Air Products & Chemicals Inc. (NYSE:APD)

The analysis of the financial ratios over the six-year period reveals several notable trends in the company's operational efficiency, liquidity, leverage, and profitability.

Asset Turnover

Both reported and adjusted total asset turnover ratios exhibit a declining trend from 2015 to 2020. Reported total asset turnover decreased from 0.57 in 2015 to 0.35 in 2020, indicating a reduction in the company's efficiency in generating sales from its assets. The adjusted ratio follows a similar pattern, suggesting consistent data adjustments do not materially change this insight.

Current Ratio

The current ratio has shown a significant improvement, increasing steadily from 0.80 in 2015 to 3.59 in 2020 in reported figures. The adjusted current ratio corroborates this trend, reaching 3.60 in 2020. This pattern reflects an enhancement in the company’s short-term liquidity position, implying stronger ability to cover current liabilities with current assets over time.

Debt to Equity

Reported debt to equity ratio declined from 0.81 in 2015 to a low of 0.30 in 2019, indicating reduced reliance on equity financing during most of the period. However, there was an increase to 0.65 in 2020, suggesting a reversal or increased leverage in that year. The adjusted debt to equity ratio reflects the same trend, with a slightly lower magnitude in values.

Debt to Capital

Debt to capital ratio also declined steadily from 0.45 in 2015 to 0.23 by 2019, demonstrating a conservative capital structure with diminished debt proportion. This ratio rises noticeably in 2020 to 0.40, aligning with the debt to equity increase, signaling a higher debt load relative to capital in the latest period analyzed.

Financial Leverage

The reported financial leverage ratio gradually decreased from 2.41 in 2015 to 1.71 in 2019, indicating a reduced use of debt in financing assets. However, it increased again to 2.08 in 2020, consistent with the observed uptick in debt ratios. Adjusted leverage trends mirror this movement but are slightly less pronounced.

Net Profit Margin

The reported net profit margin displayed volatility, starting at a relatively high 12.91% in 2015, dropping to 6.63% in 2016, then spiking dramatically to 36.65% in 2017 before moderate fluctuations to 21.3% in 2020. Adjusted net profit margin, while showing less extreme swings, generally increased over time, peaking at 26.29% in 2020. This suggests overall improving profitability with some reporting fluctuations or adjustments affecting the reported figures.

Return on Equity (ROE)

Reported ROE dropped from 17.63% in 2015 to 8.91% in 2016, surged to 29.75% in 2017, then declined and stabilized around the mid-teens, ending near 15.62% in 2020. Adjusted ROE showed less pronounced volatility but an overall downward trend between 2015 and 2019, followed by a rise to 17.48% in 2020. This indicates mixed performance in generating returns for shareholders, with a recovery in the latest year.

Return on Assets (ROA)

Reported ROA followed a pattern similar to profitability metrics, declining from 7.33% in 2015 to 3.5% in 2016, peaking at 16.25% in 2017, and subsequently settling at a moderate 7.5% in 2020. Adjusted ROA shows a generally increasing trend with some fluctuations, reaching 9.28% in 2020. The company demonstrates capacity to generate returns on assets, though with variability across the years.

In summary, the company has improved its liquidity position significantly and maintained a moderate level of profitability with variable returns. The asset turnover ratio decline coupled with fluctuating leverage ratios points to changes in operational efficiency and capital structure management, particularly an increased leverage in the most recent year examined. Profitability ratios suggest resilience with recovery in 2020, but overall growth in efficiency metrics appears limited during this period.

The financial data analyzed reveals several noteworthy trends over the period from 2015 to 2020. Sales figures demonstrate fluctuation with a general decline observed over these years. Starting at approximately $9.89 billion in 2015, sales decreased to roughly $8.19 billion in 2017, partially recovering to about $8.92 billion by 2018, before slightly decreasing again to near $8.86 billion in 2020.

Total assets exhibited a consistent upward trajectory throughout the period. Beginning at approximately $17.44 billion in 2015, the asset base grew each year, reaching approximately $25.17 billion by 2020. This represents a significant increase, particularly between 2019 and 2020, where total assets rose sharply by over $6 billion.

The reported total asset turnover ratio, indicative of how efficiently the company uses its assets to generate sales, declined steadily. Starting at 0.57 in 2015, this ratio decreased to 0.35 by 2020, signaling a reduced efficiency in asset utilization relative to sales generation. This decline parallels the increase in total assets and the decrease in sales volume.

