Motorola Solutions Inc. (NYSE:MSI)

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Motorola Solutions Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
U.S. federal statutory tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State income taxes, net of federal benefit	3.30%	5.00%	3.50%	3.30%	3.20%
Non-U.S. tax expense on non-U.S. earnings	0.70%	0.10%	0.50%	0.50%	0.40%
U.S. tax expense (benefit) on undistributed non-U.S. earnings	-2.10%	-2.80%	0.40%	-0.20%	0.60%
Intra-group IP transfer	0.00%	-5.10%	0.00%	0.00%	0.00%
Stock compensation	-1.50%	-4.50%	-2.10%	-4.10%	-2.70%
Valuation allowances	-0.60%	-3.40%	-2.20%	0.30%	-7.90%
Research credits	-0.90%	-1.10%	-1.30%	-2.40%	-1.00%
Reserve for uncertain tax positions	-0.10%	-0.40%	-0.60%	0.00%	-0.30%
Other tax expense (benefit)	0.30%	1.00%	0.30%	0.40%	-0.30%
Effective tax rate	20.10%	9.80%	19.50%	18.80%	13.00%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The effective tax rate exhibits significant volatility over the five-year period from 2019 to 2023, fluctuating between a low of 9.8% and a high of 20.1%. Despite these fluctuations, the effective rate remained consistently below the U.S. federal statutory tax rate of 21.00%, indicating the continuous application of tax benefits and credits to reduce the overall tax burden.

Effective Tax Rate Trends: The effective tax rate rose from 13.00% in 2019 to 19.50% by 2021. A sharp contraction occurred in 2022, where the rate dropped to 9.80%, before rebounding to its period high of 20.10% in 2023. This suggests a cyclical or event-driven influence on tax liabilities rather than a linear trend.
Primary Tax Reduction Drivers: Stock compensation and research credits served as consistent downward pressures on the effective rate. Stock compensation benefits peaked in 2020 and 2022 at -4.10% and -4.50% respectively, while research credits provided a steady reduction ranging from -0.90% to -2.40% annually. Valuation allowances also contributed significantly to rate reductions in most years, most notably in 2019 at -7.90%.
Analysis of the 2022 Fiscal Anomaly: The significant decline in the 2022 effective tax rate is primarily attributed to a one-time intra-group IP transfer, which reduced the rate by 5.10%. This benefit was further augmented by a -2.80% impact from U.S. tax expenses on undistributed non-U.S. earnings. These factors outweighed a simultaneous increase in state income taxes, which reached a five-year peak of 5.00% in the same year.
International and State Tax Influence: State income taxes generally remained stable between 3.20% and 3.50%, with the exception of the 2022 spike. The tax expense on undistributed non-U.S. earnings shifted from a modest expense in 2019 (0.60%) to a consistent benefit in 2022 (-2.80%) and 2023 (-2.10%), contributing to the lower effective rates in the latter part of the period.

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Motorola Solutions Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Inventory	30)	38)	29)	22)	45)
Accrued liabilities and allowances	77)	67)	86)	67)	65)
Employee benefits	270)	290)	321)	372)	392)
Capitalized items	146)	95)	(86)	(61)	(129)
Tax basis differences on investments	4)	6)	(1)	(3)	2)
Depreciation tax basis differences on fixed assets	(2)	1)	23)	52)	68)
Undistributed non-U.S. earnings	(28)	(38)	(36)	(33)	(27)
Tax attribute carryforwards	115)	298)	410)	449)	471)
Business reorganization	9)	7)	8)	16)	10)
Warranty and customer liabilities	22)	22)	27)	24)	33)
Deferred revenue and costs	406)	382)	213)	203)	165)
Valuation allowances	(63)	(221)	(275)	(341)	(349)
Operating lease assets	(120)	(116)	(95)	(103)	(125)
Operating lease liabilities	129)	129)	108)	119)	139)
Other	10)	4)	1)	3)	(1)
Net deferred tax assets (liabilities)	1,005)	964)	733)	786)	759)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Net deferred tax assets have exhibited a general upward trajectory over the five-year period, increasing from 759 million USD in 2019 to 1,005 million USD by the end of 2023. This growth reflects a systemic shift in the composition of the company's deferred tax position, characterized by a significant reduction in valuation allowances and a substantial increase in deferred revenue and costs.

