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Analysis of Income Taxes
- Accounting Policy on Income Taxes
- Income Tax Expense (Benefit)
- Effective Income Tax Rate (EITR)
- Components of Deferred Tax Assets and Liabilities
- Deferred Tax Assets and Liabilities, Classification
- Adjustments to Financial Statements: Removal of Deferred Taxes
- Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
- Adjusted Current Ratio
- Adjusted Net Profit Margin
- Adjusted Total Asset Turnover
- Adjusted Financial Leverage
- Adjusted Return on Equity (ROE)
- Adjusted Return on Assets (ROA)
Accounting Policy on Income Taxes
The provision for income taxes is based on pretax income reported in the consolidated statements of earnings and tax rates currently enacted in each jurisdiction. Certain income and expense items are recognized in different time periods for financial reporting and income tax filing purposes, and deferred income taxes are provided for the effect of temporary differences. Emerson also provides for withholding taxes and any applicable U.S. income taxes on earnings intended to be repatriated from non-U.S. locations. No provision has been made for these taxes on approximately $4.0 billion of undistributed earnings of non-U.S. subsidiaries as of September 30, 2019, as these earnings are considered indefinitely invested or otherwise retained for continuing international operations. Recognition of withholding taxes and any applicable U.S. income taxes on undistributed non-U.S. earnings would be triggered by a management decision to repatriate those earnings. Determination of the amount of taxes that might be paid on these undistributed earnings if eventually remitted is not practicable.
Source: 10-K (filing date: 2019-11-18).
Income Tax Expense (Benefit)
Emerson Electric Co., income tax expense (benefit), continuing operations
US$ in millions
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Item | Description | The company |
---|---|---|
Current | Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. | Emerson Electric Co.’s current decreased from 2017 to 2018 and from 2018 to 2019. |
Deferred | Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. | Emerson Electric Co.’s deferred decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level. |
Income tax expense | Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. | Emerson Electric Co.’s income tax expense decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Effective Income Tax Rate (EITR)
Emerson Electric Co., effective income tax rate (EITR) reconciliation
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Item | Description | The company |
---|---|---|
Effective income tax rate, before transition impact of Tax Act | Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. | Emerson Electric Co.’s effective income tax rate, before transition impact of Tax Act decreased from 2017 to 2018 and from 2018 to 2019. |
Components of Deferred Tax Assets and Liabilities
Emerson Electric Co., components of deferred tax assets and liabilities
US$ in millions
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Item | Description | The company |
---|---|---|
Deferred tax assets, gross | Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. | Emerson Electric Co.’s deferred tax assets, gross decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Deferred tax assets, net | Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. | Emerson Electric Co.’s deferred tax assets, net decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Net deferred income tax asset (liability) | Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. | Emerson Electric Co.’s net deferred income tax asset (liability) decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
Deferred Tax Assets and Liabilities, Classification
Emerson Electric Co., deferred tax assets and liabilities, classification
US$ in millions
Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | Sep 30, 2014 | ||
---|---|---|---|---|---|---|---|
Current deferred tax assets, net | |||||||
Noncurrent deferred tax assets | |||||||
Noncurrent deferred tax liabilities |
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Item | Description | The company |
---|---|---|
Noncurrent deferred tax assets | Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. | Emerson Electric Co.’s noncurrent deferred tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level. |
Noncurrent deferred tax liabilities | Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. | Emerson Electric Co.’s noncurrent deferred tax liabilities increased from 2017 to 2018 but then decreased significantly from 2018 to 2019. |
Adjustments to Financial Statements: Removal of Deferred Taxes
Emerson Electric Co., adjustments to financial statements
US$ in millions
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Emerson Electric Co., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Emerson Electric Co., adjusted financial ratios
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
Financial ratio | Description | The company |
---|---|---|
Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. | Emerson Electric Co.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019. |
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by total revenue. | Emerson Electric Co.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Emerson Electric Co.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
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. |
Emerson Electric Co.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | Emerson Electric Co.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Emerson Electric Co.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019. |
Emerson Electric Co., Financial Ratios: Reported vs. Adjusted
Adjusted Current Ratio
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =
Liquidity ratio | Description | The company |
---|---|---|
Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. | Emerson Electric Co.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019. |
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 Net profit margin = 100 × Net earnings common stockholders ÷ Net sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net earnings common stockholders ÷ Net sales
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by total revenue. | Emerson Electric Co.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 Total asset turnover = Net sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= ÷ =
Activity ratio | Description | The company |
---|---|---|
Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Emerson Electric Co.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 Financial leverage = Total assets ÷ Common stockholders’ equity
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted common stockholders’ equity
= ÷ =
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. |
Emerson Electric Co.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 ROE = 100 × Net earnings common stockholders ÷ Common stockholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net earnings common stockholders ÷ Adjusted common stockholders’ equity
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | Emerson Electric Co.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2019-11-18), 10-K (filing date: 2018-11-19), 10-K (filing date: 2017-11-20), 10-K (filing date: 2016-11-16), 10-K (filing date: 2015-11-18), 10-K (filing date: 2014-11-19).
2019 Calculations
1 ROA = 100 × Net earnings common stockholders ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net earnings common stockholders ÷ Adjusted total assets
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Emerson Electric Co.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019. |