ConocoPhillips (COP)

Analysis of Investments

Difficulty: Advanced

Investment Accounting Policy
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
Adjusted Net Profit Margin
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Investment Accounting Policy

Investments in bank time deposits and marketable securities (commercial paper and government obligations) with original maturities of greater than 90 days but less than one year are classified as short-term investments.

Source: ConocoPhillips, Annual Report

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

ConocoPhillips, adjustment to Net Income (loss) Attributable To ConocoPhillips

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Net income (loss) attributable to ConocoPhillips (as reported)
	Add: Unrealized loss on securities, net of tax
	Net income (loss) attributable to ConocoPhillips (adjusted)

Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

ConocoPhillips, adjusted ratios

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net Profit Margin
Reported net profit margin	%	%	%	%	%
Adjusted net profit margin	%	%	%	%	%
Return on Equity (ROE)
Reported ROE	%	%	%	%	%
Adjusted ROE	%	%	%	%	%
Return on Assets (ROA)
Reported ROA	%	%	%	%	%
Adjusted ROA	%	%	%	%	%

Ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	ConocoPhillips's adjusted net profit margin deteriorated from 2015 to 2016 but then improved from 2016 to 2017 exceeding 2015 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders' equity.	ConocoPhillips's adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	ConocoPhillips's adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

Adjusted Net Profit Margin

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) attributable to ConocoPhillips (USD $ in millions)
Sales and other operating revenues (USD $ in millions)

Net profit margin¹	%	%	%	%	%
Adjusted: Mark to Market Available-for-sale Securities
Adjusted net income (loss) attributable to ConocoPhillips (USD $ in millions)
Sales and other operating revenues (USD $ in millions)

Adjusted net profit margin²	%	%	%	%	%

2017 Calculations

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

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Sales and other operating revenues
= 100 × hidden ÷ hidden = hidden %

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

Adjusted Return on Equity (ROE)

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) attributable to ConocoPhillips (USD $ in millions)
Common stockholders’ equity (USD $ in millions)

ROE¹	%	%	%	%	%
Adjusted: Mark to Market Available-for-sale Securities
Adjusted net income (loss) attributable to ConocoPhillips (USD $ in millions)
Common stockholders’ equity (USD $ in millions)

Adjusted ROE²	%	%	%	%	%

2017 Calculations

¹ ROE = 100 × Net income (loss) attributable to ConocoPhillips ÷ Common stockholders’ equity
= 100 × hidden ÷ hidden = hidden %

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Common stockholders’ equity
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by shareholders' equity.	ConocoPhillips's adjusted ROE improved from 2015 to 2016 and from 2016 to 2017.

Adjusted Return on Assets (ROA)

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
As Reported
Net income (loss) attributable to ConocoPhillips (USD $ in millions)
Total assets (USD $ in millions)

ROA¹	%	%	%	%	%
Adjusted: Mark to Market Available-for-sale Securities
Adjusted net income (loss) attributable to ConocoPhillips (USD $ in millions)
Total assets (USD $ in millions)

Adjusted ROA²	%	%	%	%	%

2017 Calculations

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

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to ConocoPhillips ÷ Total assets
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by total assets.	ConocoPhillips's adjusted ROA improved from 2015 to 2016 and from 2016 to 2017.

	ConocoPhillips	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality