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)

HP Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
U.S. federal taxes	751)	189)	439)	(324)	381)	475)
Non-U.S. taxes	528)	302)	288)	993)	984)	1,275)
State taxes	61)	20)	(35)	210)	212)	57)
Current	1,340)	511)	692)	879)	1,577)	1,807)
U.S. federal taxes	(3,132)	197)	470)	(1,237)	210)	(666)
Non-U.S. taxes	(563)	4)	(123)	678)	(42)	89)
State taxes	41)	38)	56)	(142)	(201)	167)
Deferred	(3,654)	239)	403)	(701)	(33)	(410)
Provision for (benefit from) taxes on earnings	(2,314)	750)	1,095)	178)	1,544)	1,397)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

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Item	Description	The company
Current	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	HP Inc. current decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.
Deferred	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	HP Inc. deferred decreased from 2016 to 2017 and from 2017 to 2018.
Provision for (benefit from) taxes on earnings	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	HP Inc. provision for (benefit from) taxes on earnings decreased from 2016 to 2017 and from 2017 to 2018.

HP Inc., effective income tax rate (EITR) reconciliation

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
U.S. federal statutory income tax rate	23.30%	35.00%	35.00%	35.00%	35.00%	35.00%
State income taxes, net of federal tax benefit	0.50%	1.40%	1.10%	-4.60%	0.40%	0.10%
Lower rates in other jurisdictions, net	-10.90%	-13.20%	-9.30%	-16.20%	-12.90%	-24.50%
U.S. Tax Reform impacts	-35.80%	0.00%	0.00%	0.00%	0.00%	0.00%
Research and development (R&D) credit	-0.70%	-0.50%	-2.40%	0.00%	0.00%	-0.70%
Valuation allowances	-9.30%	-1.90%	-1.20%	-23.40%	1.70%	3.80%
Uncertain tax positions and audit settlements	-50.30%	0.40%	11.70%	10.10%	-2.30%	4.10%
Indemnification related items	5.20%	-0.30%	-4.10%	0.00%	0.00%	0.00%
Other, net	1.20%	2.00%	-1.70%	2.90%	1.60%	3.70%
HP’s effective tax rate	-76.80%	22.90%	29.10%	3.80%	23.50%	21.50%

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

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Item	Description	The company
HP’s effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	HP Inc. hP’s effective tax rate decreased from 2016 to 2017 and from 2017 to 2018.

HP Inc., components of deferred tax assets and liabilities

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Loss and credit carryforwards	8,204)	9,914)	8,725)	9,202)	11,853)	14,068)
Intercompany transactions, profit in inventory	—)	—)	—)	147)	136)	125)
Intercompany transactions, excluding inventory	994)	1,901)	2,560)	6,952)	4,403)	1,923)
Fixed assets	151)	256)	274)	377)	383)	289)
Warranty	194)	219)	248)	549)	616)	622)
Employee and retiree benefits	401)	519)	592)	1,872)	2,790)	2,350)
Deferred revenue	164)	231)	206)	1,235)	1,143)	1,119)
Other	422)	511)	556)	2,784)	2,398)	2,320)
Gross deferred tax assets	10,530)	13,551)	13,161)	23,118)	23,722)	22,816)
Valuation allowances	(7,906)	(8,807)	(8,520)	(9,878)	(11,915)	(11,390)
Deferred tax assets	2,624)	4,744)	4,641)	13,240)	11,807)	11,426)
Unremitted earnings of foreign subsidiaries	(31)	(5,554)	(5,179)	(8,450)	(7,828)	(7,469)
Accounts receivable allowance	—)	—)	—)	(1)	(1)	(1)
Intangible assets	(229)	(209)	(213)	(546)	(596)	(886)
Deferred revenue	—)	—)	—)	(5)	(12)	(19)
Other	(33)	(49)	(111)	(1,588)	(1,284)	(855)
Deferred tax liabilities	(293)	(5,812)	(5,503)	(10,590)	(9,721)	(9,230)
Net deferred tax assets and liabilities	2,331)	(1,068)	(862)	2,650)	2,086)	2,196)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

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Item	Description	The company
Gross deferred tax assets	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	HP Inc. gross deferred tax assets increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	HP Inc. deferred tax assets increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.
Net deferred tax assets and liabilities	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	HP Inc. net deferred tax assets and liabilities decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

HP Inc., deferred tax assets and liabilities, classification

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Current deferred tax assets	—)	—)	—)	2,242)	2,754)	3,893)
Current deferred tax liabilities	—)	—)	—)	168)	284)	375)
Long-term deferred tax assets	2,431)	342)	254)	871)	740)	1,346)
Long-term deferred tax liabilities	100)	1,410)	1,116)	295)	1,124)	2,668)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

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Item	Description	The company
Long-term 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.	HP Inc. long-term deferred tax assets increased from 2016 to 2017 and from 2017 to 2018.
Long-term deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	HP Inc. long-term deferred tax liabilities increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.