Adjusted total assets and adjusted total asset turnover show trends consistent with their reported counterparts. Adjusted total assets increased from approximately $17.71 billion in 2015 to $25.08 billion in 2020, paralleling the trend observed in reported total assets. The adjusted total asset turnover declined from 0.56 in 2015 to 0.35 in 2020, again reflecting diminishing asset utilization efficiency.

Sales

Decreased overall from $9.89 billion in 2015 to $8.86 billion in 2020, with a notable dip in 2017 followed by a partial recovery and slight subsequent decline.

Total Assets

Expanded steadily from $17.44 billion in 2015 to $25.17 billion in 2020, with substantial growth between 2019 and 2020.

Reported Total Asset Turnover

Reduced from 0.57 in 2015 to 0.35 in 2020, indicating less efficient use of assets to generate sales.

Adjusted Total Assets

Increased in tandem with reported total assets from $17.71 billion to $25.08 billion over the period.

Adjusted Total Asset Turnover

Declined from 0.56 in 2015 to 0.35 in 2020, mirroring the trend of reported total asset turnover.

In summary, the observed data reflects a period of asset growth accompanied by decreasing sales and diminishing asset turnover ratios. This pattern suggests that while the company expanded its asset base significantly, the effectiveness of these assets in generating sales diminished over the analyzed timeframe.

Trends in Current Assets

Current assets demonstrated a generally increasing trend over the six-year period, starting at approximately $2.91 billion in 2015 and reaching a peak near $8.68 billion in 2020. There was a notable rise from 2015 to 2017, followed by a decline in 2018 and 2019, before a substantial increase occurred in 2020.

Trends in Current Liabilities

Current liabilities showed a declining pattern from 2015 through 2019, decreasing from about $3.65 billion to $1.82 billion. However, in 2020, there was an increase to approximately $2.42 billion, interrupting the prior downward trend.

Current Ratio Analysis

The reported current ratio followed an upward trend throughout the period, moving from 0.8 in 2015 to 3.59 in 2020. This indicates improving short-term liquidity, with the ratio more than quadrupling over the six years. The adjusted current ratio showed similar behavior, closely mirroring the reported current ratio values.

Comparison of Reported and Adjusted Figures

The adjusted figures for current assets and liabilities were very close to the reported values for each period, resulting in nearly identical adjusted current ratios compared to the reported current ratios. This suggests that adjustments made did not materially affect the liquidity assessment.

Overall Financial Position Insight

The increase in current assets combined with the decline in current liabilities until 2019 contributed to progressively stronger liquidity, as evidenced by rising current ratios. The spike in current assets in 2020, alongside a moderate increase in current liabilities, further enhanced liquidity. These trends imply a more conservative working capital approach, improving the company’s ability to cover short-term obligations.

The financial data reveals notable fluctuations in both debt and equity levels over the six-year period under review. Total debt experienced a significant decline from 2015 through 2019, decreasing from approximately 5.88 billion US dollars to 3.33 billion US dollars. However, in 2020, the total debt surged sharply to nearly 7.91 billion US dollars, representing the highest point in the period.

Shareholders’ equity displayed a generally increasing trend throughout the years. Starting at roughly 7.25 billion US dollars in 2015, equity rose steadily each year and reached its peak at about 12.08 billion US dollars in 2020. The equity growth trend demonstrates strengthening capital base despite the volatility in debt.

Debt to equity ratios, both reported and adjusted, reflect the changes in debt and equity levels and indicate shifting leverage positions. The reported debt to equity ratio decreased from 0.81 in 2015 to a low of 0.30 in 2019, suggesting a reduction in reliance on debt financing relative to equity. However, in 2020, this ratio increased again to 0.65, indicating a significant increase in leverage. A similar pattern is observed in the adjusted debt to equity ratio, which dropped from 0.75 in 2015 to 0.30 in 2019 before rising sharply to 0.62 in 2020.

The adjusted figures for debt and equity show consistent trends paralleling the reported figures, reinforcing the reliability of these observations. The reduction in debt until 2019 coupled with rising equity implies a strengthening balance sheet and potentially greater financial flexibility. The considerable increase in debt in 2020, however, suggests a strategic shift towards increased leverage, which may be linked to external factors or specific investment needs.

