United Parcel Service Inc. (NYSE:UPS)

Goodwill

The goodwill balance shows an overall increasing trend from 3,367 million US dollars in 2020 to a peak of 4,872 million in 2023, followed by a decline to 4,300 million in 2024. This indicates that the company increased its goodwill value significantly over the initial years, but then recorded a reduction in the most recent year, possibly due to impairment or divestitures.

Capitalized Software

Capitalized software has exhibited steady growth each year, rising from 4,531 million in 2020 to 6,088 million in 2024. This consistent upward trend reflects ongoing investments in software development and capital expenditure in technology assets.

Licenses

The value of licenses declined considerably from 95 million in 2020 to 30 million by 2023 and remained flat at 30 million in 2024. This decrease suggests a reduction in licensing agreements or a shift in how licenses are managed or classified.

Franchise Rights

Franchise rights increased steadily, more than doubling from 165 million in 2020 to 348 million in 2024, indicating expanded franchise agreements or valuation adjustments reflecting growth in this intangible asset category.

Customer Relationships

Customer relationships showed growth from 729 million in 2020 to 1,115 million in 2023, followed by a sharp decrease to 677 million in 2024. This pattern may suggest revaluation, partial impairment, or changes in customer contracts impacting asset values.

Trade Name

The gross carrying amount of trade name intangible assets increased from 67 million in 2021 to 172 million in 2023 but declined to 109 million in 2024. The net carrying value decreased from 200 million in 2020 to 89 million by 2023, and data is missing for 2024. This mixed pattern indicates potential write-downs or reclassification of trade name assets.

Trademarks, Patents, and Other

These assets have increased markedly from 18 million in 2020 to 369 million in 2024, indicating active acquisition or capitalization strategies in intellectual property and other intangible assets.

Amortizable Intangible Assets

The gross carrying amount of amortizable intangible assets shows a steady increase from 5,538 million in 2020 to a peak of 7,767 million in 2023, slightly decreasing to 7,621 million in 2024. Accumulated amortization also rose consistently from -3,469 million to -4,561 million over the same period. Consequently, the net carrying value increased from 2,069 million to 3,212 million in 2023 and slightly decreased to 3,060 million in 2024. This indicates ongoing additions balanced by amortization, leading to a net growth in amortizable intangibles.

Indefinite Lived Intangible Assets

The indefinite lived intangible assets remained stable around 204-205 million from 2020 through 2022, but saw a significant decline to 93 million in 2023 and further to just 4 million in 2024, signaling likely impairments or reclassifications.

Intangible Assets

Total intangible assets rose over the first four years from 2,274 million in 2020 to 3,305 million in 2023, followed by a decrease to 3,064 million in 2024, consistent with observed declines in some specific intangible asset categories.

Goodwill and Intangible Assets

The combined balance of goodwill and intangible assets increased steadily from 5,641 million in 2020 to a peak of 8,177 million in 2023 before dropping to 7,364 million in 2024. This pattern is driven by growth in the earlier years and a tapering or reduction in the latest year.

The financial data reflect notable trends over the five-year period under review, highlighting changes in asset base, equity, and profitability both on a reported and goodwill-adjusted basis.

Total Assets

Reported total assets increased steadily from 62,408 million US dollars in 2020 to a peak of 71,124 million in 2022, followed by a slight decline to 70,070 million by the end of 2024. Adjusted total assets, which exclude goodwill, show a similar trend, rising from 59,041 million in 2020 to 66,901 million in 2022, then falling modestly to 65,770 million in 2024. This indicates the asset base expanded until 2022 before stabilizing and slightly contracting.

Equity for Controlling Interests

The reported equity experienced significant growth, rising from a low 657 million in 2020 to 19,786 million in 2022. However, a decline is observed subsequently, with equity decreasing to 16,718 million by 2024. The adjusted equity, which accounts for goodwill removal, changed from a negative figure of -2,710 million in 2020 to a positive 15,563 million in 2022, mirroring the reported equity's upward trajectory before also decreasing to 12,418 million by 2024. The negative adjusted equity in 2020 suggests significant goodwill or intangible asset adjustments, which normalized by 2021 and onward.

