Stock Analysis on Net
Stock Analysis on Net
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Becton, Dickinson & Co. (NYSE:BDX)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Becton, Dickinson & Co., income tax expense (benefit), continuing operations

US$ in millions

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12 months ended: Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Federal (50) 235  665  (230) 312  50 
State and local, including Puerto Rico 47  41  72  (20) 18  16 
Foreign 400  300  387  200  286  252 
Current 397  576  1,124  (50) 616  318 
Domestic (184) (566) (201) (64) (441) (238)
Foreign (102) (67) (61) (10) (78) (36)
Deferred (286) (633) (262) (74) (519) (274)
Income tax provision (benefit) 111  (57) 862  (124) 97  44 

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Becton, Dickinson & Co.’s current decreased from 2018 to 2019 and from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Becton, Dickinson & Co.’s deferred decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.
Income tax provision (benefit) Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Becton, Dickinson & Co.’s income tax provision (benefit) decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Effective Income Tax Rate (EITR)

Becton, Dickinson & Co., effective income tax rate (EITR) reconciliation

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Federal statutory tax rate 21.00% 21.00% 24.50% 35.00% 35.00% 35.00%
State and local income taxes, net of federal tax benefit -1.90% 0.10% 0.80% -2.60% 1.50% -3.60%
Foreign income tax at rates other than 21% -14.80% -6.60% -11.70% 0.00% 0.00% 0.00%
Effect of foreign operations 19.10% -5.50% 19.00% 0.00% 0.00% 0.00%
Effect of foreign and Puerto Rico earnings (losses) and foreign tax credits (legacy) 0.00% 0.00% 0.00% -40.80% -23.70% -24.50%
Effect of Research Credits and FDII/Domestic Production Activities -5.00% -3.30% -2.80% -2.70% -4.40% -1.60%
Effect of tax benefit relating to share-based compensation -4.50% -3.90% -6.10% -7.90% 0.00% 0.00%
Effect of gain on divestitures -4.50% -2.00% 1.30% 0.00% 0.00% 0.00%
Effect of uncertain tax position 0.00% 0.00% 3.30% 0.00% 0.00% 0.00%
Effect of valuation allowance release 0.00% 0.00% -4.80% 0.00% 0.00% 0.00%
Effect of application for change in accounting method 0.00% 0.00% -4.50% 0.00% 0.00% 0.00%
Effect of nondeductible compensation 0.00% 0.00% 1.60% 0.00% 0.00% 0.00%
Other, net 1.90% -0.30% -1.70% 6.30% 0.70% 0.60%
Effective income tax rate, before new U.S. tax legislation 11.30% -0.50% 18.90% -12.70% 9.10% 5.90%
New U.S. tax legislation 0.00% -4.30% 54.60% 0.00% 0.00% 0.00%
Effective income tax rate 11.30% -4.80% 73.50% -12.70% 9.10% 5.90%

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

Item Description The company
Effective income tax rate, before new U.S. tax legislation Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Becton, Dickinson & Co.’s effective income tax rate, before new U.S. tax legislation decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Components of Deferred Tax Assets and Liabilities

Becton, Dickinson & Co., components of deferred tax assets and liabilities

US$ in millions

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Compensation and benefits 554  513  458  618  720  647 
Loss and credit carryforwards 1,900  1,327  1,290  1,098  1,101  538 
Product recall and liability reserves 241  —  —  —  —  — 
Other 501  634  707  531  720  634 
Deferred tax assets 3,196  2,474  2,455  2,247  2,541  1,819 
Valuation allowance (1,820) (1,240) (1,180) (1,031) (997) (452)
Net deferred tax assets 1,376  1,234  1,275  1,216  1,544  1,367 
Property and equipment (361) (255) (253) (244) (235) (156)
Intangibles (2,408) (2,624) (2,948) (1,584) (1,493) (2,033)
Other (137) (189) (384) (164) (608) (606)
Deferred tax liabilities (2,906) (3,068) (3,585) (1,992) (2,336) (2,795)
Net deferred tax assets (liabilities) (1,530) (1,834) (2,310) (776) (792) (1,428)

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Becton, Dickinson & Co.’s deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Net deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Becton, Dickinson & Co.’s net deferred tax assets decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Net deferred tax assets (liabilities) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. Becton, Dickinson & Co.’s net deferred tax assets (liabilities) increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Becton, Dickinson & Co., adjustments to financial statements

US$ in millions

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Adjustment to Total Liabilities
Total liabilities (as reported) 30,248  30,684  32,910  24,786  17,953  19,656 
Less: Noncurrent deferred tax liabilities, net 1,530  1,834  2,310  776  792  1,428 
Total liabilities (adjusted) 28,718  28,850  30,600  24,010  17,161  18,228 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 23,765  21,081  20,994  12,948  7,633  7,164 
Less: Net deferred tax assets (liabilities) (1,530) (1,834) (2,310) (776) (792) (1,428)
Shareholders’ equity (adjusted) 25,295  22,915  23,304  13,724  8,425  8,592 
Adjustment to Net Income
Net income (as reported) 874  1,233  311  1,100  976  695 
Add: Deferred income tax expense (benefit) (286) (633) (262) (74) (519) (274)
Net income (adjusted) 588  600  49  1,026  457  421 

