Stock Analysis on Net
Stock Analysis on Net
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United Parcel Service Inc. (NYSE:UPS)

Analysis of Operating Leases

Advanced level

An operating lease is treated like a rental contract. Neither the leased asset nor the associated liability is reported on the lessee balance sheet, but the rights may be very similar to the rights of an owner. The lessee only records the lease payments as a rental expense in income statement.

Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

United Parcel Service Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total undiscounted future operating lease payments — 2,967  1,637  1,470  1,259 
Discount rate1 — 4.33% 7.43% 6.60% 7.04%
 
Total present value of future operating lease payments — 2,510  1,290  1,198  1,012 

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

1 Weighted average discount rate, finance leases

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 4.33%
2019 578  2019 578  554 
2020 477  2020 477  438 
2021 399  2021 399  351 
2022 325  2022 325  274 
2023 262  2023 262  212 
2024 and thereafter 926  2024 262  203 
2025 262  195 
2026 262  187 
2027 140  96 
Total: 2,967  2,967  2,510 

Based on: 10-K (filing date: 2019-02-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 7.43%
2018 398  2018 398  370 
2019 305  2019 305  264 
2020 239  2020 239  193 
2021 186  2021 186  140 
2022 138  2022 138  96 
2023 and thereafter 371  2023 138  90 
2024 138  84 
2025 95  54 
Total: 1,637  1,637  1,290 

Based on: 10-K (filing date: 2018-02-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 6.60%
2017 368  2017 368  345 
2018 302  2018 302  266 
2019 221  2019 221  182 
2020 168  2020 168  130 
2021 111  2021 111  81 
2022 and thereafter 300  2022 111  76 
2023 111  71 
2024 78  47 
Total: 1,470  1,470  1,198 

Based on: 10-K (filing date: 2017-02-21).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 7.04%
2016 324  2016 324  303 
2017 263  2017 263  230 
2018 197  2018 197  161 
2019 125  2019 125  95 
2020 84  2020 84  60 
2021 and thereafter 266  2021 84  56 
2022 84  52 
2023 84  49 
2024 14  8 
Total: 1,259  1,259  1,012 

Based on: 10-K (filing date: 2016-02-25).

Adjustments to Financial Statements for Operating Leases

United Parcel Service Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Adjustment to Total Assets
Total assets (as reported) 57,857  50,016  45,403  40,377  38,311 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 —  2,510  1,290  1,198  1,012 
Total assets (adjusted) 57,857  52,526  46,693  41,575  39,323 
Adjustment to Total Debt
Total debt (as reported) 25,238  22,736  24,289  16,075  14,334 
Add: Operating lease liability (before adoption of FASB Topic 842)2 —  2,510  1,290  1,198  1,012 
Add: Current maturities of operating leases 538  —  —  —  — 
Add: Non-current operating leases 2,391  —  —  —  — 
Total debt (adjusted) 28,167  25,246  25,579  17,273  15,346 

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

1, 2 Equal to total present value of future operating lease payments.

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

Adjusted Financial Ratios for Operating Leases (Summary)

United Parcel Service Inc., adjusted financial ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Total Asset Turnover1
Reported total asset turnover 1.28 1.44 1.45 1.51 1.52
Adjusted total asset turnover 1.28 1.37 1.41 1.46 1.48
Debt to Equity2
Reported debt to equity 7.73 7.53 24.29 39.69 5.80
Adjusted debt to equity 8.62 8.36 25.58 42.65 6.21
Return on Assets3 (ROA)
Reported ROA 7.67% 9.58% 10.81% 8.50% 12.64%
Adjusted ROA 7.67% 9.12% 10.52% 8.25% 12.32%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

1 See details »

2 See details »

3 See details »

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. United Parcel Service Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. United Parcel Service Inc.’s adjusted debt to equity ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. United Parcel Service Inc.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.

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

Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Revenue 74,094  71,861  65,872  60,906  58,363 
Total assets 57,857  50,016  45,403  40,377  38,311 
Activity Ratio
Total asset turnover1 1.28 1.44 1.45 1.51 1.52
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenue 74,094  71,861  65,872  60,906  58,363 
Adjusted total assets 57,857  52,526  46,693  41,575  39,323 
Activity Ratio
Adjusted total asset turnover2 1.28 1.37 1.41 1.46 1.48

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= 74,094 ÷ 57,857 = 1.28

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 74,094 ÷ 57,857 = 1.28

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.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Total debt 25,238  22,736  24,289  16,075  14,334 
Equity for controlling interests 3,267  3,021  1,000  405  2,470 
Solvency Ratio
Debt to equity1 7.73 7.53 24.29 39.69 5.80
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 28,167  25,246  25,579  17,273  15,346 
Equity for controlling interests 3,267  3,021  1,000  405  2,470 
Solvency Ratio
Adjusted debt to equity2 8.62 8.36 25.58 42.65 6.21

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

2019 Calculations

1 Debt to equity = Total debt ÷ Equity for controlling interests
= 25,238 ÷ 3,267 = 7.73

2 Adjusted debt to equity = Adjusted total debt ÷ Equity for controlling interests
= 28,167 ÷ 3,267 = 8.62

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. United Parcel Service Inc.’s adjusted debt-to-equity ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 4,440  4,791  4,910  3,431  4,844 
Total assets 57,857  50,016  45,403  40,377  38,311 
Profitability Ratio
ROA1 7.67% 9.58% 10.81% 8.50% 12.64%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income 4,440  4,791  4,910  3,431  4,844 
Adjusted total assets 57,857  52,526  46,693  41,575  39,323 
Profitability Ratio
Adjusted ROA2 7.67% 9.12% 10.52% 8.25% 12.32%

Based on: 10-K (filing date: 2020-02-20), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-25).

2019 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 4,440 ÷ 57,857 = 7.67%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 4,440 ÷ 57,857 = 7.67%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. United Parcel Service Inc.’s adjusted ROA deteriorated from 2017 to 2018 and from 2018 to 2019.