McKesson Corp. (NYSE:MCK)

Current Income Tax Expense

The current income tax expense exhibits variability over the observed periods. Beginning at $377 million in 2011, it slightly decreased to $351 million in 2012, followed by a sharp decline to a negative value of −$25 million in 2013. This negative figure indicates that the company recorded a current tax benefit rather than an expense in that year. Subsequently, the amount significantly increased to $726 million in 2014, then followed by a decrease to $644 million in 2015, before rising again to $844 million in 2016. The overall trend indicates considerable fluctuations with a general increase after 2013.

Deferred Income Tax Expense

The deferred income tax expense shows a generally inconsistent pattern. Starting at $128 million in 2011, it rose to $165 million in 2012 and then sharply increased to $606 million in 2013. This peak was followed by a pronounced decrease to $16 million in 2014. Subsequently, it increased again to $171 million in 2015 but dropped to $64 million in 2016. This erratic behavior suggests that deferred tax adjustments were subject to significant changes, possibly due to shifts in timing differences, tax rate changes, or reassessments of deferred tax assets and liabilities during these years.

Total Income Tax Expense

The total income tax expense, representing the sum of current and deferred amounts, shows a generally upward trajectory from $505 million in 2011 to $908 million in 2016. There is steady growth with a minor dip or slower growth in certain years; for example, the expense increased modestly from $505 million in 2011 to $516 million in 2012 and then accelerated to $581 million in 2013. A more pronounced increase occurred in 2014 to $742 million, continuing upward in the following years with $815 million in 2015 and reaching $908 million in 2016. This overall increase reflects higher taxable income or changes in tax regulations impacting the company's tax obligations.

Summary of Trends and Insights

Throughout the six-year period, there is marked volatility in both current and deferred tax expenses. The negative current tax figure in 2013 is an unusual occurrence, indicating tax benefits or refunds for that specific year. Deferred tax expenses exhibit dramatic spikes and drops, highlighting possible volatility in temporary differences or tax planning strategies. Despite fluctuations in components, the total income tax expense demonstrates consistent growth, implying overall increased tax burden possibly driven by higher earnings before tax or evolving tax environments.

The financial data reveals several noteworthy trends over the six-year period under consideration.

Receivable Allowances

These figures show fluctuations, with a general increasing trend from US$48 million in 2011 to US$110 million in 2016, peaking notably in 2014 at US$106 million. This indicates a growing amount of receivables deemed uncollectible or requiring allowances over the years.

Deferred Revenue

The amounts vary moderately, starting at US$107 million in 2011, reaching a high of US$136 million in 2014, before declining to US$72 million in 2015 and slightly rebounding to US$77 million in 2016. This suggests some volatility in the recognition of revenue that is received in advance.

Compensation and Benefit Related Accruals

There is a steady upward trend from US$409 million in 2011 to US$710 million in 2016, indicating increasing obligations related to employee compensation and benefits. This consistent rise reflects growing labor costs or expanding workforce-related liabilities.

Net Operating Loss and Credit Carryforwards

These balances decrease from US$494 million in 2011 to a low of US$316 million in 2015, with a slight increase to US$367 million in 2016. This pattern indicates the utilization or expiration of carryforwards over time, with some replenishment in the final year.

Other Assets

The category labeled 'Other' shows variability, rising from US$338 million in 2011 to US$431 million in 2012, then declining notably to US$266 million in 2015, followed by a mild increase to US$275 million in 2016. This suggests fluctuating miscellaneous asset values.

Subtotal of Listed Assets

The subtotal figures present a generally stable to slightly increasing trend, from US$1,396 million in 2011 to US$1,539 million in 2016, with some variations and a peak in 2014 at US$1,602 million.

Valuation Allowance

The valuation allowance becomes more significant over the years, deepening from a negative US$99 million in 2011 to a negative US$267 million in 2016. The marked increase in 2014 to negative US$270 million indicates heightened concerns about the recoverability of deferred tax assets.

Assets

Reported assets show minor fluctuations but overall a slight decline, starting at US$1,297 million in 2011, peaking at US$1,335 million in 2012, and decreasing to US$1,189 million in 2015 before a modest rise to US$1,272 million in 2016.

