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Schlumberger Ltd. (SLB)

Analysis of Goodwill and Intangible Assets

Advanced level

Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Goodwill and Intangible Asset Disclosure

Schlumberger Ltd., balance sheet: goodwill and intangible assets

US$ in millions

		Dec 31, 2019		Dec 31, 2018		Dec 31, 2017		Dec 31, 2016		Dec 31, 2015
	Customer relationships
	Technology/technical know-how
	Tradenames
	Other
	Intangible assets, gross book value
	Accumulated amortization
	Intangible assets, net book value
	Goodwill
	Intangible assets and goodwill

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

Item	Description	The company
Intangible assets, net book value	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Schlumberger Ltd.’s intangible assets, net book value decreased from 2017 to 2018 and from 2018 to 2019.
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Schlumberger Ltd.’s goodwill decreased from 2017 to 2018 and from 2018 to 2019.
Intangible assets and goodwill	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Schlumberger Ltd.’s intangible assets and goodwill decreased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Goodwill

Schlumberger Ltd., adjustments to financial statements

US$ in millions

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Adjustment to Total Assets
	Total assets (as reported)
	Less: Goodwill
	Total assets (adjusted)
	Adjustment to Total Schlumberger Stockholders’ Equity
	Total Schlumberger stockholders’ equity (as reported)
	Less: Goodwill
	Total Schlumberger stockholders’ equity (adjusted)
	Adjustment to Net Income (loss) Attributable To Schlumberger
	Net income (loss) attributable to Schlumberger (as reported)
	Add: Goodwill impairment
	Net income (loss) attributable to Schlumberger (adjusted)

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

Schlumberger Ltd., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Schlumberger Ltd., adjusted financial ratios

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	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: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

Financial ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Schlumberger Ltd.’s adjusted net profit margin ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Schlumberger Ltd.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.
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.	Schlumberger Ltd.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Schlumberger Ltd.’s adjusted ROE improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Schlumberger Ltd.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Schlumberger Ltd., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income (loss) attributable to Schlumberger
	Revenue
	Profitability Ratio
	Net profit margin¹
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted net income (loss) attributable to Schlumberger
	Revenue
	Profitability Ratio
	Adjusted net profit margin²

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

2019 Calculations

¹ Net profit margin = 100 × Net income (loss) attributable to Schlumberger ÷ Revenue
= 100 × ÷ =

² Adjusted net profit margin = 100 × Adjusted net income (loss) attributable to Schlumberger ÷ Revenue
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by revenue.	Schlumberger Ltd.’s adjusted net profit margin ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Adjusted Total Asset Turnover

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Revenue
	Total assets
	Activity Ratio
	Total asset turnover¹
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Revenue
	Adjusted total assets
	Activity Ratio
	Adjusted total asset turnover²

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

2019 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= ÷ =

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

Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Schlumberger Ltd.’s adjusted total asset turnover ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Financial Leverage

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Total assets
	Total Schlumberger stockholders’ equity
	Solvency Ratio
	Financial leverage¹
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted total assets
	Adjusted total Schlumberger stockholders’ equity
	Solvency Ratio
	Adjusted financial leverage²

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

2019 Calculations

¹ Financial leverage = Total assets ÷ Total Schlumberger stockholders’ equity
= ÷ =

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Schlumberger stockholders’ 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.	Schlumberger Ltd.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income (loss) attributable to Schlumberger
	Total Schlumberger stockholders’ equity
	Profitability Ratio
	ROE¹
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted net income (loss) attributable to Schlumberger
	Adjusted total Schlumberger stockholders’ equity
	Profitability Ratio
	Adjusted ROE²

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

2019 Calculations

¹ ROE = 100 × Net income (loss) attributable to Schlumberger ÷ Total Schlumberger stockholders’ equity
= 100 × ÷ =

² Adjusted ROE = 100 × Adjusted net income (loss) attributable to Schlumberger ÷ Adjusted total Schlumberger stockholders’ equity
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Schlumberger Ltd.’s adjusted ROE improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Adjusted Return on Assets (ROA)

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	As Reported
	Selected Financial Data (US$ in millions)
	Net income (loss) attributable to Schlumberger
	Total assets
	Profitability Ratio
	ROA¹
	Adjusted for Goodwill
	Selected Financial Data (US$ in millions)
	Adjusted net income (loss) attributable to Schlumberger
	Adjusted total assets
	Profitability Ratio
	Adjusted ROA²

Based on: 10-K (filing date: 2020-01-22), 10-K (filing date: 2019-01-23), 10-K (filing date: 2018-01-24), 10-K (filing date: 2017-01-25), 10-K (filing date: 2016-01-27).

2019 Calculations

¹ ROA = 100 × Net income (loss) attributable to Schlumberger ÷ Total assets
= 100 × ÷ =

² Adjusted ROA = 100 × Adjusted net income (loss) attributable to Schlumberger ÷ Adjusted total assets
= 100 × ÷ =

Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted net income divided by adjusted total assets.	Schlumberger Ltd.’s adjusted ROA improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

	Schlumberger Ltd.	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