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)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

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

US$ in thousands

	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

¹ Capital lease discount rate

2019 Calculations

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 (reporting date: 2019-09-30).

2018 Calculations

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 (reporting date: 2018-09-30).

2017 Calculations

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 (reporting date: 2017-09-30).

2016 Calculations

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 (reporting date: 2016-09-30).

2015 Calculations

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 (reporting date: 2015-09-30).

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Air Products & Chemicals Inc., adjustments to financial statements

US$ in thousands

	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

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

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

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Air Products & Chemicals Inc., adjusted financial ratios

	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

¹ See details »

² See details »

³ See details »

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. 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. 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. adjusted ROA improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

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

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	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

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

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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. adjusted total asset turnover ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

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

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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. adjusted debt-to-equity ratio improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

	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 (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).

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%

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

Air Products & Chemicals Inc. (NYSE:APD)

Analysis of Operating Leases

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

Adjustments to Financial Statements for Operating Leases

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

Adjusted Financial Ratios for Operating Leases (Summary)

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

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)