Inventory Valuation and Other Assets (Negative Values)

This category consistently expands its negative balance, growing from negative US$1,450 million in 2011 to negative US$2,619 million in 2016. This substantial increase indicates growing deductions from the asset base related to inventory valuation or other adjustments.

Fixed Assets and Systems Development Costs (Negative Values)

These costs remain relatively stable in their negative values, moving from negative US$221 million in 2011 to negative US$326 million in 2016, indicating consistent capitalized expenditures offset by amortization or depreciation.

Intangibles (Negative Values)

There is a notable increase in negative intangible assets from negative US$532 million in 2011 to a peak negative figure of US$1,531 million in 2014, followed by a reduction to negative US$981 million in 2016. The spike in 2014 could represent significant impairments or write-downs, with partial recoveries or asset disposals thereafter.

Other (Negative Values)

These figures fluctuate, beginning at negative US$58 million in 2011, declining to negative US$24 million in 2013, then increasing again to negative US$118 million in 2014, and finally reducing to negative US$21 million by 2016. This pattern reflects irregular adjustments or reallocations within this miscellaneous category.

Liabilities (Negative Values)

The liabilities show an increasing negative trend from negative US$2,261 million in 2011 to negative US$3,947 million in 2016, highlighting a growing overall liability burden throughout the period.

Net Deferred Tax Asset (Liability)

The net deferred tax balance worsens significantly, starting at negative US$964 million in 2011 and deepening to negative US$2,675 million in 2016, reflecting increasing net deferred tax liabilities that could stem from timing differences or changes in tax law and valuation allowances.

In summary, the data indicates rising compensation-related accruals and liabilities, fluctuating but generally increasing receivable allowances, and an expanding negative asset base primarily due to inventory valuation and intangible asset charges. The steep increase in valuation allowances and deferred tax liabilities suggests cautious recognition of tax asset recoverability. Overall, the financials portray a trend of increased obligations and asset adjustments impacting the net asset position over the examined years.

Current net deferred tax asset

The current net deferred tax asset was not recorded in the initial two years but appeared in 2014 at 16 million USD, rising significantly to 51 million USD in 2015 before declining to 26 million USD in 2016. This indicates fluctuating recoverable tax amounts in the short term during this period.

Current net deferred tax liability

Current net deferred tax liability increased steadily from 1036 million USD in 2011 to 1092 million USD in 2012. A more pronounced rise occurred through 2013 to 2015, reaching 1626, 1588, and 1819 million USD respectively. The liability remained high, reflecting ongoing substantial tax obligations expected within one year.

Long-term deferred tax asset

The long-term deferred tax asset showed a declining trend from 72 million USD in 2011 to 20-21 million USD in 2012 and 2013, slightly decreasing to 19 million USD in 2014. Subsequently, it increased to 50 million USD in 2015 and further to 59 million USD in 2016. This pattern suggests variability in anticipated future tax benefits beyond one year, with notable growth in the last two reported periods.

Long-term deferred tax liability

The long-term deferred tax liability displayed significant volatility, starting unrecorded in 2011, then rising from 88 million USD in 2012 to 278 million USD in 2013. A sharp increase occurred in 2014, reaching 1283 million USD, followed by a decrease to 859 million USD in 2015. However, a substantial surge to 2734 million USD took place in 2016. This indicates considerable changes in deferred tax obligations over the long term, with pronounced fluctuations likely influenced by changes in tax laws, asset valuations, or timing differences.

The financial data over the six-year period reveals distinct trends in both reported and adjusted figures for current assets, total assets, liabilities, equity, and net income. Overall, the company demonstrated growth in assets and equity, with net income exhibiting some variability but generally trending upward.

Current Assets

Reported current assets generally increased year over year, rising from 22,357 million USD in 2011 to 38,437 million USD in 2016. The adjusted current assets exhibit a similar pattern, though slightly lower in some years, particularly in 2013 and 2014. The growth accelerates notably starting in 2014, indicating improvements in short-term asset holdings.

Total Assets

Both reported and adjusted total assets show a continuous upward trend over the period. Reported total assets grew from 30,886 million USD in 2011 to 56,563 million USD in 2016, with adjusted total assets closely tracking these values but consistently marginally lower. There was a significant jump between 2013 and 2014, suggesting possible acquisition or expansion activities during that time.