Overall, the data indicates a period of deleveraging and capital enhancement from 2015 to 2019, followed by a pronounced leverage increase in 2020. Monitoring the drivers and impacts of this increased debt level will be crucial for assessing ongoing financial stability and risk profile.

Total Debt

The total debt exhibited variability over the analyzed periods. Initially, it rose from approximately 5.88 billion USD in 2015 to a peak near 6.23 billion USD in 2016. This was followed by a significant decrease reaching about 3.33 billion USD in 2019. However, in 2020, debt levels sharply increased again, exceeding 7.9 billion USD, the highest in the span.

Total Capital

Total capital showed a general growth trend. It increased steadily from about 13.13 billion USD in 2015 to almost 14.67 billion USD by 2018, then slightly declined to around 14.38 billion USD in 2019, before rising substantially to nearly 20.0 billion USD in 2020.

Reported Debt to Capital Ratio

The reported debt to capital ratio decreased consistently from 0.45 in 2015 to a low of 0.23 in 2019, indicating a reduction in leverage relative to capital during that period. However, in 2020, the ratio surged back to 0.40, reflecting increased leverage associated with the debt increase.

Adjusted Total Debt

Adjusted total debt followed a pattern similar to reported total debt but with slightly higher values each year. It rose from about 6.21 billion USD in 2015 to over 6.42 billion USD in 2016, then declined to approximately 3.59 billion USD by 2019. A notable increase occurred in 2020, reaching about 8.31 billion USD.

Adjusted Total Capital

Adjusted total capital rose steadily from about 14.48 billion USD in 2015 to nearly 15.89 billion USD in 2018. There was a slight decline to approximately 15.72 billion USD in 2019, followed by a substantial increase to over 21.63 billion USD in 2020.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio decreased from 0.43 in 2015 to 0.23 in 2019, aligning with the trend observed in the reported ratio and reflecting a reduction in leverage over this period. The ratio then increased sharply to 0.38 in 2020, indicating a significant change in the capital structure driven by increased debt levels.

The analysis of the financial data over the six-year period from 2015 to 2020 reveals several key trends concerning assets, equity, and financial leverage.

Total Assets

Total assets exhibit a generally upward trend from 17.4 billion US dollars in 2015 to 25.2 billion in 2020. Notably, there is a steady increase each year except for a slight decline in 2019 compared to 2018. The most significant growth occurs between 2019 and 2020, reflecting an increase of over 6 billion US dollars, indicating possible expansion or asset acquisition during that period.

Total Shareholders’ Equity

Shareholders’ equity shows fluctuations throughout the period. After a modest decline from 7.2 billion in 2015 to 7.1 billion in 2016, equity sharply increases to over 10 billion in 2017 and continues to grow steadily, reaching approximately 12.1 billion by 2020. This pattern suggests improvements in retained earnings or capital inflows during and after 2016.

Reported Financial Leverage

The reported financial leverage ratio decreases from 2.41 in 2015 to a low of 1.71 in 2019, indicating a reduction in reliance on debt relative to equity. However, there is a reversal in 2020, with leverage rising back to 2.08. This shift coincides with the significant increase in total assets in 2020 and may reflect increased borrowing or changes in capital structure.

Adjusted Total Assets

Adjusted total assets follow a pattern closely aligned with reported total assets, increasing progressively from approximately 17.7 billion in 2015 to 25.1 billion in 2020. The minor differences suggest that adjustments have a consistent proportional impact without altering overall asset growth trends.

Adjusted Total Equity

Adjusted total equity exhibits a trend similar to reported shareholders’ equity, with a decrease early in the period followed by significant recovery and growth, increasing from about 8.3 billion in 2015 to 13.3 billion in 2020. This indicates that adjustments enhance the equity figures, promoting a more robust equity base over time.

Adjusted Financial Leverage

Adjusted financial leverage mirrors the reported leverage trend, decreasing steadily from 2.14 in 2015 to 1.58 in 2019, suggesting improved financial stability or reduced debt levels relative to equity. The ratio then rises to 1.88 in 2020, confirming a change in financing strategy or increased leverage corresponding with asset growth during that year.

