Linde plc (NASDAQ:LIN)

The values associated with goodwill and intangible assets exhibit varied trends over the five-year period. Overall, goodwill demonstrates relative stability with fluctuations, while specific intangible assets show both growth and decline.

Goodwill

Goodwill decreased from US$27,038 million in 2021 to US$25,817 million in 2022, representing a reduction of approximately 4.7%. It then increased to US$26,751 million in 2023, followed by a slight decrease to US$25,937 million in 2024. A notable increase is observed in 2025, reaching US$27,927 million. This suggests potential acquisitions or reassessments of goodwill value during that year.

Customer Relationships

Customer relationships experienced a decrease from US$11,859 million in 2021 to US$11,062 million in 2022. A modest recovery occurred in 2023, rising to US$11,479 million, but decreased again in 2024 to US$10,972 million. The value increased significantly in 2025, reaching US$11,957 million, surpassing the initial 2021 value.

Brands/Tradenames

The value of brands and tradenames generally remained stable, with a decrease from US$2,685 million in 2021 to US$2,565 million in 2022. A slight increase to US$2,609 million occurred in 2023, followed by a decrease to US$2,504 million in 2024. The value increased to US$2,690 million in 2025, approaching the 2021 level.

Other Intangible Assets

Other intangible assets, reported both at cost and net of accumulated amortization, show distinct patterns. The cost of these assets decreased from US$16,173 million in 2021 to US$15,324 million in 2022, then increased to US$16,001 million in 2023, decreased to US$15,410 million in 2024, and increased again to US$16,852 million in 2025. Accumulated amortization consistently increased throughout the period, moving from -US$2,371 million in 2021 to -US$4,981 million in 2025. Consequently, the net value of other intangible assets decreased from US$13,802 million in 2021 to US$11,871 million in 2025, despite the increases in cost.

Total Goodwill and Intangible Assets

The combined value of goodwill and other intangible assets decreased from US$40,840 million in 2021 to US$38,237 million in 2022. It experienced a slight increase to US$39,150 million in 2023, followed by a decrease to US$37,267 million in 2024. The total value increased to US$39,798 million in 2025, but remained below the 2021 level.

The increasing accumulated amortization suggests a consistent recognition of the expense related to intangible assets. The fluctuations in goodwill may be attributable to impairment charges, acquisitions, or other adjustments. The increases in certain intangible asset categories in 2025 warrant further investigation to understand the underlying drivers.

An examination of the financial information reveals a significant divergence between reported and adjusted total assets and shareholders’ equity over the five-year period. The adjustments consistently result in substantially lower values for both metrics, indicating a considerable reduction related to the removal of goodwill and intangible assets.

Total Assets

Reported total assets experienced a decrease from US$81,605 million in 2021 to US$79,658 million in 2022, followed by a slight increase to US$80,811 million in 2023. A further decrease to US$80,147 million was observed in 2024, before a more substantial rise to US$86,817 million in 2025. However, adjusted total assets demonstrate a more stable, albeit declining, trend. They decreased consistently from US$54,567 million in 2021 to US$53,841 million in 2022, US$54,060 million in 2023, US$54,210 million in 2024, and US$58,890 million in 2025. The difference between reported and adjusted total assets widens over time, suggesting an increasing impact from the adjustments.

Shareholders’ Equity

Reported total shareholders’ equity exhibited a notable decline from US$44,035 million in 2021 to US$40,028 million in 2022, continuing to US$39,720 million in 2023 and US$38,092 million in 2024. A marginal increase to US$38,245 million was recorded in 2025. The adjusted shareholders’ equity shows a more pronounced downward trend, decreasing from US$16,997 million in 2021 to US$14,211 million in 2022, US$12,969 million in 2023, US$12,155 million in 2024, and US$10,318 million in 2025. The gap between reported and adjusted shareholders’ equity also expands throughout the period, reinforcing the conclusion that the adjustments significantly impact the equity position.

The consistent and substantial adjustments to both total assets and shareholders’ equity suggest a systematic removal of goodwill and intangible assets from the balance sheet. This could be due to impairment charges or a change in accounting policy. The increasing divergence between reported and adjusted figures indicates that these adjustments are becoming a more significant factor in the company’s financial presentation. Further investigation into the nature and rationale behind these adjustments is warranted to fully understand their implications.

The financial metrics demonstrate a significant impact from adjusting for goodwill and intangible assets. Removing these items from the calculations results in substantially different financial profiles compared to the reported figures. Generally, the adjusted ratios reveal a stronger financial position and improved performance than initially indicated by the reported values.

Total Asset Turnover

Reported total asset turnover exhibits relative stability, fluctuating between 0.38 and 0.42 over the five-year period. In contrast, the adjusted total asset turnover consistently shows higher values, ranging from 0.56 to 0.62, indicating a more efficient use of assets when goodwill is excluded. Both reported and adjusted figures show a slight downward trend in the most recent year.

