United Parcel Service Inc. (NYSE:UPS)

Goodwill and intangible assets exhibited a general upward trend over the analyzed period, though with some fluctuations. Significant changes are observed in specific intangible asset categories, warranting further investigation. Overall, the combined value of goodwill and intangible assets increased from US$6,178 million in 2021 to US$9,858 million in 2025.

Goodwill

Goodwill increased from US$3,692 million in 2021 to US$4,872 million in 2023, representing substantial growth. A decrease was then noted in 2024 to US$4,300 million, followed by a significant increase to US$5,837 million in 2025. This volatility suggests potential acquisitions, divestitures, or impairment charges impacting goodwill.

Capitalized Software

Capitalized software consistently increased throughout the period, rising from US$4,910 million in 2021 to US$6,810 million in 2025. This indicates ongoing investment in software development and implementation.

Customer Relationships

Customer relationships showed growth from US$733 million in 2021 to US$1,115 million in 2023. However, a substantial decrease occurred in 2024 to US$677 million, followed by a recovery to US$1,438 million in 2025. This fluctuation may be linked to changes in customer base, acquisition activity, or valuation adjustments.

Trademarks, Patents, and Other & Franchise Rights & Trade Name & Licenses

These intangible assets generally increased over the period, though at varying rates. Trademarks, patents, and other increased from US$158 million to US$368 million. Franchise rights grew from US$119 million to US$382 million. Trade name increased from US$67 million to US$116 million. Licenses increased from US$58 million to US$88 million. These increases suggest continued investment in brand development and intellectual property.

Amortizable Intangible Assets

The gross carrying amount of amortizable intangible assets increased from US$6,045 million in 2021 to US$9,202 million in 2025. Accumulated amortization also increased, from US$3,763 million to US$5,186 million over the same period. Consequently, the net carrying value of amortizable intangible assets rose from US$2,282 million to US$4,016 million, indicating a net increase in the value of these assets after accounting for amortization.

Indefinite-Lived Intangible Assets

Indefinite-lived intangible assets decreased significantly from US$204 million in 2021 and 2022 to US$93 million in 2023, and further to US$4 million in 2024, before a slight increase to US$5 million in 2025. This substantial decline suggests potential impairment charges or reclassifications of these assets.

The combined value of intangible assets increased from US$2,486 million in 2021 to US$4,021 million in 2025. The significant increase in goodwill and capitalized software, coupled with fluctuations in customer relationships and indefinite-lived intangible assets, warrants further scrutiny to understand the underlying drivers and potential risks associated with these assets.

The information presents a five-year trend of reported and adjusted financial figures. The adjustments primarily relate to the removal of goodwill and associated amortization, impacting total assets and equity. A consistent difference exists between the reported and adjusted figures, indicating a significant amount of goodwill on the balance sheet.

Total Assets

Reported total assets exhibited an initial increase from 69,405 in 2021 to 71,124 in 2022, followed by a slight decrease to 70,857 in 2023 and a further decrease to 70,070 in 2024. A recovery is observed in 2025, with total assets reaching 73,090. Adjusted total assets follow a similar pattern, consistently lower than reported assets due to the goodwill removal, ranging from 65,713 in 2021 to 67,253 in 2025. The difference between reported and adjusted total assets remains relatively stable over the period.

Equity for Controlling Interests

Reported equity for controlling interests increased substantially from 14,253 in 2021 to 19,786 in 2022, then decreased to 17,306 in 2023, 16,718 in 2024, and 16,227 in 2025. Adjusted equity mirrors this trend but at lower levels, ranging from 10,561 in 2021 to 10,390 in 2025. The reduction in adjusted equity is directly attributable to the elimination of goodwill, which is a component of equity. The gap between reported and adjusted equity widens in 2022, reflecting the initial impact of the adjustment, and remains substantial throughout the period.

