Eli Lilly & Co. (LLY)
Analysis of Revenues
High level of difficulty
Accounting Policy on Revenue Recognition
Revenue from sales of products is recognized at the point where the customer obtains control of the goods and Lilly satisfies the performance obligation, which generally is at the time Lilly ships the product to the customer. Payment terms differ by jurisdiction and customer, but payment terms in most of Lilly’s major jurisdictions typically range from 30 to 75 days from date of shipment. Revenue for the product sales has not been adjusted for the effects of a financing component as Lilly expects, at contract inception, that the period between when Lilly transfers control of the product and when Lilly receives payment will be one year or less. Any exceptions are either not material or Lilly collects interest for payments made after the due date. Provisions for rebates and discounts, and returns are established in the same period the related sales are recognized. Lilly generally ships product shortly after orders are received; therefore, Lilly generally only has a few days of orders received but not yet shipped at the end of any reporting period. Shipping and handling activities are considered to be fulfillment activities and are not considered to be a separate performance obligation. Lilly excludes from the measurement of the transaction price all taxes assessed by a governmental authority that are imposed on the sales of product and collected from a customer.
Source: 10-K (filing date: 2019-02-19).
Revenues as Reported
Eli Lilly & Co., Income Statement, Revenues
US$ in thousands
|12 months ended||Dec 31, 2018||Dec 31, 2017||Dec 31, 2016||Dec 31, 2015||Dec 31, 2014|
|Other human pharmaceutical products|
|Human pharmaceutical products|
|Animal health products|
|Revenue||Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).||Eli Lilly & Co.’s revenue increased from 2016 to 2017 and from 2017 to 2018.|