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Analysis of Inventory
Inventory Disclosure
Illinois Tool Works Inc., balance sheet: inventory
US$ in millions
Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Raw material | |||||||||||
Work-in-process | |||||||||||
Finished goods | |||||||||||
Less: LIFO reserve | |||||||||||
Inventories |
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
Item | Description | The company |
---|---|---|
Inventories | Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. | Illinois Tool Works Inc.’s inventories increased from 2017 to 2018 but then decreased significantly from 2018 to 2019. |
Adjustment to Inventory: Conversion from LIFO to FIFO
Adjusting LIFO Inventory to FIFO (Current) Cost
US$ in millions
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
Illinois Tool Works Inc.’s inventory value on Dec 31, 2019 would be $1,253 (in millions) if the FIFO inventory method was used instead of LIFO. Illinois Tool Works Inc.’s inventories, valued on a LIFO basis, on Dec 31, 2019 were $1,164 . Illinois Tool Works Inc.’s inventories would have been $89 higher than reported on Dec 31, 2019 if the FIFO method had been used instead.
Illinois Tool Works Inc., Financial Data: Reported vs. Adjusted
Adjusted Financial Ratios: LIFO vs. FIFO (Summary)
Illinois Tool Works Inc., adjusted financial ratios
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
Financial ratio | Description | The company |
---|---|---|
Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Illinois Tool Works Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Illinois Tool Works Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Illinois Tool Works Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Illinois Tool Works Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | Illinois Tool Works Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Illinois Tool Works Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Illinois Tool Works Inc., Financial Ratios: Reported vs. Adjusted
Adjusted Current Ratio
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= ÷ =
Liquidity ratio | Description | The company |
---|---|---|
Adjusted current ratio | A liquidity ratio calculated as adjusted current assets divided by current liabilities. | Illinois Tool Works Inc.’s adjusted current ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level. |
Adjusted Net Profit Margin
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 Net profit margin = 100 × Net income ÷ Operating revenue
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net income ÷ Operating revenue
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted net profit margin | An indicator of profitability, calculated as adjusted net income divided by revenue. | Illinois Tool Works Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Total Asset Turnover
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 Total asset turnover = Operating revenue ÷ Total assets
= ÷ =
2 Adjusted total asset turnover = Operating revenue ÷ Adjusted total assets
= ÷ =
Activity ratio | Description | The company |
---|---|---|
Adjusted total asset turnover | An activity ratio calculated as total revenue divided by adjusted total assets. | Illinois Tool Works Inc.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Adjusted Financial Leverage
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 Financial leverage = Total assets ÷ Stockholders’ equity attributable to ITW
= ÷ =
2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted stockholders’ equity attributable to ITW
= ÷ =
Solvency ratio | Description | The company |
---|---|---|
Adjusted financial leverage | A measure of financial leverage calculated as adjusted total assets divided by adjusted total equity. Financial leverage is the extent to which a company can effect, through the use of debt, a proportional change in the return on common equity that is greater than a given proportional change in operating income. |
Illinois Tool Works Inc.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Equity (ROE)
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 ROE = 100 × Net income ÷ Stockholders’ equity attributable to ITW
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted stockholders’ equity attributable to ITW
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROE | A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. | Illinois Tool Works Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019. |
Adjusted Return on Assets (ROA)
Based on: 10-K (filing date: 2020-02-14), 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-10), 10-K (filing date: 2016-02-12).
2019 Calculations
1 ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × ÷ =
Profitability ratio | Description | The company |
---|---|---|
Adjusted ROA | A profitability ratio calculated as adjusted net income divided by adjusted total assets. | Illinois Tool Works Inc.’s adjusted ROA improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |