Baxter International Inc. (NYSE:BAX)

Current Income Tax Expense

The current income tax expense exhibited a rising trend from 2011 to 2013, increasing from 381 million US dollars to a peak of 761 million US dollars. However, in the subsequent years, this expense decreased significantly, declining to 571 million US dollars in 2014 and dropping sharply to 88 million US dollars in 2015.

Deferred Income Tax Expense (Benefit)

The deferred income tax component showed considerable variability over the observed periods. It started as a positive expense of 172 million US dollars in 2011 but turned into a benefit in the following years, reaching negative values of -17 million in 2012 and further decreasing to -224 million in 2013. The deferred tax benefit reduced in magnitude in the later years, recorded at -78 million in 2014 and -53 million in 2015, indicating a consistent benefit but lessening over time.

Overall Income Tax Expense

The total income tax expense remained relatively stable from 2011 to 2013, fluctuating slightly between 553 million and 563 million US dollars. It then declined gradually to 493 million US dollars in 2014 and experienced a significant drop to 35 million US dollars in 2015. This overall downward trend in total tax expense appears influenced by both the sharp reduction in current tax expense and the persistent deferred tax benefits in the latter years.

The analysis of the financial data reveals consistent trends in the corporate tax rates over the five-year period ending December 31, 2015. The U.S. federal statutory tax rate remained constant at 35% throughout the entire timeframe, indicating no changes in the statutory tax legislation applicable to the entity during these years.

In contrast, the effective income tax rate exhibited notable fluctuations and a significant decline by the end of the period. From 2011 to 2014, the effective tax rate hovered slightly around 20%, with values recorded at 20%, 20%, 21%, and 20.2% respectively. This stability suggests relatively consistent tax planning effectiveness or similar operational structures impacting taxable income and deductions during these years.

A marked decrease is observed in 2015, with the effective income tax rate dropping sharply to 8.2%. This considerable reduction relative to prior years implies a substantial change in tax strategy, income composition, or recognition of tax benefits that considerably lowered the overall tax burden. Such a deviation from previous trends merits further investigation to understand the underlying causes, which could include increased tax credits, changes in income allocations across jurisdictions, or non-recurring tax events influencing that year's taxation.

Overall, while the statutory tax rate provided a stable framework, the effective tax rate demonstrated both consistency in the initial years and a pronounced shift in the final year analyzed. This pattern reflects dynamic tax management and operational factors influencing taxable income beyond static statutory rates.

The financial data reveals several notable trends and fluctuations in accrued expenses, retirement benefits, tax-related assets and liabilities, as well as deferred tax balances over the period analyzed.

Accrued Expenses

Accrued expenses exhibited considerable volatility, starting at 251 million USD in 2011, decreasing to a low of 171 million USD in 2012, then sharply rising to 426 million USD in 2013 and reaching a peak of 642 million USD in 2014, before falling back to 389 million USD in 2015. This pattern indicates fluctuating short-term liabilities or operational accruals.

Retirement Benefits

Retirement benefits showed inconsistent trends, increasing from 658 million USD in 2011 to 804 million USD in 2012, declining to 669 million USD in 2013, then rising again to 898 million USD in 2014, and finally falling substantially to 352 million USD in 2015. Such swings could reflect changes in actuarial valuations or funding policies.

Alternative Minimum Tax Credit

The alternative minimum tax credit was reported only in 2011 at 54 million USD, with no data available for subsequent years, indicating the likely absence or non-recording of this item thereafter.

Tax Credits and Net Operating Losses

Tax credits and net operating losses decreased slightly from 198 million USD in 2011 to 169 million USD in 2012, then increased significantly to 426 million USD in 2013, followed by a moderate decrease to 369 million USD in 2014 and a further rise to 547 million USD in 2015. This general upward trend suggests an increase in tax benefits and loss carryforwards available for offsetting taxable income.

Deferred Tax Assets, Gross

The gross deferred tax assets increased steadily from 1,161 million USD in 2011 to a peak of 1,909 million USD in 2014, before declining to 1,288 million USD in 2015. This rise and fall pattern indicates variability in temporary differences expected to be realized in the future.

