Stock Analysis on Net
Stock Analysis on Net
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Oracle Corp. (NYSE:ORCL)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

Oracle Corp., income tax expense (benefit), continuing operations

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Federal 1,616  979  8,329  936  1,301  2,153 
State 19  300  264  257  271  310 
Foreign 1,144  1,097  1,084  1,475  1,074  981 
Current provision 2,779  2,376  9,677  2,668  2,646  3,444 
Federal (983) 483  (614) (201) (123) (408)
State 50  (28) (13) (36) (21) (46)
Foreign 82  (1,646) 16  (249) 39  (94)
Deferred provision (benefit) (851) (1,191) (611) (486) (105) (548)
Provision for income taxes 1,928  1,185  9,066  2,182  2,541  2,896 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

Item Description The company
Current provision Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Oracle Corp.’s current provision decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.
Deferred provision (benefit) Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Oracle Corp.’s deferred provision (benefit) decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.
Provision for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Oracle Corp.’s provision for income taxes decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Effective Income Tax Rate (EITR)

Oracle Corp., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Federal statutory income tax rate 21.00% 21.00% 29.20% 35.00% 35.00% 35.00%
Effective income tax rate, before impact of the Tax Act of 2017 16.00% 12.80% 16.30% 18.90% 22.20% 22.60%
Effective income tax rate 16.00% 9.70% 70.30% 18.90% 22.20% 22.60%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

Item Description The company
Effective income tax rate, before impact of the Tax Act of 2017 Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Oracle Corp.’s effective income tax rate, before impact of the Tax Act of 2017 decreased from 2018 to 2019 but then increased from 2019 to 2020 not reaching 2018 level.

Components of Deferred Tax Assets and Liabilities

Oracle Corp., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Accruals and allowances 469  541  567  532  492  421 
Employee compensation and benefits 638  646  789  1,251  1,149  1,123 
Differences in timing of revenue recognition 524  322  310  385  351  335 
Lease liabilities 253  —  —  —  —  — 
Basis of property, plant and equipment and intangible assets 1,115  1,238  —  —  155 
Tax credit and net operating loss carryforwards 3,871  3,717  2,614  4,029  2,935  2,649 
Deferred tax assets 6,870  6,464  4,280  6,197  4,936  4,683 
Valuation allowance (1,359) (1,266) (1,308) (1,164) (1,173) (1,024)
Deferred tax assets, net 5,511  5,198  2,972  5,033  3,763  3,659 
Unrealized gain on stock (78) (78) (78) (130) (130) (130)
Acquired intangible assets (561) (973) (1,254) (2,502) (1,482) (1,879)
GILTI deferred (1,108) (1,515) —  —  —  — 
ROU assets (241) —  —  —  —  — 
Withholding taxes on foreign earnings (171) (91) —  —  —  — 
Unremitted earnings —  —  —  (1,515) (987) (646)
Basis of property, plant and equipment and intangible assets —  —  (158) (180) —  — 
Other (141) (109) (48) (23) (33) (11)
Deferred tax liabilities (2,300) (2,766) (1,538) (4,350) (2,632) (2,666)
Net deferred tax assets (liabilities) 3,211  2,432  1,434  683  1,131  993 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Oracle Corp.’s deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax assets, net Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Oracle Corp.’s deferred tax assets, net 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. Oracle Corp.’s net deferred tax assets (liabilities) increased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

Oracle Corp., deferred tax assets and liabilities, classification

US$ in millions

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May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Current deferred tax assets —  —  —  —  —  663 
Non-current deferred tax assets 3,252  2,696  1,491  1,143  1,291  795 
Current deferred tax liabilities (in Other current liabilities) —  —  —  —  —  85 
Non-current deferred tax liabilities (in Other non-current liabilities) 41  264  57  460  160  380 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

