Stock Analysis on Net
Stock Analysis on Net
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Chevron Corp. (NYSE:CVX)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Chevron Corp., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments 2,159  2,895  2,481  3,348 
Discount rate1 8.24% 11.02% 12.05% 8.83%
 
Total present value of future operating lease payments 1,708  2,102  1,777  2,599 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1 Weighted-average discount rate for finance leases

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 8.24%
2019 540  2019 540  499 
2020 492  2020 492  420 
2021 378  2021 378  298 
2022 242  2022 242  176 
2023 166  2023 166  112 
2024 and thereafter 341  2024 166  103 
2025 166  95 
2026
Total: 2,159  2,159  1,708 

Based on: 10-K (filing date: 2019-02-22).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 11.02%
2018 693  2018 693  624 
2019 628  2019 628  510 
2020 474  2020 474  346 
2021 339  2021 339  223 
2022 223  2022 223  132 
2023 and thereafter 538  2023 223  119 
2024 223  107 
2025 92  40 
Total: 2,895  2,895  2,102 

Based on: 10-K (filing date: 2018-02-22).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 12.05%
2017 615  2017 615  549 
2018 554  2018 554  441 
2019 387  2019 387  275 
2020 298  2020 298  189 
2021 235  2021 235  133 
2022 and thereafter 392  2022 235  119 
2023 157  71 
Total: 2,481  2,481  1,777 

Based on: 10-K (filing date: 2017-02-23).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 8.83%
2016 846  2016 846  777 
2017 689  2017 689  582 
2018 554  2018 554  430 
2019 420  2019 420  299 
2020 311  2020 311  204 
2021 and thereafter 528  2021 311  187 
2022 217  120 
Total: 3,348  3,348  2,599 

Based on: 10-K (filing date: 2016-02-25).


Adjustments to Financial Statements for Operating Leases

Chevron Corp., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 237,428  253,863  253,806  260,078  266,103 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  1,708  2,102  1,777  2,599 
Total assets (adjusted) 237,428  255,571  255,908  261,855  268,702 
Adjustment to Total Debt
Total debt (as reported) 26,973  34,459  38,763  46,126  38,592 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  1,708  2,102  1,777  2,599 
Add: Current lease liabilities for operating leases (included in Accrued liabilities) 1,277  —  —  —  — 
Add: Noncurrent lease liabilities for operating leases (included in Deferred credits and other noncurrent obligations) 2,608  —  —  —  — 
Total debt (adjusted) 30,858  36,167  40,865  47,903  41,191 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1, 2 Equal to total present value of future operating lease payments.


Chevron Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Chevron Corp., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover1
Reported total asset turnover 0.59 0.63 0.53 0.42 0.49
Adjusted total asset turnover 0.59 0.62 0.53 0.42 0.48
Debt to Equity2
Reported debt to equity 0.19 0.22 0.26 0.32 0.25
Adjusted debt to equity 0.21 0.23 0.28 0.33 0.27
Return on Assets3 (ROA)
Reported ROA 1.23% 5.84% 3.62% -0.19% 1.72%
Adjusted ROA 1.23% 5.80% 3.59% -0.19% 1.71%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Chevron Corp.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Chevron Corp.’s adjusted debt to equity ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Chevron Corp.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Chevron Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Sales and other operating revenues 139,865  158,902  134,674  110,215  129,925 
Total assets 237,428  253,863  253,806  260,078  266,103 
Activity Ratio
Total asset turnover1 0.59 0.63 0.53 0.42 0.49
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Sales and other operating revenues 139,865  158,902  134,674  110,215  129,925 
Adjusted total assets 237,428  255,571  255,908  261,855  268,702 
Activity Ratio
Adjusted total asset turnover2 0.59 0.62 0.53 0.42 0.48

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Total asset turnover = Sales and other operating revenues ÷ Total assets
= 139,865 ÷ 237,428 = 0.59

2 Adjusted total asset turnover = Sales and other operating revenues ÷ Adjusted total assets
= 139,865 ÷ 237,428 = 0.59

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Chevron Corp.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 26,973  34,459  38,763  46,126  38,592 
Total Chevron Corporation stockholders’ equity 144,213  154,554  148,124  145,556  152,716 
Solvency Ratio
Debt to equity1 0.19 0.22 0.26 0.32 0.25
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 30,858  36,167  40,865  47,903  41,191 
Total Chevron Corporation stockholders’ equity 144,213  154,554  148,124  145,556  152,716 
Solvency Ratio
Adjusted debt to equity2 0.21 0.23 0.28 0.33 0.27

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Debt to equity = Total debt ÷ Total Chevron Corporation stockholders’ equity
= 26,973 ÷ 144,213 = 0.19

2 Adjusted debt to equity = Adjusted total debt ÷ Total Chevron Corporation stockholders’ equity
= 30,858 ÷ 144,213 = 0.21

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Chevron Corp.’s adjusted debt-to-equity ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Chevron Corporation 2,924  14,824  9,195  (497) 4,587 
Total assets 237,428  253,863  253,806  260,078  266,103 
Profitability Ratio
ROA1 1.23% 5.84% 3.62% -0.19% 1.72%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income (loss) attributable to Chevron Corporation 2,924  14,824  9,195  (497) 4,587 
Adjusted total assets 237,428  255,571  255,908  261,855  268,702 
Profitability Ratio
Adjusted ROA2 1.23% 5.80% 3.59% -0.19% 1.71%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

2019 Calculations

1 ROA = 100 × Net income (loss) attributable to Chevron Corporation ÷ Total assets
= 100 × 2,924 ÷ 237,428 = 1.23%

2 Adjusted ROA = 100 × Net income (loss) attributable to Chevron Corporation ÷ Adjusted total assets
= 100 × 2,924 ÷ 237,428 = 1.23%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Chevron Corp.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.