Net Income

Reported net income decreased from 12,890 in 2021 to 11,548 in 2022, then experienced a significant decline to 6,708 in 2023, followed by further decreases to 5,782 in 2024 and 5,572 in 2025. Adjusted net income is identical to reported net income in all years. This indicates that the goodwill adjustments do not directly impact the reported net income figure. The decline in net income appears to be driven by operational factors, independent of the goodwill treatment.

The consistent adjustments to total assets and equity suggest a deliberate accounting choice to present a financial position without the impact of goodwill. The absence of any adjustment to net income implies that the amortization of goodwill, if previously recognized, was not impacting reported earnings. The overall trend indicates a period of initial growth followed by a decline in both reported and adjusted financial metrics, particularly in net income.

The financial performance metrics demonstrate a consistent pattern when goodwill is removed from the calculations. Generally, the adjusted ratios indicate a stronger financial position than those reported, and the differences between the reported and adjusted figures become more pronounced over time. A general decline in profitability ratios is observed across the period, but the impact is lessened when goodwill is excluded.

Profitability

The reported net profit margin exhibits a decreasing trend from 13.25% in 2021 to 6.28% in 2025. The adjusted net profit margin remains identical to the reported margin throughout the period, indicating that goodwill does not affect this metric. However, the adjusted Return on Equity (ROE) consistently exceeds the reported ROE, starting with a significant difference in 2021 (122.05% adjusted vs. 90.44% reported) and remaining substantial through 2025 (53.63% adjusted vs. 34.34% reported). Similarly, the adjusted Return on Assets (ROA) is consistently higher than the reported ROA, though the difference is less dramatic than with ROE. Both ROA and ROE show a general decline over the five-year period, even when adjusted.

Asset Utilization & Financial Leverage

The reported total asset turnover shows a slight initial increase from 1.40 in 2021 to 1.41 in 2022, followed by a decline to 1.21 in 2025. The adjusted total asset turnover is consistently higher, suggesting that excluding goodwill improves the measure of how efficiently assets are used to generate revenue. The adjusted financial leverage ratio is notably higher than the reported ratio in each year, increasing from 6.22 in 2021 to 6.47 in 2025, while the reported ratio fluctuates. This indicates that the company’s debt levels appear more significant when goodwill is not considered an asset.

The consistent divergence between reported and adjusted ratios, particularly in ROE and financial leverage, suggests that goodwill represents a substantial portion of total assets. The increasing difference over time implies that goodwill’s relative weight within the asset base is growing, or that the impact of its exclusion is becoming more significant as other asset values change. The trend in profitability ratios, even when adjusted, indicates a weakening financial performance over the observed period.

The reported and adjusted net income figures demonstrate a declining trend over the five-year period. While both reported and adjusted net income decreased from 2021 to 2023, they remained consistent from 2023 to 2025. Correspondingly, both net profit margins exhibit a similar pattern of decline followed by stabilization.

Reported Net Profit Margin

The reported net profit margin decreased from 13.25% in 2021 to 6.28% in 2025. The most significant decline occurred between 2021 and 2023, falling from 13.25% to 7.37%. From 2023 to 2025, the margin remained relatively stable, fluctuating between 6.35% and 6.28%.

Adjusted Net Profit Margin

The adjusted net profit margin mirrors the trend of the reported margin, decreasing from 13.25% in 2021 to 6.28% in 2025. A substantial decrease is observed between 2021 and 2023, moving from 13.25% to 7.51%. Similar to the reported margin, the adjusted margin shows stability from 2023 to 2025, remaining within the 6.28% to 6.35% range.

The consistency between reported and adjusted net income and their respective margins suggests that adjustments made to net income do not materially impact the overall profitability picture. The primary driver of the observed trends appears to be a decrease in net income, rather than differences arising from accounting adjustments. The stabilization of both margins from 2023 to 2025 indicates a potential leveling off of profitability after the initial decline.

An examination of the provided financial information reveals trends in total asset values and associated turnover ratios over a five-year period. Reported total assets experienced initial growth between 2021 and 2022, followed by a slight decline in 2023 and a further decrease in 2024. A recovery is observed in 2025, with reported total assets increasing to their highest level during the analyzed period.

