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Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities
Stryker Corp., adjustment to net earnings
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net earnings (as reported) | ||||||
| Add: Marketable securities | ||||||
| Net earnings (adjusted) |
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).
The financial data reveals fluctuations in both reported and adjusted net earnings over the five-year period ending December 31, 2021. The values are expressed in millions of US dollars.
- 2017 to 2018
- There was a significant increase in net earnings, with reported net earnings rising from 1020 million USD to 3553 million USD, and similarly for adjusted net earnings, increasing from 1016 million USD to 3553 million USD. This jump indicates a strong performance improvement during this period.
- 2018 to 2019
- Both reported and adjusted net earnings declined noticeably, with reported earnings decreasing to 2083 million USD and adjusted slightly higher at 2084 million USD. Despite the decrease, the earnings remained well above the 2017 level.
- 2019 to 2020
- The downward trend continued into 2020, with reported net earnings dropping to 1599 million USD and adjusted net earnings matching this figure. This represents the lowest earnings in the five-year span since 2017.
- 2020 to 2021
- There was a recovery in net earnings in 2021, with reported net earnings increasing to 1994 million USD and adjusted net earnings slightly higher at 1997 million USD. This suggests a rebound after the previous decline.
- General Observations
- The close alignment between reported and adjusted net earnings across all years indicates consistency in earnings quality and minimal impact from adjustment items. The most notable characteristic is the sharp increase in 2018 followed by a gradual decrease and partial recovery, reflecting volatility in the company’s earnings capacity over the period analyzed.
Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)
Stryker Corp., adjusted profitability ratios
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).
The financial data reveals notable fluctuations in profitability and efficiency ratios over the analyzed period from 2017 to 2021.
- Net Profit Margin
- The reported net profit margin exhibited a substantial increase from 8.2% in 2017 to a peak of 26.12% in 2018, followed by a notable decline to 13.99% in 2019. Subsequently, the margin decreased further to 11.14% in 2020 and slightly improved to 11.66% in 2021. The adjusted net profit margin closely mirrors this trend, indicating consistent treatment of exceptional items or adjustments over the years.
- Return on Equity (ROE)
- ROE showed a similar pattern with a significant rise from 10.23% in 2017 to 30.29% in 2018. This figure then decreased markedly to 16.26% in 2019, followed by a continuous decline to 12.22% in 2020 before a modest recovery to 13.4% in 2021. The adjusted ROE aligns closely with the reported figures, suggesting that nonrecurring items had limited impact on the equity returns.
- Return on Assets (ROA)
- ROA reflected growth from 4.6% in 2017 to 13.05% in 2018, indicating improved asset efficiency. Nevertheless, this was followed by a decrease to 6.9% in 2019 and a further reduction to 4.66% in 2020. In 2021, a recovery trend was observed with ROA rising to 5.76%. Adjusted ROA values echoed the reported numbers closely, reinforcing the consistency of operational performance evaluation.
Overall, the data shows a peak in profitability and returns in 2018, after which there was a gradual erosion over the subsequent years. Despite this downward trend post-2018, a slight improvement occurred in 2021 across all metrics. The close alignment between reported and adjusted figures across net profit margin, ROE, and ROA suggests that the adjustments made for nonrecurring items did not materially alter the interpretation of the company’s financial performance trends.
Stryker Corp., Profitability Ratios: Reported vs. Adjusted
Adjusted Net Profit Margin
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 earnings ÷ Net sales
= 100 × ÷ =
2 Adjusted net profit margin = 100 × Adjusted net earnings ÷ Net sales
= 100 × ÷ =
The financial data indicates notable fluctuations in both reported and adjusted net earnings over the five-year period from 2017 to 2021. Initially, there is a strong increase in net earnings from approximately 1.02 billion US dollars in 2017 to a peak of 3.553 billion in 2018. This is followed by a significant decline in 2019 to around 2.08 billion and a further decrease in 2020 to about 1.6 billion. However, a modest recovery is observed in 2021, with net earnings rising to nearly 2 billion US dollars.
These trends are mirrored closely by the adjusted net earnings, which show nearly identical figures to the reported net earnings throughout the period, suggesting minimal adjustments made to the reported results. The differences between reported and adjusted earnings are negligible, indicating consistency in accounting practices or limited extraordinary items affecting profitability during these years.
The net profit margin follows a similar pattern, with a dramatic increase from 8.20% in 2017 to 26.12% in 2018, signifying a substantial improvement in profitability relative to revenue. However, the margin sharply declines to approximately 14% in 2019 and further to about 11.1% in 2020. In 2021, there is a slight improvement to around 11.7%. The adjusted net profit margin aligns very closely with the reported figures, reinforcing the conclusion that the company's core profitability trends remain stable when accounting adjustments are considered.
