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Microsoft Excel LibreOffice Calc


Analysis of Equity Method Investment

Difficulty: Advanced


Selected Financial Data

Chevron Corp.'s selected financial data

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Income from equity affiliates hidden hidden hidden hidden hidden
Investments in companies accounted for using the equity method hidden hidden hidden hidden hidden
ROA (equity method investments only)1 hidden% hidden% hidden% hidden% hidden%

Source: Based on data from Chevron Corp. Annual Reports

2017 Calculations

1 ROA (equity method investments only) = 100 × Income from equity affiliates ÷ Investments in companies accounted for using the equity method
= 100 × hidden ÷ hidden = hidden%

Item Description The company
Income from equity affiliates This item represents the entity's proportionate share for the period of the net income (loss) of its investee (such as unconsolidated subsidiaries and joint ventures) to which the equity method of accounting is applied. Such amount typically reflects adjustments similar to those made in preparing consolidated statements, including adjustments to eliminate intercompany gains and losses, and to amortize, if appropriate, any difference between cost and underlying equity in net assets of the investee at the date of investment. Chevron Corp.'s income from equity affiliates declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.
Investments in companies accounted for using the equity method This item represents the carrying amount on the entity's balance sheet of its investment in common stock of an equity method investee. This is not an indicator of the fair value of the investment, rather it is the initial cost adjusted for the entity's share of earnings and losses of the investee, adjusted for any distributions (dividends) and other than temporary impairment losses recognized. Chevron Corp.'s investments in companies accounted for using the equity method increased from 2015 to 2016 and from 2016 to 2017.
ROA (equity method investments only) A profitability ratio calculated as income from equity affiliates divided by investments in companies accounted for using the equity method. Chevron Corp.'s ROA of equity method investments deteriorated from 2015 to 2016 but then improved from 2016 to 2017 not reaching 2015 level.

Summarized Financial Information

Summarized financial information for Chevron Corp.'s affiliates, subsidiaries, associates, and joint ventures

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Current assets hidden hidden hidden hidden hidden
Noncurrent assets hidden hidden hidden hidden hidden
Total assets hidden hidden hidden hidden hidden
Current liabilities hidden hidden hidden hidden hidden
Noncurrent liabilities hidden hidden hidden hidden hidden
Total liabilities hidden hidden hidden hidden hidden
Affiliates’ net equity hidden hidden hidden hidden hidden
Total liabilities and equity hidden hidden hidden hidden hidden
Revenues hidden hidden hidden hidden hidden
Income before income tax expense hidden hidden hidden hidden hidden
Net income attributable to affiliates hidden hidden hidden hidden hidden

Source: Based on data from Chevron Corp. Annual Reports

Item Description The company
Affiliates’ net equity This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets, liabilities, and results of operations of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may include total equity or capital (as applicable). Affiliates’ net equity of Chevron Corp.'s affiliates, subsidiaries, associates, and joint ventures increased from 2015 to 2016 and from 2016 to 2017.
Net income attributable to affiliates This item represents the disclosure of summarized financial information for unconsolidated subsidiaries and 50 percent-or-less owned entities accounted for using the equity method of accounting. If investments in common stock of corporate joint ventures or other investments accounted for under the equity method are, in the aggregate, material in relation to the financial position or results of operations of an investor, it may be necessary to present summarized information as to assets of the investee, or group of investments for which combined disclosure is appropriate, either by individual financial statement caption or in groups, as appropriate. Such summarized financial information may, at a minimum, include net income or loss. Net income attributable to affiliates of Chevron Corp.'s affiliates, subsidiaries, associates, and joint ventures declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level.

Adjustments to Financial Data: Proportionate Consolidation

Recognition of Chevron Corp.'s proportionate share of affiliates, subsidiaries, associates, and joint ventures assets and liabilities instead of net equity.

Chevron Corp., adjustments to financial data

USD $ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Weighted average percentage interest in affiliates hidden% hidden% hidden% hidden% hidden%
Adjustment to Current Assets
Current assets (as reported) hidden hidden hidden hidden hidden
Add: Current assets of affiliates (adjustment) hidden hidden hidden hidden hidden
Current assets (adjusted) hidden hidden hidden hidden hidden
Adjustment to Total Assets
Total assets (as reported) hidden hidden hidden hidden hidden
Less: Investments in companies accounted for using the equity method (adjustment) hidden hidden hidden hidden hidden
Add: Total assets of affiliates (adjustment) hidden hidden hidden hidden hidden
Total assets (adjusted) hidden hidden hidden hidden hidden
Adjustment to Current Liabilities
Current liabilities (as reported) hidden hidden hidden hidden hidden
Add: Current liabilities of affiliates (adjustment) hidden hidden hidden hidden hidden
Current liabilities (adjusted) hidden hidden hidden hidden hidden
Adjustment to Total Liabilities
Total liabilities (as reported) hidden hidden hidden hidden hidden
Add: Total liabilities of affiliates (adjustment) hidden hidden hidden hidden hidden
Total liabilities (adjusted) hidden hidden hidden hidden hidden
Adjustment to Sales And Other Operating Revenues
Sales and other operating revenues (as reported) hidden hidden hidden hidden hidden
Add: Revenues of affiliates (adjustment) hidden hidden hidden hidden hidden
Sales and other operating revenues (adjusted) hidden hidden hidden hidden hidden