HP Inc., adjustments to financial statements

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Adjustment to Current Assets
Current assets (as reported)	21,387)	22,318)	18,468)	51,787)	50,145)	50,364)
Less: Current deferred tax assets, net	—)	—)	—)	2,242)	2,754)	3,893)
Current assets (adjusted)	21,387)	22,318)	18,468)	49,545)	47,391)	46,471)
Adjustment to Total Assets
Total assets (as reported)	34,622)	32,913)	29,010)	106,882)	103,206)	105,676)
Less: Current deferred tax assets, net	—)	—)	—)	2,242)	2,754)	3,893)
Less: Noncurrent deferred tax assets, net	2,431)	342)	254)	871)	740)	1,346)
Total assets (adjusted)	32,191)	32,571)	28,756)	103,769)	99,712)	100,437)
Adjustment to Current Liabilities
Current liabilities (as reported)	25,131)	22,412)	18,808)	42,191)	43,735)	45,521)
Less: Current deferred tax liabilities, net	—)	—)	—)	168)	284)	375)
Current liabilities (adjusted)	25,131)	22,412)	18,808)	42,023)	43,451)	45,146)
Adjustment to Total Liabilities
Total liabilities (as reported)	35,261)	36,321)	32,899)	78,731)	76,079)	78,020)
Less: Current deferred tax liabilities, net	—)	—)	—)	168)	284)	375)
Less: Noncurrent deferred tax liabilities, net	100)	1,410)	1,116)	295)	1,124)	2,668)
Total liabilities (adjusted)	35,161)	34,911)	31,783)	78,268)	74,671)	74,977)
Adjustment to Total HP Stockholders’ Equity (deficit)
Total HP stockholders’ equity (deficit) (as reported)	(639)	(3,408)	(3,889)	27,768)	26,731)	27,269)
Less: Net deferred tax assets (liabilities)	2,331)	(1,068)	(862)	2,650)	2,086)	2,196)
Total HP stockholders’ equity (deficit) (adjusted)	(2,970)	(2,340)	(3,027)	25,118)	24,645)	25,073)
Adjustment to Net Earnings
Net earnings (as reported)	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Add: Deferred income tax expense (benefit)	(3,654)	239)	403)	(701)	(33)	(410)
Net earnings (adjusted)	1,673)	2,765)	2,899)	3,853)	4,980)	4,703)

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

HP Inc., Financial Data: Reported vs. Adjusted

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HP Inc., adjusted financial ratios

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Current Ratio
Reported current ratio	0.85	1.00	0.98	1.23	1.15	1.11
Adjusted current ratio	0.85	1.00	0.98	1.18	1.09	1.03
Net Profit Margin
Reported net profit margin	9.11%	4.85%	5.17%	4.41%	4.50%	4.55%
Adjusted net profit margin	2.86%	5.31%	6.01%	3.73%	4.47%	4.19%
Total Asset Turnover
Reported total asset turnover	1.69	1.58	1.66	0.97	1.08	1.06
Adjusted total asset turnover	1.82	1.60	1.68	1.00	1.12	1.12
Financial Leverage
Reported financial leverage	—	—	—	3.85	3.86	3.88
Adjusted financial leverage	—	—	—	4.13	4.05	4.01
Return on Equity (ROE)
Reported ROE	—	—	—	16.40%	18.75%	18.75%
Adjusted ROE	—	—	—	15.34%	20.21%	18.76%
Return on Assets (ROA)
Reported ROA	15.39%	7.67%	8.60%	4.26%	4.86%	4.84%
Adjusted ROA	5.20%	8.49%	10.08%	3.71%	4.99%	4.68%

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

Financial ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities.	HP Inc. adjusted current ratio improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	HP Inc. adjusted net profit margin ratio deteriorated from 2016 to 2017 and from 2017 to 2018.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	HP Inc. adjusted total asset turnover ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	HP Inc. adjusted ROA deteriorated from 2016 to 2017 and from 2017 to 2018.

