560  18,377  14,479  13,279  10,669  11,897 
Cash operating taxes 1,440,649  1,488,362  1,490,042  1,337,395  1,183,050  1,589,055 

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Accenture PLC’s cash operating taxes decreased from 2018 to 2019 and from 2019 to 2020.

Invested Capital

Accenture PLC, invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel LibreOffice Calc
Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Current portion of long-term debt and bank borrowings 7,820  6,411  5,337  2,907  2,773  1,848 
Long-term debt, excluding current portion 54,052  16,247  19,676  22,163  24,457  25,587 
Operating lease liability1 3,423,641  3,839,556  3,651,481  3,706,874  2,817,304  2,454,523 
Total reported debt & leases 3,485,513  3,862,214  3,676,494  3,731,944  2,844,534  2,481,958 
Total Accenture plc shareholders’ equity 17,000,536  14,409,008  10,364,753  8,949,477  7,555,262  6,133,725 
Net deferred tax (assets) liabilities2 (3,973,443) (4,216,232) (1,961,078) (2,077,803) (1,966,292) (1,998,556)
Allowances for client receivables3 40,277  45,538  49,913  74,450  79,440  70,165 
Deferred revenues4 4,327,672  3,754,059  3,455,806  3,332,768  3,119,540  2,776,072 
Equity equivalents5 394,506  (416,635) 1,544,641  1,329,415  1,232,688  847,681 
Accumulated other comprehensive (income) loss, net of tax6 1,561,837  1,840,577  1,576,171  1,094,784  1,661,720  1,411,972 
Noncontrolling interests 498,637  418,683  359,835  760,723  634,114  513,846 
Adjusted total Accenture plc shareholders’ equity 19,455,516  16,251,633  13,845,400  12,134,399  11,083,784  8,907,224 
Short-term investments7 (94,309) (3,313) (3,192) (3,011) (2,875) (2,448)
Invested capital 22,846,720  20,110,534  17,518,702  15,863,332  13,925,443  11,386,734 

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenues.

5 Addition of equity equivalents to total Accenture plc shareholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of short-term investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Accenture PLC’s invested capital increased from 2018 to 2019 and from 2019 to 2020.

Cost of Capital

Accenture PLC, cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 144,662,081  144,662,081  ÷ 148,147,594  = 0.98 0.98 × 12.13% = 11.84%
Outstanding debt3 61,872  61,872  ÷ 148,147,594  = 0.00 0.00 × 0.00% × (1 – 21.00%) = 0.00%
Operating lease liability4 3,423,641  3,423,641  ÷ 148,147,594  = 0.02 0.02 × 4.20% × (1 – 21.00%) = 0.08%
Total: 148,147,594  1.00 11.92%

Based on: 10-K (filing date: 2020-10-22).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 117,472,267  117,472,267  ÷ 121,334,481  = 0.97 0.97 × 12.13% = 11.74%
Outstanding debt3 22,658  22,658  ÷ 121,334,481  = 0.00 0.00 × 0.00% × (1 – 21.00%) = 0.00%
Operating lease liability4 3,839,556  3,839,556  ÷ 121,334,481  = 0.03 0.03 × 0.00% × (1 – 21.00%) = 0.00%
Total: 121,334,481  1.00 11.74%

Based on: 10-K (filing date: 2019-10-29).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 97,842,277  97,842,277  ÷ 101,518,771  = 0.96 0.96 × 12.13% = 11.69%
Outstanding debt3 25,013  25,013  ÷ 101,518,771  = 0.00 0.00 × 0.00% × (1 – 25.70%) = 0.00%
Operating lease liability4 3,651,481  3,651,481  ÷ 101,518,771  = 0.04 0.04 × 0.00% × (1 – 25.70%) = 0.00%
Total: 101,518,771  1.00 11.69%

Based on: 10-K (filing date: 2018-10-24).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 90,182,783  90,182,783  ÷ 93,914,727  = 0.96 0.96 × 12.13% = 11.64%
Outstanding debt3 25,070  25,070  ÷ 93,914,727  = 0.00 0.00 × 0.00% × (1 – 35.00%) = 0.00%
Operating lease liability4 3,706,874  3,706,874  ÷ 93,914,727  = 0.04 0.04 × 0.00% × (1 – 35.00%) = 0.00%
Total: 93,914,727  1.00 11.64%

Based on: 10-K (filing date: 2017-10-26).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 74,281,472  74,281,472  ÷ 77,126,006  = 0.96 0.96 × 12.13% = 11.68%
Outstanding debt3 27,230  27,230  ÷ 77,126,006  = 0.00 0.00 × 0.00% × (1 – 35.00%) = 0.00%
Operating lease liability4 2,817,304  2,817,304  ÷ 77,126,006  = 0.04 0.04 × 0.00% × (1 – 35.00%) = 0.00%
Total: 77,126,006  1.00 11.68%

Based on: 10-K (filing date: 2016-10-28).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 69,476,448  69,476,448  ÷ 71,958,406  = 0.97 0.97 × 12.13% = 11.71%
Outstanding debt3 27,435  27,435  ÷ 71,958,406  = 0.00 0.00 × 0.00% × (1 – 35.00%) = 0.00%
Operating lease liability4 2,454,523  2,454,523  ÷ 71,958,406  = 0.03 0.03 × 0.00% × (1 – 35.00%) = 0.00%
Total: 71,958,406  1.00 11.71%

Based on: 10-K (filing date: 2015-10-30).

1 US$ in thousands

2 Equity. See details »

3 Outstanding debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Accenture PLC, economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 3,286,931  2,631,872  2,332,441  1,617,397  3,132,776  1,339,707 
Invested capital2 22,846,720  20,110,534  17,518,702  15,863,332  13,925,443  11,386,734 
Performance Ratio
Economic spread ratio3 14.39% 13.09% 13.31% 10.20% 22.50% 11.77%
Benchmarks
Economic Spread Ratio, Competitors4
Automatic Data Processing Inc. 16.41% 14.38% 12.55% 13.84% 9.65% 11.22%
Waste Management Inc. 1.04% 1.52% 4.37% 3.28% 1.31%

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 3,286,931 ÷ 22,846,720 = 14.39%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Accenture PLC’s economic spread ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Economic Profit Margin

Accenture PLC, economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Aug 31, 2020 Aug 31, 2019 Aug 31, 2018 Aug 31, 2017 Aug 31, 2016 Aug 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 3,286,931  2,631,872  2,332,441  1,617,397  3,132,776  1,339,707 
 
Revenues 44,327,039  43,215,013  41,603,428  36,765,478  34,797,661  32,914,424 
Add: Increase (decrease) in deferred revenues 573,613  298,253  123,038  213,228  343,468  (116,793)
Adjusted revenues 44,900,652  43,513,266  41,726,466  36,978,706  35,141,129  32,797,631 
Performance Ratio
Economic profit margin2 7.32% 6.05% 5.59% 4.37% 8.91% 4.08%
Benchmarks
Economic Profit Margin, Competitors3
Automatic Data Processing Inc. 10.80% 9.64% 6.88% 8.40% 6.54% 6.27%
Waste Management Inc. 1.63% 2.22% 5.39% 4.00% 1.65%

Based on: 10-K (filing date: 2020-10-22), 10-K (filing date: 2019-10-29), 10-K (filing date: 2018-10-24), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-30).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 3,286,931 ÷ 44,900,652 = 7.32%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Accenture PLC’s economic profit margin improved from 2018 to 2019 and from 2019 to 2020.