Financial Leverage

Reported financial leverage steadily increases from 1.85 to 2.27, suggesting a growing reliance on debt financing. The adjusted financial leverage demonstrates a much more pronounced increase, escalating from 3.21 to 5.71. This indicates that the company’s leverage is considerably higher when goodwill and intangibles are removed from the asset base, potentially reflecting a greater financial risk profile than the reported figures suggest.

Return on Equity (ROE)

Reported ROE shows a positive trend, rising from 8.69% to 18.04%. However, the adjusted ROE exhibits a dramatic increase, moving from 22.51% to 66.85%. This substantial difference highlights the considerable contribution of goodwill and intangible assets to the reported ROE. The adjusted ROE suggests a significantly higher return generated from the core business operations when these items are excluded.

Return on Assets (ROA)

Reported ROA increases from 4.69% to 7.95% over the period. The adjusted ROA also shows an upward trend, but at higher levels, ranging from 7.01% to 11.71%. Similar to ROE, the adjusted ROA indicates a more robust return on assets when goodwill and intangible assets are not considered, suggesting a stronger operational efficiency.

In summary, the adjustments for goodwill and intangible assets reveal a substantial difference in the company’s financial performance and position. The adjusted ratios consistently demonstrate higher asset turnover, increased financial leverage, and significantly improved profitability metrics. These findings suggest that the reported financial statements may be influenced by the inclusion of these non-operating assets, and a deeper understanding of the underlying business operations is warranted when evaluating the company’s true financial health.

Analysis reveals distinct trends in both reported and adjusted total asset turnover ratios over the five-year period. While the reported total asset turnover demonstrates relative stability, the adjusted ratio presents a more nuanced picture of asset utilization efficiency.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibits a slight increase from 0.38 in 2021 to 0.42 in 2022. This suggests improved efficiency in generating sales from reported assets. However, the ratio then plateaus at 0.41 for both 2023 and 2024 before decreasing slightly to 0.39 in 2025. This indicates a stabilization followed by a minor decline in sales generation relative to the company’s reported total assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio shows a more pronounced upward trend initially, increasing from 0.56 in 2021 to a peak of 0.62 in 2022. This improvement suggests that excluding certain asset components – likely related to goodwill and intangible assets – reveals a more efficient use of core operating assets. The ratio remains relatively stable at 0.61 for 2023 and 2024, indicating sustained efficiency. A slight decrease to 0.58 is observed in 2025, mirroring the trend in the reported ratio but remaining higher overall.

The divergence between the reported and adjusted ratios highlights the impact of goodwill and intangible assets on overall asset turnover. The consistently higher adjusted ratio suggests that the company generates more sales per dollar of tangible, operating assets when these items are excluded. The relatively stable adjusted ratio from 2022 to 2024 indicates consistent operational efficiency. The slight decline in both ratios in 2025 warrants further investigation to determine the underlying causes.

Asset Base Trends

Reported total assets decreased from US$81,605 million in 2021 to US$79,658 million in 2022, then increased to US$80,811 million in 2023, slightly decreasing to US$80,147 million in 2024, and finally increasing significantly to US$86,817 million in 2025. Adjusted total assets follow a similar pattern, though the magnitude of change is less pronounced. This suggests that changes in goodwill and intangible assets are contributing to the fluctuations in reported total assets.

In conclusion, the analysis indicates a generally efficient use of core operating assets, as evidenced by the adjusted total asset turnover ratio. However, the influence of goodwill and intangible assets on the reported ratio necessitates careful consideration when evaluating overall asset utilization performance.

Analysis reveals a consistent divergence between reported and adjusted financial leverage over the five-year period. While reported financial leverage demonstrates a gradual increasing trend, adjusted financial leverage exhibits a more pronounced and accelerating increase. This suggests the impact of goodwill and intangible assets on the company’s capital structure is becoming increasingly significant.

Reported Financial Leverage

Reported financial leverage increased steadily from 1.85 in 2021 to 2.27 in 2025. This indicates a growing proportion of assets financed by equity over time, based on reported figures. The increases between each year are relatively consistent, suggesting a stable pattern of capital structure evolution when considering reported assets and equity.

Adjusted Financial Leverage

Adjusted financial leverage shows a more dramatic increase, rising from 3.21 in 2021 to 5.71 in 2025. This substantial increase indicates that when goodwill and intangible assets are excluded from the asset base, the company appears significantly more leveraged. The rate of increase also accelerates over the period; the difference between 2021 and 2022 is 0.58, while the difference between 2024 and 2025 is 1.25. This suggests a growing reliance on debt or other liabilities relative to the tangible asset base.

