Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Honeywell International Inc. (NYSE:HON)

Analysis of Operating Leases

Advanced level

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)

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

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments 856  1,126  1,123  1,201 
Discount rate1 2.62% 2.48% 2.98% 5.45%
 
Total present value of future operating lease payments 789  1,040  1,017  1,007 

Based on: 10-K (filing date: 2020-02-14), 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).

1 Weighted-average interest rate for Honeywell International Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.62%
2019 210  2019 210  205 
2020 168  2020 168  160 
2021 142  2021 142  131 
2022 109  2022 109  98 
2023 80  2023 80  70 
2024 and thereafter 147  2024 80  69 
2025 67  56 
Total: 856  856  789 

Based on: 10-K (filing date: 2019-02-08).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.48%
2018 295  2018 295  288 
2019 226  2019 226  215 
2020 161  2020 161  150 
2021 121  2021 121  110 
2022 97  2022 97  86 
2023 and thereafter 226  2023 97  84 
2024 97  82 
2025 32  26 
Total: 1,126  1,126  1,040 

Based on: 10-K (filing date: 2018-02-09).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.98%
2017 289  2017 289  281 
2018 216  2018 216  204 
2019 158  2019 158  145 
2020 110  2020 110  98 
2021 94  2021 94  81 
2022 and thereafter 256  2022 94  79 
2023 94  77 
2024 68  54 
Total: 1,123  1,123  1,017 

Based on: 10-K (filing date: 2017-02-10).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 5.45%
2016 316  2016 316  300 
2017 249  2017 249  224 
2018 172  2018 172  147 
2019 114  2019 114  92 
2020 77  2020 77  59 
2021 and thereafter 273  2021 77  56 
2022 77  53 
2023 77  50 
2024 42  26 
Total: 1,201  1,201  1,007 

Based on: 10-K (filing date: 2016-02-12).


Adjustments to Financial Statements for Operating Leases

Honeywell International Inc., adjustments to financial statements

US$ in millions

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 58,679  57,773  59,387  54,146  49,316 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  789  1,040  1,017  1,007 
Total assets (adjusted) 58,679  58,562  60,427  55,163  50,323 
Adjustment to Total Debt
Total debt (as reported) 16,002  16,214  17,882  15,775  12,068 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  789  1,040  1,017  1,007 
Add: Current operating lease liabilities 171  —  —  —  — 
Add: Non-current operating lease liabilities 534  —  —  —  — 
Total debt (adjusted) 16,707  17,003  18,922  16,792  13,075 

Based on: 10-K (filing date: 2020-02-14), 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).

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


Honeywell International Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Honeywell International Inc., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover1
Reported total asset turnover 0.63 0.72 0.68 0.73 0.78
Adjusted total asset turnover 0.63 0.71 0.67 0.71 0.77
Debt to Equity2
Reported debt to equity 0.87 0.89 1.04 0.81 0.66
Adjusted debt to equity 0.90 0.94 1.10 0.87 0.72
Return on Assets3 (ROA)
Reported ROA 10.47% 11.71% 2.79% 8.88% 9.67%
Adjusted ROA 10.47% 11.55% 2.74% 8.72% 9.47%

Based on: 10-K (filing date: 2020-02-14), 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).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Honeywell International Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Honeywell International Inc.’s adjusted debt to equity ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Honeywell International Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Honeywell International Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net sales 36,709  41,802  40,534  39,302  38,581 
Total assets 58,679  57,773  59,387  54,146  49,316 
Activity Ratio
Total asset turnover1 0.63 0.72 0.68 0.73 0.78
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net sales 36,709  41,802  40,534  39,302  38,581 
Adjusted total assets 58,679  58,562  60,427  55,163  50,323 
Activity Ratio
Adjusted total asset turnover2 0.63 0.71 0.67 0.71 0.77

Based on: 10-K (filing date: 2020-02-14), 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).

2019 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 36,709 ÷ 58,679 = 0.63

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 36,709 ÷ 58,679 = 0.63

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Honeywell International Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 16,002  16,214  17,882  15,775  12,068 
Total Honeywell shareowners’ equity 18,494  18,180  17,276  19,369  18,283 
Solvency Ratio
Debt to equity1 0.87 0.89 1.04 0.81 0.66
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 16,707  17,003  18,922  16,792  13,075 
Total Honeywell shareowners’ equity 18,494  18,180  17,276  19,369  18,283 
Solvency Ratio
Adjusted debt to equity2 0.90 0.94 1.10 0.87 0.72

Based on: 10-K (filing date: 2020-02-14), 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).

2019 Calculations

1 Debt to equity = Total debt ÷ Total Honeywell shareowners’ equity
= 16,002 ÷ 18,494 = 0.87

2 Adjusted debt to equity = Adjusted total debt ÷ Total Honeywell shareowners’ equity
= 16,707 ÷ 18,494 = 0.90

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Honeywell International Inc.’s adjusted debt-to-equity ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Honeywell 6,143  6,765  1,655  4,809  4,768 
Total assets 58,679  57,773  59,387  54,146  49,316 
Profitability Ratio
ROA1 10.47% 11.71% 2.79% 8.88% 9.67%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income attributable to Honeywell 6,143  6,765  1,655  4,809  4,768 
Adjusted total assets 58,679  58,562  60,427  55,163  50,323 
Profitability Ratio
Adjusted ROA2 10.47% 11.55% 2.74% 8.72% 9.47%

Based on: 10-K (filing date: 2020-02-14), 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).

2019 Calculations

1 ROA = 100 × Net income attributable to Honeywell ÷ Total assets
= 100 × 6,143 ÷ 58,679 = 10.47%

2 Adjusted ROA = 100 × Net income attributable to Honeywell ÷ Adjusted total assets
= 100 × 6,143 ÷ 58,679 = 10.47%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Honeywell International Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.