Item Description The company
Non-current deferred tax 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. Oracle Corp.’s non-current deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Non-current deferred tax liabilities (in Other non-current liabilities) Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. Oracle Corp.’s non-current deferred tax liabilities (in Other non-current liabilities) increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Oracle Corp., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Adjustment to Current Assets
Current assets (as reported) 52,140  46,386  75,964  74,515  64,313  63,183 
Less: Current deferred tax assets, net —  —  —  —  —  663 
Current assets (adjusted) 52,140  46,386  75,964  74,515  64,313  62,520 
Adjustment to Total Assets
Total assets (as reported) 115,438  108,709  137,264  134,991  112,180  110,903 
Less: Current deferred tax assets, net —  —  —  —  —  663 
Less: Noncurrent deferred tax assets, net 3,252  2,696  1,491  1,143  1,291  795 
Total assets (adjusted) 112,186  106,013  135,773  133,848  110,889  109,445 
Adjustment to Current Liabilities
Current liabilities (as reported) 17,200  18,630  19,195  24,178  17,208  15,291 
Less: Current deferred tax liabilities, net —  —  —  —  —  85 
Current liabilities (adjusted) 17,200  18,630  19,195  24,178  17,208  15,206 
Adjustment to Total Liabilities
Total liabilities (as reported) 102,721  86,346  91,040  80,745  64,390  61,805 
Less: Current deferred tax liabilities, net —  —  —  —  —  85 
Less: Noncurrent deferred tax liabilities, net 41  264  57  460  160  380 
Total liabilities (adjusted) 102,680  86,082  90,983  80,285  64,230  61,340 
Adjustment to Total Oracle Corporation Stockholders’ Equity
Total Oracle Corporation stockholders’ equity (as reported) 12,074  21,785  45,726  53,860  47,289  48,663 
Less: Net deferred tax assets (liabilities) 3,211  2,432  1,434  683  1,131  993 
Total Oracle Corporation stockholders’ equity (adjusted) 8,863  19,353  44,292  53,177  46,158  47,670 
Adjustment to Net Income
Net income (as reported) 10,135  11,083  3,825  9,335  8,901  9,938 
Add: Deferred income tax expense (benefit) (851) (1,191) (611) (486) (105) (548)
Net income (adjusted) 9,284  9,892  3,214  8,849  8,796  9,390 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).


Oracle Corp., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Oracle Corp., adjusted financial ratios

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Current Ratio
Reported current ratio 3.03 2.49 3.96 3.08 3.74 4.13
Adjusted current ratio 3.03 2.49 3.96 3.08 3.74 4.11
Net Profit Margin
Reported net profit margin 25.94% 28.05% 9.60% 24.74% 24.03% 26.00%
Adjusted net profit margin 23.76% 25.04% 8.07% 23.45% 23.74% 24.56%
Total Asset Turnover
Reported total asset turnover 0.34 0.36 0.29 0.28 0.33 0.34
Adjusted total asset turnover 0.35 0.37 0.29 0.28 0.33 0.35
Financial Leverage
Reported financial leverage 9.56 4.99 3.00 2.51 2.37 2.28
Adjusted financial leverage 12.66 5.48 3.07 2.52 2.40 2.30
Return on Equity (ROE)
Reported ROE 83.94% 50.87% 8.37% 17.33% 18.82% 20.42%
Adjusted ROE 104.75% 51.11% 7.26% 16.64% 19.06% 19.70%
Return on Assets (ROA)
Reported ROA 8.78% 10.20% 2.79% 6.92% 7.93% 8.96%
Adjusted ROA 8.28% 9.33% 2.37% 6.61% 7.93% 8.58%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

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

Oracle Corp., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Current assets 52,140  46,386  75,964  74,515  64,313  63,183 
Current liabilities 17,200  18,630  19,195  24,178  17,208  15,291 
Liquidity Ratio
Current ratio1 3.03 2.49 3.96 3.08 3.74 4.13
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted current assets 52,140  46,386  75,964  74,515  64,313  62,520 
Adjusted current liabilities 17,200  18,630  19,195  24,178  17,208  15,206 
Liquidity Ratio
Adjusted current ratio2 3.03 2.49 3.96 3.08 3.74 4.11

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 52,140 ÷ 17,200 = 3.03

2 Adjusted current ratio = Adjusted current assets ÷ Adjusted current liabilities
= 52,140 ÷ 17,200 = 3.03

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Oracle Corp.’s adjusted current ratio deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020.

