Stock Analysis on Net

Sherwin-Williams Co. (NYSE:SHW)

This company has been moved to the archive! The financial data has not been updated since July 27, 2022.

Analysis of Inventory

Microsoft Excel

Inventory Disclosure

Sherwin-Williams Co., balance sheet: inventory

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Finished goods 1,378,800 1,427,600 1,509,600 1,426,366 1,415,339
Work in process and raw materials 548,400 376,500 380,000 388,909 386,036
Inventories 1,927,200 1,804,100 1,889,600 1,815,275 1,801,375

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Item Description The company
Inventories Amount after valuation and LIFO reserves of inventory expected to be sold, or consumed within one year or operating cycle, if longer. Sherwin-Williams Co. inventories decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Adjustment to Inventory: Conversion from LIFO to FIFO

Adjusting LIFO Inventory to FIFO (Current) Cost

US$ in thousands

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Adjustment to Inventories
Inventories at LIFO (as reported) 1,927,200 1,804,100 1,889,600 1,815,275 1,801,375
Add: Inventory LIFO reserve 593,000 312,100 339,800 436,010 286,961
Inventories at FIFO (adjusted) 2,520,200 2,116,200 2,229,400 2,251,285 2,088,336
Adjustment to Current Assets
Current assets (as reported) 5,053,700 4,591,400 4,631,700 4,344,487 4,465,840
Add: Inventory LIFO reserve 593,000 312,100 339,800 436,010 286,961
Current assets (adjusted) 5,646,700 4,903,500 4,971,500 4,780,497 4,752,801
Adjustment to Total Assets
Total assets (as reported) 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Add: Inventory LIFO reserve 593,000 312,100 339,800 436,010 286,961
Total assets (adjusted) 21,259,700 20,713,700 20,836,000 19,570,289 20,245,388
Adjustment to Shareholders’ Equity
Shareholders’ equity (as reported) 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Add: Inventory LIFO reserve 593,000 312,100 339,800 436,010 286,961
Shareholders’ equity (adjusted) 3,030,200 3,922,900 4,463,100 4,166,755 3,979,149
Adjustment to Net Income
Net income (as reported) 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Add: Increase (decrease) in inventory LIFO reserve 280,900 (27,700) (37,300) 147,824 33,608
Net income (adjusted) 2,145,300 2,002,700 1,504,000 1,256,570 1,805,870

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Sherwin-Williams Co. inventory value on Dec 31, 2021 would be $2,520,200 (in thousands) if the FIFO inventory method was used instead of LIFO. Sherwin-Williams Co. inventories, valued on a LIFO basis, on Dec 31, 2021 were $1,927,200. Sherwin-Williams Co. inventories would have been $593,000 higher than reported on Dec 31, 2021 if the FIFO method had been used instead.


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


Adjusted Financial Ratios: LIFO vs. FIFO (Summary)

Sherwin-Williams Co., adjusted financial ratios

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
Current Ratio
Reported current ratio (LIFO) 0.88 1.00 1.02 1.01 1.12
Adjusted current ratio (FIFO) 0.99 1.07 1.10 1.11 1.19
Net Profit Margin
Reported net profit margin (LIFO) 9.35% 11.06% 8.61% 6.32% 11.83%
Adjusted net profit margin (FIFO) 10.76% 10.91% 8.40% 7.17% 12.05%
Total Asset Turnover
Reported total asset turnover (LIFO) 0.97 0.90 0.87 0.92 0.75
Adjusted total asset turnover (FIFO) 0.94 0.89 0.86 0.90 0.74
Financial Leverage
Reported financial leverage (LIFO) 8.48 5.65 4.97 5.13 5.41
Adjusted financial leverage (FIFO) 7.02 5.28 4.67 4.70 5.09
Return on Equity (ROE)
Reported ROE (LIFO) 76.50% 56.23% 37.38% 29.72% 48.00%
Adjusted ROE (FIFO) 70.80% 51.05% 33.70% 30.16% 45.38%
Return on Assets (ROA)
Reported ROA (LIFO) 9.02% 9.95% 7.52% 5.79% 8.88%
Adjusted ROA (FIFO) 10.09% 9.67% 7.22% 6.42% 8.92%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

Financial ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Sherwin-Williams Co. adjusted current ratio deteriorated from 2019 to 2020 and from 2020 to 2021.
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.
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. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 and from 2020 to 2021.