Overall, the company demonstrates a trajectory of asset growth and increasing equity, with financial leverage ratios declining over most of the analyzed period before rising again in 2020. These dynamics may reflect strategic financial management aimed at strengthening the balance sheet, followed by increased leveraging to support new initiatives or expansion in the most recent fiscal year.

The financial data reveals fluctuations in both net income and sales over the six-year period ending in 2020. Net income attributable to the company exhibited volatility, starting at 1.28 billion USD in 2015, dropping sharply to 631 million USD in 2016, rebounding significantly to 3 billion USD in 2017, and then stabilizing within a range of approximately 1.5 to 1.9 billion USD through 2018 to 2020. This pattern indicates notable variability in profitability, with 2017 being an outlier year of exceptional income.

Sales figures displayed a predominantly declining trend, beginning at roughly 9.9 billion USD in 2015 and decreasing steadily to about 8.2 billion USD in 2017. Following this trough, sales showed marginal improvement but remained below initial levels, closing at approximately 8.9 billion USD in 2019 and slightly declining again to 8.86 billion USD in 2020. The overall sales trend suggests challenges in revenue generation or market conditions impacting the company’s sales volumes or pricing.

Analysis of reported net profit margin aligns with the net income trend and reveals considerable variation. The margin fell from a relatively healthy 12.91% in 2015 down to 6.63% in 2016, surged dramatically to 36.65% in 2017, and then settled between 16.77% and 21.3% for the subsequent years. This substantial margin increase in 2017 is consistent with the spike in net income for the same year, suggesting either one-time gains, operational efficiencies, or accounting adjustments that year. The following years show improved profitability relative to the earlier part of the period despite lower sales, indicating better cost control or pricing power.

Adjusted net income data presents a different perspective, showing initial growth from 441 million USD in 2015 to 1.3 billion USD in 2016 and further to 1.7 billion USD in 2017. However, adjusted income then declined from 2018 through 2019 to approximately 1.2 billion USD before surging again to nearly 2.33 billion USD in 2020. This pattern implies adjustments that mitigate some of the volatility seen in reported net income, though it still reflects significant annual fluctuations.

Correspondingly, the adjusted net profit margin rose from 4.46% in 2015 to a peak of 20.95% in 2017 before declining to around 13.86% in 2019 and culminating in a pronounced increase to 26.29% in 2020. This suggests improved underlying profitability in 2020 when excluding one-time or non-recurring items.

Overall, the data indicates a business environment marked by volatility in income and profit margins amidst generally declining sales. The sharp fluctuations in net income and profit margins, particularly the spikes in 2017 and 2020, may reflect significant one-off events or changes in accounting treatments. Despite lower sales volumes, the company appears to have enhanced profitability and cost management in recent years, particularly visible through adjusted figures. The improved adjusted profit margin in 2020 points to stronger operational performance, though the persistent sales decline could present ongoing challenges.

The financial data reveals notable fluctuations and overall progression in the company's profitability and equity base over the six-year period from 2015 to 2020.

Net Income Attributable to Air Products

Net income exhibited substantial volatility. Starting at 1.28 billion USD in 2015, it declined sharply to 631 million USD in 2016, followed by a significant surge to 3.00 billion USD in 2017. Subsequently, it decreased to 1.50 billion USD in 2018, then increased moderately to 1.76 billion USD in 2019, and further to 1.89 billion USD in 2020. This pattern suggests variable earnings performance with high peaks particularly in 2017.

Total Air Products Shareholders’ Equity

The total shareholders’ equity consistently increased over the period. Beginning at approximately 7.25 billion USD in 2015, it slightly decreased in 2016 but then rose every year thereafter, reaching nearly 12.08 billion USD by 2020. This trend reflects steady growth in the company’s equity position, indicative of strengthening financial stability and reinvestment.

Reported Return on Equity (ROE)

The reported ROE mirrored the volatility in net income, starting at 17.63% in 2015, dropping to 8.91% in 2016, then peaking sharply at 29.75% in 2017. After the peak, it declined to 13.8% in 2018, before gradually increasing to 15.92% in 2019 and slightly decreasing to 15.62% in 2020. The fluctuations indicate variability in profitability relative to shareholders’ equity, with 2017 being an exceptional year.

Adjusted Net Income

The adjusted net income presents a different trend with less volatility. It started at 441 million USD in 2015, increased to 1.31 billion USD in 2016, and further to 1.72 billion USD in 2017. It then declined gradually to 1.43 billion USD in 2018 and 1.24 billion USD in 2019 before increasing significantly to 2.33 billion USD in 2020. This pattern suggests smoother earnings performance after adjustments, with a strong recovery in the most recent year.

