Analysis of Investments
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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Operating Profit Margin since 2005
- Analysis of Debt
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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
EMC Corp., adjustment to net income attributable to EMC Corporation
US$ in millions
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
- Net Income Trends
- The reported net income attributable to EMC Corporation exhibited an overall increasing trend from 2011 through 2013, rising from 2,461 million US dollars in 2011 to a peak of 2,889 million US dollars in 2013. However, this upward momentum reversed in subsequent years, decreasing to 2,714 million US dollars in 2014 and further declining to 1,990 million US dollars in 2015.
- Adjusted Net Income Trends
- The adjusted net income followed a somewhat similar pattern to the reported net income, with a steady increase from 2,436 million US dollars in 2011 to a high of 2,856 million US dollars in 2013. Subsequently, adjusted net income experienced a slight increase in 2014, reaching 2,732 million US dollars, before a significant reduction to 1,931 million US dollars in 2015.
- Comparison Between Reported and Adjusted Figures
- The adjusted net income figures were consistently close to, but slightly lower or higher than, the reported net income across all years. This indicates adjustments made to reported results were relatively minor and did not substantially alter the core profitability trends.
- Insight on Profitability
- Profitability peaked in 2013 for both reported and adjusted net income, followed by a notable decline through 2015. The most significant year-over-year decrease occurred between 2014 and 2015, suggesting potential challenges or one-time events negatively impacting earnings during this period.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
EMC Corp., adjusted profitability ratios
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
- Net Profit Margin Trends
- The reported net profit margin shows a declining trend over the five-year period, starting at 12.3% in 2011 and decreasing steadily to 8.06% in 2015. The adjusted net profit margin follows a similar pattern, beginning slightly lower at 12.17% in 2011, peaking modestly in 2012 at 12.81%, and then declining consistently to 7.82% by 2015. This indicates a gradual erosion in profitability relative to sales.
- Return on Equity (ROE) Trends
- Reported ROE experienced minor fluctuations from 2011 through 2014, ranging narrowly between about 12.22% and 12.98%, before a significant drop to 9.41% in 2015. The adjusted ROE mirrors these movements closely, with a slight increase in 2012 and 2014 followed by a decline to 9.13% in 2015. The data suggest that shareholder returns remained relatively stable for several years but weakened notably in the final year.
- Return on Assets (ROA) Trends
- The reported ROA steadily decreased from 7.18% in 2011 and 2012 down to 4.27% in 2015, showing a continuous decline in asset profitability. Adjusted ROA follows this downward trajectory with a marginally higher value in 2012 but a consistent fall thereafter ending at 4.14% in 2015. This pattern reflects decreasing efficiency in asset utilization over time.
- Comparison between Reported and Adjusted Metrics
- The adjusted margins and returns are consistently close to the reported figures, with only slight variations year-over-year. This suggests that the adjustments made for investment-related impacts have a modest effect on overall profitability and efficiency metrics. Both reported and adjusted data agree on the negative trend in profitability and returns from 2011 to 2015.
- Overall Observations
- Across all metrics—net profit margin, ROE, and ROA—the company exhibits a downward trend over the examined period. Profitability and returns to shareholders and assets have all declined, with the most significant reduction observed in 2015. The stability in earlier years followed by a marked drop in the final year could indicate emerging challenges or adverse conditions impacting financial performance.
EMC Corp., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 Net profit margin = 100 × Net income attributable to EMC Corporation ÷ Revenues
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income attributable to EMC Corporation ÷ Revenues
= 100 × ÷ =
- Net Income Trends
- Reported net income attributable to the corporation showed an increasing trend from 2011 through 2013, peaking at 2,889 million US dollars in 2013. Subsequently, a decline occurred in 2014 and further in 2015, with net income falling to 1,990 million US dollars. Adjusted net income followed a similar pattern, rising from 2,436 million in 2011 to a peak of 2,856 million in 2013, then declining to 1,931 million by 2015.
- Profit Margin Analysis
- Reported net profit margin exhibited a rising trend from 12.3% in 2011 to a peak of 12.58% in 2012, and remained relatively stable in 2013 at 12.44%. Thereafter, profit margins declined more sharply, dropping to 11.1% in 2014 and further to 8.06% in 2015. Adjusted net profit margin followed a closely aligned pattern, starting at 12.17% in 2011, increasing to 12.81% in 2012, then decreasing progressively to 7.82% by 2015.