Valuation Allowances

Valuation allowances showed relative stability with minor fluctuations, moving from a negative 116 million USD in 2011 to negative 104 million USD in 2012, dipping further to negative 137 million USD during 2013 and 2014, before slightly improving to negative 135 million USD in 2015. The consistent negative balance suggests a continuing estimate of uncollectible deferred tax assets.

Deferred Tax Assets, Net

Net deferred tax assets closely followed the trends in gross deferred tax assets, with slight declines and recoveries, amounting to 1,045 million USD in 2011, a small decrease to 1,040 million USD in 2012, a substantial increase to 1,384 million USD in 2013, rising further to 1,772 million USD in 2014, before decreasing to 1,153 million USD in 2015.

Subsidiaries’ Unremitted Earnings

Negative balances for subsidiaries’ unremitted earnings show a steady improvement over the period, from negative 211 million USD in 2011 worsening to negative 222 million USD in 2012 and further negative 265 million USD in 2013, then improving to negative 208 million USD in 2014 and reaching negative 147 million USD in 2015. This could indicate reduced deferred tax liabilities related to foreign earnings retained overseas.

Asset Basis Differences

Asset basis differences also reflect increasing negative values, starting at negative 270 million USD in 2011, slightly worsening to negative 294 million USD in 2012, then sharply dropping to negative 849 million USD in 2013, further to negative 1,011 million USD in 2014, and somewhat improving to negative 847 million USD in 2015. The growing negative balances may indicate timing differences associated with assets bases for tax purposes.

Deferred Tax Liabilities

Deferred tax liabilities expanded in magnitude over the years, from negative 481 million USD in 2011 to negative 516 million USD in 2012, declining sharply further to negative 1,114 million USD in 2013, increasing to negative 1,219 million USD in 2014, and then improving to negative 994 million USD in 2015, consistent with the asset basis differences trend.

Net Deferred Tax Asset (Liability)

The net deferred tax asset (liability) position exhibited pronounced fluctuations, starting at a positive 564 million USD in 2011, decreasing to 524 million USD in 2012, sharply declining to 270 million USD in 2013, rebounding to 553 million USD in 2014, and decreasing significantly to 159 million USD in 2015. This volatility reflects the dynamic interplay between deferred tax assets and liabilities during the period.

Current Deferred Tax Assets

The current deferred tax assets increased steadily from US$295 million in 2011 to US$501 million in 2014, indicating a growing expectation of future tax benefits within one year. However, data for 2015 is missing, preventing further analysis for that year.

Noncurrent Deferred Tax Assets

Noncurrent deferred tax assets showed a decline from US$1,156 million in 2012 to US$273 million in 2014, followed by a partial recovery to US$354 million in 2015. This pattern suggests a significant reduction in long-term tax asset expectations during 2013-2014, with some stabilization or reversal occurring later.

Current Deferred Tax Liabilities

Current deferred tax liabilities fluctuated, rising from US$738 million in 2011 to a peak of US$878 million in 2012, then falling sharply to US$9 million by the end of 2014. The sharp decline by 2014 indicates either reversal of previous liabilities or reclassification. Data for 2015 is unavailable.

Noncurrent Deferred Tax Liabilities

Noncurrent deferred tax liabilities increased from US$98 million in 2012 to US$239 million in 2013, then slightly decreased to US$195 million by 2015. The rise followed by a moderate decline suggests some variability in long-term tax obligations, but overall levels remained relatively stable after the peak in 2013.

The financial data over the five-year period reveals several notable trends in the company's assets, liabilities, equity, and net income when considering both reported and adjusted figures.

Assets

The current assets steadily increased from 2011 to 2015, with reported current assets growing from $8,650 million to $11,796 million. Adjusted current assets followed a similar trend, showing a consistent rise each year and aligning with reported figures by 2015. Total assets, however, showed more variability. Reported total assets increased significantly from 2011 to 2014, peaking at $25,869 million in 2013 and slightly declining thereafter to $20,975 million in 2015. Adjusted total assets mirrored this pattern but were consistently lower than reported figures, reflecting the effect of deferred income tax adjustments. Overall, asset growth was positive in current assets but fluctuated in total assets towards the end of the period.

Liabilities

Current liabilities showed some fluctuation within the period. Reported current liabilities decreased slightly from 2011 to 2012, then increased through 2014 before declining again in 2015. Adjusted current liabilities exhibited a similar pattern but were consistently lower than reported amounts, indicating adjustments that reduced the liability base. Total liabilities rose steadily from 2011, reaching a peak in 2014, before falling sharply by 2015. Adjusted total liabilities consistently trailed reported totals but demonstrated the same overall trend of increasing then decreasing. The 2015 decrease in liabilities suggests a reduction in debt or other obligations.

Shareholders’ Equity

Reported shareholders’ equity increased gradually from 2011 through 2015, with a moderate dip in 2014 followed by a recovery in 2015. Adjusted equity values also increased over the period, though they were consistently lower than reported equity, reflecting deferred tax liabilities or related adjustments. The upward trajectory in equity suggests sustained growth in net assets attributable to shareholders, indicating overall financial strengthening despite fluctuations in total assets and liabilities.

Net Income

Net income attributable to the company showed variability and a general decline over the five years. Both reported and adjusted net income peaked in 2012, with reported income at $2,326 million and adjusted at $2,309 million. Afterwards, net income declined in 2013 and rebounded in 2014 before experiencing a significant drop in 2015, with reported net income falling to $968 million and adjusted to $915 million. This decline in the latest period suggests challenges affecting the company's profitability.

Overall, the data reflects growth in current assets and shareholders’ equity during most of the period, tempered by volatility in total assets and liabilities. The downward trend in net income in the final year is a point of concern, indicating possible operational or market difficulties impacting earnings. The adjustments for deferred income taxes consistently result in lower asset and equity values and slightly lower liabilities, underscoring the importance of these adjustments in presenting a more conservative financial position.

The financial ratios exhibit notable trends over the five-year period from 2011 to 2015, reflecting the company's evolving operational efficiency, profitability, and financial structure.

Current Ratio

The reported current ratio fluctuated moderately, beginning at 1.78 in 2011, increasing to 1.95 in 2012, then declining to 1.69 and 1.71 in the subsequent two years before rising sharply to 2.05 in 2015. The adjusted current ratio follows a similar pattern but starts higher at 2.03 in 2011 and peaks at 2.3 in 2012. It then declines more substantially to 1.63 in 2014, before increasing again to 2.05 in 2015. Overall, the liquidity position appears to strengthen by the end of the period, with 2015 showing the highest current ratio in both reported and adjusted figures.

Net Profit Margin

Both reported and adjusted net profit margins show a downward trend over the period. The reported margin decreases from 16.01% in 2011 to 9.71% in 2015, despite a temporary rebound in 2014. Similarly, the adjusted margin declines from a higher starting point of 17.25% in 2011 to 9.18% in 2015, indicating a consistent erosion of profitability on sales over time.

Total Asset Turnover

The total asset turnover ratios, both reported and adjusted, demonstrate a steady decline, suggesting diminishing efficiency in generating sales from assets. The reported ratio drops from 0.73 in 2011 to 0.48 in 2015. The adjusted ratio shows a similar pattern, falling from 0.79 to 0.48 over the same timeframe. The decrease is more pronounced after 2012 and indicates potential challenges in asset utilization.

Financial Leverage

Financial leverage ratios exhibit relative stability in the early years, with reported leverage close to 2.9 and adjusted leverage slightly higher. The leverage gradually increases to peak in 2014 at 3.19 (reported) and 3.32 (adjusted), implying greater reliance on debt or other liabilities during this period. However, both measures decline sharply to 2.37 in 2015, signaling a reduction in financial risk or a change in capital structure strategy.

