Stock Analysis on Net

Air Products & Chemicals Inc. (NYSE:APD)

This company has been moved to the archive! The financial data has not been updated since August 9, 2021.

Economic Value Added (EVA)

Microsoft Excel

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

Air Products & Chemicals Inc., economic profit calculation

US$ in thousands

Microsoft Excel
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Net operating profit after taxes (NOPAT)1 2,189,491 2,040,608 1,476,037 1,274,219 1,657,195 1,418,609
Cost of capital2 11.09% 11.81% 11.42% 11.33% 10.59% 10.50%
Invested capital3 20,884,500 16,921,739 16,696,916 15,661,095 15,185,876 14,344,261
 
Economic profit4 (127,086) 41,915 (430,921) (499,964) 49,144 (87,639)

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 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
= 2,189,49111.09% × 20,884,500 = -127,086

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. Air Products & Chemicals Inc. economic profit increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Air Products & Chemicals Inc., NOPAT calculation

US$ in thousands

Microsoft Excel
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Net income attributable to Air Products 1,886,700 1,760,000 1,497,800 3,000,400 631,100 1,277,900
Deferred income tax expense (benefit)1 165,000 57,600 (55,400) (38,000) 62,900 2,900
Increase (decrease) in allowance for doubtful accounts2 (900) 24,800 (21,800) 24,000 (3,500) 9,900
Increase (decrease) in LIFO reserve3 (23,300) 11,600 (21,800) (4,600)
Increase (decrease) in accrual for cost reduction actions4 (13,100) 17,800 (31,600) 25,800 (25,400) 21,100
Increase (decrease) in equity equivalents5 151,000 100,200 (132,100) 23,400 12,200 29,300
Interest expense 109,300 137,000 130,500 120,600 115,500 103,500
Interest expense, operating lease liability6 8,537 28,833 25,046 26,507 37,262 6,821
Adjusted interest expense 117,837 165,833 155,546 147,107 152,762 110,321
Tax benefit of interest expense7 (24,746) (34,825) (38,109) (51,487) (53,467) (38,612)
Adjusted interest expense, after taxes8 93,091 131,008 117,437 95,619 99,295 71,709
(Income) loss from discontinued operations, net of tax9 14,300 (42,200) (1,866,000) 884,200
Net income (loss) attributable to noncontrolling interest 44,400 49,400 35,100 20,800 30,400 39,700
Net operating profit after taxes (NOPAT) 2,189,491 2,040,608 1,476,037 1,274,219 1,657,195 1,418,609

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 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in accrual for cost reduction actions.

5 Addition of increase (decrease) in equity equivalents to net income attributable to Air Products.

6 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 406,500 × 2.10% = 8,537

7 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 117,837 × 21.00% = 24,746

8 Addition of after taxes interest expense to net income attributable to Air Products.

9 Elimination of discontinued operations.

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. Air Products & Chemicals Inc. NOPAT increased from 2018 to 2019 and from 2019 to 2020.

Cash Operating Taxes

Air Products & Chemicals Inc., cash operating taxes calculation

US$ in thousands

Microsoft Excel
12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Income tax provision 478,400 480,100 524,300 260,900 586,500 415,900
Less: Deferred income tax expense (benefit) 165,000 57,600 (55,400) (38,000) 62,900 2,900
Add: Tax savings from interest expense 24,746 34,825 38,109 51,487 53,467 38,612
Cash operating taxes 338,146 457,325 617,809 350,387 577,067 451,612

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).

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. Air Products & Chemicals Inc. cash operating taxes decreased from 2018 to 2019 and from 2019 to 2020.

Invested Capital

Air Products & Chemicals Inc., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Short-term borrowings 7,700 58,200 54,300 144,000 935,800 1,494,300
Current portion of long-term debt 470,000 40,400 406,600 416,400 371,300 435,600
Long-term debt, excluding current portion 7,132,900 2,907,300 2,967,400 3,402,400 4,918,100 3,949,100
Long-term debt, related party 297,200 320,100 384,300
Operating lease liability1 406,500 264,039 211,716 172,795 194,476 334,361
Total reported debt & leases 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
Net deferred tax (assets) liabilities2 847,500 678,600 653,700 603,900 574,400 720,700
Allowance for doubtful accounts3 23,900 48,800 24,000 45,800 22,800 26,300
LIFO reserve4 23,300 79,000 100,800
Accrual for cost reduction actions5 4,700 17,800 9,900 41,500 16,300 41,700
Equity equivalents6 876,100 745,200 687,600 714,500 692,500 889,500
Accumulated other comprehensive (income) loss, net of tax7 2,140,100 2,375,600 1,741,900 1,847,400 2,388,300 2,125,900
Noncontrolling interests 363,300 334,700 318,800 99,300 133,800 132,100
Adjusted total Air Products shareholders’ equity 15,459,300 14,509,100 13,605,800 12,747,400 10,294,200 10,396,500
Construction in progress8 (1,784,200) (1,011,400) (748,500) (817,900) (1,528,000) (2,265,600)
Short-term investments9 (1,104,900) (166,000) (184,700) (404,000)
Invested capital 20,884,500 16,921,739 16,696,916 15,661,095 15,185,876 14,344,261

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 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 LIFO reserve. See details »

5 Addition of accrual for cost reduction actions.

6 Addition of equity equivalents to total Air Products shareholders’ equity.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

9 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. Air Products & Chemicals Inc. invested capital increased from 2018 to 2019 and from 2019 to 2020.