- Key observations:
- - A pronounced peak in both net earnings and profit margins occurred in 2018, which subsequently experienced a downward correction.
- - The period from 2019 to 2020 shows a reduction in profitability and earnings, possibly indicating external or internal challenges affecting company performance.
- - A partial recovery in earnings and margins is evident in 2021, though not reaching the peak levels of 2018.
- - The minimal differences between reported and adjusted figures suggest consistent reporting standards and limited impact from non-recurring items or accounting changes.
Overall, the financial data reveals a cyclical pattern with significant volatility in earnings and profitability, highlighting periods of strong performance as well as notable declines and modest recoveries. This pattern may warrant further investigation into the underlying drivers, including market conditions, operational factors, or one-time events impacting the financial outcomes.
Adjusted Return on Equity (ROE)
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 earnings ÷ Total Stryker shareholders’ equity
= 100 × ÷ =
2 Adjusted ROE = 100 × Adjusted net earnings ÷ Total Stryker shareholders’ equity
= 100 × ÷ =
- Net Earnings Trends
- There was a notable increase in net earnings from 2017 to 2018, with reported net earnings rising sharply from 1,020 million US dollars to 3,553 million US dollars. However, following this peak in 2018, net earnings exhibited a declining trend over the next two years, decreasing to 2,083 million US dollars in 2019 and further down to 1,599 million US dollars in 2020. In 2021, there was a partial recovery, with earnings increasing to 1,994 million US dollars. The adjusted net earnings closely mirrored the reported figures throughout the period, indicating minimal impact from adjustments on net earnings.
- Return on Equity (ROE) Analysis
- The reported ROE demonstrated significant volatility over the observed period. Starting at 10.23% in 2017, ROE increased substantially to 30.29% in 2018, which represents the highest point in the dataset. Subsequently, ROE declined sharply to 16.26% in 2019 and further to 12.22% in 2020. There was a modest increase in 2021 reaching 13.4%. The adjusted ROE values are very closely aligned with the reported ROE, suggesting that adjustments had minimal effect on the profitability ratios.
- Overall Observations
- The data reveal a pronounced peak in both earnings and ROE in 2018, followed by a multi-year decline and partial recovery by 2021. The alignment between reported and adjusted figures throughout indicates that non-operational or irregular items had negligible influence on earnings and return metrics during this period. This pattern suggests that while the company experienced strong performance in 2018, it encountered challenges in maintaining those levels subsequently, though the partial rebound in 2021 may indicate some stabilization or improvement in operational outcomes.
Adjusted Return on Assets (ROA)
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 earnings ÷ Total assets
= 100 × ÷ =
2 Adjusted ROA = 100 × Adjusted net earnings ÷ Total assets
= 100 × ÷ =
The analysis of the financial data over the period from 2017 to 2021 reveals notable fluctuations in both reported and adjusted net earnings, as well as in return on assets (ROA) metrics. The reported and adjusted net earnings follow a closely aligned trajectory, indicating minimal adjustments between the two measurements and confirming consistency in the accounting measures applied.
- Net Earnings Trends
- Reported net earnings saw a sharp increase from 1,020 million US dollars in 2017 to a peak of 3,553 million US dollars in 2018. Following this peak, earnings declined significantly to 2,083 million in 2019 and further to 1,599 million in 2020. In 2021, there was a partial recovery with net earnings rising to 1,994 million. The adjusted net earnings mirrored this pattern almost exactly, suggesting that the fluctuations are fundamentally related to operational or market factors rather than accounting adjustments.
- Return on Assets (ROA) Trends
- The reported ROA exhibited a similar pattern to net earnings, increasing from 4.6% in 2017 to a high of 13.05% in 2018, more than doubling the initial value. Subsequent years saw a decline to 6.9% in 2019 and a further decrease to 4.66% in 2020. ROA improved again to 5.76% in 2021 but did not approach the elevated 2018 level. Adjusted ROA figures were nearly identical to reported ROA in each year, reinforcing the reliability of these returns as reflective of operational efficiency and asset utilization.
Overall, the data suggests a period of exceptional financial performance in 2018, followed by a downturn over the next two years, possibly influenced by broader economic or industry-specific challenges. The partial recovery in 2021 indicates some improvement in profitability and asset efficiency but not a full return to the peak performance levels observed in 2018. The close correspondence between reported and adjusted figures throughout the period underscores consistent financial reporting practices without significant restatements or extraordinary adjustments.