Adjusted Net Profit Margin

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May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 10,135  11,083  3,825  9,335  8,901  9,938 
Revenues 39,068  39,506  39,831  37,728  37,047  38,226 
Profitability Ratio
Net profit margin1 25.94% 28.05% 9.60% 24.74% 24.03% 26.00%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 9,284  9,892  3,214  8,849  8,796  9,390 
Revenues 39,068  39,506  39,831  37,728  37,047  38,226 
Profitability Ratio
Adjusted net profit margin2 23.76% 25.04% 8.07% 23.45% 23.74% 24.56%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 10,135 ÷ 39,068 = 25.94%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 9,284 ÷ 39,068 = 23.76%

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

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Revenues 39,068  39,506  39,831  37,728  37,047  38,226 
Total assets 115,438  108,709  137,264  134,991  112,180  110,903 
Activity Ratio
Total asset turnover1 0.34 0.36 0.29 0.28 0.33 0.34
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenues 39,068  39,506  39,831  37,728  37,047  38,226 
Adjusted total assets 112,186  106,013  135,773  133,848  110,889  109,445 
Activity Ratio
Adjusted total asset turnover2 0.35 0.37 0.29 0.28 0.33 0.35

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 39,068 ÷ 115,438 = 0.34

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 39,068 ÷ 112,186 = 0.35

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

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total assets 115,438  108,709  137,264  134,991  112,180  110,903 
Total Oracle Corporation stockholders’ equity 12,074  21,785  45,726  53,860  47,289  48,663 
Solvency Ratio
Financial leverage1 9.56 4.99 3.00 2.51 2.37 2.28
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 112,186  106,013  135,773  133,848  110,889  109,445 
Adjusted total Oracle Corporation stockholders’ equity 8,863  19,353  44,292  53,177  46,158  47,670 
Solvency Ratio
Adjusted financial leverage2 12.66 5.48 3.07 2.52 2.40 2.30

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 Financial leverage = Total assets ÷ Total Oracle Corporation stockholders’ equity
= 115,438 ÷ 12,074 = 9.56

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Oracle Corporation stockholders’ equity
= 112,186 ÷ 8,863 = 12.66

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.
Oracle Corp.’s adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 10,135  11,083  3,825  9,335  8,901  9,938 
Total Oracle Corporation stockholders’ equity 12,074  21,785  45,726  53,860  47,289  48,663 
Profitability Ratio
ROE1 83.94% 50.87% 8.37% 17.33% 18.82% 20.42%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 9,284  9,892  3,214  8,849  8,796  9,390 
Adjusted total Oracle Corporation stockholders’ equity 8,863  19,353  44,292  53,177  46,158  47,670 
Profitability Ratio
Adjusted ROE2 104.75% 51.11% 7.26% 16.64% 19.06% 19.70%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 ROE = 100 × Net income ÷ Total Oracle Corporation stockholders’ equity
= 100 × 10,135 ÷ 12,074 = 83.94%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted total Oracle Corporation stockholders’ equity
= 100 × 9,284 ÷ 8,863 = 104.75%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Oracle Corp.’s adjusted ROE improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 10,135  11,083  3,825  9,335  8,901  9,938 
Total assets 115,438  108,709  137,264  134,991  112,180  110,903 
Profitability Ratio
ROA1 8.78% 10.20% 2.79% 6.92% 7.93% 8.96%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 9,284  9,892  3,214  8,849  8,796  9,390 
Adjusted total assets 112,186  106,013  135,773  133,848  110,889  109,445 
Profitability Ratio
Adjusted ROA2 8.28% 9.33% 2.37% 6.61% 7.93% 8.58%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 10,135 ÷ 115,438 = 8.78%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 9,284 ÷ 112,186 = 8.28%

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