Cost of Capital

Air Products & Chemicals Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 59,756,749 59,756,749 ÷ 68,449,349 = 0.87 0.87 × 12.48% = 10.89%
Debt3 8,286,100 8,286,100 ÷ 68,449,349 = 0.12 0.12 × 1.98% × (1 – 21.00%) = 0.19%
Operating lease liability4 406,500 406,500 ÷ 68,449,349 = 0.01 0.01 × 2.10% × (1 – 21.00%) = 0.01%
Total: 68,449,349 1.00 11.09%

Based on: 10-K (reporting date: 2020-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 51,669,712 51,669,712 ÷ 55,342,851 = 0.93 0.93 × 12.48% = 11.65%
Debt3 3,409,100 3,409,100 ÷ 55,342,851 = 0.06 0.06 × 2.48% × (1 – 21.00%) = 0.12%
Operating lease liability4 264,039 264,039 ÷ 55,342,851 = 0.00 0.00 × 10.92% × (1 – 21.00%) = 0.04%
Total: 55,342,851 1.00 11.81%

Based on: 10-K (reporting date: 2019-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 34,589,703 34,589,703 ÷ 38,643,920 = 0.90 0.90 × 12.48% = 11.17%
Debt3 3,842,500 3,842,500 ÷ 38,643,920 = 0.10 0.10 × 2.71% × (1 – 24.50%) = 0.20%
Operating lease liability4 211,716 211,716 ÷ 38,643,920 = 0.01 0.01 × 11.83% × (1 – 24.50%) = 0.05%
Total: 38,643,920 1.00 11.42%

Based on: 10-K (reporting date: 2018-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 35,236,905 35,236,905 ÷ 39,481,900 = 0.89 0.89 × 12.48% = 11.14%
Debt3 4,072,200 4,072,200 ÷ 39,481,900 = 0.10 0.10 × 2.22% × (1 – 35.00%) = 0.15%
Operating lease liability4 172,795 172,795 ÷ 39,481,900 = 0.00 0.00 × 15.34% × (1 – 35.00%) = 0.04%
Total: 39,481,900 1.00 11.33%

Based on: 10-K (reporting date: 2017-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 30,375,996 30,375,996 ÷ 36,973,472 = 0.82 0.82 × 12.48% = 10.25%
Debt3 6,403,000 6,403,000 ÷ 36,973,472 = 0.17 0.17 × 2.42% × (1 – 35.00%) = 0.27%
Operating lease liability4 194,476 194,476 ÷ 36,973,472 = 0.01 0.01 × 19.16% × (1 – 35.00%) = 0.07%
Total: 36,973,472 1.00 10.59%

Based on: 10-K (reporting date: 2016-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 30,045,544 30,045,544 ÷ 36,519,904 = 0.82 0.82 × 12.48% = 10.27%
Debt3 6,140,000 6,140,000 ÷ 36,519,904 = 0.17 0.17 × 2.04% × (1 – 35.00%) = 0.22%
Operating lease liability4 334,361 334,361 ÷ 36,519,904 = 0.01 0.01 × 2.04% × (1 – 35.00%) = 0.01%
Total: 36,519,904 1.00 10.50%

Based on: 10-K (reporting date: 2015-09-30).

1 US$ in thousands

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Air Products & Chemicals Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 (127,086) 41,915 (430,921) (499,964) 49,144 (87,639)
Invested capital2 20,884,500 16,921,739 16,696,916 15,661,095 15,185,876 14,344,261
Performance Ratio
Economic spread ratio3 -0.61% 0.25% -2.58% -3.19% 0.32% -0.61%
Benchmarks
Economic Spread Ratio, Competitors4
Linde plc -8.04% -8.38%

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 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -127,086 ÷ 20,884,500 = -0.61%

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. Air Products & Chemicals Inc. economic spread ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Economic Profit Margin

Air Products & Chemicals Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Selected Financial Data (US$ in thousands)
Economic profit1 (127,086) 41,915 (430,921) (499,964) 49,144 (87,639)
Sales 8,856,300 8,918,900 8,930,200 8,187,600 9,524,400 9,894,900
Performance Ratio
Economic profit margin2 -1.43% 0.47% -4.83% -6.11% 0.52% -0.89%
Benchmarks
Economic Profit Margin, Competitors3
Linde plc -23.23% -23.32%

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 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × -127,086 ÷ 8,856,300 = -1.43%

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 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. Air Products & Chemicals Inc. economic profit margin improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.