Stock Analysis on Net
Stock Analysis on Net
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Air Products & Chemicals Inc. (NYSE:APD)

Analysis of Inventory

Advanced level

Inventory Disclosure

Air Products & Chemicals Inc., balance sheet: inventory

US$ in thousands

Microsoft Excel LibreOffice Calc
Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
Finished goods 128,800  125,400  120,000  456,700  494,900  493,900 
Work in process 27,500  21,200  15,700  38,200  34,400  34,100 
Raw materials, supplies and other 232,000  249,500  223,000  204,000  229,300  283,400 
FIFO Cost 388,300  396,100  358,700  698,900  758,600  811,400 
Excess of FIFO cost over LIFO cost —  —  (23,300) (79,000) (100,800) (105,400)
Inventories 388,300  396,100  335,400  619,900  657,800  706,000 

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Air Products & Chemicals Inc.’s inventories increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in thousands

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Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
Adjustment to Inventories
Inventories at LIFO (as reported) 388,300  396,100  335,400  619,900  657,800  706,000 
Add: Inventory LIFO reserve —  —  23,300  79,000  100,800  105,400 
Inventories at FIFO (adjusted) 388,300  396,100  358,700  698,900  758,600  811,400 
Adjustment to Current Assets
Current assets (as reported) 4,618,300  5,082,200  5,876,700  4,317,300  2,910,800  3,294,800 
Add: Inventory LIFO reserve —  —  23,300  79,000  100,800  105,400 
Current assets (adjusted) 4,618,300  5,082,200  5,900,000  4,396,300  3,011,600  3,400,200 
Adjustment to Total Assets
Total assets (as reported) 18,942,800  19,178,300  18,467,200  18,055,300  17,438,100  17,779,100 
Add: Inventory LIFO reserve —  —  23,300  79,000  100,800  105,400 
Total assets (adjusted) 18,942,800  19,178,300  18,490,500  18,134,300  17,538,900  17,884,500 
Adjustment to Total Air Products Shareholders’ Equity
Total Air Products shareholders’ equity (as reported) 11,053,600  10,857,500  10,086,200  7,079,600  7,249,000  7,365,800 
Add: Inventory LIFO reserve —  —  23,300  79,000  100,800  105,400 
Total Air Products shareholders’ equity (adjusted) 11,053,600  10,857,500  10,109,500  7,158,600  7,349,800  7,471,200 
Adjustment to Net Income Attributable To Air Products
Net income attributable to Air Products (as reported) 1,760,000  1,497,800  3,000,400  631,100  1,277,900  991,700 
Add: Increase (decrease) in inventory LIFO reserve —  (23,300) 11,600  (21,800) (4,600) 10,600 
Net income attributable to Air Products (adjusted) 1,760,000  1,474,500  3,012,000  609,300  1,273,300  1,002,300 

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

Air Products & Chemicals Inc.’s inventory value on Sep 30, 2019 would be $388,300  (in thousands) if the FIFO inventory method was used instead of LIFO. Air Products & Chemicals Inc.’s inventories, valued on a LIFO basis, on Sep 30, 2019 were $388,300 . Air Products & Chemicals Inc.’s inventories would have been $—  higher than reported on Sep 30, 2019 if the FIFO method had been used instead.


Air Products & Chemicals Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Air Products & Chemicals Inc., adjusted financial ratios

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Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
Current Ratio
Reported current ratio (LIFO) 2.54 2.17 2.36 1.31 0.80 1.11
Adjusted current ratio (FIFO) 2.54 2.17 2.37 1.34 0.83 1.15
Net Profit Margin
Reported net profit margin (LIFO) 19.73% 16.77% 36.65% 6.63% 12.91% 9.50%
Adjusted net profit margin (FIFO) 19.73% 16.51% 36.79% 6.40% 12.87% 9.60%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.47 0.47 0.44 0.53 0.57 0.59
Adjusted total asset turnover (FIFO) 0.47 0.47 0.44 0.53 0.56 0.58
Financial Leverage
Reported financial leverage (LIFO) 1.71 1.77 1.83 2.55 2.41 2.41
Adjusted financial leverage (FIFO) 1.71 1.77 1.83 2.53 2.39 2.39
Return on Equity (ROE)
Reported ROE (LIFO) 15.92% 13.80% 29.75% 8.91% 17.63% 13.46%
Adjusted ROE (FIFO) 15.92% 13.58% 29.79% 8.51% 17.32% 13.42%
Return on Assets (ROA)
Reported ROA (LIFO) 9.29% 7.81% 16.25% 3.50% 7.33% 5.58%
Adjusted ROA (FIFO) 9.29% 7.69% 16.29% 3.36% 7.26% 5.60%

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Air Products & Chemicals Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Air Products & Chemicals Inc.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Air Products & Chemicals 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.
Air Products & Chemicals Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Air Products & Chemicals Inc.’s adjusted ROE deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Air Products & Chemicals Inc.’s adjusted ROA deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Air Products & Chemicals Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Current assets 4,618,300  5,082,200  5,876,700  4,317,300  2,910,800  3,294,800 
Current liabilities 1,820,900  2,338,300  2,489,000  3,283,300  3,648,100  2,963,000 
Liquidity Ratio
Current ratio1 2.54 2.17 2.36 1.31 0.80 1.11
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted current assets 4,618,300  5,082,200  5,900,000  4,396,300  3,011,600  3,400,200 
Current liabilities 1,820,900  2,338,300  2,489,000  3,283,300  3,648,100  2,963,000 
Liquidity Ratio
Adjusted current ratio2 2.54 2.17 2.37 1.34 0.83 1.15