Current Liabilities

Reported current liabilities rose from 18,726 million USD in 2011 to 35,071 million USD in 2016. Adjusted figures are consistently lower than reported amounts until 2016, where they converge. The adjusted liabilities grew steadily but at a slower pace compared to current assets, which could indicate improved liquidity or working capital management over the period.

Total Liabilities

Total liabilities (both reported and adjusted) increased across the years, from approximately 23,666 million USD to 46,149 million USD (reported) and from 22,630 million USD to 43,415 million USD (adjusted). The adjusted liabilities persistently remain below the reported figures, suggesting the adjustments effectively reduce the recognized liabilities, perhaps by excluding deferred tax components or other adjustments.

Shareholders' Equity

Reported stockholders’ equity experienced moderate fluctuation, starting at 7,220 million USD in 2011, dipping in 2012 and 2015, but ultimately increasing to 8,924 million USD in 2016. In contrast, the adjusted equity presents a stronger upward trajectory, rising consistently from 8,184 million USD to 11,599 million USD. The divergence between reported and adjusted equity, especially from 2013 onward, implies impactful adjustments that enhance equity valuation, possibly incorporation of deferred income tax benefits or other comprehensive income elements.

Net Income

Reported net income shows an overall increasing trend with some variability: beginning at 1,202 million USD in 2011, peaking and fluctuating around 1,300 to 1,476 million USD through 2014-2015, and then rising sharply to 2,258 million USD in 2016. The adjusted net income tells a slightly different story, with a significant increase in 2013 (1,944 million USD) and a more pronounced jump in 2016 to 2,322 million USD. The adjustments appear to mitigate volatility and reflect higher profitability, possibly through accounting for deferred tax effects or other non-recurring items.

In summary, the entity displayed substantial growth in total and current assets as well as equity over the analysis period, supported by increasing net income. The adjustments made to the financial data consistently reduce liabilities and increase equity and income figures, suggesting that the underlying financial position and profitability may be stronger than reported figures alone indicate. The year 2014 marks a distinct inflection point in assets and liabilities scale, hinting at strategic changes or acquisitions. The improved relationship between current assets and liabilities indicates strengthened liquidity and financial flexibility.

The analysis of the financial data over the six-year period reveals several noteworthy trends in key liquidity, profitability, efficiency, and leverage metrics.

Current Ratio:

The reported current ratio shows a slight decline from 1.19 in 2011 to 1.10 in 2016, with minor fluctuations around 1.08 to 1.10 in the intermediate years. The adjusted current ratio exhibits a similar but somewhat higher trend, beginning at 1.26 in 2011 and decreasing to 1.10 by 2016. This suggests a gradual reduction in short-term liquidity over the period, with adjusted figures consistently above reported ones initially, converging in 2016.

Net Profit Margin:

Reported net profit margin experiences volatility, peaking at 1.14% in 2012, dipping to a low of 0.82% in 2015, and rebounding notably to 1.18% in 2016. The adjusted net profit margin follows a comparable pattern with generally higher values, notably reaching 1.59% in 2013, before declining to 0.92% in 2015 and recovering to 1.22% in 2016. These movements indicate periods of fluctuating profitability with a significant recovery in the final year.

Total Asset Turnover:

Both reported and adjusted total asset turnover ratios start at approximately 3.63-3.64 in 2011, exhibiting stability until 2013, after which there is a marked decrease to 2.66 in 2014. The turnover then increases again to around 3.32-3.38 by 2016. This pattern points to a temporary decline in asset utilization efficiency around 2014, followed by a recovery.

Financial Leverage:

The reported financial leverage shows a clear upward trend from 4.28 in 2011 to a peak of 6.73 in 2015, then slightly decreases to 6.34 in 2016. The adjusted financial leverage also increases from 3.77 in 2011 to 5.07 in 2015, before falling to 4.87 in 2016. This progression indicates greater reliance on debt financing over the years, with a minor reduction towards the end of the period.