- Overall Financial Performance Insights
- The data indicates the company experienced growth in net income and profitability through the initial period up to 2013. However, the subsequent two years show a notable downturn in both income and margin figures, suggesting either increased costs, diminished revenues, or other factors negatively impacting profitability. The close alignment between reported and adjusted figures suggests that the adjustments made did not significantly alter the overall trend or the company’s underlying financial performance during these years.
Adjusted Return on Equity (ROE)
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 ROE = 100 × Net income attributable to EMC Corporation ÷ Total EMC Corporation’s shareholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income attributable to EMC Corporation ÷ Total EMC Corporation’s shareholders’ equity
= 100 × ÷ =
- Net Income Trends
- The reported net income attributable to the corporation showed an overall upward trend from 2011 through 2013, increasing from 2461 million US dollars in 2011 to a peak of 2889 million in 2013. However, this upward momentum reversed in the following years, with reported net income declining to 2714 million in 2014 and further dropping significantly to 1990 million in 2015. The adjusted net income followed a similar pattern, rising from 2436 million in 2011 to a high of 2856 million in 2013, then slightly increasing to 2732 million in 2014 before a notable decrease to 1931 million in 2015.
- Return on Equity (ROE) Trends
- The reported Return on Equity (ROE) exhibited a generally stable pattern from 2011 to 2014, fluctuating moderately between approximately 12.22% and 12.98%. This metric peaked in 2011 at 12.98%, dipped slightly in 2012, rose again in 2013, and experienced a marginal decline in 2014 to 12.39%. In 2015, reported ROE saw a substantial decline reaching 9.41%, signifying a decrease in profitability relative to equity. Adjusted ROE followed a comparable trajectory, with values close to reported ROE figures for each year. It ranged from 12.85% in 2011, slightly increasing to 12.48% in 2014, before dropping to 9.13% in 2015.
- Insights and Overall Patterns
- The financial metrics indicate that the company experienced growth in profitability and efficiency up until 2013, after which performance deteriorated notably. Both reported and adjusted measures of net income and ROE align closely, suggesting consistency between reported results and adjustments made for investment factors. The significant downturn in 2015 across these key performance indicators implies potential challenges faced by the company during that year, which may warrant further examination into operational, market, or economic conditions impacting profitability.
Adjusted Return on Assets (ROA)
Based on: 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31).
2015 Calculations
1 ROA = 100 × Net income attributable to EMC Corporation ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income attributable to EMC Corporation ÷ Total assets
= 100 × ÷ =
- Net Income Trends
- The reported net income attributable to EMC Corporation showed an overall increase from 2011 to 2013, growing from $2,461 million to $2,889 million. However, this positive trend reversed starting in 2014, with net income declining to $2,714 million and further dropping significantly to $1,990 million in 2015. The adjusted net income followed a similar pattern, peaking in 2013 at $2,856 million before decreasing to $2,732 million in 2014 and then substantially to $1,931 million in 2015.
- Return on Assets (ROA) Performance
- Both reported and adjusted ROA percentages exhibited a comparable downward trajectory across the period. Reported ROA remained steady at 7.18% from 2011 to 2012 but then declined to 6.3% in 2013, continuing down to 5.91% in 2014 and dropping sharply to 4.27% by 2015. Adjusted ROA mirrored this trend with a slight increase from 7.11% in 2011 to 7.3% in 2012, followed by a consistent decrease to 6.23% in 2013, 5.95% in 2014, and 4.14% in 2015.
- Comparison Between Reported and Adjusted Metrics
- The reported and adjusted net income values are closely aligned, differing by relatively small margins each year, suggesting limited impact of adjustments on net income figures. Similarly, reported and adjusted ROA values show minor differences annually, indicating consistent financial performance with or without adjustments considered.
- Overall Interpretation
- Analysis of the data reveals that EMC Corporation experienced growth in profitability and asset efficiency through 2013, followed by a notable decline in both net income and ROA measures over the subsequent two years. The decline in net income and return on assets in 2014 and 2015 suggests challenges affecting profitability and asset utilization during this period, which may warrant further investigation into underlying operational or market factors.