Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Sherwin-Williams Co. (NYSE:SHW)

Analysis of Income Taxes

Advanced level


Income Tax Expense (Benefit)

Sherwin-Williams Co., income tax expense (benefit), continuing operations

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Federal 440,100  288,755  269,330  438,244  399,677 
Foreign 71,100  53,155  53,442  31,125  30,145 
State and local 60,400  52,372  39,320  61,402  60,319 
Current 571,600  394,282  362,092  530,771  490,141 
Federal (83,700) (102,149) (474,889) (56,891) 13,505 
Foreign (32,300) (35,276) (42,292) (2,121) (10,752)
State and local (15,100) (5,953) (88,954) (9,229) 2,223 
Deferred (131,100) (143,378) (606,135) (68,241) 4,976 
Provisions (credits) for income taxes 440,500  250,904  (244,043) 462,530  495,117 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Sherwin-Williams Co.’s current increased from 2017 to 2018 and from 2018 to 2019.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Sherwin-Williams Co.’s deferred increased from 2017 to 2018 and from 2018 to 2019.
Provisions (credits) for income taxes Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Sherwin-Williams Co.’s provisions (credits) for income taxes increased from 2017 to 2018 and from 2018 to 2019.

Effective Income Tax Rate (EITR)

Sherwin-Williams Co., effective income tax rate (EITR) reconciliation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Statutory federal income tax rate 21.00% 21.00% 35.00% 35.00% 35.00%
State and local income taxes 2.30% 3.20% 2.20% 2.30% 2.60%
Investment vehicles -1.30% -1.20% -1.40% -1.50% -1.60%
Domestic production activities 0.00% 0.00% -3.00% -2.90% -2.20%
Employee share-based payments -3.30% -3.20% -5.60% -2.80% 0.00%
Research and development credits -1.10% -1.30% 0.00% 0.00% 0.00%
Amended returns and refunds 0.10% -1.60% 0.00% 0.00% 0.00%
Tax credit reversal 3.70% 0.00% 0.00% 0.00% 0.00%
Other, net 0.80% -0.30% -2.10% -1.10% -1.80%
Reported effective tax rate, before Tax Act 22.20% 16.60% 25.10% 29.00% 32.00%
Tax Act 0.00% 1.90% -39.80% 0.00% 0.00%
Subsidiary mergers 0.00% 0.00% -4.00% 0.00% 0.00%
Reported effective tax rate 22.20% 18.50% -18.70% 29.00% 32.00%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

Item Description The company
Reported effective tax rate, before Tax Act Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Sherwin-Williams Co.’s reported effective tax rate, before Tax Act decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Components of Deferred Tax Assets and Liabilities

Sherwin-Williams Co., components of deferred tax assets and liabilities

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Exit costs, environmental and other similar items 83,500  84,517  50,193  74,535  63,851 
Employee related and benefit items 129,300  96,963  104,098  166,313  141,974 
Operating lease liabilities 430,600  —  —  —  — 
Other items 204,000  161,578  110,960  148,910  116,302 
Deferred tax assets 847,400  343,058  265,251  389,758  322,127 
Depreciation and amortization (1,232,600) (1,303,620) (1,506,650) (254,430) (241,101)
LIFO inventories (80,500) (64,502) (78,952) (83,659) (89,330)
Operating lease right-of-use assets (417,800) —  —  —  — 
Other items (28,100) (29,464) (49,670) (59,746) (33,433)
Deferred tax liabilities (1,759,000) (1,397,586) (1,635,272) (397,835) (363,864)
Net deferred tax assets (liabilities) (911,600) (1,054,528) (1,370,021) (8,077) (41,737)

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

Item Description The company
Deferred tax assets Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. Sherwin-Williams Co.’s deferred tax assets increased from 2017 to 2018 and from 2018 to 2019.
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. Sherwin-Williams Co.’s net deferred tax assets (liabilities) increased from 2017 to 2018 and from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Sherwin-Williams Co., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Current Assets
Current assets (as reported) 4,631,700  4,344,487  4,465,840  3,627,298  2,658,874 
Less: Current deferred tax assets, net —  —  —  57,162  87,883 
Current assets (adjusted) 4,631,700  4,344,487  4,465,840  3,570,136  2,570,991 
Adjustment to Total Assets
Total assets (as reported) 20,496,200  19,134,279  19,958,427  6,752,521  5,791,855 
Less: Current deferred tax assets, net —  —  —  57,162  87,883 
Total assets (adjusted) 20,496,200  19,134,279  19,958,427  6,695,359  5,703,972 
Adjustment to Total Liabilities
Total liabilities (as reported) 16,372,900  15,403,534  16,266,239  4,874,080  4,923,945 
Less: Noncurrent deferred tax liabilities, net 969,900  1,130,872  1,434,196  73,833  138,709 
Total liabilities (adjusted) 15,403,000  14,272,662  14,832,043  4,800,247  4,785,236 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 4,123,300  3,730,745  3,692,188  1,878,441  867,910 
Less: Net deferred tax assets (liabilities) (911,600) (1,054,528) (1,370,021) (8,077) (41,737)
Shareholders’ equity (adjusted) 5,034,900  4,785,273  5,062,209  1,886,518  909,647 
Adjustment to Net Income
Net income (as reported) 1,541,300  1,108,746  1,772,262  1,132,703  1,053,849 
Add: Deferred income tax expense (benefit) (131,100) (143,378) (606,135) (68,241) 4,976 
Net income (adjusted) 1,410,200  965,368  1,166,127  1,064,462  1,058,825 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).


