Stock Analysis on Net
Stock Analysis on Net

United Parcel Service Inc. (NYSE:UPS)

Analysis of Income Taxes

Microsoft Excel LibreOffice Calc

Income Tax Expense (Benefit)

United Parcel Service Inc., income tax expense (benefit), continuing operations

US$ in millions

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12 months ended: Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
U.S. federal 839  570  89  671  1,338 
U.S. state and local 100  183  7  49  67 
Non-U.S. 420  359  374  288  177 
Current 1,359  1,112  470  1,008  1,582 
U.S. federal (725) 255  668  1,121  103 
U.S. state and local (159) (93) 75  118  31 
Non-U.S. 26  (62) 15  (9) (11)
Deferred (858) 100  758  1,230  123 
Income tax expense 501  1,212  1,228  2,238  1,705 

Based on: 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), 10-K (reporting date: 2016-12-31).

Item Description The company
Current Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. United Parcel Service Inc. current increased from 2018 to 2019 and from 2019 to 2020.
Deferred Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. United Parcel Service Inc. deferred decreased from 2018 to 2019 and from 2019 to 2020.
Income tax expense Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. United Parcel Service Inc. income tax expense decreased from 2018 to 2019 and from 2019 to 2020.

Effective Income Tax Rate (EITR)

United Parcel Service Inc., effective income tax rate (EITR) reconciliation

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Statutory U.S. federal income tax rate 21.00% 21.00% 21.00% 35.00% 35.00%
U.S. state and local income taxes, net of federal benefit -2.60% 1.40% 1.40% 1.50% 1.50%
Non-U.S. tax rate differential 1.60% 0.30% 0.20% -2.00% -2.40%
U.S. federal tax credits -3.60% -1.40% -1.10% -1.80% -1.20%
Goodwill and other asset impairments 5.10% 0.00% 0.00% 0.00% 0.00%
Net uncertain tax positions 3.60% 0.10% -0.60% 0.00% 0.00%
Defined benefit plans mark-to-market charge tax rate differential 0.00% 0.00% 0.00% 1.50% 0.00%
Non-U.S. valuation allowance release 0.00% -1.20% 0.00% 0.00% 0.00%
Other 2.10% 1.20% -0.50% 0.70% 0.30%
Effective income tax rate, before income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes 27.20% 21.40% 20.40% 34.90% 33.20%
Income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes 0.00% 0.00% 0.00% -3.60% 0.00%
Effective income tax rate 27.20% 21.40% 20.40% 31.30% 33.20%

Based on: 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), 10-K (reporting date: 2016-12-31).

Item Description The company
Effective income tax rate, before income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. United Parcel Service Inc. effective income tax rate, before income tax benefit from the Tax Cuts and Jobs Act and other non-U.S. tax law changes increased from 2018 to 2019 and from 2019 to 2020.

Components of Deferred Tax Assets and Liabilities

United Parcel Service Inc., components of deferred tax assets and liabilities

US$ in millions

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Pension and postretirement benefits 3,994  2,522  1,743  1,877  4,236 
Loss and credit carryforwards 325  328  298  323  229 
Insurance reserves 535  413  437  449  733 
Stock compensation 183  249  189  182  297 
Accrued employee compensation 583  287  274  266  — 
Operating lease liabilities 736  691  —  —  — 
Other 357  205  196  360  681 
Deferred tax assets 6,713  4,695  3,137  3,457  6,176 
Deferred tax assets valuation allowance (88) (54) (112) (126) (159)
Deferred tax asset, net of valuation allowance 6,625  4,641  3,025  3,331  6,017 
Fixed assets and capitalized software (5,355) (4,720) (4,010) (3,288) (4,782)
Operating lease right-of-use assets (730) (685) —  —  — 
Other (501) (538) (493) (535) (756)
Deferred tax liabilities (6,586) (5,943) (4,503) (3,823) (5,538)
Net deferred tax asset (liability) 39  (1,302) (1,478) (492) 479 

Based on: 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), 10-K (reporting date: 2016-12-31).