Net Income

The net income figures depict a significant increase from 1,343 million in 2020 to 12,890 million in 2021, marking a sharp improvement. This peak is sustained in 2021 before decreasing steadily to 5,782 million in 2024. The adjusted net income is closely aligned with the reported figures, with a slight positive adjustment in 2020 (1,837 million vs. 1,343 million) and a minor adjustment in 2023 (6,833 million adjusted vs. 6,708 million reported). The overall pattern shows a strong profit peak in 2021 followed by a decline over subsequent years.

In summary, the data indicate that the company experienced asset growth and strengthening equity positions through 2022, supported by a substantial net income increase in 2021. Post-2022, there is evidence of stabilization and a downward trend in assets, equity, and profitability. The adjustments for goodwill generally reduce asset and equity figures in earlier years but have a diminishing impact in later years, suggesting either impairment or amortization effects over time. The decline in net income after 2021 warrants further exploration into operational or market factors affecting profitability.

The analysis of the financial data over the five-year period reveals distinct trends in profitability, efficiency, and leverage metrics, both in reported and goodwill adjusted terms.

Net Profit Margin

The reported net profit margin shows a significant increase from 1.59% in 2020 to a peak of 13.25% in 2021, followed by a gradual decline to 6.35% by 2024. The adjusted net profit margin follows a similar trajectory, starting slightly higher than the reported figure at 2.17% in 2020 and mirroring the eventual decline to 6.35% in 2024. This indicates a peak in profitability in 2021 with subsequent pressure on margins in the following years.

Total Asset Turnover

Reported total asset turnover remains relatively stable, increasing slightly from 1.36 in 2020 to 1.41 in 2022, before declining to 1.28 in 2023 and partially recovering to 1.30 in 2024. The adjusted figures consistently exceed the reported values, starting at 1.43 in 2020 and peaking at 1.50 in 2022, then decreasing to 1.38 by 2024. This suggests a general trend of efficient asset utilization that slightly weakened after 2022 but remained above the initial levels.

Financial Leverage

The reported financial leverage exhibits an extreme value in 2020 (94.99), which significantly drops in subsequent years to stabilize between 3.59 and 4.19 from 2022 onward. Adjusted financial leverage values, available from 2021, indicate a decrease from 6.22 in 2021 to around 5.3 in 2024, showing a relatively stable leverage position in the later years. The anomalously high leverage in 2020 suggests a potential data irregularity or a unique financial structure in that year.

Return on Equity (ROE)

Reported ROE experiences a marked decrease from an extremely high 204.41% in 2020 to 34.59% in 2024, reflecting declining profitability or changes in equity structure after 2020. Adjusted ROE, available from 2021, follows a similar downward trend from 122.05% to 46.56%. Both sets of figures display a consistent reduction in equity returns, indicative of diminishing profitability or increased equity base over the period.

Return on Assets (ROA)

Reported ROA rises significantly from 2.15% in 2020 to a peak of 18.57% in 2021, then gradually declines to 8.25% by 2024. Adjusted ROA mirrors this trend but remains consistently higher, peaking at 19.62% in 2021 and decreasing to 8.79% in 2024. This pattern suggests improved asset efficiency up to 2021 followed by reduced relative profitability in asset usage thereafter.

Overall, the company demonstrated strong profitability and efficiency improvements in 2021 across most metrics, followed by a noticeable reduction in profitability margins, returns on equity and assets, and a slight tapering in asset turnover ratios in subsequent years. Financial leverage adjusted for goodwill shows a more stabilized leverage position after the initial year, contrasting with the extreme reported leverage in 2020. The goodwill adjustment generally results in higher asset turnover and profitability ratios, illustrating the impact of intangible assets on performance evaluation.

Net Income Trends

The reported net income experienced a significant increase from 1,343 million US dollars in 2020 to a peak of 12,890 million in 2021, followed by a slight decline to 11,548 million in 2022. From 2022 onwards, there was a marked decline over the subsequent two years, reaching 6,708 million in 2023 and further decreasing to 5,782 million in 2024.

The adjusted net income closely mirrors the reported figures, with the exception of 2020 and 2023. In 2020, the adjusted net income was higher at 1,837 million compared to the reported value, indicating some adjustments that positively impacted earnings. Similarly, in 2023, the adjusted net income of 6,833 million slightly exceeded the reported amount. From 2021 onward, both measures aligned until the final year where adjusted and reported values were equal.

Net Profit Margin Trends

The reported net profit margin showed a dramatic increase from 1.59% in 2020 to 13.25% in 2021, reflecting the surge in net income relative to revenues. It then decreased to 11.51% in 2022 and continued to decline in the following years, reaching 7.37% in 2023 and 6.35% in 2024.

