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Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Income Tax Expense (Benefit)

Linde plc, income tax expense (benefit), continuing operations

US$ in millions

	12 months ended:	Dec 31, 2020		Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016
	U.S. federal
	State and local
	Foreign
	Current tax expense
	U.S. federal
	State and local
	Foreign
	Deferred tax expense (benefit)
	Provision for income taxes

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Item	Description	The company
Current tax expense	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Linde plc’s current tax expense increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax expense (benefit)	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Linde plc’s deferred tax expense (benefit) decreased from 2018 to 2019 and from 2019 to 2020.
Provision for income taxes	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Linde plc’s provision for income taxes decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Effective Income Tax Rate (EITR)

Linde plc, effective income tax rate (EITR) reconciliation

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	U.S. statutory income tax rate
	State and local taxes, net of federal benefit
	U.S. tax credits and deductions
	Foreign tax differentials
	Share-Based compensation
	Divestitures
	Other, net
	Effective tax rate, before Tax Act
	Tax Act
	Effective tax rate

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Item	Description	The company
Effective tax rate, before Tax Act	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Linde plc’s effective tax rate, before Tax Act increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Components of Deferred Tax Assets and Liabilities

Linde plc, components of deferred tax assets and liabilities

US$ in millions

		Dec 31, 2020		Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016
	Carryforwards
	Benefit plans and related
	Inventory
	Accruals and other
	Deferred tax assets, before valuation allowances
	Valuation allowances
	Deferred tax assets
	Fixed assets
	Goodwill
	Other intangible assets
	Subsidiary/equity investments
	Other
	Deferred tax liabilities
	Net deferred tax assets (liabilities)

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Item	Description	The company
Deferred tax assets, before valuation allowances	Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Linde plc’s deferred tax assets, before valuation allowances increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax assets	Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards.	Linde plc’s deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Net deferred tax assets (liabilities)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting.	Linde plc’s net deferred tax assets (liabilities) increased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

Linde plc, deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	Deferred tax assets (included in Other long-term assets)
	Deferred tax liabilities (included in Deferred credits)

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Item	Description	The company
Deferred tax assets (included in Other long-term assets)	Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent.	Linde plc’s deferred tax assets (included in Other long-term assets) decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.
Deferred tax liabilities (included in Deferred credits)	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Linde plc’s deferred tax liabilities (included in Deferred credits) decreased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Linde plc, adjustments to financial statements

US$ in millions

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Noncurrent deferred tax assets, net
	Total assets (adjusted)
	Adjustment to Total Liabilities
	Total liabilities (as reported)
	Less: Noncurrent deferred tax liabilities, net
	Total liabilities (adjusted)
	Adjustment to Total Linde Plc Shareholders’ Equity
	Total Linde plc shareholders’ equity (as reported)
	Less: Net deferred tax assets (liabilities)
	Total Linde plc shareholders’ equity (adjusted)
	Adjustment to Net Income, Linde Plc
	Net income, Linde plc (as reported)
	Add: Deferred income tax expense (benefit)
	Net income, Linde plc (adjusted)

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Linde plc, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Linde plc, adjusted financial ratios

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	Net Profit Margin
	Reported net profit margin
	Adjusted net profit margin
	Total Asset Turnover
	Reported total asset turnover
	Adjusted total asset turnover
	Financial Leverage
	Reported financial leverage
	Adjusted financial leverage
	Return on Equity (ROE)
	Reported ROE
	Adjusted ROE
	Return on Assets (ROA)
	Reported ROA
	Adjusted ROA

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Linde plc’s adjusted net profit margin ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Linde plc’s adjusted total asset turnover ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.
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.	Linde plc’s adjusted financial leverage ratio decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Linde plc’s adjusted ROE deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Linde plc’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Linde plc, Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	As Reported
	Selected Financial Data (US$ in millions)
	Net income, Linde plc
	Sales
	Profitability Ratio
	Net profit margin¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income, Linde plc
	Sales
	Profitability Ratio
	Adjusted net profit margin²

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

2020 Calculations

¹ Net profit margin = 100 × Net income, Linde plc ÷ Sales
= 100 × ÷ =

² Adjusted net profit margin = 100 × Adjusted net income, Linde plc ÷ Sales
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Linde plc’s adjusted net profit margin ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Adjusted Total Asset Turnover

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	As Reported
	Selected Financial Data (US$ in millions)
	Sales
	Total assets
	Activity Ratio
	Total asset turnover¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Sales
	Adjusted total assets
	Activity Ratio
	Adjusted total asset turnover²

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

2020 Calculations

¹ Total asset turnover = Sales ÷ Total assets
= ÷ =

² Adjusted total asset turnover = Sales ÷ Adjusted total assets
= ÷ =

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Linde plc’s adjusted total asset turnover ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Adjusted Financial Leverage

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	As Reported
	Selected Financial Data (US$ in millions)
	Total assets
	Total Linde plc shareholders’ equity
	Solvency Ratio
	Financial leverage¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted total assets
	Adjusted total Linde plc shareholders’ equity
	Solvency Ratio
	Adjusted financial leverage²

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

2020 Calculations

¹ Financial leverage = Total assets ÷ Total Linde plc shareholders’ equity
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Linde plc shareholders’ equity
= ÷ =

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.	Linde plc’s adjusted financial leverage ratio decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Adjusted Return on Equity (ROE)

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	As Reported
	Selected Financial Data (US$ in millions)
	Net income, Linde plc
	Total Linde plc shareholders’ equity
	Profitability Ratio
	ROE¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income, Linde plc
	Adjusted total Linde plc shareholders’ equity
	Profitability Ratio
	Adjusted ROE²

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

2020 Calculations

¹ ROE = 100 × Net income, Linde plc ÷ Total Linde plc shareholders’ equity
= 100 × ÷ =

² Adjusted ROE = 100 × Adjusted net income, Linde plc ÷ Adjusted total Linde plc shareholders’ equity
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Linde plc’s adjusted ROE deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Adjusted Return on Assets (ROA)

		Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
	As Reported
	Selected Financial Data (US$ in millions)
	Net income, Linde plc
	Total assets
	Profitability Ratio
	ROA¹
	Adjusted for Deferred Taxes
	Selected Financial Data (US$ in millions)
	Adjusted net income, Linde plc
	Adjusted total assets
	Profitability Ratio
	Adjusted ROA²

Based on: 10-K (filing date: 2021-03-01), 10-K (filing date: 2020-03-02), 10-K (filing date: 2019-03-18), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-03-01).

2020 Calculations

¹ ROA = 100 × Net income, Linde plc ÷ Total assets
= 100 × ÷ =

² Adjusted ROA = 100 × Adjusted net income, Linde plc ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Linde plc’s adjusted ROA deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

	Linde plc	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

Linde plc (NYSE:LIN)

Analysis of Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Linde plc, Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Linde plc, Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)