HP Inc. (NYSE:HPQ)

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Area Asset Turnover: United States

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.; United States; area asset turnover calculation

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Selected Financial Data (US$ in millions)
Net revenue	20,602)	19,321)	18,042)	37,679)	38,805)	40,284)
Net property, plant and equipment	935)	866)	737)	5,501)	5,668)	5,546)
Area Activity Ratio
Area asset turnover¹	22.03	22.31	24.48	6.85	6.85	7.26

¹ 2018 Calculation
Area asset turnover = Net revenue ÷ Net property, plant and equipment
= 20,602 ÷ 935 = 22.03

The financial performance for the United States geographic area between 2013 and 2018 is characterized by a significant structural shift occurring between the 2015 and 2016 fiscal years. This period saw a substantial reduction in both revenue and the asset base, resulting in a dramatic increase in asset efficiency ratios.

Net Revenue Trends: Revenue remained relatively stable from 2013 to 2015, declining slightly from 40,284 million US$ to 37,679 million US$. A sharp contraction occurred in 2016, where revenue fell to 18,042 million US$, representing a decrease of approximately 52% from the previous year. Following this decline, a modest recovery trend was established, with revenue increasing to 19,321 million US$ in 2017 and 20,602 million US$ in 2018.
Net Property, Plant and Equipment (PP&E): Net PP&E exhibited stability between 2013 and 2015, fluctuating within a narrow range around 5,500 million US$. In 2016, a drastic reduction in the asset base was observed, with net PP&E falling to 737 million US$, a decrease of roughly 86%. This asset base grew marginally in subsequent years, reaching 935 million US$ by October 31, 2018.
Area Asset Turnover Analysis: The area asset turnover ratio remained consistent between 2013 and 2015, hovering between 6.85 and 7.26. A significant spike occurred in 2016, where the ratio rose to 24.48. This increase was driven by the fact that the reduction in net PP&E was disproportionately larger than the reduction in net revenue. From 2016 to 2018, the ratio experienced a gradual decline, settling at 22.03, as the growth in net PP&E slightly outpaced the growth in revenue during the recovery phase.

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Area Asset Turnover: Other countries

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.; Other countries; area asset turnover calculation

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
Selected Financial Data (US$ in millions)
Net revenue	37,870)	32,735)	30,196)	65,676)	72,649)	72,014)
Net property, plant and equipment	1,263)	1,012)	999)	5,589)	5,672)	5,917)
Area Activity Ratio
Area asset turnover¹	29.98	32.35	30.23	11.75	12.81	12.17

¹ 2018 Calculation
Area asset turnover = Net revenue ÷ Net property, plant and equipment
= 37,870 ÷ 1,263 = 29.98

A significant structural shift in financial performance is observed between the 2015 and 2016 fiscal years, characterized by a substantial contraction in both revenue and the fixed asset base in other countries. While the initial three-year period showed relative stability, the subsequent years reflect a different operational scale with markedly higher asset efficiency.

Revenue Performance: Net revenue remained relatively stable between 2013 and 2014, followed by a moderate decline in 2015 to 65,676 million USD. A sharp reduction occurred in 2016, with revenue falling to 30,196 million USD. However, a recovery trend is evident from 2016 through 2018, with revenue climbing to 37,870 million USD by the end of the period.
Net Property, Plant, and Equipment (PPE): The fixed asset base exhibited a consistent, slight decline from 5,917 million USD in 2013 to 5,589 million USD in 2015. This was followed by a precipitous drop in 2016 to 999 million USD. PPE levels remained low through 2018, ending at 1,263 million USD, indicating a significant reduction in the capital intensity of operations in these geographic areas.
Area Asset Turnover Ratio: The area asset turnover ratio experienced a dramatic increase coinciding with the reduction in net PPE. From 2013 to 2015, the ratio fluctuated within a narrow band between 11.75 and 12.81. Starting in 2016, the ratio spiked to 30.23 and peaked at 32.35 in 2017, before slightly moderating to 29.98 in 2018. This trend indicates that the company generated significantly more revenue per unit of net PPE after the 2016 asset contraction, reflecting a shift toward a more asset-light operational model in other countries.