Growth Drivers of Deferred Tax Assets: Deferred revenue and costs represent a primary driver of asset growth, rising consistently from 165 million USD in 2019 to 406 million USD in 2023. This indicates a widening gap between book revenue recognition and tax reporting. Simultaneously, valuation allowances have decreased sharply from -349 million USD to -63 million USD, suggesting an increased probability that the company will realize its deferred tax assets in future periods.
Declining Asset Components: Tax attribute carryforwards have seen a steady and significant decline, dropping from 471 million USD in 2019 to 115 million USD in 2023, which typically indicates the utilization of these attributes to offset taxable income. Similarly, assets related to employee benefits have trended downward, moving from 392 million USD in 2019 to 270 million USD in 2023.
Structural Shifts in Tax Liabilities: Capitalized items underwent a complete reversal, shifting from a deferred tax liability of -129 million USD in 2019 to a deferred tax asset of 146 million USD in 2023. Furthermore, depreciation tax basis differences on fixed assets have largely eroded, declining from a positive 68 million USD in 2019 to a negligible -2 million USD in 2023, indicating a convergence between book and tax depreciation schedules.
Stable and Offset Components: Operating lease assets and liabilities have remained relatively stable and largely offset one another, with lease liabilities ranging between 108 million USD and 139 million USD and lease assets ranging between -95 million USD and -125 million USD. Undistributed non-U.S. earnings have remained consistently negative, fluctuating within a narrow band between -27 million USD and -38 million USD.

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Motorola Solutions Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Deferred tax assets	1,062)	1,036)	916)	966)	943)
	Deferred tax liabilities	55)	73)	183)	180)	184)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The financial trajectory of deferred tax accounts from 2019 to 2023 indicates a significant shift toward a stronger net deferred tax asset position. While assets have experienced moderate growth, liabilities have undergone a substantial reduction, particularly in the latter half of the period.

Deferred Tax Assets Trend: Deferred tax assets exhibited a generally upward trend over the five-year period. Following a period of slight fluctuation between 2019 and 2021, where values moved from 943 million USD to 916 million USD, assets grew consistently to reach 1,062 million USD by December 31, 2023. This represents an overall increase of approximately 12.6% relative to the 2019 baseline.
Deferred Tax Liabilities Trend: Deferred tax liabilities remained relatively stable between 2019 and 2021, oscillating narrowly between 180 million USD and 184 million USD. A sharp contraction occurred starting in 2022, with liabilities dropping to 73 million USD and continuing the downward trend to 55 million USD by the end of 2023. This constitutes a decline of approximately 70% compared to the 2019 levels.
Net Deferred Tax Position: The divergence between the expanding asset base and the diminishing liability base has resulted in a marked expansion of the net deferred tax asset. The net position increased from 759 million USD in 2019 to 1,007 million USD in 2023, suggesting a significant accumulation of future tax benefits or the resolution of deferred tax obligations.

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Motorola Solutions Inc., Financial Data: Reported vs. Adjusted

Motorola Solutions Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	13,336)	12,814)	12,189)	10,876)	10,642)
Less: Noncurrent deferred tax assets, net	1,062)	1,036)	916)	966)	943)
Total assets (adjusted)	12,274)	11,778)	11,273)	9,910)	9,699)
Adjustment to Total Liabilities
Total liabilities (as reported)	12,597)	12,683)	12,212)	11,417)	11,325)
Less: Noncurrent deferred tax liabilities, net	55)	73)	183)	180)	184)
Total liabilities (adjusted)	12,542)	12,610)	12,029)	11,237)	11,141)
Adjustment to Total Motorola Solutions, Inc. Stockholders’ Equity (deficit)
Total Motorola Solutions, Inc. stockholders’ equity (deficit) (as reported)	724)	116)	(40)	(558)	(700)
Less: Net deferred tax assets (liabilities)	1,005)	964)	733)	786)	759)
Total Motorola Solutions, Inc. stockholders’ equity (deficit) (adjusted)	(281)	(848)	(773)	(1,344)	(1,459)
Adjustment to Net Earnings Attributable To Motorola Solutions, Inc.
Net earnings attributable to Motorola Solutions, Inc. (as reported)	1,709)	1,363)	1,245)	949)	868)
Add: Deferred income tax expense (benefit)	(32)	(334)	34)	(25)	(84)
Net earnings attributable to Motorola Solutions, Inc. (adjusted)	1,677)	1,029)	1,279)	924)	784)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