Adjusted Ratios: Proportionate Consolidation (Summary)

Chevron Corp., adjusted ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Current Ratio
Reported current ratio hidden hidden hidden hidden hidden
Adjusted current ratio hidden hidden hidden hidden hidden
Net Profit Margin
Reported net profit margin hidden% hidden% hidden% hidden% hidden%
Adjusted net profit margin hidden% hidden% hidden% hidden% hidden%
Total Asset Turnover
Reported total asset turnover hidden hidden hidden hidden hidden
Adjusted total asset turnover hidden hidden hidden hidden hidden
Financial Leverage
Reported financial leverage hidden hidden hidden hidden hidden
Adjusted financial leverage hidden hidden hidden hidden hidden
Return on Assets (ROA)
Reported ROA hidden% hidden% hidden% hidden% hidden%
Adjusted ROA hidden% hidden% hidden% hidden% hidden%
Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Chevron Corp.'s adjusted current ratio deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.
Adjusted net profit margin An indicator of profitability, calculated as net income divided by adjusted revenue. Chevron Corp.'s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted total asset turnover An activity ratio calculated as adjusted total revenue divided by adjusted total assets. Chevron Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by 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.
Chevron Corp.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Chevron Corp.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Current assets (USD $ in millions) hidden hidden hidden hidden hidden
Current liabilities (USD $ in millions) hidden hidden hidden hidden hidden
Current ratio1 hidden hidden hidden hidden hidden
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted current assets (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted current liabilities (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted current ratio2 hidden hidden hidden hidden hidden

2017 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= hidden ÷ hidden = hidden

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Chevron Corp.'s adjusted current ratio deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income (loss) attributable to Chevron Corporation (USD $ in millions) hidden hidden hidden hidden hidden
Sales and other operating revenues (USD $ in millions) hidden hidden hidden hidden hidden
Net profit margin1 hidden% hidden% hidden% hidden% hidden%
Adjusted: from Equity Method to Proportionate Consolidation
Net income (loss) attributable to Chevron Corporation (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted sales and other operating revenues (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted net profit margin2 hidden% hidden% hidden% hidden% hidden%

2017 Calculations

1 Net profit margin = 100 × Net income (loss) attributable to Chevron Corporation ÷ Sales and other operating revenues
= 100 × hidden ÷ hidden = hidden%

2 Adjusted net profit margin = 100 × Net income (loss) attributable to Chevron Corporation ÷ Adjusted sales and other operating revenues
= 100 × hidden ÷ hidden = hidden%

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as net income divided by adjusted revenue. Chevron Corp.'s adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Sales and other operating revenues (USD $ in millions) hidden hidden hidden hidden hidden
Total assets (USD $ in millions) hidden hidden hidden hidden hidden
Total asset turnover1 hidden hidden hidden hidden hidden
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted sales and other operating revenues (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted total assets (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted total asset turnover2 hidden hidden hidden hidden hidden

2017 Calculations

1 Total asset turnover = Sales and other operating revenues ÷ Total assets
= hidden ÷ hidden = hidden

2 Adjusted total asset turnover = Adjusted sales and other operating revenues ÷ Adjusted total assets
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted total asset turnover An activity ratio calculated as adjusted total revenue divided by adjusted total assets. Chevron Corp.'s adjusted total asset turnover deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Total assets (USD $ in millions) hidden hidden hidden hidden hidden
Total Chevron Corporation stockholders' equity (USD $ in millions) hidden hidden hidden hidden hidden
Financial leverage1 hidden hidden hidden hidden hidden
Adjusted: from Equity Method to Proportionate Consolidation
Adjusted total assets (USD $ in millions) hidden hidden hidden hidden hidden
Total Chevron Corporation stockholders' equity (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted financial leverage2 hidden hidden hidden hidden hidden

2017 Calculations

1 Financial leverage = Total assets ÷ Total Chevron Corporation stockholders' equity
= hidden ÷ hidden = hidden

2 Adjusted financial leverage = Adjusted total assets ÷ Total Chevron Corporation stockholders' equity
= hidden ÷ hidden = hidden

Ratio Description The company
Adjusted financial leverage A measure of financial leverage calculated as adjusted total assets divided by 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.
Chevron Corp.'s adjusted financial leverage increased from 2015 to 2016 but then declined significantly from 2016 to 2017.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
As Reported
Net income (loss) attributable to Chevron Corporation (USD $ in millions) hidden hidden hidden hidden hidden
Total assets (USD $ in millions) hidden hidden hidden hidden hidden
ROA1 hidden% hidden% hidden% hidden% hidden%
Adjusted: from Equity Method to Proportionate Consolidation
Net income (loss) attributable to Chevron Corporation (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted total assets (USD $ in millions) hidden hidden hidden hidden hidden
Adjusted ROA2 hidden% hidden% hidden% hidden% hidden%

1 ROA = 100 × Net income (loss) attributable to Chevron Corporation ÷ Total assets
= 100 × hidden ÷ hidden = hidden%

2 Adjusted ROA = 100 × Net income (loss) attributable to Chevron Corporation ÷ Adjusted total assets
= 100 × hidden ÷ hidden = hidden%

Ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Chevron Corp.'s adjusted ROA deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.