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

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Air Products & Chemicals Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in thousands

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Total undiscounted future operating lease payments 418,000  334,400  314,200  355,100  366,700 
Discount rate1 10.92% 11.83% 15.34% 19.16% 2.04%
 
Total present value of future operating lease payments 264,039  211,716  172,795  194,476  334,361 

Based on: 10-K (filing date: 2020-11-19), 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).

1 Capital lease discount rate

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 10.92%
2020 75,100  2020 75,100  67,706 
2021 62,600  2021 62,600  50,881 
2022 44,400  2022 44,400  32,535 
2023 35,900  2023 35,900  23,717 
2024 28,600  2024 28,600  17,034 
2025 and thereafter 171,400  2025 28,600  15,357 
2026 28,600  13,845 
2027 28,600  12,482 
2028 28,600  11,253 
2029 28,600  10,145 
2030 28,400  9,083 
Total: 418,000  418,000  264,039 

Based on: 10-K (filing date: 2019-11-26).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 11.83%
2019 65,900  2019 65,900  58,929 
2020 50,400  2020 50,400  40,301 
2021 41,400  2021 41,400  29,602 
2022 30,400  2022 30,400  19,437 
2023 23,300  2023 23,300  13,322 
2024 and thereafter 123,000  2024 23,300  11,913 
2025 23,300  10,652 
2026 23,300  9,526 
2027 23,300  8,518 
2028 23,300  7,617 
2029 6,500  1,900 
Total: 334,400  334,400  211,716 

Based on: 10-K (filing date: 2018-11-20).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 15.34%
2018 56,600  2018 56,600  49,072 
2019 45,800  2019 45,800  34,428 
2020 35,200  2020 35,200  22,940 
2021 27,100  2021 27,100  15,313 
2022 22,900  2022 22,900  11,219 
2023 and thereafter 126,600  2023 22,900  9,726 
2024 22,900  8,433 
2025 22,900  7,311 
2026 22,900  6,339 
2027 22,900  5,496 
2028 12,100  2,518 
Total: 314,200  314,200  172,795 

Based on: 10-K (filing date: 2017-11-16).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 19.16%
2017 70,500  2017 70,500  59,164 
2018 62,500  2018 62,500  44,017 
2019 49,900  2019 49,900  29,492 
2020 38,400  2020 38,400  19,046 
2021 31,600  2021 31,600  13,153 
2022 and thereafter 102,200  2022 31,600  11,038 
2023 31,600  9,263 
2024 31,600  7,774 
2025 7,400  1,528 
Total: 355,100  355,100  194,476 

Based on: 10-K (filing date: 2016-11-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.04%
2016 65,900  2016 65,900  64,583 
2017 54,400  2017 54,400  52,247 
2018 45,700  2018 45,700  43,014 
2019 36,400  2019 36,400  33,575 
2020 26,400  2020 26,400  23,864 
2021 and thereafter 137,900  2021 26,400  23,387 
2022 26,400  22,920 
2023 26,400  22,462 
2024 26,400  22,013 
2025 26,400  21,572 
2026 5,900  4,725 
Total: 366,700  366,700  334,361 

Based on: 10-K (filing date: 2015-11-24).


Adjustments to Financial Statements for Operating Leases

Air Products & Chemicals Inc., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Adjustment to Total Assets
Total assets (as reported) 25,168,500  18,942,800  19,178,300  18,467,200  18,055,300  17,438,100 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  264,039  211,716  172,795  194,476  334,361 
Total assets (adjusted) 25,168,500  19,206,839  19,390,016  18,639,995  18,249,776  17,772,461 
Adjustment to Total Debt
Total debt (as reported) 7,907,800  3,326,000  3,812,600  3,962,800  6,225,200  5,879,000 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  264,039  211,716  172,795  194,476  334,361 
Add: Current operating lease liabilities 70,700  —  —  —  —  — 
Add: Noncurrent operating lease liabilities 335,800  —  —  —  —  — 
Total debt (adjusted) 8,314,300  3,590,039  4,024,316  4,135,595  6,419,676  6,213,361 

Based on: 10-K (filing date: 2020-11-19), 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).

1, 2 Equal to total present value of future operating lease payments.


