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Thermo Fisher Scientific Inc. (TMO)

Analysis of Investments

Advanced level

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Thermo Fisher Scientific Inc., adjustment to net income

US$ in millions

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12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net income (as reported) 2,938  2,225  2,022  1,975  1,894 
Add: Unrealized gains (losses) on available-for-sale investments —  (2) (1) 1  — 
Net income (adjusted) 2,938  2,223  2,021  1,976  1,894 

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)

Thermo Fisher Scientific Inc., adjusted profitability ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net Profit Margin
Reported net profit margin 12.06% 10.64% 11.06% 11.64% 11.22%
Adjusted net profit margin 12.06% 10.63% 11.06% 11.65% 11.22%
Return on Equity (ROE)
Reported ROE 10.65% 8.76% 9.39% 9.25% 9.22%
Adjusted ROE 10.65% 8.75% 9.38% 9.25% 9.22%
Return on Assets (ROA)
Reported ROA 5.22% 3.93% 4.40% 4.83% 4.42%
Adjusted ROA 5.22% 3.92% 4.40% 4.83% 4.42%

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Thermo Fisher Scientific Inc.’s adjusted net profit margin ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Thermo Fisher Scientific Inc.’s adjusted ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Thermo Fisher Scientific Inc.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Thermo Fisher Scientific Inc., Profitability Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income 2,938  2,225  2,022  1,975  1,894 
Revenues 24,358  20,918  18,274  16,965  16,890 
Profitability Ratio
Net profit margin1 12.06% 10.64% 11.06% 11.64% 11.22%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,938  2,223  2,021  1,976  1,894 
Revenues 24,358  20,918  18,274  16,965  16,890 
Profitability Ratio
Adjusted net profit margin2 12.06% 10.63% 11.06% 11.65% 11.22%

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

2018 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 2,938 ÷ 24,358 = 12.06%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 2,938 ÷ 24,358 = 12.06%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Thermo Fisher Scientific Inc.’s adjusted net profit margin ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Adjusted Return on Equity (ROE)

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income 2,938  2,225  2,022  1,975  1,894 
Shareholders’ equity 27,586  25,413  21,539  21,350  20,548 
Profitability Ratio
ROE1 10.65% 8.76% 9.39% 9.25% 9.22%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,938  2,223  2,021  1,976  1,894 
Shareholders’ equity 27,586  25,413  21,539  21,350  20,548 
Profitability Ratio
Adjusted ROE2 10.65% 8.75% 9.38% 9.25% 9.22%

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

2018 Calculations

1 ROE = 100 × Net income ÷ Shareholders’ equity
= 100 × 2,938 ÷ 27,586 = 10.65%

2 Adjusted ROE = 100 × Adjusted net income ÷ Shareholders’ equity
= 100 × 2,938 ÷ 27,586 = 10.65%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Thermo Fisher Scientific Inc.’s adjusted ROE deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Adjusted Return on Assets (ROA)

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income 2,938  2,225  2,022  1,975  1,894 
Total assets 56,232  56,669  45,908  40,889  42,852 
Profitability Ratio
ROA1 5.22% 3.93% 4.40% 4.83% 4.42%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 2,938  2,223  2,021  1,976  1,894 
Total assets 56,232  56,669  45,908  40,889  42,852 
Profitability Ratio
Adjusted ROA2 5.22% 3.92% 4.40% 4.83% 4.42%

Based on: 10-K (filing date: 2019-02-27), 10-K (filing date: 2018-02-28), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-25), 10-K (filing date: 2015-02-26).

2018 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 2,938 ÷ 56,232 = 5.22%

2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 2,938 ÷ 56,232 = 5.22%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Thermo Fisher Scientific Inc.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.