Return on Equity (ROE)

ROE trends mirror those of profitability, with reported ROE decreasing from 33.77% in 2011 to 10.94% in 2015. Adjusted ROE starts higher at 39.79% but similarly declines to 10.53% by the end of the period. The fluctuations in the middle years include a dip in 2013 followed by partial recovery in 2014, yet the overall trajectory is downward, indicating reduced effectiveness in generating equity returns.

Return on Assets (ROA)

The ROA ratios also follow a declining trend. Reported ROA drops from 11.66% in 2011 to 4.62% in 2015, while adjusted ROA falls from 13.57% to 4.44% in the same period. These decreases align with the declining asset turnover and net profit margin, underscoring weakened asset profitability.

In summary, the data reflects a complex financial profile with improving liquidity but weakening profitability and asset efficiency from 2011 to 2015. Financial leverage increased until 2014 before decreasing markedly, which could have contributed to somewhat stabilizing the capital structure. However, the overall lower returns on equity and assets by 2015 highlight challenges in maintaining profitability and efficient resource utilization.

The data reveals several notable patterns and developments in the company's liquidity position over the five-year period.

Current Assets

Reported current assets exhibit a consistent upward trend, increasing from $8,650 million in 2011 to $11,796 million in 2015. Adjusted current assets follow a similar pattern, rising steadily from $8,355 million to $11,796 million over the same period. The adjustment narrows the asset base slightly in the earlier years but converges with the reported figures by 2015.

Current Liabilities

Reported current liabilities show some fluctuation, declining slightly from $4,857 million in 2011 to $4,759 million in 2012, then increasing to a peak of $6,042 million in 2014 before decreasing again to $5,750 million in 2015. Adjusted current liabilities follow a parallel trend but at consistently lower levels than reported liabilities, beginning at $4,119 million in 2011 and rising to $5,750 million in 2015. The adjustment results in a significant reduction in liabilities in the earlier years, particularly notable in 2011 and 2012.

Current Ratio

Examining the liquidity ratios, the reported current ratio initially improves from 1.78 in 2011 to a peak of 1.95 in 2012, decreases over the next two years to approximately 1.69–1.71, and increases again to 2.05 by 2015, indicating strengthening liquidity in the latest year. The adjusted current ratio shows a somewhat different pattern: a higher starting point at 2.03 in 2011, increasing to 2.30 in 2012, then declining more sharply to 1.63 in 2014 before recovering to 2.05 in 2015. The adjusted ratios tend to be higher than reported ratios in the earlier years but align precisely by 2015.

Overall, the liquidity position improves over the five-year horizon, with both current assets and adjusted current assets rising strongly. Adjustments consistently reduce current liabilities in earlier years, which enhances the adjusted current ratios relative to reported figures, signifying that deferred income tax adjustments may have a significant impact on short-term obligations. The convergence of reported and adjusted figures in 2015 suggests either reduced deferred tax effects or a change in accounting approaches, resulting in a clearer picture of the company's liquidity at that date.

The financial data reveals several notable trends in the company’s profitability over the five-year period ending December 31, 2015.

Net Income Trends

The reported net income attributable to the company shows an initial increase from 2,224 million USD in 2011 to 2,326 million USD in 2012, followed by a decline to 2,012 million USD in 2013. Subsequently, it rises again to a peak of 2,497 million USD in 2014, before experiencing a sharp decrease to 968 million USD in 2015. This pattern indicates significant volatility with a particularly pronounced decline in the last year analyzed.

The adjusted net income follows a similar trajectory but consistently exceeds reported figures from 2011 through 2014, suggesting adjustments, possibly for deferred taxes or non-recurring items, generally enhance net income values. In 2015, both reported and adjusted net incomes fall substantially, with adjusted net income notably lower at 915 million USD.

Net Profit Margin Trends

The reported net profit margin exhibits a moderate upward movement from 16.01% in 2011 to 16.39% in 2012, then drops considerably to 13.19% in 2013. It recovers to 14.98% in 2014 but then sharply declines to 9.71% in 2015, mirroring the net income patterns. This suggests a deterioration in profitability relative to revenue in the final year.