The removal of deferred taxes reveals a significant divergence between reported financial health and adjusted financial positioning, particularly regarding the company's solvency and equity structure. While reported figures indicate a transition from a deficit to a positive equity position, the adjusted figures show a persistent negative equity balance throughout the five-year period from 2019 to 2023.

Asset Valuation Trends: A consistent upward trend in total assets is observed, with reported assets increasing from 10,642 million USD in 2019 to 13,336 million USD in 2023. The adjusted assets follow a similar growth trajectory, rising from 9,699 million USD to 12,274 million USD. The variance between reported and adjusted assets remains relatively stable, fluctuating between approximately 916 million USD and 1,062 million USD, indicating a consistent presence of deferred tax assets on the balance sheet.
Liability and Debt Analysis: Reported total liabilities showed a general increase from 2019 to 2022 before a slight decrease in 2023. A notable trend is observed in the narrowing gap between reported and adjusted liabilities. The difference was approximately 180 million USD between 2019 and 2021, but dropped significantly to 73 million USD in 2022 and 55 million USD in 2023, suggesting a reduction in the deferred tax liabilities recognized by the company.
Stockholders' Equity and Solvency: There is a stark contrast in the equity trend when deferred taxes are removed. Reported stockholders' equity improved from a deficit of 700 million USD in 2019 to a positive balance of 724 million USD by 2023. However, the adjusted equity remained negative for the entire duration, moving from -1,459 million USD in 2019 to -281 million USD in 2023. This indicates that the reported shift into positive equity is heavily dependent on the inclusion of deferred tax items.
Net Earnings Performance: Net earnings attributable to the company exhibited strong growth, nearly doubling from 868 million USD in 2019 to 1,709 million USD in 2023. Adjusted net earnings generally tracked this growth, except for a significant divergence in 2022, where adjusted earnings of 1,029 million USD were substantially lower than the reported 1,363 million USD. This suggests a one-time tax-related adjustment or a non-recurring tax benefit that inflated reported earnings in that specific year.

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Motorola Solutions Inc., Financial Ratios: Reported vs. Adjusted

Motorola Solutions Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net Profit Margin
Reported net profit margin	17.13%	14.96%	15.24%	12.80%	11.01%
Adjusted net profit margin	16.81%	11.29%	15.65%	12.46%	9.94%
Total Asset Turnover
Reported total asset turnover	0.75	0.71	0.67	0.68	0.74
Adjusted total asset turnover	0.81	0.77	0.72	0.75	0.81
Financial Leverage
Reported financial leverage	18.42	110.47	—	—	—
Adjusted financial leverage	—	—	—	—	—
Return on Equity (ROE)
Reported ROE	236.05%	1,175.00%	—	—	—
Adjusted ROE	—	—	—	—	—
Return on Assets (ROA)
Reported ROA	12.81%	10.64%	10.21%	8.73%	8.16%
Adjusted ROA	13.66%	8.74%	11.35%	9.32%	8.08%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

An analysis of the financial performance from 2019 to 2023 reveals a general upward trajectory in profitability and asset utilization, although the removal of deferred taxes introduces notable variance in specific periods, most prominently in 2022.