Adjusted total assets, which exclude goodwill and intangible assets, generally follow a similar pattern to reported total assets. Growth occurred from 2021 to 2022, with subsequent declines in 2023 and 2024. Adjusted total assets also increased in 2025, though the increase was less pronounced than that of reported total assets.

Reported Total Asset Turnover

The reported total asset turnover ratio exhibited a slight increase from 1.40 in 2021 to 1.41 in 2022. A decrease to 1.28 was then noted in 2023, followed by a modest recovery to 1.30 in 2024. The ratio continued to decline in 2025, reaching 1.21. This suggests a decreasing efficiency in generating revenue from reported assets.

Adjusted Total Asset Turnover

The adjusted total asset turnover ratio demonstrated a similar trend, increasing from 1.48 in 2021 to 1.50 in 2022. A decline to 1.38 occurred in 2023, remaining stable at 1.38 in 2024, and then decreased further to 1.32 in 2025. The adjusted ratio consistently remained higher than the reported ratio throughout the period, indicating that excluding goodwill and intangible assets results in a more favorable asset turnover metric. The decreasing trend in the adjusted ratio, however, still suggests diminishing efficiency in revenue generation from core operating assets.

The convergence of the reported and adjusted total asset turnover ratios in later years suggests that changes in goodwill and intangible assets are having a proportionally smaller impact on the overall turnover calculation. The consistent downward trend in both ratios from 2022 to 2025 warrants further investigation to determine the underlying causes of reduced asset efficiency.

An examination of the financial information reveals trends in total assets, equity, and associated leverage ratios over a five-year period. Reported total assets demonstrate initial growth from 2021 to 2022, followed by a slight decline in 2023 and 2024, before increasing again in 2025. Adjusted total assets follow a similar pattern, though the magnitude of change is generally less pronounced. Reported equity for controlling interests increased significantly between 2021 and 2022, then decreased in subsequent years, while adjusted equity mirrors this trend with similar fluctuations.

Reported Financial Leverage

Reported financial leverage decreased from 4.87 in 2021 to 3.59 in 2022, indicating a reduced reliance on debt financing relative to equity. This was followed by increases in 2023, 2024, and 2025, reaching 4.50, suggesting a gradual increase in financial leverage over those years. The overall trend suggests a cyclical pattern in reported leverage.

Adjusted Financial Leverage

Adjusted financial leverage exhibits a more substantial fluctuation. It increased notably from 6.22 in 2021 to 4.30 in 2022, then rose again to 5.31 in 2023, remaining relatively stable at 5.30 in 2024, and increasing significantly to 6.47 in 2025. This indicates a greater sensitivity to adjustments made to the asset and equity bases. The adjusted leverage ratio consistently exceeds the reported leverage ratio throughout the period, suggesting that the adjustments related to goodwill and intangible assets have a material impact on the assessment of financial risk.

The divergence between reported and adjusted figures suggests that a significant portion of the reported asset base is comprised of items subject to adjustment, likely including goodwill and intangible assets. The increasing adjusted financial leverage in 2025, coupled with the decreasing adjusted equity, warrants further investigation into the underlying drivers of these changes and their potential implications for the company’s financial stability.

Asset and Equity Adjustments

The difference between reported and adjusted total assets remained relatively consistent between approximately US$3.7 billion and US$4.2 billion from 2021 to 2024. However, the difference widened to approximately US$5.8 billion in 2025, indicating a larger adjustment to total assets in that year. A similar pattern is observed with equity, where the difference between reported and adjusted equity remained relatively stable until 2025, when it increased to approximately US$5.8 billion.

These trends suggest that the adjustments to assets and equity are becoming more significant over time, potentially reflecting changes in the valuation of goodwill or intangible assets. The increasing adjusted financial leverage, in conjunction with these adjustments, highlights the importance of considering the quality of assets when evaluating the company’s financial position.