The adjusted net profit margin follows a similar trajectory to the reported margin but is slightly higher in 2020 and 2023. In 2020, the adjusted margin was 2.17%, compared to 1.59% reported, consistent with higher earnings after adjustments. In 2023, the adjusted margin is 7.51%, slightly above the reported 7.37%. For 2021, 2022, and 2024, the margins are identical, indicating no significant adjustments affecting profitability for those years.

Overall Insights

The data reveals a peak in profitability and net income during 2021, with subsequent declines over the next three years. The adjustments to net income and profit margin indicate some non-operational or one-time effects impacting the 2020 and 2023 results, slightly improving those metrics after adjustments. Nevertheless, the overall trend depicts a reduction in both absolute profitability and relative margins starting from 2022 through 2024.

The analysis of the reported and goodwill adjusted financial data over the five-year period reveals several notable trends in asset management and operational efficiency.

Total Assets

Reported total assets increased from 62,408 million USD in 2020 to a peak of 71,124 million USD in 2022, followed by a slight decline to 70,070 million USD in 2024. The adjusted total assets, which exclude goodwill, show a similar trend with growth from 59,041 million USD in 2020 to 66,901 million USD in 2022, then decreasing to 65,770 million USD by 2024. This indicates a general expansion of the asset base until 2022, after which there is modest contraction or asset revaluation.

Total Asset Turnover

The reported total asset turnover ratio, which measures the efficiency in using assets to generate revenue, slightly increased from 1.36 in 2020 to 1.41 in 2022, suggesting improved efficiency. However, it declined to 1.3 by 2024, indicating somewhat reduced asset utilization efficiency in recent years. The adjusted total asset turnover, which considers assets net of goodwill, follows a similar pattern with an increase from 1.43 in 2020 to 1.5 in 2022 and then a drop to 1.38 by 2024. Despite the decline, the adjusted ratios consistently remain higher than the reported ones, reflecting the impact of goodwill on total assets and asset efficiency measurements.

Overall, the data suggest that the company expanded its asset base substantially until 2022, optimizing asset utilization during this period. After 2022, there is a slight decline in both asset size and turnover ratios, signaling potential challenges in maintaining operational efficiency or shifts in asset management strategy. The consistently higher adjusted turnover ratios compared to reported ones underline the effect of goodwill adjustments in providing a clearer view of tangible asset productivity.

The analysis of the financial data over the period from 2020 to 2024 reveals several noteworthy trends in assets, equity, and leverage ratios. These insights are based on both reported and goodwill adjusted figures.

Total Assets

The reported total assets increased from US$ 62,408 million in 2020 to a peak of US$ 71,124 million in 2022, followed by a slight decline to US$ 70,070 million by the end of 2024. Adjusted total assets show a similar pattern, rising from US$ 59,041 million in 2020 to US$ 66,901 million in 2022, then decreasing gradually to US$ 65,770 million in 2024. The consistent difference between reported and adjusted totals suggests a stable goodwill component being accounted for.

Equity for Controlling Interests

Reported equity exhibits substantial growth from a very low base of US$ 657 million in 2020 to US$ 19,786 million in 2022, before declining to US$ 16,718 million by 2024. The adjusted equity follows a somewhat parallel trend but starts from a negative value of -US$ 2,710 million in 2020, indicating prior goodwill adjustments impacting equity negatively. Adjusted equity improves markedly, peaking at US$ 15,563 million in 2022 and then retracting to US$ 12,418 million in 2024. This suggests that despite improvements, goodwill adjustments still exert a material impact.

Financial Leverage

Reported financial leverage shows a dramatic shift from an extremely high ratio of 94.99 in 2020 to a more stabilized range between 3.59 and 4.19 from 2022 to 2024. This suggests a relative improvement in the equity base or a reduction in liabilities after 2020. Adjusted financial leverage data, available from 2021 onwards, starts at 6.22 in 2021, decreases to 4.3 in 2022, then rises again to about 5.3 by 2024. The higher adjusted leverage ratios compared to reported figures reflect the persistent impact of goodwill adjustments on equity, indicating a higher dependence on debt relative to adjusted equity.

