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Analysis of Income Taxes
Difficulty: Advanced
- Income Tax Expense (Benefit)
- Effective Income Tax Rate (EITR)
- Components of Deferred Tax Assets and Liabilities
- Deferred Tax Assets and Liabilities, Classification
- Analyst Adjustments: Removal of Deferred Taxes
- Adjusted Ratios: Removal of Deferred Taxes (Summary)
- Adjusted Net Profit Margin
- Adjusted Total Asset Turnover
- Adjusted Financial Leverage
- Adjusted Return on Equity (ROE)
- Adjusted Return on Assets (ROA)
Income Tax Expense (Benefit)
Ford Motor Co., income tax expense (benefit), continuing operations
USD $ in millions
Source: Based on data from Ford Motor Co. Annual Reports
| Item | Description | The company |
|---|---|---|
| Current | The component of income tax expense for the period representing amounts of income taxes paid or payable (or refundable) for the period for all income tax obligations as determined by applying the provisions of relevant enacted tax laws to relevant amounts of taxable income (loss) from continuing operations. | Ford Motor Co.'s current declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level. |
| Deferred | The component of income tax expense for the period representing the net change in the entity's deferred tax assets and liabilities pertaining to continuing operations. | Ford Motor Co.'s deferred declined from 2015 to 2016 and from 2016 to 2017. |
| Provision for (benefit from) income taxes | The sum of the current income tax expense (benefit) and the deferred income tax expense (benefit) pertaining to pretax income (loss) from continuing operations; income tax expense (benefit) may include interest and penalties on tax uncertainties based on the entity's accounting policy. | Ford Motor Co.'s provision for (benefit from) income taxes declined from 2015 to 2016 and from 2016 to 2017. |
Effective Income Tax Rate (EITR)
Ford Motor Co., effective income tax rate (EITR) reconciliation
Source: Based on data from Ford Motor Co. Annual Reports
| Item | Description | The company |
|---|---|---|
| Effective tax rate | A ratio calculated by dividing the reported amount of income tax expense attributable to continuing operations for the period by GAAP-basis pretax income from continuing operations. | Ford Motor Co.'s effective tax rate increased from 2015 to 2016 but then declined significantly from 2016 to 2017. |
Components of Deferred Tax Assets and Liabilities
Ford Motor Co., components of deferred tax assets and liabilities
USD $ in millions
Source: Based on data from Ford Motor Co. Annual Reports
| Item | Description | The company |
|---|---|---|
| Gross deferred tax assets | The sum of the tax effects as of the balance sheet date of the amounts of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws (before the valuation allowance, if any, to reduce such sum amount to net realizable value). Includes any tax benefit realized in deferred tax assets for significant impacts of tax planning strategies. | Ford Motor Co.'s gross deferred tax assets declined from 2015 to 2016 and from 2016 to 2017. |
| Net deferred tax assets | The aggregate tax effects as of the balance sheet date of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; net of deducting the allocated valuation allowance, if any, to reduce such amount to net realizable value. | Ford Motor Co.'s net deferred tax assets declined from 2015 to 2016 and from 2016 to 2017. |
| Net deferred tax assets (liabilities) | For entities that net deferred tax assets and tax liabilities, represents the unclassified net amount of deferred tax assets and liabilities as of the balance sheet date, which result from applying the applicable enacted tax rate to net temporary differences and carryforwards pertaining to assets or liabilities. A temporary difference is a difference between the tax basis of an asset or liability and its carrying amount in the financial statements prepared in accordance with generally accepted accounting principles that will reverse in ensuing periods. | Ford Motor Co.'s net deferred tax assets (liabilities) declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level. |
Deferred Tax Assets and Liabilities, Classification
Ford Motor Co., deferred tax assets and liabilities, classification
USD $ in millions
| Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | Dec 31, 2013 | ||
|---|---|---|---|---|---|---|
| Non-current deferred tax assets | |
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| Non-current deferred tax liabilities | |
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Source: Based on data from Ford Motor Co. Annual Reports
| Item | Description | The company |
|---|---|---|