Return on Equity (ROE):

Reported ROE rises from 16.65% in 2011 to a peak of 25.3% in 2016, although it dips to 14.82% in 2014 before increasing again. Adjusted ROE presents a somewhat different trajectory, peaking at 21.75% in 2013, dropping to 11.3% in 2014, and then recovering to 20.02% in 2016. This fluctuation implies variability in shareholders’ returns, impacted by the changes in underlying profitability and leverage.

Return on Assets (ROA):

Reported ROA drops notably from 3.89% in 2011 to 2.44% in 2014, then improves to 3.99% in 2016. Adjusted ROA follows a parallel trend but with higher peak values, starting at 4.32%, reaching 5.59% in 2013, dipping to 2.47% in 2014, and rising to 4.11% by 2016. These results reflect a period of decreased asset efficiency and profitability around 2014, followed by a recovery phase.

Overall, the financial data demonstrates a pattern of decreasing liquidity coupled with increasing leverage until 2015, which may indicate greater financial risk exposure. Profitability and efficiency metrics present a dip around 2014 with subsequent recovery by 2016, suggesting the company faced challenges mid-period but improved performance and operational effectiveness in the later years. The adjustments to the primary reported figures generally lead to higher liquidity and profitability measures, highlighting the influence of deferred income tax accounting on financial ratios.

The analysis of reported and adjusted financial data over the six-year period reveals several notable trends in the company's current assets, current liabilities, and current ratios.

Current Assets

The reported current assets exhibit a general upward trend, increasing from approximately 22,357 million USD in 2011 to 38,437 million USD in 2016. A slight dip is observable in 2013 but is followed by a significant increase in 2014 and subsequent years. The adjusted current assets closely follow the reported values, differing marginally only in 2013 and 2014, where the adjustments slightly reduce the values relative to the reported figures.

Current Liabilities

Reported current liabilities steadily increased over the same period, rising from 18,726 million USD in 2011 to 35,071 million USD in 2016. Adjusted liabilities are consistently lower than reported liabilities, suggesting revisions for deferred tax impacts or other adjustments. The adjusted liabilities show a steady rise like the reported ones but reflect a more conservative liability position, particularly notable in the years 2012 to 2015 where the difference between reported and adjusted values is greater.

Current Ratios

The reported current ratio remains relatively stable, fluctuating slightly around a range between 1.08 and 1.19 with a marginal incremental trend toward 1.1 by 2016. The adjusted current ratios are consistently higher than the reported ones for the initial years, peaking at 1.26 in 2011 and decreasing gradually to align more closely with reported ratios by 2016. This indicates that when accounting for deferred income tax adjustments, the company's short-term liquidity position appears stronger in the earlier years, but the advantage decreases over time.

Overall Trends and Insights

The trends in assets and liabilities indicate consistent growth in both categories, with current liabilities growing slightly faster than assets based on the current ratio stability around 1.1. The adjusted data highlight the impact of deferred income tax adjustments, which temporarily enhance the perceived liquidity position of the company in earlier years. However, by 2016, the adjustments have lesser differential impact, indicating convergence between reported and adjusted financial figures. The stable current ratio above 1 suggests a generally adequate ability to meet short-term obligations throughout the observed period.

The financial data over the six-year period demonstrates several noteworthy trends in both reported and adjusted net income and margins.

Net Income Performance

The reported net income attributable to McKesson Corporation generally exhibits an upward trajectory, increasing from 1202 million US dollars in 2011 to 2258 million US dollars in 2016. There was a slight decline observed in 2014 compared to the previous year, but the overall trend remains positive. Adjusted net income follows a similar trend, rising from 1330 million US dollars in 2011 to 2322 million US dollars in 2016. The adjusted figures, however, surpassed reported net income each year and showed a particularly strong increase in 2013 before a dip in 2014.

Net Profit Margin Trends

The reported net profit margin fluctuated within a narrow range but overall rose from 1.07% in 2011 to 1.18% in 2016. It peaked at 1.14% in 2012 and reached a low of 0.82% in 2015 before recovering. The adjusted net profit margin shows higher variability, with the highest margin recorded in 2013 at 1.59%, followed by a notable decline to 0.92% in 2015 and a rebound to 1.22% in 2016. The adjusted margin consistently remains above the reported margin across all periods, indicating the impact of tax-related adjustments on profitability ratios.