Sherwin-Williams Co., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Sherwin-Williams Co., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Current Ratio
Reported current ratio 1.02 1.01 1.12 1.28 1.24
Adjusted current ratio 1.02 1.01 1.12 1.26 1.20
Net Profit Margin
Reported net profit margin 8.61% 6.32% 11.83% 9.55% 9.29%
Adjusted net profit margin 7.88% 5.51% 7.78% 8.98% 9.34%
Total Asset Turnover
Reported total asset turnover 0.87 0.92 0.75 1.76 1.96
Adjusted total asset turnover 0.87 0.92 0.75 1.77 1.99
Financial Leverage
Reported financial leverage 4.97 5.13 5.41 3.59 6.67
Adjusted financial leverage 4.07 4.00 3.94 3.55 6.27
Return on Equity (ROE)
Reported ROE 37.38% 29.72% 48.00% 60.30% 121.42%
Adjusted ROE 28.01% 20.17% 23.04% 56.42% 116.40%
Return on Assets (ROA)
Reported ROA 7.52% 5.79% 8.88% 16.77% 18.20%
Adjusted ROA 6.88% 5.05% 5.84% 15.90% 18.56%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Sherwin-Williams Co.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Sherwin-Williams Co.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated 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.
Sherwin-Williams Co.’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. Sherwin-Williams Co.’s adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Sherwin-Williams Co., Financial Ratios: Reported vs. Adjusted


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Current assets 4,631,700  4,344,487  4,465,840  3,627,298  2,658,874 
Current liabilities 4,521,900  4,297,747  3,987,180  2,829,179  2,141,859 
Liquidity Ratio
Current ratio1 1.02 1.01 1.12 1.28 1.24
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted current assets 4,631,700  4,344,487  4,465,840  3,570,136  2,570,991 
Current liabilities 4,521,900  4,297,747  3,987,180  2,829,179  2,141,859 
Liquidity Ratio
Adjusted current ratio2 1.02 1.01 1.12 1.26 1.20

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 4,631,700 ÷ 4,521,900 = 1.02

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 4,631,700 ÷ 4,521,900 = 1.02

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by adjusted current liabilities. Sherwin-Williams Co.’s adjusted current ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,541,300  1,108,746  1,772,262  1,132,703  1,053,849 
Net sales 17,900,800  17,534,493  14,983,788  11,855,602  11,339,304 
Profitability Ratio
Net profit margin1 8.61% 6.32% 11.83% 9.55% 9.29%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,410,200  965,368  1,166,127  1,064,462  1,058,825 
Net sales 17,900,800  17,534,493  14,983,788  11,855,602  11,339,304 
Profitability Ratio
Adjusted net profit margin2 7.88% 5.51% 7.78% 8.98% 9.34%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,541,300 ÷ 17,900,800 = 8.61%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 1,410,200 ÷ 17,900,800 = 7.88%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Sherwin-Williams Co.’s adjusted net profit margin ratio deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net sales 17,900,800  17,534,493  14,983,788  11,855,602  11,339,304 
Total assets 20,496,200  19,134,279  19,958,427  6,752,521  5,791,855 
Activity Ratio
Total asset turnover1 0.87 0.92 0.75 1.76 1.96
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales 17,900,800  17,534,493  14,983,788  11,855,602  11,339,304 
Adjusted total assets 20,496,200  19,134,279  19,958,427  6,695,359  5,703,972 
Activity Ratio
Adjusted total asset turnover2 0.87 0.92 0.75 1.77 1.99

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 17,900,800 ÷ 20,496,200 = 0.87

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 17,900,800 ÷ 20,496,200 = 0.87

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co.’s adjusted total asset turnover ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Total assets 20,496,200  19,134,279  19,958,427  6,752,521  5,791,855 
Shareholders’ equity 4,123,300  3,730,745  3,692,188  1,878,441  867,910 
Solvency Ratio
Financial leverage1 4.97 5.13 5.41 3.59 6.67
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 20,496,200  19,134,279  19,958,427  6,695,359  5,703,972 
Adjusted shareholders’ equity 5,034,900  4,785,273  5,062,209  1,886,518  909,647 
Solvency Ratio
Adjusted financial leverage2 4.07 4.00 3.94 3.55 6.27

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 20,496,200 ÷ 4,123,300 = 4.97

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 20,496,200 ÷ 5,034,900 = 4.07

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.
Sherwin-Williams Co.’s adjusted financial leverage ratio increased from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,541,300  1,108,746  1,772,262  1,132,703  1,053,849 
Shareholders’ equity 4,123,300  3,730,745  3,692,188  1,878,441  867,910 
Profitability Ratio
ROE1 37.38% 29.72% 48.00% 60.30% 121.42%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,410,200  965,368  1,166,127  1,064,462  1,058,825 
Adjusted shareholders’ equity 5,034,900  4,785,273  5,062,209  1,886,518  909,647 
Profitability Ratio
Adjusted ROE2 28.01% 20.17% 23.04% 56.42% 116.40%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,541,300 ÷ 4,123,300 = 37.38%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 1,410,200 ÷ 5,034,900 = 28.01%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co.’s adjusted ROE deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,541,300  1,108,746  1,772,262  1,132,703  1,053,849 
Total assets 20,496,200  19,134,279  19,958,427  6,752,521  5,791,855 
Profitability Ratio
ROA1 7.52% 5.79% 8.88% 16.77% 18.20%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,410,200  965,368  1,166,127  1,064,462  1,058,825 
Adjusted total assets 20,496,200  19,134,279  19,958,427  6,695,359  5,703,972 
Profitability Ratio
Adjusted ROA2 6.88% 5.05% 5.84% 15.90% 18.56%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

2019 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 1,541,300 ÷ 20,496,200 = 7.52%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,410,200 ÷ 20,496,200 = 6.88%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co.’s adjusted ROA deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.