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


Adjusted Financial Ratios for Operating Leases (Summary)

Air Products & Chemicals Inc., adjusted financial ratios

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Total Asset Turnover1
Reported total asset turnover 0.35 0.47 0.47 0.44 0.53 0.57
Adjusted total asset turnover 0.35 0.46 0.46 0.44 0.52 0.56
Debt to Equity2
Reported debt to equity 0.65 0.30 0.35 0.39 0.88 0.81
Adjusted debt to equity 0.69 0.32 0.37 0.41 0.91 0.86
Return on Assets3 (ROA)
Reported ROA 7.50% 9.29% 7.81% 16.25% 3.50% 7.33%
Adjusted ROA 7.50% 9.16% 7.72% 16.10% 3.46% 7.19%

Based on: 10-K (filing date: 2020-11-19), 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).

Financial 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 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Air Products & Chemicals Inc.’s adjusted debt to equity ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Air Products & Chemicals Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

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


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in thousands)
Sales 8,856,300  8,918,900  8,930,200  8,187,600  9,524,400  9,894,900 
Total assets 25,168,500  18,942,800  19,178,300  18,467,200  18,055,300  17,438,100 
Activity Ratio
Total asset turnover1 0.35 0.47 0.47 0.44 0.53 0.57
Adjusted for Operating Leases
Selected Financial Data (US$ in thousands)
Sales 8,856,300  8,918,900  8,930,200  8,187,600  9,524,400  9,894,900 
Adjusted total assets 25,168,500  19,206,839  19,390,016  18,639,995  18,249,776  17,772,461 
Activity Ratio
Adjusted total asset turnover2 0.35 0.46 0.46 0.44 0.52 0.56

Based on: 10-K (filing date: 2020-11-19), 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).

2020 Calculations

1 Total asset turnover = Sales ÷ Total assets
= 8,856,300 ÷ 25,168,500 = 0.35

2 Adjusted total asset turnover = Sales ÷ Adjusted total assets
= 8,856,300 ÷ 25,168,500 = 0.35

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 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in thousands)
Total debt 7,907,800  3,326,000  3,812,600  3,962,800  6,225,200  5,879,000 
Total Air Products shareholders’ equity 12,079,800  11,053,600  10,857,500  10,086,200  7,079,600  7,249,000 
Solvency Ratio
Debt to equity1 0.65 0.30 0.35 0.39 0.88 0.81
Adjusted for Operating Leases
Selected Financial Data (US$ in thousands)
Adjusted total debt 8,314,300  3,590,039  4,024,316  4,135,595  6,419,676  6,213,361 
Total Air Products shareholders’ equity 12,079,800  11,053,600  10,857,500  10,086,200  7,079,600  7,249,000 
Solvency Ratio
Adjusted debt to equity2 0.69 0.32 0.37 0.41 0.91 0.86

Based on: 10-K (filing date: 2020-11-19), 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).

2020 Calculations

1 Debt to equity = Total debt ÷ Total Air Products shareholders’ equity
= 7,907,800 ÷ 12,079,800 = 0.65

2 Adjusted debt to equity = Adjusted total debt ÷ Total Air Products shareholders’ equity
= 8,314,300 ÷ 12,079,800 = 0.69

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Air Products & Chemicals Inc.’s adjusted debt-to-equity ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income attributable to Air Products 1,886,700  1,760,000  1,497,800  3,000,400  631,100  1,277,900 
Total assets 25,168,500  18,942,800  19,178,300  18,467,200  18,055,300  17,438,100 
Profitability Ratio
ROA1 7.50% 9.29% 7.81% 16.25% 3.50% 7.33%
Adjusted for Operating Leases
Selected Financial Data (US$ in thousands)
Net income attributable to Air Products 1,886,700  1,760,000  1,497,800  3,000,400  631,100  1,277,900 
Adjusted total assets 25,168,500  19,206,839  19,390,016  18,639,995  18,249,776  17,772,461 
Profitability Ratio
Adjusted ROA2 7.50% 9.16% 7.72% 16.10% 3.46% 7.19%

Based on: 10-K (filing date: 2020-11-19), 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).

2020 Calculations

1 ROA = 100 × Net income attributable to Air Products ÷ Total assets
= 100 × 1,886,700 ÷ 25,168,500 = 7.50%

2 Adjusted ROA = 100 × Net income attributable to Air Products ÷ Adjusted total assets
= 100 × 1,886,700 ÷ 25,168,500 = 7.50%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Air Products & Chemicals Inc.’s adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.