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Microsoft Excel LibreOffice Calc


Economic Value Added (EVA)

Difficulty: Advanced


Economic Profit

Allergan PLC, economic profit calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net operating profit after taxes (NOPAT)1 hidden hidden hidden hidden hidden
Cost of capital2 hidden hidden hidden hidden hidden
Invested capital3 hidden hidden hidden hidden hidden
Economic profit4 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

2017 Calculations

1 NOPAT. See Details »

2 Cost of capital. See Details »

3 Invested capital. See Details »

4 Economic profit = NOPAT – Cost of capital × Invested capital
= hiddenhidden × hidden = hidden

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. Allergan PLC's economic profit increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Net Operating Profit after Taxes (NOPAT)

Allergan PLC, NOPAT calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Net income (loss) attributable to shareholders hidden hidden hidden hidden hidden
Deferred income tax expense (benefit)1 hidden hidden hidden hidden hidden
Increase (decrease) in allowance for doubtful accounts2 hidden hidden hidden hidden hidden
Increase (decrease) in deferred revenue3 hidden hidden hidden hidden hidden
Increase (decrease) in accrued product warranties4 hidden hidden hidden hidden hidden
Increase (decrease) in restructuring accrual5 hidden hidden hidden hidden hidden
Increase (decrease) in equity equivalents6 hidden hidden hidden hidden hidden
Interest expense hidden hidden hidden hidden hidden
Interest expense, operating lease obligations7 hidden hidden hidden hidden hidden
Adjusted interest expense hidden hidden hidden hidden hidden
Tax benefit of interest expense8 hidden hidden hidden hidden hidden
Adjusted interest expense, after taxes9 hidden hidden hidden hidden hidden
Interest income hidden hidden hidden hidden hidden
Dividend income hidden hidden hidden hidden hidden
Investment income, before taxes hidden hidden hidden hidden hidden
Tax expense (benefit) of investment income10 hidden hidden hidden hidden hidden
Investment income, after taxes11 hidden hidden hidden hidden hidden
(Income) loss from discontinued operations, net of tax12 hidden hidden hidden hidden hidden
Net income (loss) attributable to noncontrolling interest hidden hidden hidden hidden hidden
Net operating profit after taxes (NOPAT) hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Elimination of deferred tax expense. See Details »

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

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in accrued product warranties.

5 Addition of increase (decrease) in restructuring accrual.

6 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to shareholders.

7 Addition of interest expense on capitalized operating leases. See Details »

8 Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 12.50% = hidden

9 Addition of after taxes interest expense to net income (loss) attributable to shareholders.

10 Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 12.50% = hidden

11 Elimination of after taxes investment income.

12 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. Allergan PLC's NOPAT increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Cash Operating Taxes

Allergan PLC, cash operating taxes calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Provision (benefit) for income taxes hidden hidden hidden hidden hidden
Less: Deferred income tax expense (benefit) hidden hidden hidden hidden hidden
Add: Tax savings from interest expense hidden hidden hidden hidden hidden
Less: Tax imposed on investment income hidden hidden hidden hidden hidden
Cash operating taxes hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

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. Allergan PLC's cash operating taxes declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

Invested Capital

Allergan PLC, invested capital calculation (financing approach)

USD $ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Current portion of long-term debt and capital leases hidden hidden hidden hidden hidden
Long-term debt and capital leases, excluding current portion hidden hidden hidden hidden hidden
PV of operating lease payments1 hidden hidden hidden hidden hidden
Total reported debt & leases hidden hidden hidden hidden hidden
Shareholders' equity hidden hidden hidden hidden hidden
Net deferred tax (assets) liabilities2 hidden hidden hidden hidden hidden
Allowance for doubtful accounts3 hidden hidden hidden hidden hidden
Deferred revenue4 hidden hidden hidden hidden hidden
Accrued product warranties5 hidden hidden hidden hidden hidden
Restructuring accrual6 hidden hidden hidden hidden hidden
Equity equivalents7 hidden hidden hidden hidden hidden
Accumulated other comprehensive (income) loss, net of tax8 hidden hidden hidden hidden hidden
Noncontrolling interest hidden hidden hidden hidden hidden
Adjusted shareholders' equity hidden hidden hidden hidden hidden
Construction in progress9 hidden hidden hidden hidden hidden
Marketable securities10 hidden hidden hidden hidden hidden
Invested capital hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

1 Addition of capitalized operating leases. See Details »

2 Elimination of deferred taxes from assets and liabilities. See Details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of accrued product warranties.

6 Addition of restructuring accrual.

7 Addition of equity equivalents to shareholders' equity.

8 Removal of accumulated other comprehensive income.

9 Subtraction of construction in progress.

10 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Allergan PLC's invested capital declined from 2015 to 2016 and from 2016 to 2017.

Cost of Capital

Allergan PLC, cost of capital calculations

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Preferred shares, $0.0001 par value per share (book value) hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Long-term debt and capital leases, including current portion3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16).

1 USD $ in thousands

2 Equity. See Details »

3 Long-term debt and capital leases, including current portion. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Preferred shares, $0.0001 par value per share (book value) hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Long-term debt and capital leases, including current portion3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2017-02-24).

1 USD $ in thousands

2 Equity. See Details »

3 Long-term debt and capital leases, including current portion. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Preferred shares, $0.0001 par value per share (book value) hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Long-term debt and capital leases, including current portion3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2016-02-26).

1 USD $ in thousands

2 Equity. See Details »

3 Long-term debt and capital leases, including current portion. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Preferred shares, $0.0001 par value per share (book value) hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Long-term debt and capital leases, including current portion3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2015-02-18).

1 USD $ in thousands

2 Equity. See Details »

3 Long-term debt and capital leases, including current portion. See Details »

4 PV of operating lease payments. See Details »

Fair Value1 Weights Cost of Capital
Equity2 hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Preferred shares, $0.0001 par value per share (book value) hidden hidden ÷ hidden = hidden hidden × hidden = hidden
Long-term debt and capital leases, including current portion3 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
PV of operating lease payments4 hidden hidden ÷ hidden = hidden hidden × hidden × (1 – 12.50%) = hidden
Total: hidden hidden hidden

Based on: 10-K (filing date: 2014-02-25).

1 USD $ in thousands

2 Equity. See Details »

3 Long-term debt and capital leases, including current portion. See Details »

4 PV of operating lease payments. See Details »


Economic Spread

Allergan PLC, economic spread calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in thousands)
Economic profit1 hidden hidden hidden hidden hidden
Invested capital2 hidden hidden hidden hidden hidden
Ratio
Economic spread3 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Economic profit. See Details »

2 Invested capital. See Details »

3 Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Economic spread The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Allergan PLC's economic spread improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

Economic Profit Margin

Allergan PLC, economic profit margin calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in thousands)
Economic profit1 hidden hidden hidden hidden hidden
Net revenues hidden hidden hidden hidden hidden
Add: Increase (decrease) in deferred revenue hidden hidden hidden hidden hidden
Adjusted net revenues hidden hidden hidden hidden hidden
Ratio
Economic profit margin2 hidden hidden hidden hidden hidden

Based on: 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26), 10-K (filing date: 2015-02-18), 10-K (filing date: 2014-02-25).

2017 Calculations

1 Economic profit. See Details »

2 Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × hidden ÷ hidden = hidden

Ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company's 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. Allergan PLC's economic profit margin improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.