An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)
Adjustments to Financial Statements for Operating Leases
Adjusted Financial Ratios for Operating Leases (Summary)
Adjusted Total Asset Turnover
Adjusted Debt to Equity
Adjusted Return on Assets (ROA)

HP Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Total undiscounted future operating lease payments	1,487)	1,231)	1,068)	2,868)	3,064)	2,993)
Discount rate¹	4.60%	4.40%	4.69%	4.20%	3.79%	4.05%

Total present value of future operating lease payments	1,260)	1,036)	901)	2,461)	2,681)	2,606)

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).

¹ Weighted-average interest rate for HP Inc. debt

2018 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.60%
2019	317)	2019	317)	303)
2020	256)	2020	256)	234)
2021	200)	2021	200)	175)
2022	162)	2022	162)	135)
2023	141)	2023	141)	113)
2024 and thereafter	411)	2024	141)	108)
		2025	141)	103)
		2026	129)	90)
Total:	1,487)		1,487)	1,260)

Based on: 10-K (reporting date: 2018-10-31).

2017 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.40%
2018	288)	2018	288)	276)
2019	213)	2019	213)	195)
2020	147)	2020	147)	129)
2021	99)	2021	99)	83)
2022	83)	2022	83)	67)
2023 and thereafter	401)	2023	83)	64)
		2024	83)	61)
		2025	83)	59)
		2026	83)	56)
		2027	69)	45)
Total:	1,231)		1,231)	1,036)

Based on: 10-K (reporting date: 2017-10-31).

2016 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.69%
2017	199)	2017	199)	190)
2018	204)	2018	204)	186)
2019	175)	2019	175)	153)
2020	136)	2020	136)	113)
2021	75)	2021	75)	60)
2022 and thereafter	279)	2022	75)	57)
		2023	75)	54)
		2024	75)	52)
		2025	54)	36)
Total:	1,068)		1,068)	901)

Based on: 10-K (reporting date: 2016-10-31).

2015 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.20%
2016	624)	2016	624)	599)
2017	517)	2017	517)	476)
2018	379)	2018	379)	335)
2019	310)	2019	310)	263)
2020	237)	2020	237)	193)
2021 and thereafter	801)	2021	237)	185)
		2022	237)	178)
		2023	237)	171)
		2024	90)	62)
Total:	2,868)		2,868)	2,461)

Based on: 10-K (reporting date: 2015-10-31).

2014 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 3.79%
2015	744)	2015	744)	717)
2016	555)	2016	555)	515)
2017	416)	2017	416)	372)
2018	308)	2018	308)	265)
2019	237)	2019	237)	197)
2020 and thereafter	804)	2020	237)	190)
		2021	237)	183)
		2022	237)	176)
		2023	93)	67)
Total:	3,064)		3,064)	2,681)

Based on: 10-K (reporting date: 2014-10-31).

2013 Calculations

Year	Future operating lease payments (as reported)	Year	Future operating lease payments (estimated)	Present value at 4.05%
2014	763)	2014	763)	733)
2015	605)	2015	605)	559)
2016	435)	2016	435)	386)
2017	275)	2017	275)	235)
2018	180)	2018	180)	148)
2019 and thereafter	735)	2019	180)	142)
		2020	180)	136)
		2021	180)	131)
		2022	180)	126)
		2023	15)	10)
Total:	2,993)		2,993)	2,606)

Based on: 10-K (reporting date: 2013-10-31).

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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 Total Assets
Total assets (as reported)	34,622)	32,913)	29,010)	106,882)	103,206)	105,676)
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)¹	1,260)	1,036)	901)	2,461)	2,681)	2,606)
Total assets (adjusted)	35,882)	33,949)	29,911)	109,343)	105,887)	108,282)
Adjustment to Total Debt
Total debt (as reported)	5,987)	7,819)	6,836)	24,665)	19,525)	22,587)
Add: Operating lease liability (before adoption of FASB Topic 842)²	1,260)	1,036)	901)	2,461)	2,681)	2,606)
Total debt (adjusted)	7,247)	8,855)	7,737)	27,126)	22,206)	25,193)

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).

^{1, 2} Equal to total present value of future operating lease payments.

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
Total Asset Turnover¹
Reported total asset turnover	1.69	1.58	1.66	0.97	1.08	1.06
Adjusted total asset turnover	1.63	1.53	1.61	0.95	1.05	1.04
Debt to Equity²
Reported debt to equity	—	—	—	0.89	0.73	0.83
Adjusted debt to equity	—	—	—	0.98	0.83	0.92
Return on Assets³ (ROA)
Reported ROA	15.39%	7.67%	8.60%	4.26%	4.86%	4.84%
Adjusted ROA	14.85%	7.44%	8.34%	4.16%	4.73%	4.72%

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).

¹ See details »

² See details »

³ See details »

Financial 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.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	HP Inc. adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

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)
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 Operating Leases
Selected Financial Data (US$ in millions)
Net revenue	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)
Adjusted total assets	35,882)	33,949)	29,911)	109,343)	105,887)	108,282)
Activity Ratio
Adjusted total asset turnover²	1.63	1.53	1.61	0.95	1.05	1.04

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 ÷ 35,882 = 1.63

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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 debt	5,987)	7,819)	6,836)	24,665)	19,525)	22,587)
Total HP stockholders’ equity (deficit)	(639)	(3,408)	(3,889)	27,768)	26,731)	27,269)
Solvency Ratio
Debt to equity¹	—	—	—	0.89	0.73	0.83
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt	7,247)	8,855)	7,737)	27,126)	22,206)	25,193)
Total HP stockholders’ equity (deficit)	(639)	(3,408)	(3,889)	27,768)	26,731)	27,269)
Solvency Ratio
Adjusted debt to equity²	—	—	—	0.98	0.83	0.92

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 Debt to equity = Total debt ÷ Total HP stockholders’ equity (deficit)
= 5,987 ÷ -639 = —

² Adjusted debt to equity = Adjusted total debt ÷ Total HP stockholders’ equity (deficit)
= 7,247 ÷ -639 = —

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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 Operating Leases
Selected Financial Data (US$ in millions)
Net earnings	5,327)	2,526)	2,496)	4,554)	5,013)	5,113)
Adjusted total assets	35,882)	33,949)	29,911)	109,343)	105,887)	108,282)
Profitability Ratio
Adjusted ROA²	14.85%	7.44%	8.34%	4.16%	4.73%	4.72%

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 × Net earnings ÷ Adjusted total assets
= 100 × 5,327 ÷ 35,882 = 14.85%

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

HP Inc. (NYSE:HPQ)

Analysis of Operating Leases

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Adjustments to Financial Statements for Operating Leases

HP Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios for Operating Leases (Summary)

HP Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Debt to Equity

Adjusted Return on Assets (ROA)