Adjusted Total Equity

Adjusted total equity followed a growing trajectory similar to total reported equity. Starting at 8.27 billion USD in 2015, there was a slight decrease in 2016, after which it continually increased to reach 13.32 billion USD by 2020. This indicates ongoing strengthening of equity on an adjusted basis as well.

Adjusted Return on Equity (Adjusted ROE)

Adjusted ROE showed an initial low of 5.33% in 2015, followed by a sharp increase to 16.51% in 2016. It remained relatively stable in 2017 at 15.74%, before a gradual decline over 2018 (12.02%) and 2019 (10.19%). However, in 2020, adjusted ROE rebounded strongly to 17.48%, representing the highest level observed over the period. This pattern implies increasing profitability on an adjusted basis in recent years after a period of decline.

In summary, the company experienced pronounced variability in reported net income and ROE, with a notable peak in 2017. Adjusted figures indicate steadier performance and a strong recovery in 2020. The equity base consistently expanded, underlining a strengthening financial structure. The divergence between reported and adjusted metrics suggests the presence of non-recurring items or accounting adjustments influencing reported earnings and returns.

The analysis of the financial data over the period from 2015 to 2020 reveals several key trends and notable fluctuations in profitability and asset levels.

Net Income Attributable to Air Products (US$ in thousands)

This metric exhibited considerable volatility. After a strong position in 2015 with approximately $1.28 billion, net income dropped sharply in 2016 to around $631 million. In 2017, the company experienced a significant rebound, peaking at about $3 billion. Subsequently, the net income fluctuated, declining to approximately $1.5 billion in 2018, then rising moderately through 2019 and 2020 to about $1.9 billion. This indicates a year of exceptional profit in 2017 followed by a return to a more moderate, but still improved, level.

Total Assets (US$ in thousands)

Total assets showed a steady upward trend from $17.4 billion in 2015 to approximately $19 billion in 2019, reflecting consistent asset growth. In 2020, total assets surged significantly to about $25.2 billion, indicating a major investment or acquisition, or reassessment of assets in that period.

Reported Return on Assets (ROA, %)

The ROA mirrored the volatility seen in net income. A peak was observed in 2017 at 16.25%, attributed to the substantial spike in net income that year. Before and after 2017, ROA values remained generally lower, ranging from about 3.5% in 2016 to roughly 9.3% in 2019, followed by a decline to 7.5% in 2020. This suggests that asset efficiency in generating reported net income was unusually high in 2017 but more moderate and consistent in other years.

Adjusted Net Income (US$ in thousands)

The adjusted net income followed a different pattern from the reported net income, beginning with a relatively low figure of about $441 million in 2015, increasing steadily to a high of approximately $1.7 billion in 2017, before declining through 2019 to about $1.2 billion. In 2020 adjusted net income recovered significantly to nearly $2.3 billion, indicating possibly improved operational performance after adjustments for non-recurring or unusual items.

Adjusted Total Assets (US$ in thousands)

Adjusted total assets trended upward throughout the period from roughly $17.7 billion in 2015 to about $19.1 billion in 2019, before a substantial increase in 2020 to approximately $25.1 billion, aligning closely with the pattern observed in reported total assets. This rise suggests a major strategic move or reassessment with a material impact on the asset base.

Adjusted Return on Assets (Adjusted ROA, %)

Adjusted ROA increased from a low 2.49% in 2015 to a peak of 9.26% in 2017, then declined steadily to 6.46% in 2019. A notable improvement occurred in 2020, with adjusted ROA rising to 9.28%. This pattern indicates that, when considering adjustments, asset profitability improved significantly in 2017, weakened somewhat in the following years, then recovered in 2020.

Overall, the financial data suggests a period marked by strong fluctuations in profitability, particularly visible in the 2017 peak for both reported and adjusted net income and ROA. Asset growth was steady until 2019, followed by a material increase in 2020, which may reflect strategic investments or acquisitions influencing asset base and subsequent returns. The adjusted figures provide a smoother perspective on profitability trends, with 2020 showing a recovery after a period of decline. This implies operational improvements or favorable adjustments during the final year analyzed.