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Microsoft Excel LibreOffice Calc

Allergan PLC (NYSE:AGN)


Economic Value Added (EVA)

Advanced level


Economic Profit

Allergan PLC, economic profit calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =

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 2017 to 2018 and from 2018 to 2019.

Net Operating Profit after Taxes (NOPAT)

Allergan PLC, NOPAT calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income (loss) attributable to shareholders
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for doubtful accounts2
Increase (decrease) in deferred revenue3
Increase (decrease) in accrued product warranties4
Increase (decrease) in restructuring reserve5
Increase (decrease) in equity equivalents6
Interest expense
Interest expense, operating lease liability7
Adjusted interest expense
Tax benefit of interest expense8
Adjusted interest expense, after taxes9
Interest income
Dividend income
Investment income, before taxes
Tax expense (benefit) of investment income10
Investment income, after taxes11
(Income) loss from discontinued operations, net of tax12
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

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 reserve.

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

7 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

8 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 12.50% =

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

10 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 12.50% =

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 2017 to 2018 and from 2018 to 2019.

Cash Operating Taxes

Allergan PLC, cash operating taxes calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Provision (benefit) for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

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 decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Invested Capital

Allergan PLC, invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Current portion of long-term debt and capital leases
Long-term debt and capital leases, excluding current portion
Operating lease liability1
Total reported debt & leases
Shareholders’ equity
Net deferred tax (assets) liabilities2
Allowance for doubtful accounts3
Deferred revenue4
Accrued product warranties5
Restructuring reserve6
Equity equivalents7
Accumulated other comprehensive (income) loss, net of tax8
Noncontrolling interest
Adjusted shareholders’ equity
Construction in progress9
Marketable securities and other long-term investments10
Invested capital

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

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 deferred revenue.

5 Addition of accrued product warranties.

6 Addition of restructuring reserve.

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 and other long-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. Allergan PLC’s invested capital decreased from 2017 to 2018 and from 2018 to 2019.

Cost of Capital

Allergan PLC, cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Preferred shares, $0.0001 par value per share (book value) ÷ = × =
Long-term debt and capital leases, including current portion3 ÷ = × × (1 – 12.50%) =
Operating lease liability4 ÷ = × × (1 – 12.50%) =
Total:

Based on: 10-K (filing date: 2020-02-18).

1 US$ in thousands

2 Equity. See details »

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

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Preferred shares, $0.0001 par value per share (book value) ÷ = × =
Long-term debt and capital leases, including current portion3 ÷ = × × (1 – 12.50%) =
Operating lease liability4 ÷ = × × (1 – 12.50%) =
Total:

Based on: 10-K (filing date: 2019-02-15).

1 US$ in thousands

2 Equity. See details »

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

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Preferred shares, $0.0001 par value per share (book value) ÷ = × =
Long-term debt and capital leases, including current portion3 ÷ = × × (1 – 12.50%) =
Operating lease liability4 ÷ = × × (1 – 12.50%) =
Total:

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

1 US$ in thousands

2 Equity. See details »

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

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Preferred shares, $0.0001 par value per share (book value) ÷ = × =
Long-term debt and capital leases, including current portion3 ÷ = × × (1 – 12.50%) =
Operating lease liability4 ÷ = × × (1 – 12.50%) =
Total:

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

1 US$ in thousands

2 Equity. See details »

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

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Preferred shares, $0.0001 par value per share (book value) ÷ = × =
Long-term debt and capital leases, including current portion3 ÷ = × × (1 – 12.50%) =
Operating lease liability4 ÷ = × × (1 – 12.50%) =
Total:

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

1 US$ in thousands

2 Equity. See details »

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

4 Operating lease liability. See details »


Economic Spread Ratio

Allergan PLC, economic spread ratio calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

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. Allergan PLC’s economic spread ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Economic Profit Margin

Allergan PLC, economic profit margin calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1
Net revenues
Add: Increase (decrease) in deferred revenue
Adjusted net revenues
Performance Ratio
Economic profit margin2

Based on: 10-K (filing date: 2020-02-18), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-24), 10-K (filing date: 2016-02-26).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × ÷ =

Performance 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 2017 to 2018 and from 2018 to 2019.