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Analysis of Investments

Difficulty: Advanced


Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Honeywell International Inc., adjustment to Net Income Attributable To Honeywell

USD $ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income attributable to Honeywell (as reported) 6,765  1,655  4,809  4,768  4,239 
Add: Changes in fair value of available for sale investments –  –  –  –  (170)
Net income attributable to Honeywell (adjusted) 6,765  1,655  4,809  4,768  4,069 

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).


Adjusted Ratios: Mark to Market Available-for-sale Securities (Summary)

Honeywell International Inc., adjusted ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net Profit Margin
Reported net profit margin 16.18% 4.08% 12.24% 12.36% 10.52%
Adjusted net profit margin 16.18% 4.08% 12.24% 12.36% 10.10%
Return on Equity (ROE)
Reported ROE 37.21% 9.58% 24.83% 26.08% 24.01%
Adjusted ROE 37.21% 9.58% 24.83% 26.08% 23.04%
Return on Assets (ROA)
Reported ROA 11.71% 2.79% 8.88% 9.67% 9.33%
Adjusted ROA 11.71% 2.79% 8.88% 9.67% 8.95%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Honeywell International Inc.’s adjusted net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Honeywell International Inc.’s adjusted ROE 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 total assets. Honeywell International Inc.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Honeywell International Inc., Ratios: Reported vs. Adjusted


Adjusted Net Profit Margin

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,239 
Net sales 41,802  40,534  39,302  38,581  40,306 
Ratio
Net profit margin1 16.18% 4.08% 12.24% 12.36% 10.52%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,069 
Net sales 41,802  40,534  39,302  38,581  40,306 
Ratio
Adjusted net profit margin2 16.18% 4.08% 12.24% 12.36% 10.10%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

2018 Calculations

1 Net profit margin = 100 × Net income attributable to Honeywell ÷ Net sales
= 100 × 6,765 ÷ 41,802 = 16.18%

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Honeywell ÷ Net sales
= 100 × 6,765 ÷ 41,802 = 16.18%

Ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Honeywell International Inc.’s adjusted net profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Adjusted Return on Equity (ROE)

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,239 
Total Honeywell shareowners’ equity 18,180  17,276  19,369  18,283  17,657 
Ratio
ROE1 37.21% 9.58% 24.83% 26.08% 24.01%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,069 
Total Honeywell shareowners’ equity 18,180  17,276  19,369  18,283  17,657 
Ratio
Adjusted ROE2 37.21% 9.58% 24.83% 26.08% 23.04%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

2018 Calculations

1 ROE = 100 × Net income attributable to Honeywell ÷ Total Honeywell shareowners’ equity
= 100 × 6,765 ÷ 18,180 = 37.21%

2 Adjusted ROE = 100 × Adjusted net income attributable to Honeywell ÷ Total Honeywell shareowners’ equity
= 100 × 6,765 ÷ 18,180 = 37.21%

Ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Honeywell International Inc.’s adjusted ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Adjusted Return on Assets (ROA)

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (USD $ in millions)
Net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,239 
Total assets 57,773  59,387  54,146  49,316  45,451 
Ratio
ROA1 11.71% 2.79% 8.88% 9.67% 9.33%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (USD $ in millions)
Adjusted net income attributable to Honeywell 6,765  1,655  4,809  4,768  4,069 
Total assets 57,773  59,387  54,146  49,316  45,451 
Ratio
Adjusted ROA2 11.71% 2.79% 8.88% 9.67% 8.95%

Based on: 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-09), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

2018 Calculations

1 ROA = 100 × Net income attributable to Honeywell ÷ Total assets
= 100 × 6,765 ÷ 57,773 = 11.71%

2 Adjusted ROA = 100 × Adjusted net income attributable to Honeywell ÷ Total assets
= 100 × 6,765 ÷ 57,773 = 11.71%

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