Overall, the data indicates a significant strengthening of the equity base after 2020, reflected in decreased reported leverage ratios. However, adjustments for goodwill moderate these improvements, showing that the company's financial position, when excluding goodwill, remains more leveraged and less robust. Asset growth peaks around 2022, with a slight decline thereafter, suggesting possible asset optimization or divestitures. The trends point to an ongoing impact of intangible asset adjustments on key financial metrics, which must be carefully considered in evaluating the company's leverage and equity structure.

The data presents several key financial metrics over a five-year period, illustrating evolving profitability and equity positions. There is a notable divergence between reported and adjusted figures, particularly in net income, equity, and return on equity (ROE). These differences reflect the impact of goodwill adjustments on the overall financial assessment.

Net Income Trends

The reported net income shows a marked increase from 1,343 million US dollars in 2020 to a peak of 12,890 million in 2021, followed by a gradual decline to 5,782 million by 2024. Adjusted net income closely mirrors this pattern except for the initial year 2020, where it is higher at 1,837 million compared to the reported figure. The adjustment appears to have no effect from 2021 onwards, suggesting that the goodwill adjustments primarily impacted the 2020 figure.

Equity for Controlling Interests

Reported equity exhibits robust growth from 657 million in 2020 to a peak of 19,786 million in 2022, before experiencing a decline to 16,718 million in 2024. Adjusted equity, however, starts with a negative balance of -2,710 million in 2020 and then increases to 10,561 million in 2021, continuing to grow until reaching 15,563 million in 2022. From 2022 onward, adjusted equity decreases steadily to 12,418 million by 2024. The adjustments to equity are substantial in the initial years, reflecting the effect of goodwill deductions, which diminish over time but remain material.

Return on Equity (ROE)

The reported ROE starts exceptionally high at 204.41% in 2020, then declines significantly over the period to 34.59% in 2024. The adjusted ROE, available from 2021, begins at an even higher level of 122.05%, decreasing consistently to 46.56% by 2024. This trend indicates that the company’s profitability relative to shareholder equity is decreasing, although the adjusted ROE remains higher than the reported ROE in the later years, pointing to more conservative equity valuation when goodwill is excluded.

Overall Financial Insights

The company experienced a peak in profitability and equity strength around 2021 and 2022, indicated by the highest net income and equity figures reported. Subsequent years show a declining trend in both profitability and equity values. The goodwill adjustments significantly affect equity and ROE measurements, particularly in the earliest year, reducing equity and thus affecting the performance ratios. Over time, although the adjusted figures remain lower than the reported ones, the gap narrows, suggesting a partial stabilization of goodwill-related impacts.

The financial data indicates significant fluctuations in net income, total assets, and return on assets (ROA) over the five-year period.

Net Income Trends

Reported net income showed a substantial increase from 1,343 million USD in 2020 to a peak of 12,890 million USD in 2021, followed by a gradual decline over the subsequent years to 5,782 million USD in 2024. Adjusted net income closely mirrors these figures, with a slight increase in 2020 compared to reported net income. Notably, adjusted net income values remain identical to reported figures from 2021 onward, except for a minor deviation in 2023 where adjusted income is slightly higher (6,833 million USD vs. 6,708 million USD).

Total Assets Development

Reported total assets steadily increased from 62,408 million USD in 2020 to a maximum of 71,124 million USD in 2022. Thereafter, a slight decrease is observed, resulting in 70,070 million USD by 2024. Adjusted total assets, which exclude goodwill, follow a similar but consistently lower trend, rising from 59,041 million USD in 2020 to 66,901 million USD in 2022 and then declining to 65,770 million USD in 2024. The persistent gap between reported and adjusted figures suggests a stable valuation of goodwill or other intangible assets across the periods.

Return on Assets (ROA) Analysis

Reported ROA exhibits a sharp rise from 2.15% in 2020 to 18.57% in 2021, before declining steadily to 8.25% in 2024. Adjusted ROA consistently surpasses reported ROA, starting at 3.11% in 2020, peaking at 19.62% in 2021, and then decreasing to 8.79% in 2024. The higher adjusted ROA suggests that excluding goodwill from asset base improves asset efficiency metrics, although the overall downward trend from 2021 indicates reducing profitability relative to asset levels over time.

Overall, the data reveals a peak in profitability and asset accumulation in 2021 and 2022, followed by a decline in both net income and asset base through 2024. The adjustment for goodwill slightly enhances profitability metrics but does not alter the downward trajectory observed in recent years. This pattern may reflect changes in operational performance, market conditions, or asset valuation practices affecting the company's financial efficiency and returns.