Comparative Insights

Both adjusted net income and adjusted net profit margins generally exceed their reported counterparts, suggesting that deferred tax adjustments positively influence the adjusted financial metrics. The divergence between reported and adjusted measures appears most pronounced around 2013, indicating a year with significant tax-related adjustments. The fluctuations in profit margins, particularly the dip in 2014 and 2015, may reflect changing operational efficiency or tax impacts during those periods.

Asset Growth Analysis

There is a consistent increase in both reported and adjusted total assets over the six-year period. Reported total assets rose from approximately 30.9 billion USD in 2011 to about 56.6 billion USD in 2016. Adjusted total assets follow a similar pattern, increasing steadily from around 30.8 billion USD to 56.5 billion USD. This indicates sustained asset base growth without significant divergence between reported and adjusted measures.

Total Asset Turnover Trends

Total asset turnover ratios, both reported and adjusted, exhibit initial stability and then a notable dip followed by moderate recovery. From 2011 to 2013, turnover slightly fluctuates near 3.5 to 3.7 times. However, in 2014, turnover declines sharply to approximately 2.66 times, indicating a reduced efficiency in generating sales from assets during that year. Subsequently, turnover increases moderately in 2015 and 2016, reaching around 3.3 to 3.38 times, but does not fully return to the earlier levels.

Comparison of Reported vs Adjusted Figures

The differences between reported and adjusted total assets and turnover ratios are minimal across all years. This suggests that deferred income tax adjustments have limited impact on the overall financial indicators related to assets and their utilization efficiency.

Insight on Operational Efficiency

The observed dip in total asset turnover in 2014, coinciding with a large increase in total assets, may reflect a timing issue or acquisition effect where asset growth was not immediately matched by revenue increases. The partial recovery in turnover after 2014 could imply efforts to improve asset utilization or integration of newly acquired assets.

Total Assets

The total assets, both reported and adjusted, show a consistent upward trend from fiscal year 2011 to 2016. Reported total assets increased from approximately $30.9 billion in 2011 to $56.6 billion in 2016, nearly doubling over the period. Adjusted total assets reflected a very similar pattern, rising steadily from $30.8 billion to $56.5 billion, indicating that adjustments for deferred income taxes had a minimal impact on the asset base.

Stockholders’ Equity

Reported stockholders’ equity exhibited some fluctuations, starting at $7.2 billion in 2011, declining to around $6.8 billion in 2012, then recovering to $8.9 billion by 2016. In contrast, adjusted stockholders’ equity consistently increased each year, from $8.2 billion in 2011 to $11.6 billion in 2016. This adjustment reveals a stronger equity position than the reported figures suggest, highlighting the importance of deferred tax considerations in evaluating the company's net worth.

Financial Leverage

Reported financial leverage, calculated as a ratio, increased significantly over the period from 4.28 in 2011 to a peak of 6.73 in 2015, followed by a slight decline to 6.34 in 2016. This indicates rising reliance on debt relative to equity over the years, with a minor reduction at the end of the period. Adjusted financial leverage shows a less pronounced increase, advancing from 3.77 to 5.07 and then moderately decreasing to 4.87, suggesting that adjustments for deferred taxes result in a lower leverage assessment. Overall, the company’s leverage increased, signaling a growing use of financial obligations to support asset growth, but adjustments provide a more conservative leverage view.

General Insights

The data reflects a company expanding its asset base and equity, with leverage rising as a result. The difference between reported and adjusted figures underscores the impact of deferred income tax adjustments on capital structure evaluation. Adjusted equity growth being more consistent suggests a stronger financial position when considering deferred tax effects. Meanwhile, the moderation in adjusted leverage in 2016 could point to improved balance sheet management or debt reduction efforts.

The analysis of the financial data over the six-year period reveals several important trends in net income, stockholders' equity, and return on equity (ROE) for the company.

Net Income Trends

The reported net income demonstrates a generally positive trajectory from 2011 to 2016, starting at $1,202 million and reaching a peak of $2,258 million. There is a minor decline observed in 2014, where net income dropped to $1,263 million from a previous level of $1,338 million in 2013, but the overall trend is upward. The adjusted net income, which presumably accounts for non-recurring or deferred tax items, generally mirrors this pattern but shows more pronounced fluctuations. Adjusted net income peaked earlier in 2013 at $1,944 million, dipped significantly in 2014 to $1,279 million, and then steadily increased thereafter, reaching $2,322 million in 2016.