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 4,618,300 ÷ 1,820,900 = 2.54

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 4,618,300 ÷ 1,820,900 = 2.54

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Air Products & Chemicals Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Net Profit Margin

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Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Air Products 1,760,000  1,497,800  3,000,400  631,100  1,277,900  991,700 
Sales 8,918,900  8,930,200  8,187,600  9,524,400  9,894,900  10,439,000 
Profitability Ratio
Net profit margin1 19.73% 16.77% 36.65% 6.63% 12.91% 9.50%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Air Products 1,760,000  1,474,500  3,012,000  609,300  1,273,300  1,002,300 
Sales 8,918,900  8,930,200  8,187,600  9,524,400  9,894,900  10,439,000 
Profitability Ratio
Adjusted net profit margin2 19.73% 16.51% 36.79% 6.40% 12.87% 9.60%

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 Net profit margin = 100 × Net income attributable to Air Products ÷ Sales
= 100 × 1,760,000 ÷ 8,918,900 = 19.73%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Air Products ÷ Sales
= 100 × 1,760,000 ÷ 8,918,900 = 19.73%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Air Products & Chemicals Inc.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Sales 8,918,900  8,930,200  8,187,600  9,524,400  9,894,900  10,439,000 
Total assets 18,942,800  19,178,300  18,467,200  18,055,300  17,438,100  17,779,100 
Activity Ratio
Total asset turnover1 0.47 0.47 0.44 0.53 0.57 0.59
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Sales 8,918,900  8,930,200  8,187,600  9,524,400  9,894,900  10,439,000 
Adjusted total assets 18,942,800  19,178,300  18,490,500  18,134,300  17,538,900  17,884,500 
Activity Ratio
Adjusted total asset turnover2 0.47 0.47 0.44 0.53 0.56 0.58

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 Total asset turnover = Sales ÷ Total assets
= 8,918,900 ÷ 18,942,800 = 0.47

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 8,918,900 ÷ 18,942,800 = 0.47

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Air Products & Chemicals 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 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Total assets 18,942,800  19,178,300  18,467,200  18,055,300  17,438,100  17,779,100 
Total Air Products shareholders’ equity 11,053,600  10,857,500  10,086,200  7,079,600  7,249,000  7,365,800 
Solvency Ratio
Financial leverage1 1.71 1.77 1.83 2.55 2.41 2.41
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted total assets 18,942,800  19,178,300  18,490,500  18,134,300  17,538,900  17,884,500 
Adjusted total Air Products shareholders’ equity 11,053,600  10,857,500  10,109,500  7,158,600  7,349,800  7,471,200 
Solvency Ratio
Adjusted financial leverage2 1.71 1.77 1.83 2.53 2.39 2.39

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Air Products shareholders’ equity
= 18,942,800 ÷ 11,053,600 = 1.71

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Air Products shareholders’ equity
= 18,942,800 ÷ 11,053,600 = 1.71

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.
Air Products & Chemicals Inc.’s adjusted financial leverage ratio decreased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Air Products 1,760,000  1,497,800  3,000,400  631,100  1,277,900  991,700 
Total Air Products shareholders’ equity 11,053,600  10,857,500  10,086,200  7,079,600  7,249,000  7,365,800 
Profitability Ratio
ROE1 15.92% 13.80% 29.75% 8.91% 17.63% 13.46%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Air Products 1,760,000  1,474,500  3,012,000  609,300  1,273,300  1,002,300 
Adjusted total Air Products shareholders’ equity 11,053,600  10,857,500  10,109,500  7,158,600  7,349,800  7,471,200 
Profitability Ratio
Adjusted ROE2 15.92% 13.58% 29.79% 8.51% 17.32% 13.42%

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 ROE = 100 × Net income attributable to Air Products ÷ Total Air Products shareholders’ equity
= 100 × 1,760,000 ÷ 11,053,600 = 15.92%

2 Adjusted ROE = 100 × Adjusted net income attributable to Air Products ÷ Adjusted total Air Products shareholders’ equity
= 100 × 1,760,000 ÷ 11,053,600 = 15.92%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Air Products & Chemicals Inc.’s adjusted ROE deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015 Sep 30, 2014
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Air Products 1,760,000  1,497,800  3,000,400  631,100  1,277,900  991,700 
Total assets 18,942,800  19,178,300  18,467,200  18,055,300  17,438,100  17,779,100 
Profitability Ratio
ROA1 9.29% 7.81% 16.25% 3.50% 7.33% 5.58%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income attributable to Air Products 1,760,000  1,474,500  3,012,000  609,300  1,273,300  1,002,300 
Adjusted total assets 18,942,800  19,178,300  18,490,500  18,134,300  17,538,900  17,884,500 
Profitability Ratio
Adjusted ROA2 9.29% 7.69% 16.29% 3.36% 7.26% 5.60%

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

2019 Calculations

1 ROA = 100 × Net income attributable to Air Products ÷ Total assets
= 100 × 1,760,000 ÷ 18,942,800 = 9.29%

2 Adjusted ROA = 100 × Adjusted net income attributable to Air Products ÷ Adjusted total assets
= 100 × 1,760,000 ÷ 18,942,800 = 9.29%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Air Products & Chemicals Inc.’s adjusted ROA deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.