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, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Federal 457,700  440,100  288,755  269,330  438,244 
Foreign 92,000  71,100  53,155  53,442  31,125 
State and local 84,400  60,400  52,372  39,320  61,402 
Current 634,100  571,600  394,282  362,092  530,771 
Federal (102,700) (83,700) (102,149) (474,889) (56,891)
Foreign (19,000) (32,300) (35,276) (42,292) (2,121)
State and local (23,600) (15,100) (5,953) (88,954) (9,229)
Deferred (145,300) (131,100) (143,378) (606,135) (68,241)
Provisions (credits) for income taxes 488,800  440,500  250,904  (244,043) 462,530 

Based on: 10-K (filing date: 2021-02-19), 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).

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 2018 to 2019 and from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Sherwin-Williams Co.’s deferred increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.
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 2018 to 2019 and from 2019 to 2020.

Effective Income Tax Rate (EITR)

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

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Statutory federal income tax rate 21.00% 21.00% 21.00% 35.00% 35.00%
State and local income taxes 2.50% 2.30% 3.20% 2.20% 2.30%
Investment vehicles -0.80% -1.30% -1.20% -1.40% -1.50%
Domestic production activities 0.00% 0.00% 0.00% -3.00% -2.90%
Employee share-based payments -3.80% -3.30% -3.20% -5.60% -2.80%
Research and development credits -0.50% -1.10% -1.30% 0.00% 0.00%
Amended returns and refunds 0.30% 0.10% -1.60% 0.00% 0.00%
Tax credit reversal 0.00% 3.70% 0.00% 0.00% 0.00%
Other, net 0.70% 0.80% -0.30% -2.10% -1.10%
Reported effective tax rate, before Tax Act 19.40% 22.20% 16.60% 25.10% 29.00%
Tax Act 0.00% 0.00% 1.90% -39.80% 0.00%
Subsidiary mergers 0.00% 0.00% 0.00% -4.00% 0.00%
Reported effective tax rate 19.40% 22.20% 18.50% -18.70% 29.00%

Based on: 10-K (filing date: 2021-02-19), 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).

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.

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, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Environmental and other similar items 82,900  83,500  84,517  50,193  74,535 
Employee related and benefit items 166,600  129,300  96,963  104,098  166,313 
Operating lease liabilities 448,900  430,600  —  —  — 
Other items 232,800  204,000  161,578  110,960  148,910 
Deferred tax assets 931,200  847,400  343,058  265,251  389,758 
Intangible assets and Property, plant, and equipment (1,156,400) (1,232,600) (1,303,620) (1,506,650) (254,430)
LIFO inventories (87,600) (80,500) (64,502) (78,952) (83,659)
Operating lease right-of-use assets (434,000) (417,800) —  —  — 
Other items (31,700) (28,100) (29,464) (49,670) (59,746)
Deferred tax liabilities (1,709,700) (1,759,000) (1,397,586) (1,635,272) (397,835)
Net deferred tax assets (liabilities) (778,500) (911,600) (1,054,528) (1,370,021) (8,077)

Based on: 10-K (filing date: 2021-02-19), 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).

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 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. Sherwin-Williams Co.’s net deferred tax assets (liabilities) increased from 2018 to 2019 and from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

Sherwin-Williams Co., adjustments to financial statements

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Current Assets
Current assets (as reported) 4,591,400  4,631,700  4,344,487  4,465,840  3,627,298 
Less: Current deferred tax assets, net —  —  —  —  57,162 
Current assets (adjusted) 4,591,400  4,631,700  4,344,487  4,465,840  3,570,136 
Adjustment to Total Assets
Total assets (as reported) 20,401,600  20,496,200  19,134,279  19,958,427  6,752,521 
Less: Current deferred tax assets, net —  —  —  —  57,162 
Total assets (adjusted) 20,401,600  20,496,200  19,134,279  19,958,427  6,695,359 
Adjustment to Total Liabilities
Total liabilities (as reported) 16,790,800  16,372,900  15,403,534  16,266,239  4,874,080 
Less: Noncurrent deferred tax liabilities, net 846,100  969,900  1,130,872  1,434,196  73,833 
Total liabilities (adjusted) 15,944,700  15,403,000  14,272,662  14,832,043  4,800,247 
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 3,610,800  4,123,300  3,730,745  3,692,188  1,878,441 
Less: Net deferred tax assets (liabilities) (778,500) (911,600) (1,054,528) (1,370,021) (8,077)
Shareholders’ equity (adjusted) 4,389,300  5,034,900  4,785,273  5,062,209  1,886,518 
Adjustment to Net Income
Net income (as reported) 2,030,400  1,541,300  1,108,746  1,772,262  1,132,703 
Add: Deferred income tax expense (benefit) (145,300) (131,100) (143,378) (606,135) (68,241)
Net income (adjusted) 1,885,100  1,410,200  965,368  1,166,127  1,064,462 

Based on: 10-K (filing date: 2021-02-19), 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).


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, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Current Ratio
Reported current ratio 1.00 1.02 1.01 1.12 1.28
Adjusted current ratio 1.00 1.02 1.01 1.12 1.26
Net Profit Margin
Reported net profit margin 11.06% 8.61% 6.32% 11.83% 9.55%
Adjusted net profit margin 10.27% 7.88% 5.51% 7.78% 8.98%
Total Asset Turnover
Reported total asset turnover 0.90 0.87 0.92 0.75 1.76
Adjusted total asset turnover 0.90 0.87 0.92 0.75 1.77
Financial Leverage
Reported financial leverage 5.65 4.97 5.13 5.41 3.59
Adjusted financial leverage 4.65 4.07 4.00 3.94 3.55
Return on Equity (ROE)
Reported ROE 56.23% 37.38% 29.72% 48.00% 60.30%
Adjusted ROE 42.95% 28.01% 20.17% 23.04% 56.42%
Return on Assets (ROA)
Reported ROA 9.95% 7.52% 5.79% 8.88% 16.77%
Adjusted ROA 9.24% 6.88% 5.05% 5.84% 15.90%

Based on: 10-K (filing date: 2021-02-19), 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).

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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.
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 improved from 2018 to 2019 and from 2019 to 2020.
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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.
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 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co.’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. Sherwin-Williams Co.’s adjusted ROA improved from 2018 to 2019 and from 2019 to 2020.

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


Adjusted Current Ratio

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Current assets 4,591,400  4,631,700  4,344,487  4,465,840  3,627,298 
Current liabilities 4,594,400  4,521,900  4,297,747  3,987,180  2,829,179 
Liquidity Ratio
Current ratio1 1.00 1.02 1.01 1.12 1.28
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted current assets 4,591,400  4,631,700  4,344,487  4,465,840  3,570,136 
Current liabilities 4,594,400  4,521,900  4,297,747  3,987,180  2,829,179 
Liquidity Ratio
Adjusted current ratio2 1.00 1.02 1.01 1.12 1.26

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 4,591,400 ÷ 4,594,400 = 1.00

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 4,591,400 ÷ 4,594,400 = 1.00

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 improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020.

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income 2,030,400  1,541,300  1,108,746  1,772,262  1,132,703 
Net sales 18,361,700  17,900,800  17,534,493  14,983,788  11,855,602 
Profitability Ratio
Net profit margin1 11.06% 8.61% 6.32% 11.83% 9.55%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,885,100  1,410,200  965,368  1,166,127  1,064,462 
Net sales 18,361,700  17,900,800  17,534,493  14,983,788  11,855,602 
Profitability Ratio
Adjusted net profit margin2 10.27% 7.88% 5.51% 7.78% 8.98%

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Net sales
= 100 × 2,030,400 ÷ 18,361,700 = 11.06%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 1,885,100 ÷ 18,361,700 = 10.27%

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 improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net sales 18,361,700  17,900,800  17,534,493  14,983,788  11,855,602 
Total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,752,521 
Activity Ratio
Total asset turnover1 0.90 0.87 0.92 0.75 1.76
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Net sales 18,361,700  17,900,800  17,534,493  14,983,788  11,855,602 
Adjusted total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,695,359 
Activity Ratio
Adjusted total asset turnover2 0.90 0.87 0.92 0.75 1.77

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 18,361,700 ÷ 20,401,600 = 0.90

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 18,361,700 ÷ 20,401,600 = 0.90

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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,752,521 
Shareholders’ equity 3,610,800  4,123,300  3,730,745  3,692,188  1,878,441 
Solvency Ratio
Financial leverage1 5.65 4.97 5.13 5.41 3.59
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,695,359 
Adjusted shareholders’ equity 4,389,300  5,034,900  4,785,273  5,062,209  1,886,518 
Solvency Ratio
Adjusted financial leverage2 4.65 4.07 4.00 3.94 3.55

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 20,401,600 ÷ 3,610,800 = 5.65

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 20,401,600 ÷ 4,389,300 = 4.65

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 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income 2,030,400  1,541,300  1,108,746  1,772,262  1,132,703 
Shareholders’ equity 3,610,800  4,123,300  3,730,745  3,692,188  1,878,441 
Profitability Ratio
ROE1 56.23% 37.38% 29.72% 48.00% 60.30%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,885,100  1,410,200  965,368  1,166,127  1,064,462 
Adjusted shareholders’ equity 4,389,300  5,034,900  4,785,273  5,062,209  1,886,518 
Profitability Ratio
Adjusted ROE2 42.95% 28.01% 20.17% 23.04% 56.42%

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 2,030,400 ÷ 3,610,800 = 56.23%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 1,885,100 ÷ 4,389,300 = 42.95%

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 improved from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in thousands)
Net income 2,030,400  1,541,300  1,108,746  1,772,262  1,132,703 
Total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,752,521 
Profitability Ratio
ROA1 9.95% 7.52% 5.79% 8.88% 16.77%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in thousands)
Adjusted net income 1,885,100  1,410,200  965,368  1,166,127  1,064,462 
Adjusted total assets 20,401,600  20,496,200  19,134,279  19,958,427  6,695,359 
Profitability Ratio
Adjusted ROA2 9.24% 6.88% 5.05% 5.84% 15.90%

Based on: 10-K (filing date: 2021-02-19), 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).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 2,030,400 ÷ 20,401,600 = 9.95%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 1,885,100 ÷ 20,401,600 = 9.24%

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 improved from 2018 to 2019 and from 2019 to 2020.