| Non-current deferred tax assets | The noncurrent portion as of the balance sheet date of the aggregate carrying amount of all future tax deductions arising from temporary differences between tax basis and generally accepted accounting principles basis recognition of assets, liabilities, revenues and expenses, which can only be deducted for tax purposes when permitted under enacted tax laws; after the valuation allowance, if any, to reduce such amount to net realizable value. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. | Ford Motor Co.'s non-current deferred tax assets declined from 2015 to 2016 but then increased from 2016 to 2017 not reaching 2015 level. |
| Non-current deferred tax liabilities | Represents the noncurrent portion of deferred tax liabilities, which result from applying the applicable tax rate to net taxable temporary differences pertaining to each jurisdiction to which the entity is obligated to pay income tax. A noncurrent taxable temporary difference is a difference between the tax basis and the carrying amount of a noncurrent asset or liability in the financial statements prepared in accordance with generally accepted accounting principles. In a classified statement of financial position, an enterprise shall separate deferred tax liabilities and assets into a current amount and a noncurrent amount. Deferred tax liabilities and assets shall be classified as current or noncurrent based on the classification of the related asset or liability for financial reporting. A deferred tax liability or asset that is not related to an asset or liability for financial reporting, including deferred tax assets related to carryforwards, shall be classified according to the expected reversal date of the temporary difference. | Ford Motor Co.'s non-current deferred tax liabilities increased from 2015 to 2016 and from 2016 to 2017. |
Analyst Adjustments: Removal of Deferred Taxes
Ford Motor Co., adjustments to financial data
USD $ in millions
Adjusted Ratios: Removal of Deferred Taxes (Summary)
Ford Motor Co., adjusted ratios
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by total revenue. | Ford Motor Co.'s adjusted net profit margin deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Ford Motor Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
| 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. |
Ford Motor Co.'s adjusted financial leverage declined from 2015 to 2016 and from 2016 to 2017. |
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Ford Motor Co.'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 adjusted total assets. | Ford Motor Co.'s adjusted ROA deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Adjusted Net Profit Margin
2017 Calculations
1 Net profit margin = 100 × Net income attributable to Ford Motor Company ÷ Automotive sales
= 100 × ÷ = %
2 Adjusted net profit margin = 100 × Adjusted net income attributable to Ford Motor Company ÷ Automotive sales
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by total revenue. | Ford Motor Co.'s adjusted net profit margin deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
Adjusted Total Asset Turnover
2017 Calculations
1 Total asset turnover = Automotive sales ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Automotive sales ÷ Adjusted total assets
= ÷ =
| Ratio | Description | The company |
|---|---|---|
| Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Ford Motor Co.'s adjusted total asset turnover deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Financial Leverage
2017 Calculations
1 Financial leverage = Total assets ÷ Equity attributable to Ford Motor Company
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity attributable to Ford Motor Company
= ÷ =
| 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. |
Ford Motor Co.'s adjusted financial leverage declined from 2015 to 2016 and from 2016 to 2017. |
Adjusted Return on Equity (ROE)
2017 Calculations
1 ROE = 100 × Net income attributable to Ford Motor Company ÷ Equity attributable to Ford Motor Company
= 100 × ÷ = %
2 Adjusted ROE = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted equity attributable to Ford Motor Company
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders' equity. | Ford Motor Co.'s adjusted ROE deteriorated from 2015 to 2016 and from 2016 to 2017. |
Adjusted Return on Assets (ROA)
2017 Calculations
1 ROA = 100 × Net income attributable to Ford Motor Company ÷ Total assets
= 100 × ÷ = %
2 Adjusted ROA = 100 × Adjusted net income attributable to Ford Motor Company ÷ Adjusted total assets
= 100 × ÷ = %
| Ratio | Description | The company |
|---|---|---|
| Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Ford Motor Co.'s adjusted ROA deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017. |