Item Description The company
Deferred tax assets Amount before allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. United Parcel Service Inc. deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax asset, net of valuation allowance Amount after allocation of valuation allowances of deferred tax asset attributable to deductible temporary differences and carryforwards. United Parcel Service Inc. deferred tax asset, net of valuation allowance increased from 2018 to 2019 and from 2019 to 2020.
Net deferred tax asset (liability) Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, without jurisdictional netting. United Parcel Service Inc. net deferred tax asset (liability) increased from 2018 to 2019 and from 2019 to 2020.

Deferred Tax Assets and Liabilities, Classification

United Parcel Service Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Deferred tax assets 527  330  141  265  591 
Deferred tax liabilities 488  1,632  1,619  757  112 

Based on: 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), 10-K (reporting date: 2016-12-31).

Item Description The company
Deferred tax assets Amount, after allocation of valuation allowances and deferred tax liability, of deferred tax asset attributable to deductible differences and carryforwards, with jurisdictional netting and classified as noncurrent. United Parcel Service Inc. deferred tax assets increased from 2018 to 2019 and from 2019 to 2020.
Deferred tax liabilities Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent. United Parcel Service Inc. deferred tax liabilities increased from 2018 to 2019 but then decreased significantly from 2019 to 2020.

Adjustments to Financial Statements: Removal of Deferred Taxes

United Parcel Service Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Adjustment to Total Assets
Total assets (as reported) 62,408  57,857  50,016  45,403  40,377 
Less: Noncurrent deferred tax assets, net 527  330  141  265  591 
Total assets (adjusted) 61,881  57,527  49,875  45,138  39,786 
Adjustment to Total Liabilities
Total liabilities (as reported) 61,739  54,574  46,979  44,373  39,948 
Less: Noncurrent deferred tax liabilities, net 488  1,632  1,619  757  112 
Total liabilities (adjusted) 61,251  52,942  45,360  43,616  39,836 
Adjustment to Equity For Controlling Interests
Equity for controlling interests (as reported) 657  3,267  3,021  1,000  405 
Less: Net deferred tax assets (liabilities) 39  (1,302) (1,478) (492) 479 
Equity for controlling interests (adjusted) 618  4,569  4,499  1,492  (74)
Adjustment to Net Income
Net income (as reported) 1,343  4,440  4,791  4,910  3,431 
Add: Deferred income tax expense (benefit) (858) 100  758  1,230  123 
Net income (adjusted) 485  4,540  5,549  6,140  3,554 

Based on: 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), 10-K (reporting date: 2016-12-31).

United Parcel Service Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

United Parcel Service Inc., adjusted financial ratios

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Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Net Profit Margin
Reported net profit margin 1.59% 5.99% 6.67% 7.45% 5.63%
Adjusted net profit margin 0.57% 6.13% 7.72% 9.32% 5.84%
Total Asset Turnover
Reported total asset turnover 1.36 1.28 1.44 1.45 1.51
Adjusted total asset turnover 1.37 1.29 1.44 1.46 1.53
Financial Leverage
Reported financial leverage 94.99 17.71 16.56 45.40 99.70
Adjusted financial leverage 100.13 12.59 11.09 30.25 —
Return on Equity (ROE)
Reported ROE 204.41% 135.90% 158.59% 491.00% 847.16%
Adjusted ROE 78.48% 99.37% 123.34% 411.53% —
Return on Assets (ROA)
Reported ROA 2.15% 7.67% 9.58% 10.81% 8.50%
Adjusted ROA 0.78% 7.89% 11.13% 13.60% 8.93%

Based on: 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), 10-K (reporting date: 2016-12-31).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. United Parcel Service Inc. adjusted net profit margin ratio deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. United Parcel Service Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.
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.		 United Parcel Service Inc. adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. United Parcel Service Inc. adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. United Parcel Service Inc. adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.