Net Profit Margin Analysis: Reported net profit margins demonstrate consistent growth, rising from 11.01% in 2019 to 17.13% in 2023. Adjusted net profit margins follow a similar overall trend, ending at 16.81% in 2023. However, a significant divergence occurred in 2022, where the adjusted margin dropped to 11.29% compared to a reported margin of 14.96%, indicating that deferred tax adjustments had a negative impact on profitability during that fiscal year.
Total Asset Turnover Efficiency: Total asset turnover remained relatively stable over the five-year period. Reported turnover fluctuated slightly, moving from 0.74 in 2019 to 0.75 in 2023. Notably, adjusted total asset turnover consistently exceeded reported figures in every year analyzed, starting and ending the period at 0.81. This suggests that the exclusion of deferred tax accounts reduces the denominator (total assets), thereby reflecting a higher intrinsic efficiency in asset utilization.
Return on Assets (ROA) Trends: Both reported and adjusted ROA exhibit a strong growth pattern. Reported ROA increased steadily from 8.16% in 2019 to 12.81% in 2023. The adjusted ROA displays higher volatility; while it reached a peak of 13.66% in 2023, it experienced a decline to 8.74% in 2022, contrasting with the reported ROA of 10.64% for the same year. This volatility mirrors the patterns observed in the adjusted net profit margins.
Financial Leverage and Return on Equity (ROE): Data for financial leverage and ROE are available only for the final two years of the period. A drastic reduction in reported financial leverage is observed, falling from 110.47 in 2022 to 18.42 in 2023. This contraction in leverage corresponds with a sharp decline in reported ROE, which fell from an exceptional 1,175.00% in 2022 to 236.05% in 2023, illustrating the high sensitivity of equity returns to the company's capital structure during this interval.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Motorola Solutions, Inc.	1,709)	1,363)	1,245)	949)	868)
Net sales	9,978)	9,112)	8,171)	7,414)	7,887)
Profitability Ratio
Net profit margin¹	17.13%	14.96%	15.24%	12.80%	11.01%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Motorola Solutions, Inc.	1,677)	1,029)	1,279)	924)	784)
Net sales	9,978)	9,112)	8,171)	7,414)	7,887)
Profitability Ratio
Adjusted net profit margin²	16.81%	11.29%	15.65%	12.46%	9.94%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Net profit margin = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Net sales
= 100 × 1,709 ÷ 9,978 = 17.13%

² Adjusted net profit margin = 100 × Adjusted net earnings attributable to Motorola Solutions, Inc. ÷ Net sales
= 100 × 1,677 ÷ 9,978 = 16.81%

The financial performance from 2019 to 2023 indicates a sustained upward trajectory in absolute profitability and net margins. Reported net earnings grew consistently year-over-year, increasing from 868 million USD in 2019 to 1,709 million USD in 2023, representing a significant expansion in the bottom line.

Reported Profitability Trends: The reported net profit margin demonstrates a steady climb, rising from 11.01% in 2019 to 17.13% in 2023. This consistent growth suggests a systemic improvement in the conversion of revenue into net income over the five-year period, with only a negligible dip observed in 2022.
Adjusted Profitability Analysis: The adjusted net profit margin exhibits higher volatility compared to reported figures. After increasing from 9.94% in 2019 to a peak of 15.65% in 2021, the adjusted margin experienced a sharp contraction to 11.29% in 2022. A robust recovery followed in 2023, with the margin reaching 16.81%, nearly aligning with the reported margin.
Comparative Analysis of Reported vs. Adjusted Earnings: A significant divergence is observed in 2022, where reported net earnings of 1,363 million USD exceeded adjusted net earnings of 1,029 million USD. This indicates that non-recurring items or specific tax effects provided a positive impact on the reported results that was excluded from the adjusted calculations. Conversely, in 2021, adjusted earnings slightly exceeded reported earnings, suggesting that one-time charges negatively impacted the reported net income for that year.
Overall Margin Evolution: By the end of 2023, both reported and adjusted profit margins converged toward a similar peak, indicating that the influence of non-recurring items on the net margin had diminished relative to previous years, while overall operational profitability reached its highest level in the analyzed period.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net sales	9,978)	9,112)	8,171)	7,414)	7,887)
Total assets	13,336)	12,814)	12,189)	10,876)	10,642)
Activity Ratio
Total asset turnover¹	0.75	0.71	0.67	0.68	0.74
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Net sales	9,978)	9,112)	8,171)	7,414)	7,887)
Adjusted total assets	12,274)	11,778)	11,273)	9,910)	9,699)
Activity Ratio
Adjusted total asset turnover²	0.81	0.77	0.72	0.75	0.81

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 9,978 ÷ 13,336 = 0.75

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 9,978 ÷ 12,274 = 0.81

A consistent expansion of the asset base is observed from 2019 through 2023, accompanied by a fluctuating but recovering trend in asset utilization efficiency as measured by total asset turnover ratios.