Stockholders' Equity Trends

Reported total stockholders’ equity fluctuates over the period without a clear consistent upward trend. It decreased slightly from $7,220 million in 2011 to $6,831 million in 2012, then experienced moderate growth, peaking at $8,924 million in 2016. Adjusted stockholders’ equity shows a more robust and consistent increase over the years, starting at $8,184 million in 2011 and rising steadily to $11,599 million by 2016. This adjusted perspective suggests underlying equity growth when accounting for tax-related adjustments.

Return on Equity (ROE) Analysis

Reported ROE values indicate variability, with an initial rise from 16.65% in 2011 to a high of 20.54% in 2012, followed by a general decline to 14.82% in 2014. Thereafter, ROE improves significantly, reaching 25.3% in 2016, marking the highest level in the observed period. The adjusted ROE figures are somewhat lower overall compared to reported ROE, starting at 16.25% in 2011 and peaking at 21.75% in 2013 before experiencing a decline to 11.3% in 2014. Although adjusted ROE recovers moderately to 20.02% by 2016, it remains below the reported measure. This divergence suggests that tax adjustments influence the assessment of profitability relative to equity.

Overall, net income and adjusted net income display strong growth in the latter years, notwithstanding a dip around 2014. Stockholders' equity shows steadier improvement when adjusted for tax effects, implying enhanced financial strength beyond reported figures. The ROE analysis highlights considerable variation, particularly in the adjusted figures, pointing to the impact of income tax adjustments on profitability measurement. The increase in reported ROE in the most recent years reflects improved efficiency in generating returns for shareholders, supported by rising net incomes and stable equity growth.

Net Income Trends

The reported net income attributable to the corporation shows an overall upward trend from 2011 to 2016, increasing from 1,202 million USD in 2011 to 2,258 million USD in 2016. There was a slight decline in 2013 and 2014, reaching a low of 1,263 million USD in 2014 before rising significantly in the subsequent years.

The adjusted net income exhibits greater volatility but generally follows a similar upward trajectory. Starting at 1,330 million USD in 2011, adjusted net income peaked in 2013 at 1,944 million USD before dropping substantially in 2014 to 1,279 million USD. After 2014, the adjusted net income resumed its increase, reaching 2,322 million USD in 2016, marginally higher than the reported figure.

Total Assets Analysis

Reported total assets have steadily increased over the six-year period, from 30,886 million USD in 2011 to 56,563 million USD in 2016. The most notable growth occurs between 2013 and 2014, where assets jumped from around 34,786 million USD to 51,759 million USD, indicating possible acquisition or significant capital investment.

The adjusted total assets closely mirror the reported total assets with negligible differences, confirming the consistency and reliability of asset adjustments over time.

Return on Assets (ROA)

The reported ROA shows fluctuations during the period with a peak at 4.24% in 2012 and a trough at 2.44% in 2014. After 2014, it steadily improved, reaching 3.99% by 2016. This pattern suggests a period of reduced profitability relative to asset base around 2014, followed by recovery.

The adjusted ROA follows a broadly similar pattern but with higher values throughout most years. It reaches a maximum of 5.59% in 2013, notably higher than the reported figure in the same year, and declines sharply in 2014 to 2.47%, before gradually improving to 4.11% in 2016. The adjusted ROA indicates that after accounting for tax adjustments, the corporation maintained better asset efficiency than is apparent from the reported figures alone.

Overall Insights

The financial data indicate a growth trajectory in both net income and total assets over the analyzed period, with a significant expansion of assets between 2013 and 2014. Both reported and adjusted figures exhibit a dip around the year 2014 in income and profitability metrics, likely linked to this major asset growth or other operational factors. The adjusted metrics consistently reflect a healthier financial position, notably in income and returns, implying that tax adjustments positively impact performance evaluation. The post-2014 recovery in income and ROA suggests successful integration or utilization of expanded asset base and improved operational efficiencies.