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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., net revenue by geographic area

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
United States	20,602)	19,321)	18,042)	37,679)	38,805)	40,284)
Other countries	37,870)	32,735)	30,196)	65,676)	72,649)	72,014)
Total	58,472)	52,056)	48,238)	103,355)	111,454)	112,298)

Net revenue experienced a significant structural shift between the 2013 and 2018 fiscal years. After maintaining revenues above 100 billion US dollars from 2013 to 2015, total net revenue decreased sharply in 2016 before initiating a steady recovery through 2018.

Total Revenue Trajectory: Total net revenue declined from 112,298 million US dollars in 2013 to 103,355 million US dollars in 2015. A precipitous drop occurred in 2016, with revenue falling to 48,238 million US dollars. A positive growth trend emerged in the final two years of the period, with revenue rising to 52,056 million US dollars in 2017 and reaching 58,472 million US dollars by 2018.
United States Market Performance: Revenue generated within the United States followed the broader corporate trend. A gradual decline was observed from 2013 (40,284 million US dollars) to 2015 (37,679 million US dollars), followed by a sharp contraction in 2016 to 18,042 million US dollars. Subsequent years showed steady growth, concluding at 20,602 million US dollars in 2018.
International Market Performance: Net revenue from other countries represented the larger share of the business throughout the period. Revenue remained relatively stable between 2013 and 2014 at approximately 72 billion US dollars before decreasing to 65,676 million US dollars in 2015. A significant reduction occurred in 2016, falling to 30,196 million US dollars, followed by a consistent recovery to 37,870 million US dollars by 2018.
Geographic Revenue Distribution: The proportional split between domestic and international revenue remained relatively constant despite the overall volatility in volume. In 2013, the United States accounted for approximately 35.9% of total revenue, while other countries accounted for 64.1%. By 2018, this distribution remained similar, with the United States contributing approximately 35.2% and international markets contributing 64.8% of total net revenue.

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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., net property, plant and equipment by geographic area

US$ in millions

	Oct 31, 2018	Oct 31, 2017	Oct 31, 2016	Oct 31, 2015	Oct 31, 2014	Oct 31, 2013
United States	935)	866)	737)	5,501)	5,668)	5,546)
Other countries	1,263)	1,012)	999)	5,589)	5,672)	5,917)
Total	2,198)	1,878)	1,736)	11,090)	11,340)	11,463)

A significant transformation in the net property, plant, and equipment (PP&E) profile is observed between 2013 and 2018. While asset levels remained relatively stable from 2013 to 2015, a substantial reduction occurred in 2016, followed by a period of modest growth through 2018.

Aggregate Asset Trend: Total net PP&E decreased marginally from $11,463 million in 2013 to $11,090 million in 2015, before experiencing a precipitous decline to $1,736 million in 2016. This represents a reduction of approximately 84% in total net assets within a single fiscal year. Following this contraction, assets grew steadily to $2,198 million by October 31, 2018.
United States Geographic Analysis: Domestic net PP&E mirrored the aggregate trend, remaining stable between $5,501 million and $5,668 million from 2013 to 2015. A sharp decline was recorded in 2016, with assets falling to $737 million. From 2016 to 2018, US assets entered a recovery phase, increasing incrementally to $935 million.
International Geographic Analysis: Net PP&E in other countries followed a similar pattern of stability followed by a sharp contraction. Assets decreased from $5,917 million in 2013 to $999 million in 2016. The subsequent recovery in international markets was more pronounced than the domestic recovery, with assets reaching $1,263 million by October 31, 2018.
Geographic Distribution Shift: Prior to 2016, the distribution of assets was balanced, with the United States and other countries each holding roughly half of the total net PP&E. In the period following 2016, international assets became the dominant component of the portfolio. By 2018, net PP&E in other countries represented approximately 57% of the total global net property, plant, and equipment.

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