Total Asset Expansion: Reported total assets grew steadily over the five-year period, increasing from US$ 10,642 million in 2019 to US$ 13,336 million by 2023. Adjusted total assets followed a similar upward trajectory, rising from US$ 9,699 million to US$ 12,274 million. The consistent growth in both metrics indicates a continuous increase in the company's resource base.
Asset Turnover Dynamics: Both reported and adjusted total asset turnover ratios exhibited a U-shaped trend. A decline occurred between 2019 and 2021, with the reported ratio dropping from 0.74 to 0.67 and the adjusted ratio falling from 0.81 to 0.72. This downward trend reversed after 2021, with both ratios improving through 2022 and 2023.
Comparative Performance Analysis: Adjusted total asset turnover remained consistently higher than reported total asset turnover across all reporting dates. By December 31, 2023, the adjusted total asset turnover returned to its initial 2019 level of 0.81. The reported total asset turnover reached 0.75 in 2023, slightly exceeding its 2019 baseline of 0.74, suggesting a marginally improved efficiency in generating revenue from reported assets compared to the start of the period.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	13,336)	12,814)	12,189)	10,876)	10,642)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	724)	116)	(40)	(558)	(700)
Solvency Ratio
Financial leverage¹	18.42	110.47	—	—	—
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	12,274)	11,778)	11,273)	9,910)	9,699)
Adjusted total Motorola Solutions, Inc. stockholders’ equity (deficit)	(281)	(848)	(773)	(1,344)	(1,459)
Solvency Ratio
Adjusted financial leverage²	—	—	—	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 13,336 ÷ 724 = 18.42

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 12,274 ÷ -281 = —

An examination of the financial position from 2019 to 2023 reveals a consistent expansion of the asset base coupled with a significant recovery in stockholders' equity. While reported equity transitioned from a deficit to a positive balance, adjusted equity remained negative throughout the period, although the magnitude of the deficit decreased substantially.

Asset Growth Trends: Reported total assets demonstrated a steady upward trajectory, increasing from 10,642 million US$ in 2019 to 13,336 million US$ by 2023. Adjusted total assets followed a similar growth pattern, rising from 9,699 million US$ to 12,274 million US$ over the same five-year interval. This indicates a sustained expansion of the company's resource base.
Equity Position and Recovery: Reported stockholders' equity exhibited a strong recovery, moving from a deficit of 700 million US$ in 2019 to a positive balance of 724 million US$ in 2023. The transition to positive equity occurred in 2022. In contrast, adjusted stockholders' equity remained in a deficit position for the entire duration. However, the adjusted deficit improved significantly, narrowing from 1,459 million US$ in 2019 to 281 million US$ in 2023.
Financial Leverage Analysis: A sharp decline in reported financial leverage is observed between 2022 and 2023, dropping from 110.47 to 18.42. This contraction is directly attributable to the increase in reported equity, which reduced the ratio of assets to equity. Regarding adjusted financial leverage, the persistent negative value of adjusted equity indicates that the company maintained a deficit position from an adjusted perspective, even as the gap between adjusted assets and adjusted liabilities narrowed toward the end of the period.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Motorola Solutions, Inc.	1,709)	1,363)	1,245)	949)	868)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	724)	116)	(40)	(558)	(700)
Profitability Ratio
ROE¹	236.05%	1,175.00%	—	—	—
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Motorola Solutions, Inc.	1,677)	1,029)	1,279)	924)	784)
Adjusted total Motorola Solutions, Inc. stockholders’ equity (deficit)	(281)	(848)	(773)	(1,344)	(1,459)
Profitability Ratio
Adjusted ROE²	—	—	—	—	—

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 100 × 1,709 ÷ 724 = 236.05%

² Adjusted ROE = 100 × Adjusted net earnings attributable to Motorola Solutions, Inc. ÷ Adjusted total Motorola Solutions, Inc. stockholders’ equity (deficit)
= 100 × 1,677 ÷ -281 = —

Net earnings attributable to Motorola Solutions, Inc. demonstrate a consistent growth trajectory over the five-year period from 2019 to 2023. Reported net earnings increased from US$ 868 million to US$ 1,709 million, while adjusted net earnings rose from US$ 784 million to US$ 1,677 million, despite a temporary contraction in 2022.