Asset Adjustments

Reported total assets fluctuate modestly, decreasing from US$81,605 million in 2021 to US$79,658 million in 2022, then increasing to US$86,817 million in 2025. Adjusted total assets, however, demonstrate a more stable, albeit decreasing, trend until 2025, where it shows a moderate increase. The difference between reported and adjusted total assets widens over time, indicating a growing proportion of total assets comprised of goodwill and intangible assets.

Equity Adjustments

Reported total shareholders’ equity declines consistently from US$44,035 million in 2021 to US$38,092 million in 2024, with a slight increase to US$38,245 million in 2025. Adjusted total shareholders’ equity exhibits a more pronounced and continuous decline, falling from US$16,997 million in 2021 to US$10,318 million in 2025. This suggests that a significant portion of reported equity is attributable to items excluded in the adjusted calculation, further emphasizing the impact of goodwill and intangibles.

The widening gap between reported and adjusted financial leverage, coupled with the trends in adjusted assets and equity, suggests that the company’s financial position is increasingly sensitive to the valuation of goodwill and intangible assets. Continued monitoring of these adjustments is warranted to assess potential risks associated with these assets.

Analysis reveals a significant divergence between reported and adjusted return on equity (ROE) figures over the five-year period. While reported ROE demonstrates a consistent upward trend, adjusted ROE exhibits a more dramatic increase, suggesting the impact of adjustments to shareholders’ equity is substantial.

Shareholders’ Equity Trends

Reported total shareholders’ equity experienced a decline from US$44,035 million in 2021 to US$38,092 million in 2023, followed by a slight increase to US$38,245 million in 2025. Conversely, adjusted total shareholders’ equity shows a consistent and more pronounced downward trend, decreasing from US$16,997 million in 2021 to US$10,318 million in 2025. This indicates a growing difference between the reported and adjusted equity values.

Reported ROE Analysis

Reported ROE increased steadily throughout the period, rising from 8.69% in 2021 to 18.04% in 2025. This consistent growth suggests improving profitability relative to reported equity. The increase from 2023 to 2025 is particularly notable, with ROE increasing from 15.61% to 18.04%.

Adjusted ROE Analysis

Adjusted ROE demonstrates a substantial and accelerating increase. Starting at 22.51% in 2021, it rose to 29.18% in 2022, 47.80% in 2023, 54.01% in 2024, and reached 66.85% in 2025. This rapid growth indicates that profitability, when considering adjustments to shareholders’ equity, is significantly higher and improving at a faster rate than reflected in the reported figures. The magnitude of the adjusted ROE values consistently exceeds the reported ROE, highlighting the impact of the adjustments.

The widening gap between reported and adjusted ROE suggests that a significant portion of reported shareholders’ equity may be attributable to items that are being adjusted for in the calculation of adjusted ROE. Further investigation into the nature of these adjustments is warranted to understand their impact on the company’s financial performance and valuation.

The reported total assets experienced a slight decrease between 2021 and 2022, followed by increases in 2023, a minor decrease in 2024, and a more substantial increase in 2025. However, the adjusted total assets demonstrate a more stable pattern, with a slight decrease in 2022 and relatively flat growth through 2024 before a noticeable increase in 2025. A significant divergence exists between the reported and adjusted return on assets, with the adjusted ROA consistently exceeding the reported ROA across the observed period.

Reported Return on Assets (ROA)

The reported ROA exhibited an increasing trend from 2021 to 2024, rising from 4.69% to 8.19%. A slight decrease to 7.95% was observed in 2025. This suggests improving profitability relative to the reported total asset base over the majority of the period, though with a minor pullback in the most recent year.

Adjusted Return on Assets (ROA)

The adjusted ROA also demonstrated an upward trend from 2021 to 2024, increasing from 7.01% to 12.11%. Similar to the reported ROA, a slight decrease to 11.71% was noted in 2025. The magnitude of the increase, and the overall levels, are considerably higher than those of the reported ROA, indicating that the adjustments made to total assets significantly impact profitability metrics.

Relationship between Reported and Adjusted ROA

The consistent difference between the reported and adjusted ROA suggests that a substantial portion of the reported total assets may consist of items, such as goodwill or intangible assets, that do not contribute proportionally to earnings. The adjustments made to arrive at the adjusted total assets appear to remove or reduce the impact of these items, resulting in a higher and potentially more representative measure of underlying profitability. The widening gap between 2021 and 2024, followed by a slight narrowing in 2025, warrants further investigation into the nature and performance of these adjusted asset components.

The increase in both reported and adjusted total assets in 2025, coupled with the slight decrease in both ROA figures, suggests that earnings growth may not have kept pace with asset growth in that year. Further analysis would be required to determine the drivers of asset growth and the reasons for the slight ROA decline in 2025.