HP Inc., Financial Ratios: Reported vs. Adjusted

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	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Current assets	21,387)	22,318)	18,468)	51,787)	50,145)	50,364)
Current liabilities	25,131)	22,412)	18,808)	42,191)	43,735)	45,521)
Liquidity Ratio
Current ratio¹	0.85	1.00	0.98	1.23	1.15	1.11
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets	21,387)	22,318)	18,468)	49,545)	47,391)	46,471)
Adjusted current liabilities	25,131)	22,412)	18,808)	42,023)	43,451)	45,146)
Liquidity Ratio
Adjusted current ratio²	0.85	1.00	0.98	1.18	1.09	1.03

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ Current ratio = Current assets ÷ Current liabilities
= 21,387 ÷ 25,131 = 0.85

² Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 21,387 ÷ 25,131 = 0.85

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Liquidity ratio	Description	The company
Adjusted current ratio	A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities.	HP Inc. adjusted current ratio improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Profitability Ratio
Net profit margin¹	9.11%	4.85%	5.17%	4.41%	4.50%	4.55%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings	1,673)	2,765)	2,899)	3,853)	4,980)	4,703)
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Profitability Ratio
Adjusted net profit margin²	2.86%	5.31%	6.01%	3.73%	4.47%	4.19%

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ Net profit margin = 100 × Net earnings ÷ Net revenue
= 100 × 5,327 ÷ 58,472 = 9.11%

² Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net revenue
= 100 × 1,673 ÷ 58,472 = 2.86%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	HP Inc. adjusted net profit margin ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Total assets	34,622)	32,913)	29,010)	106,882)	103,206)	105,676)
Activity Ratio
Total asset turnover¹	1.69	1.58	1.66	0.97	1.08	1.06
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Adjusted total assets	32,191)	32,571)	28,756)	103,769)	99,712)	100,437)
Activity Ratio
Adjusted total asset turnover²	1.82	1.60	1.68	1.00	1.12	1.12

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ Total asset turnover = Net revenue ÷ Total assets
= 58,472 ÷ 34,622 = 1.69

² Adjusted total asset turnover = Net revenue ÷ Adjusted total assets
= 58,472 ÷ 32,191 = 1.82

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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.	HP Inc. adjusted total asset turnover ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Total assets	34,622)	32,913)	29,010)	106,882)	103,206)	105,676)
Total HP stockholders’ equity (deficit)	(639)	(3,408)	(3,889)	27,768)	26,731)	27,269)
Solvency Ratio
Financial leverage¹	—	—	—	3.85	3.86	3.88
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	32,191)	32,571)	28,756)	103,769)	99,712)	100,437)
Adjusted total HP stockholders’ equity (deficit)	(2,970)	(2,340)	(3,027)	25,118)	24,645)	25,073)
Solvency Ratio
Adjusted financial leverage²	—	—	—	4.13	4.05	4.01

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ Financial leverage = Total assets ÷ Total HP stockholders’ equity (deficit)
= 34,622 ÷ -639 = —

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total HP stockholders’ equity (deficit)
= 32,191 ÷ -2,970 = —

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	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Total HP stockholders’ equity (deficit)	(639)	(3,408)	(3,889)	27,768)	26,731)	27,269)
Profitability Ratio
ROE¹	—	—	—	16.40%	18.75%	18.75%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings	1,673)	2,765)	2,899)	3,853)	4,980)	4,703)
Adjusted total HP stockholders’ equity (deficit)	(2,970)	(2,340)	(3,027)	25,118)	24,645)	25,073)
Profitability Ratio
Adjusted ROE²	—	—	—	15.34%	20.21%	18.76%

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ ROE = 100 × Net earnings ÷ Total HP stockholders’ equity (deficit)
= 100 × 5,327 ÷ -639 = —

² Adjusted ROE = 100 × Adjusted net earnings ÷ Adjusted total HP stockholders’ equity (deficit)
= 100 × 1,673 ÷ -2,970 = —

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	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
As Reported
Selected Financial Data (US$ in millions)
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Total assets	34,622)	32,913)	29,010)	106,882)	103,206)	105,676)
Profitability Ratio
ROA¹	15.39%	7.67%	8.60%	4.26%	4.86%	4.84%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings	1,673)	2,765)	2,899)	3,853)	4,980)	4,703)
Adjusted total assets	32,191)	32,571)	28,756)	103,769)	99,712)	100,437)
Profitability Ratio
Adjusted ROA²	5.20%	8.49%	10.08%	3.71%	4.99%	4.68%

Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).

2018 Calculations

¹ ROA = 100 × Net earnings ÷ Total assets
= 100 × 5,327 ÷ 34,622 = 15.39%

² Adjusted ROA = 100 × Adjusted net earnings ÷ Adjusted total assets
= 100 × 1,673 ÷ 32,191 = 5.20%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	HP Inc. adjusted ROA deteriorated from 2016 to 2017 and from 2017 to 2018.

HP Inc. (NYSE:HPQ)

Analysis of 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

HP Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

HP Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Current Ratio

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)