The period under review demonstrates significant fluctuations in reported and adjusted net income, equity, and resulting return on equity metrics. Reported net income declined substantially from 2021 to 2023, stabilized in 2023 and 2024, and experienced a minor decrease in 2025. Adjusted net income mirrored this pattern, with a slight increase in 2023 compared to the reported figure, suggesting adjustments related to specific items. Equity for controlling interests initially increased from 2021 to 2022, then decreased through 2025, indicating changes in the company’s capital structure or retained earnings. The adjusted equity exhibited a similar trend, though with differing magnitudes.

Reported Return on Equity (ROE)

Reported ROE experienced a dramatic decrease from a high of 90.44% in 2021 to 34.34% in 2025. This decline correlates with the decrease in reported net income and the subsequent fluctuations in reported equity. The most significant drop occurred between 2021 and 2022, followed by continued, albeit less pronounced, declines in subsequent years. The stabilization of net income from 2023-2024 resulted in a corresponding stabilization of the reported ROE.

Adjusted Return on Equity (ROE)

Adjusted ROE also decreased over the period, though the magnitude of the decline was less severe than that of the reported ROE. Starting at 122.05% in 2021, it fell to 53.63% in 2025. The adjusted ROE consistently remained higher than the reported ROE throughout the period, indicating that the adjustments made to net income and equity positively impacted profitability metrics. A notable increase in adjusted ROE is observed between 2024 and 2025, potentially driven by the adjustments to equity.

Relationship between Reported and Adjusted ROE

The difference between reported and adjusted ROE remained substantial throughout the period, suggesting that the adjustments made to net income and equity have a material impact on the assessment of the company’s profitability. The consistent higher value of adjusted ROE implies that certain non-recurring or unusual items are affecting the reported results. The narrowing of the gap between 2024 and 2025 may indicate a change in the nature or magnitude of these adjustments.

In summary, the financial performance, as reflected in these ratios, experienced a period of decline and stabilization. The adjustments to net income and equity consistently resulted in a more favorable ROE compared to the reported figures, highlighting the importance of considering these adjustments when evaluating the company’s financial health.

The period under review demonstrates fluctuating financial performance as indicated by reported and adjusted return on assets. Reported net income decreased significantly from 2021 to 2023, followed by relative stabilization in 2024 and 2025. Adjusted net income mirrored this pattern, with a minor adjustment in 2023. Total assets, both reported and adjusted, exhibited a generally stable trend with a slight increase in the final year of the period.

Reported Return on Assets (ROA)

Reported ROA experienced a consistent decline from 18.57% in 2021 to 7.62% in 2025. The most substantial decrease occurred between 2021 and 2023, falling from 18.57% to 9.47%. The rate of decline moderated in subsequent years, but the overall trend remains downward. This suggests diminishing profitability relative to the reported asset base.

Adjusted Return on Assets (ROA)

Adjusted ROA followed a similar trajectory to the reported ROA, decreasing from 19.62% in 2021 to 8.29% in 2025. The adjusted figures consistently exceeded the reported figures across all years, indicating that adjustments to total assets positively impacted profitability metrics. The largest decrease in adjusted ROA also occurred between 2021 and 2023, moving from 19.62% to 10.36%. The decline slowed in 2024 and 2025, but remained negative.

Asset Trends

Reported total assets increased slightly from US$69,405 million in 2021 to US$70,070 million in 2024, before rising to US$73,090 million in 2025. Adjusted total assets showed a similar pattern, beginning at US$65,713 million in 2021 and reaching US$67,253 million in 2025. The difference between reported and adjusted total assets remained relatively consistent throughout the period, suggesting a systematic adjustment is being applied.

The convergence of declining ROA, both reported and adjusted, alongside relatively stable asset levels suggests that profitability is the primary driver of the observed trend. The adjustments made to net income and total assets appear to have a limited impact on reversing this overall decline.