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

Becton, Dickinson & Co., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Becton, Dickinson & Co., adjusted financial ratios

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
Net Profit Margin
Reported net profit margin 5.11% 7.13% 1.95% 9.10% 7.82% 6.76%
Adjusted net profit margin 3.44% 3.47% 0.31% 8.48% 3.66% 4.09%
Financial Leverage
Reported financial leverage 2.27 2.46 2.57 2.91 3.35 3.74
Adjusted financial leverage 2.14 2.26 2.31 2.75 3.04 3.12
Return on Equity (ROE)
Reported ROE 3.68% 5.85% 1.48% 8.50% 12.79% 9.70%
Adjusted ROE 2.32% 2.62% 0.21% 7.48% 5.42% 4.90%
Return on Assets (ROA)
Reported ROA 1.62% 2.38% 0.58% 2.92% 3.81% 2.59%
Adjusted ROA 1.09% 1.16% 0.09% 2.72% 1.79% 1.57%

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Becton, Dickinson & Co.’s adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Becton, Dickinson & Co.’s adjusted financial leverage ratio decreased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Becton, Dickinson & Co.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Becton, Dickinson & Co.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Becton, Dickinson & Co., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 874  1,233  311  1,100  976  695 
Revenues 17,117  17,290  15,983  12,093  12,483  10,282 
Profitability Ratio
Net profit margin1 5.11% 7.13% 1.95% 9.10% 7.82% 6.76%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 588  600  49  1,026  457  421 
Revenues 17,117  17,290  15,983  12,093  12,483  10,282 
Profitability Ratio
Adjusted net profit margin2 3.44% 3.47% 0.31% 8.48% 3.66% 4.09%

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 874 ÷ 17,117 = 5.11%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 588 ÷ 17,117 = 3.44%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Becton, Dickinson & Co.’s adjusted net profit margin ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Adjusted Financial Leverage

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 54,012  51,765  53,904  37,734  25,586  26,820 
Shareholders’ equity 23,765  21,081  20,994  12,948  7,633  7,164 
Solvency Ratio
Financial leverage1 2.27 2.46 2.57 2.91 3.35 3.74
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Total assets 54,012  51,765  53,904  37,734  25,586  26,820 
Adjusted shareholders’ equity 25,295  22,915  23,304  13,724  8,425  8,592 
Solvency Ratio
Adjusted financial leverage2 2.14 2.26 2.31 2.75 3.04 3.12

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

2020 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 54,012 ÷ 23,765 = 2.27

2 Adjusted financial leverage = Total assets ÷ Adjusted shareholders’ equity
= 54,012 ÷ 25,295 = 2.14

Solvency ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity.
Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income.		 Becton, Dickinson & Co.’s adjusted financial leverage ratio decreased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

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Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 874  1,233  311  1,100  976  695 
Shareholders’ equity 23,765  21,081  20,994  12,948  7,633  7,164 
Profitability Ratio
ROE1 3.68% 5.85% 1.48% 8.50% 12.79% 9.70%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 588  600  49  1,026  457  421 
Adjusted shareholders’ equity 25,295  22,915  23,304  13,724  8,425  8,592 
Profitability Ratio
Adjusted ROE2 2.32% 2.62% 0.21% 7.48% 5.42% 4.90%

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

2020 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 874 ÷ 23,765 = 3.68%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 588 ÷ 25,295 = 2.32%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Becton, Dickinson & Co.’s adjusted ROE improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Sep 30, 2020 Sep 30, 2019 Sep 30, 2018 Sep 30, 2017 Sep 30, 2016 Sep 30, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 874  1,233  311  1,100  976  695 
Total assets 54,012  51,765  53,904  37,734  25,586  26,820 
Profitability Ratio
ROA1 1.62% 2.38% 0.58% 2.92% 3.81% 2.59%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 588  600  49  1,026  457  421 
Total assets 54,012  51,765  53,904  37,734  25,586  26,820 
Profitability Ratio
Adjusted ROA2 1.09% 1.16% 0.09% 2.72% 1.79% 1.57%

Based on: 10-K (filing date: 2020-11-25), 10-K (filing date: 2019-11-27), 10-K (filing date: 2018-11-21), 10-K (filing date: 2017-11-22), 10-K (filing date: 2016-11-23), 10-K (filing date: 2015-11-25).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 874 ÷ 54,012 = 1.62%

2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 588 ÷ 54,012 = 1.09%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Becton, Dickinson & Co.’s adjusted ROA improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.