United Parcel Service Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 1,343  4,440  4,791  4,910  3,431 
Revenue 84,628  74,094  71,861  65,872  60,906 
Profitability Ratio
Net profit margin1 1.59% 5.99% 6.67% 7.45% 5.63%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 485  4,540  5,549  6,140  3,554 
Revenue 84,628  74,094  71,861  65,872  60,906 
Profitability Ratio
Adjusted net profit margin2 0.57% 6.13% 7.72% 9.32% 5.84%

Based on: 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), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Net profit margin = 100 × Net income ÷ Revenue
= 100 × 1,343 ÷ 84,628 = 1.59%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenue
= 100 × 485 ÷ 84,628 = 0.57%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. United Parcel Service Inc. adjusted net profit margin ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Revenue 84,628  74,094  71,861  65,872  60,906 
Total assets 62,408  57,857  50,016  45,403  40,377 
Activity Ratio
Total asset turnover1 1.36 1.28 1.44 1.45 1.51
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue 84,628  74,094  71,861  65,872  60,906 
Adjusted total assets 61,881  57,527  49,875  45,138  39,786 
Activity Ratio
Adjusted total asset turnover2 1.37 1.29 1.44 1.46 1.53

Based on: 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), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 84,628 ÷ 62,408 = 1.36

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 84,628 ÷ 61,881 = 1.37

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. United Parcel Service Inc. adjusted total asset turnover ratio deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Adjusted Financial Leverage

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Total assets 62,408  57,857  50,016  45,403  40,377 
Equity for controlling interests 657  3,267  3,021  1,000  405 
Solvency Ratio
Financial leverage1 94.99 17.71 16.56 45.40 99.70
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets 61,881  57,527  49,875  45,138  39,786 
Adjusted equity for controlling interests 618  4,569  4,499  1,492  (74)
Solvency Ratio
Adjusted financial leverage2 100.13 12.59 11.09 30.25 —

Based on: 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), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 Financial leverage = Total assets ÷ Equity for controlling interests
= 62,408 ÷ 657 = 94.99

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted equity for controlling interests
= 61,881 ÷ 618 = 100.13

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.		 United Parcel Service Inc. adjusted financial leverage ratio increased from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Equity (ROE)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 1,343  4,440  4,791  4,910  3,431 
Equity for controlling interests 657  3,267  3,021  1,000  405 
Profitability Ratio
ROE1 204.41% 135.90% 158.59% 491.00% 847.16%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 485  4,540  5,549  6,140  3,554 
Adjusted equity for controlling interests 618  4,569  4,499  1,492  (74)
Profitability Ratio
Adjusted ROE2 78.48% 99.37% 123.34% 411.53% —

Based on: 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), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROE = 100 × Net income ÷ Equity for controlling interests
= 100 × 1,343 ÷ 657 = 204.41%

2 Adjusted ROE = 100 × Adjusted net income ÷ Adjusted equity for controlling interests
= 100 × 485 ÷ 618 = 78.48%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. United Parcel Service Inc. adjusted ROE deteriorated from 2018 to 2019 and from 2019 to 2020.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
As Reported
Selected Financial Data (US$ in millions)
Net income 1,343  4,440  4,791  4,910  3,431 
Total assets 62,408  57,857  50,016  45,403  40,377 
Profitability Ratio
ROA1 2.15% 7.67% 9.58% 10.81% 8.50%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income 485  4,540  5,549  6,140  3,554 
Adjusted total assets 61,881  57,527  49,875  45,138  39,786 
Profitability Ratio
Adjusted ROA2 0.78% 7.89% 11.13% 13.60% 8.93%

Based on: 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), 10-K (reporting date: 2016-12-31).

2020 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 1,343 ÷ 62,408 = 2.15%

2 Adjusted ROA = 100 × Adjusted net income ÷ Adjusted total assets
= 100 × 485 ÷ 61,881 = 0.78%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. United Parcel Service Inc. adjusted ROA deteriorated from 2018 to 2019 and from 2019 to 2020.