The adjusted net profit margin is above the reported margin in 2011 and 2012, confirming that adjustments positively influenced margin figures during these years. The margin declines steadily to 11.72% in 2013, slightly improves to 14.51% in 2014, and then plummets to 9.18% in 2015. The decreasing trend particularly in 2015 highlights weakened operational efficiency or increased costs impacting profitability.

Overall, the data indicates a period of fluctuating but generally strong earnings and margins from 2011 to 2014, followed by a substantial downturn in both reported and adjusted income and profitability measures in 2015. This could be reflective of adverse economic conditions, operational challenges, or other factors negatively influencing financial performance in the latest year analyzed.

The data reveals significant changes in the company's total assets and asset turnover ratios over the five-year period ending December 31, 2015.

Total Assets

Both reported and adjusted total assets displayed a general upward trend from 2011 to 2014, followed by a considerable decline in 2015. Reported total assets increased from 19,073 million USD in 2011 to a peak of 25,917 million USD in 2014 before dropping sharply to 20,975 million USD in 2015. Similarly, adjusted total assets rose from 17,655 million USD in 2011 to 25,143 million USD in 2014, then decreased notably to 20,621 million USD in 2015.

Total Asset Turnover

The total asset turnover ratios, both reported and adjusted, declined steadily over the period. Reported total asset turnover decreased from 0.73 in 2011 to 0.48 in 2015, with minor fluctuations in the middle years. Adjusted total asset turnover showed a similar pattern, starting at 0.79 in 2011 and falling to 0.48 by 2015. The decline indicates a reduction in the efficiency with which the company utilized its assets to generate revenue over time.

Comparison Between Reported and Adjusted Figures

Adjusted values for both assets and asset turnover generally follow the same trends as reported values but are consistently slightly lower for assets and slightly higher for asset turnover. This suggests that tax adjustments have a tangible but modest impact on the reported financial metrics, with adjustments possibly reflecting more conservative asset valuations and efficiency measures.

Overall, while the company expanded its asset base significantly until 2014, the subsequent decline in assets and consistent drop in asset turnover ratios through 2015 may indicate challenges in asset management efficiency and potential revaluation or divestment activities affecting the asset base.

The analyzed data reveals several significant trends in the financial position over the reported periods from 2011 to 2015. Total assets, both reported and adjusted, generally increased from 2011 through 2014, with a notable peak in 2014 followed by a decline in 2015. Similarly, shareholder equity figures increased overall during the same time frame, although the adjusted equity shows a slight dip in 2014 compared to 2013 before rising again in 2015.

Total Assets

Reported total assets increased steadily from 19,073 million US$ in 2011 to 25,917 million US$ in 2014, representing a substantial growth. However, there was a marked decrease in 2015 to 20,975 million US$, reversing much of the prior gains. Adjusted total assets followed a very similar trajectory, rising from 17,655 million US$ in 2011 to 25,143 million US$ in 2014 before dropping to 20,621 million US$ in 2015. This alignment suggests consistent adjustments relative to the reported figures.

Shareholders' Equity

Reported total shareholders' equity showed a continuous increase from 6,585 million US$ in 2011 to 8,846 million US$ in 2015, reflecting an overall strengthening equity base. Adjusted equity also increased from 6,021 million US$ in 2011 to 8,687 million US$ in 2015, although it showed a slight decline in 2014 (7,567 million US$) from the prior year's 8,193 million US$, indicating some variability in adjustments during that period. The recovery in 2015 brought the adjusted equity close to its highest point in the series.

Financial Leverage

Reported financial leverage, defined as a ratio, experienced a gradual increase from 2.9 in 2011 to a peak of 3.19 in 2014, followed by a sharp decrease to 2.37 in 2015. Adjusted financial leverage trends were consistent, rising from 2.93 in 2011 to 3.32 in 2014 before also falling significantly to 2.37 in 2015. This trend indicates an increase in leverage through 2014 with a subsequent reduction, possibly reflecting a reduction in debt or a restructuring affecting the capital structure associated with income tax adjustments.

Overall, the data indicates a period of growth in asset base and equity with increasing leverage through 2014, followed by a notable contraction in 2015 across all key measures. The adjusted figures closely mirror the reported data, showing that the deferred and income tax adjustments had a proportional impact on total assets, equity, and financial leverage throughout the period. The decline in 2015 may warrant further investigation into operational or strategic events influencing the financial position during that year.

The analysis of the financial data over the five-year period reveals several notable trends and fluctuations in key profitability and equity metrics.

Net Income Trends

Reported net income attributable to Baxter showed a generally positive trend from 2011 to 2014, increasing from 2224 million US dollars in 2011 to a peak of 2497 million in 2014. However, there was a significant decline in 2015, dropping sharply to 968 million. Adjusted net income follows a similar pattern, rising from 2396 million in 2011 to 2419 million in 2014, then experiencing a pronounced decrease to 915 million in 2015. The adjustments did not markedly alter the trend but slightly dampened the net income figures in most years.

Shareholders’ Equity Movement

Reported total shareholders’ equity consistently increased during the period with a minor dip in 2014. Starting at 6585 million in 2011, it rose steadily to 8463 million in 2013, slightly decreased to 8120 million in 2014, and then increased again to 8846 million in 2015. Adjusted shareholders’ equity closely mirrored the reported figures but remained consistently lower. There was a notable dip in adjusted equity in 2014 (to 7567 million), reflecting perhaps adjustments related to deferred income tax or other accounting items.

Return on Equity (ROE) Analysis

Reported ROE exhibited a declining trend from a high of 33.77% in 2011 to 30.75% in 2014. However, there was a sharp decrease in 2015, falling to 10.94%. Adjusted ROE followed a similar trajectory, with 39.79% in 2011 decreasing gradually to 31.97% in 2014 and then dropping significantly to 10.53% in 2015. The adjusted ROE values were consistently higher than reported ROE until 2015, indicating that adjustments had a positive impact on this profitability ratio in earlier years.

Overall, the data indicates strong profitability and equity growth until 2014, followed by a substantial downturn in 2015 across net income and return on equity metrics. The adjustments for reported and deferred income tax impact the figures slightly but do not alter the overall trend. The sharp decline in 2015 merits further investigation to understand the underlying causes, as it represents a significant disruption to the previously positive financial trajectory.

The financial data reveals several notable trends over the five-year period ending in 2015. There is a fluctuating pattern in both reported and adjusted net income attributable to the company, with an overall declining trend in the last year.

Net Income Trends

Reported net income increased from 2,224 million US dollars in 2011 to a peak of 2,497 million in 2014, before sharply decreasing to 968 million in 2015. Similarly, adjusted net income rose from 2,396 million in 2011 to 2,419 million in 2014, then declined to 915 million in 2015.

Total Assets Trends

Reported total assets grew steadily from 19,073 million US dollars in 2011 to a high of 25,917 million in 2014 before dropping to 20,975 million in 2015. Adjusted total assets followed a comparable pattern, increasing from 17,655 million in 2011 to 25,143 million in 2014, then declining to 20,621 million in 2015.

Return on Assets (ROA)

Reported ROA decreased from 11.66% in 2011 to 7.78% in 2013, slightly rebounded to 9.63% in 2014, and then declined sharply to 4.62% in 2015. Adjusted ROA exhibited a similar pattern, falling from 13.57% in 2011 to 7.27% in 2013, increasing slightly to 9.62% in 2014, and dropping to 4.44% in 2015.

Comparative Insights

The adjusted figures generally show slightly more conservative values for net income and assets compared to reported values, with adjusted net income consistently somewhat lower than reported values except in 2011 when it was higher. The trends in ROA suggest that asset efficiency deteriorated notably by the end of the period.

Overall Observations

The data indicates a period of growth in income and asset base through 2014, followed by a significant reduction in both income and total assets in 2015. The decline in ROA in 2015 points to reduced profitability relative to the asset base during that year. This pattern may suggest challenges faced in 2015 affecting profitability and asset management efficiency.