.Analysis of Investments
Difficulty: Advanced
Investment Accounting Policy
Investments over which Danaher has a significant influence but not a controlling interest, are accounted for using the equity method of accounting. Equity investments are recorded at the amount of Danaher's initial investment and adjusted each period for Danaher's share of the investee's income or loss and dividends paid. All equity investments are periodically reviewed to determine if declines in fair value below cost basis are other-than-temporary. Significant and sustained decreases in quoted market prices or a series of historic and projected operating losses by investees are strong indicators of other-than-temporary declines. If the decline in fair value is determined to be other-than-temporary, an impairment loss is recorded and the investment is written down to a new carrying value.
Source: Danaher Corp., Annual Report
Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Danaher Corp., adjustment to Net Earnings
USD $ in thousands
Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)
Danaher Corp., 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. | Danaher Corp.'s adjusted net profit margin deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders' equity. | Danaher Corp.'s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Danaher Corp.'s adjusted ROA deteriorated 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 earnings (USD $ in thousands) | |||||
| | Sales (USD $ in thousands) | |||||
| | Net profit margin1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net earnings (USD $ in thousands) | |||||
| | Sales (USD $ in thousands) | |||||
| | Adjusted net profit margin2 | % | % | % | % | % |
2017 Calculations
1 Net profit margin = 100 × Net earnings ÷ Sales
= 100 × ÷ = %
2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Sales
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Danaher Corp.'s adjusted net profit margin deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Return on Equity (ROE)
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| As Reported | ||||||
| | Net earnings (USD $ in thousands) | |||||
| | Total Danaher stockholders' equity (USD $ in thousands) | |||||
| | ROE1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net earnings (USD $ in thousands) | |||||
| | Total Danaher stockholders' equity (USD $ in thousands) | |||||
| | Adjusted ROE2 | % | % | % | % | % |
2017 Calculations
1 ROE = 100 × Net earnings ÷ Total Danaher stockholders' equity
= 100 × ÷ = %
2 Adjusted ROE = 100 × Adjusted net earnings ÷ Total Danaher stockholders' equity
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by shareholders' equity. | Danaher Corp.'s adjusted ROE deteriorated 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 earnings (USD $ in thousands) | |||||
| | Total assets (USD $ in thousands) | |||||
| | ROA1 | % | % | % | % | % |
| Adjusted: Mark to Market Available-for-sale Securities | ||||||
| | Adjusted net earnings (USD $ in thousands) | |||||
| | Total assets (USD $ in thousands) | |||||
| | Adjusted ROA2 | % | % | % | % | % |
2017 Calculations
1 ROA = 100 × Net earnings ÷ Total assets
= 100 × ÷ = %
2 Adjusted ROA = 100 × Adjusted net earnings ÷ Total assets
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by total assets. | Danaher Corp.'s adjusted ROA deteriorated from 2015 to 2016 and from 2016 to 2017. |
