Balance Sheet: Assets
The balance sheet provides creditors, investors, and analysts with information on company resources (assets) and its sources of capital (its equity and liabilities). It normally also provides information about the future earnings capacity of a company assets as well as an indication of cash flows that may come from receivables and inventories.
Assets are resources controlled by the company as a result of past events and from which future economic benefits are expected to flow to the entity.
Illinois Tool Works Inc., consolidated balance sheet: assets
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The financial data indicates several notable trends in asset composition and liquidity over the five-year period. Total assets decreased significantly in 2018 compared to 2017 but then exhibited a gradual recovery from 2019 through 2021, ending higher in 2021 than in 2017.
- Liquidity and Current Assets
- Cash and equivalents experienced a substantial decrease in 2018 from the 2017 level, followed by a rebound in 2019 and 2020, before dropping again in 2021 to near 2018 levels. Trade receivables remained relatively stable through the years with a slight increase in 2021, indicating steady credit sales or collections. Inventories show a mixed pattern but exhibit a sharp increase in 2021 after a dip in 2019 and 2020, which could suggest increased stockpiling or changes in demand. Other current asset components such as value-added-tax receivables and vendor advances moderately fluctuated but generally trended upwards, with vendor advances more than doubling in 2021. Income tax refunds receivable declined consistently, suggesting quicker utilization or settlement of tax claims. The current assets total followed a similar pattern to total assets, with a notable drop in 2018 and recovery thereafter but ended slightly lower in 2021 compared to 2017.
- Fixed and Noncurrent Assets
- Net plant and equipment values remained relatively stable throughout the period, with minor fluctuations but an overall slight increase by 2021, suggesting steady capital investment or maintenance. Goodwill decreased gradually from 2017 to 2019 but reversed course afterward, indicating potential acquisitions or revaluations in recent years. Intangible assets showed a marked decline from 2017 to 2020, followed by a recovery in 2021; this might reflect amortization or impairments followed by new intangibles recognized. Deferred income taxes demonstrated a modest upward trend, signaling increased deferred tax liabilities or assets. Prepaid pension assets increased notably in 2021 after a dip in prior years, possibly reflecting changes in pension funding. The cash surrender value of life insurance policies remained stable. Operating lease right-of-use assets appeared starting 2020, growing slowly, corresponding likely to new accounting standards. Customer tooling assets declined over the period with some recovery noted in 2020. Other noncurrent assets decreased after 2017 but showed growth in the last two years, indicating changes in miscellaneous asset holdings. Overall, noncurrent assets decreased initially but showed an upward trend from 2020 onwards, ending above 2017 levels.
- Additional Observations
- Assets held for sale were reported only in 2019, suggesting asset divestiture activities that year. Prepaid expenses and other current assets declined over the first four years but showed some recovery in 2021. The asset mix reflects moderate volatility in liquidity with somewhat steady long-term asset investment, indicating a cautious but adaptive approach to asset management during this timeframe.