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


Adjusted Current Ratio

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Current assets 5,053,700 4,591,400 4,631,700 4,344,487 4,465,840
Current liabilities 5,719,500 4,594,400 4,521,900 4,297,747 3,987,180
Liquidity Ratio
Current ratio1 0.88 1.00 1.02 1.01 1.12
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted current assets 5,646,700 4,903,500 4,971,500 4,780,497 4,752,801
Current liabilities 5,719,500 4,594,400 4,521,900 4,297,747 3,987,180
Liquidity Ratio
Adjusted current ratio2 0.99 1.07 1.10 1.11 1.19

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Current ratio = Current assets ÷ Current liabilities
= 5,053,700 ÷ 5,719,500 = 0.88

2 Adjusted current ratio = Adjusted current assets ÷ Current liabilities
= 5,646,700 ÷ 5,719,500 = 0.99

Liquidity ratio Description The company
Adjusted current ratio A liquidity ratio calculated as adjusted current assets divided by current liabilities. Sherwin-Williams Co. adjusted current ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Adjusted Net Profit Margin

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Profitability Ratio
Net profit margin1 9.35% 11.06% 8.61% 6.32% 11.83%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income 2,145,300 2,002,700 1,504,000 1,256,570 1,805,870
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Profitability Ratio
Adjusted net profit margin2 10.76% 10.91% 8.40% 7.17% 12.05%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Net profit margin = 100 × Net income ÷ Net sales
= 100 × 1,864,400 ÷ 19,944,600 = 9.35%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Net sales
= 100 × 2,145,300 ÷ 19,944,600 = 10.76%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Sherwin-Williams Co. adjusted net profit margin ratio improved from 2019 to 2020 but then slightly deteriorated from 2020 to 2021.

Adjusted Total Asset Turnover

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Activity Ratio
Total asset turnover1 0.97 0.90 0.87 0.92 0.75
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Net sales 19,944,600 18,361,700 17,900,800 17,534,493 14,983,788
Adjusted total assets 21,259,700 20,713,700 20,836,000 19,570,289 20,245,388
Activity Ratio
Adjusted total asset turnover2 0.94 0.89 0.86 0.90 0.74

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Total asset turnover = Net sales ÷ Total assets
= 19,944,600 ÷ 20,666,700 = 0.97

2 Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 19,944,600 ÷ 21,259,700 = 0.94

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Sherwin-Williams Co. adjusted total asset turnover ratio improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Financial Leverage

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Shareholders’ equity 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Solvency Ratio
Financial leverage1 8.48 5.65 4.97 5.13 5.41
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted total assets 21,259,700 20,713,700 20,836,000 19,570,289 20,245,388
Adjusted shareholders’ equity 3,030,200 3,922,900 4,463,100 4,166,755 3,979,149
Solvency Ratio
Adjusted financial leverage2 7.02 5.28 4.67 4.70 5.09

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 Financial leverage = Total assets ÷ Shareholders’ equity
= 20,666,700 ÷ 2,437,200 = 8.48

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted shareholders’ equity
= 21,259,700 ÷ 3,030,200 = 7.02

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. adjusted financial leverage ratio increased from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Equity (ROE)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Shareholders’ equity 2,437,200 3,610,800 4,123,300 3,730,745 3,692,188
Profitability Ratio
ROE1 76.50% 56.23% 37.38% 29.72% 48.00%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income 2,145,300 2,002,700 1,504,000 1,256,570 1,805,870
Adjusted shareholders’ equity 3,030,200 3,922,900 4,463,100 4,166,755 3,979,149
Profitability Ratio
Adjusted ROE2 70.80% 51.05% 33.70% 30.16% 45.38%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 1,864,400 ÷ 2,437,200 = 76.50%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted shareholders’ equity
= 100 × 2,145,300 ÷ 3,030,200 = 70.80%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Sherwin-Williams Co. adjusted ROE improved from 2019 to 2020 and from 2020 to 2021.

Adjusted Return on Assets (ROA)

Microsoft Excel
Dec 31, 2021 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net income 1,864,400 2,030,400 1,541,300 1,108,746 1,772,262
Total assets 20,666,700 20,401,600 20,496,200 19,134,279 19,958,427
Profitability Ratio
ROA1 9.02% 9.95% 7.52% 5.79% 8.88%
Adjusted: After Conversion from LIFO to FIFO
Selected Financial Data (US$ in thousands)
Adjusted net income 2,145,300 2,002,700 1,504,000 1,256,570 1,805,870
Adjusted total assets 21,259,700 20,713,700 20,836,000 19,570,289 20,245,388
Profitability Ratio
Adjusted ROA2 10.09% 9.67% 7.22% 6.42% 8.92%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 1,864,400 ÷ 20,666,700 = 9.02%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 2,145,300 ÷ 21,259,700 = 10.09%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Sherwin-Williams Co. adjusted ROA improved from 2019 to 2020 and from 2020 to 2021.