Stockholders' Equity Trends: Reported stockholders' equity underwent a significant transition from a deficit of US$ 700 million in 2019 to a positive balance of US$ 724 million by December 31, 2023. This indicates a steady recovery of the reported capital base over the analyzed period.; Adjusted stockholders' equity remained in a deficit position throughout the entire timeframe. However, the magnitude of the deficit decreased from US$ 1,459 million in 2019 to US$ 281 million in 2023, mirroring the upward trend seen in reported equity.
Return on Equity (ROE) Analysis: Reported ROE was only applicable in 2022 and 2023, corresponding with the shift to positive reported equity. The figure stood at 1,175% in 2022 and decreased to 236.05% in 2023; the extreme nature of these percentages is attributable to a relatively small equity base relative to the net income generated.; Adjusted ROE remains mathematically skewed throughout the period because adjusted net earnings are positive while adjusted stockholders' equity remains negative. This combination results in a negative return on equity that does not reflect operational profitability but rather the deficit in adjusted equity.

The divergence between reported and adjusted figures suggests significant non-recurring items or accounting adjustments affecting the equity base. While operational profitability as measured by net earnings is strengthening, the capital structure remains influenced by the historical equity deficits.

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net earnings attributable to Motorola Solutions, Inc.	1,709)	1,363)	1,245)	949)	868)
Total assets	13,336)	12,814)	12,189)	10,876)	10,642)
Profitability Ratio
ROA¹	12.81%	10.64%	10.21%	8.73%	8.16%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net earnings attributable to Motorola Solutions, Inc.	1,677)	1,029)	1,279)	924)	784)
Adjusted total assets	12,274)	11,778)	11,273)	9,910)	9,699)
Profitability Ratio
Adjusted ROA²	13.66%	8.74%	11.35%	9.32%	8.08%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net earnings attributable to Motorola Solutions, Inc. ÷ Total assets
= 100 × 1,709 ÷ 13,336 = 12.81%

² Adjusted ROA = 100 × Adjusted net earnings attributable to Motorola Solutions, Inc. ÷ Adjusted total assets
= 100 × 1,677 ÷ 12,274 = 13.66%

Between 2019 and 2023, there was a consistent upward trajectory in both reported and adjusted profitability, accompanied by a steady expansion of the total asset base. While reported metrics show a linear progression, the adjusted figures reveal specific periods of volatility, particularly in 2022, followed by a significant recovery in 2023.

Net Earnings Trends: Reported net earnings grew consistently from 868 million USD in 2019 to 1,709 million USD in 2023. In contrast, adjusted net earnings exhibited more fluctuation; after rising to 1,279 million USD in 2021, they decreased to 1,029 million USD in 2022 before surging to a five-year high of 1,677 million USD in 2023.
Asset Base Expansion: Total assets experienced steady growth over the analyzed period. Reported assets increased from 10,642 million USD in 2019 to 13,336 million USD by the end of 2023. Similarly, adjusted assets grew from 9,699 million USD to 12,274 million USD, indicating a sustained increase in the company's resource allocation.
Return on Assets (ROA) Analysis: The reported ROA demonstrated a continuous annual increase, rising from 8.16% in 2019 to 12.81% in 2023, reflecting improving operational efficiency. The adjusted ROA followed a more volatile path, peaking at 11.35% in 2021, falling sharply to 8.74% in 2022, and subsequently reaching its highest point of 13.66% in 2023. The divergence between reported and adjusted ROA in 2022 suggests that non-recurring items or specific tax adjustments negatively impacted the adjusted performance during that fiscal year.

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