Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Eaton Corp. plc, balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Goodwill	14,977)	14,796)	14,751)	12,903)	13,456)
Trademarks	1,207)	1,201)	1,374)	1,382)	1,516)
Intangible assets not subject to amortization	1,207)	1,201)	1,374)	1,382)	1,516)
Customer relationships	4,742)	4,677)	4,752)	3,415)	3,260)
Patents and technology	1,990)	1,987)	1,879)	1,428)	1,542)
Trademarks	1,123)	1,113)	951)	970)	1,057)
Other	176)	175)	165)	91)	92)
Intangible assets subject to amortization, historical cost	8,031)	7,952)	7,747)	5,904)	5,951)
Accumulated amortization	(4,147)	(3,668)	(3,266)	(3,111)	(2,829)
Intangible assets subject to amortization, net	3,884)	4,284)	4,481)	2,793)	3,122)
Other intangible assets	5,091)	5,485)	5,855)	4,175)	4,638)
Goodwill and other intangible assets	20,068)	20,281)	20,606)	17,078)	18,094)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Eaton Corp. plc goodwill increased from 2021 to 2022 and from 2022 to 2023.
Other intangible assets	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Eaton Corp. plc other intangible assets decreased from 2021 to 2022 and from 2022 to 2023.
Goodwill and other intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Eaton Corp. plc goodwill and other intangible assets decreased from 2021 to 2022 and from 2022 to 2023.

Eaton Corp. plc, adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	38,432)	35,014)	34,027)	31,824)	32,805)
Less: Goodwill	14,977)	14,796)	14,751)	12,903)	13,456)
Total assets (adjusted)	23,455)	20,218)	19,276)	18,921)	19,349)
Adjustment to Total Eaton Shareholders’ Equity
Total Eaton shareholders’ equity (as reported)	19,036)	17,038)	16,413)	14,930)	16,082)
Less: Goodwill	14,977)	14,796)	14,751)	12,903)	13,456)
Total Eaton shareholders’ equity (adjusted)	4,059)	2,242)	1,662)	2,027)	2,626)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Eaton Corp. plc, Financial Data: Reported vs. Adjusted

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Eaton Corp. plc, adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total Asset Turnover
Reported total asset turnover	0.60	0.59	0.58	0.56	0.65
Adjusted total asset turnover	0.99	1.03	1.02	0.94	1.11
Financial Leverage
Reported financial leverage	2.02	2.06	2.07	2.13	2.04
Adjusted financial leverage	5.78	9.02	11.60	9.33	7.37
Return on Equity (ROE)
Reported ROE	16.90%	14.45%	13.06%	9.44%	13.75%
Adjusted ROE	79.28%	109.81%	129.00%	69.56%	84.20%
Return on Assets (ROA)
Reported ROA	8.37%	7.03%	6.30%	4.43%	6.74%
Adjusted ROA	13.72%	12.18%	11.12%	7.45%	11.43%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Eaton Corp. plc adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted 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.	Eaton Corp. plc adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Eaton Corp. plc adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Eaton Corp. plc adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Eaton Corp. plc, Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales	23,196)	20,752)	19,628)	17,858)	21,390)
Total assets	38,432)	35,014)	34,027)	31,824)	32,805)
Activity Ratio
Total asset turnover¹	0.60	0.59	0.58	0.56	0.65
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net sales	23,196)	20,752)	19,628)	17,858)	21,390)
Adjusted total assets	23,455)	20,218)	19,276)	18,921)	19,349)
Activity Ratio
Adjusted total asset turnover²	0.99	1.03	1.02	0.94	1.11

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 23,196 ÷ 38,432 = 0.60

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 23,196 ÷ 23,455 = 0.99

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Eaton Corp. plc adjusted total asset turnover ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	38,432)	35,014)	34,027)	31,824)	32,805)
Total Eaton shareholders’ equity	19,036)	17,038)	16,413)	14,930)	16,082)
Solvency Ratio
Financial leverage¹	2.02	2.06	2.07	2.13	2.04
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	23,455)	20,218)	19,276)	18,921)	19,349)
Adjusted total Eaton shareholders’ equity	4,059)	2,242)	1,662)	2,027)	2,626)
Solvency Ratio
Adjusted financial leverage²	5.78	9.02	11.60	9.33	7.37

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Eaton shareholders’ equity
= 38,432 ÷ 19,036 = 2.02

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Eaton shareholders’ equity
= 23,455 ÷ 4,059 = 5.78

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Solvency ratio	Description	The company
Adjusted financial leverage	A measure of financial leverage calculated as adjusted total assets divided by adjusted 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.	Eaton Corp. plc adjusted financial leverage ratio decreased from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders	3,218)	2,462)	2,144)	1,410)	2,211)
Total Eaton shareholders’ equity	19,036)	17,038)	16,413)	14,930)	16,082)
Profitability Ratio
ROE¹	16.90%	14.45%	13.06%	9.44%	13.75%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders	3,218)	2,462)	2,144)	1,410)	2,211)
Adjusted total Eaton shareholders’ equity	4,059)	2,242)	1,662)	2,027)	2,626)
Profitability Ratio
Adjusted ROE²	79.28%	109.81%	129.00%	69.56%	84.20%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total Eaton shareholders’ equity
= 100 × 3,218 ÷ 19,036 = 16.90%

² Adjusted ROE = 100 × Net income attributable to Eaton ordinary shareholders ÷ Adjusted total Eaton shareholders’ equity
= 100 × 3,218 ÷ 4,059 = 79.28%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Eaton Corp. plc adjusted ROE deteriorated from 2021 to 2022 and from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders	3,218)	2,462)	2,144)	1,410)	2,211)
Total assets	38,432)	35,014)	34,027)	31,824)	32,805)
Profitability Ratio
ROA¹	8.37%	7.03%	6.30%	4.43%	6.74%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Eaton ordinary shareholders	3,218)	2,462)	2,144)	1,410)	2,211)
Adjusted total assets	23,455)	20,218)	19,276)	18,921)	19,349)
Profitability Ratio
Adjusted ROA²	13.72%	12.18%	11.12%	7.45%	11.43%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income attributable to Eaton ordinary shareholders ÷ Total assets
= 100 × 3,218 ÷ 38,432 = 8.37%

² Adjusted ROA = 100 × Net income attributable to Eaton ordinary shareholders ÷ Adjusted total assets
= 100 × 3,218 ÷ 23,455 = 13.72%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Eaton Corp. plc adjusted ROA improved from 2021 to 2022 and from 2022 to 2023.

Eaton Corp. plc (NYSE:ETN)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Eaton Corp. plc, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Eaton Corp. plc, Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)