Goodwill and Intangible Asset Disclosure
Adjustments to Financial Statements: Removal of Goodwill
Adjusted Financial Ratios: Removal of Goodwill (Summary)
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Zoetis Inc., balance sheet: goodwill and intangible assets

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Goodwill	2,759)	2,746)	2,682)	2,694)	2,592)
Developed technology rights	1,986)	1,918)	1,933)	1,968)	1,938)
Brands and tradenames	383)	395)	426)	427)	424)
Other	270)	337)	473)	474)	441)
Finite-lived intangible assets, gross carrying amount	2,639)	2,650)	2,832)	2,869)	2,803)
Accumulated amortization	(1,537)	(1,445)	(1,544)	(1,358)	(1,129)
Finite-lived intangible assets, less accumulated amortization	1,102)	1,205)	1,288)	1,511)	1,674)
Brands and tradenames	88)	91)	91)	104)	104)
In-process research and development	141)	77)	88)	88)	105)
Product rights	7)	7)	7)	7)	7)
Indefinite-lived intangible assets	236)	175)	186)	199)	216)
Identifiable intangible assets, less accumulated amortization	1,338)	1,380)	1,474)	1,710)	1,890)
Goodwill and other intangible assets	4,097)	4,126)	4,156)	4,404)	4,482)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Goodwill	Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.	Zoetis Inc. goodwill increased from 2021 to 2022 and from 2022 to 2023.
Identifiable intangible assets, less accumulated amortization	Sum of the carrying amounts of all intangible assets, excluding goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Zoetis Inc. identifiable intangible assets, less accumulated amortization decreased from 2021 to 2022 and from 2022 to 2023.
Goodwill and other intangible assets	Sum of the carrying amounts of all intangible assets, including goodwill, as of the balance sheet date, net of accumulated amortization and impairment charges.	Zoetis Inc. goodwill and other intangible assets decreased from 2021 to 2022 and from 2022 to 2023.

Zoetis Inc., adjustments to financial statements

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Adjustment to Total Assets
Total assets (as reported)	14,286)	14,925)	13,900)	13,609)	11,545)
Less: Goodwill	2,759)	2,746)	2,682)	2,694)	2,592)
Total assets (adjusted)	11,527)	12,179)	11,218)	10,915)	8,953)
Adjustment to Total Zoetis Inc. Equity
Total Zoetis Inc. equity (as reported)	4,997)	4,405)	4,543)	3,769)	2,708)
Less: Goodwill	2,759)	2,746)	2,682)	2,694)	2,592)
Total Zoetis Inc. equity (adjusted)	2,238)	1,659)	1,861)	1,075)	116)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Zoetis Inc., Financial Data: Reported vs. Adjusted

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Zoetis Inc., adjusted financial ratios

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total Asset Turnover
Reported total asset turnover	0.60	0.54	0.56	0.49	0.54
Adjusted total asset turnover	0.74	0.66	0.69	0.61	0.70
Financial Leverage
Reported financial leverage	2.86	3.39	3.06	3.61	4.26
Adjusted financial leverage	5.15	7.34	6.03	10.15	77.18
Return on Equity (ROE)
Reported ROE	46.91%	47.99%	44.84%	43.46%	55.39%
Adjusted ROE	104.74%	127.43%	109.46%	152.37%	1,293.10%
Return on Assets (ROA)
Reported ROA	16.41%	14.16%	14.65%	12.04%	12.99%
Adjusted ROA	20.33%	17.36%	18.16%	15.01%	16.75%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

Financial ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Zoetis Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 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.	Zoetis Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Zoetis Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Zoetis Inc. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Zoetis Inc., Financial Ratios: Reported vs. Adjusted

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	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Revenue	8,544)	8,080)	7,776)	6,675)	6,260)
Total assets	14,286)	14,925)	13,900)	13,609)	11,545)
Activity Ratio
Total asset turnover¹	0.60	0.54	0.56	0.49	0.54
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Revenue	8,544)	8,080)	7,776)	6,675)	6,260)
Adjusted total assets	11,527)	12,179)	11,218)	10,915)	8,953)
Activity Ratio
Adjusted total asset turnover²	0.74	0.66	0.69	0.61	0.70

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Total asset turnover = Revenue ÷ Total assets
= 8,544 ÷ 14,286 = 0.60

² Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= 8,544 ÷ 11,527 = 0.74

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Activity ratio	Description	The company
Adjusted total asset turnover	An activity ratio calculated as total revenue divided by adjusted total assets.	Zoetis Inc. adjusted total asset turnover ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Total assets	14,286)	14,925)	13,900)	13,609)	11,545)
Total Zoetis Inc. equity	4,997)	4,405)	4,543)	3,769)	2,708)
Solvency Ratio
Financial leverage¹	2.86	3.39	3.06	3.61	4.26
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Adjusted total assets	11,527)	12,179)	11,218)	10,915)	8,953)
Adjusted total Zoetis Inc. equity	2,238)	1,659)	1,861)	1,075)	116)
Solvency Ratio
Adjusted financial leverage²	5.15	7.34	6.03	10.15	77.18

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ Financial leverage = Total assets ÷ Total Zoetis Inc. equity
= 14,286 ÷ 4,997 = 2.86

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Zoetis Inc. equity
= 11,527 ÷ 2,238 = 5.15

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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.	Zoetis Inc. adjusted financial leverage ratio increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Total Zoetis Inc. equity	4,997)	4,405)	4,543)	3,769)	2,708)
Profitability Ratio
ROE¹	46.91%	47.99%	44.84%	43.46%	55.39%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Adjusted total Zoetis Inc. equity	2,238)	1,659)	1,861)	1,075)	116)
Profitability Ratio
Adjusted ROE²	104.74%	127.43%	109.46%	152.37%	1,293.10%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROE = 100 × Net income attributable to Zoetis Inc. ÷ Total Zoetis Inc. equity
= 100 × 2,344 ÷ 4,997 = 46.91%

² Adjusted ROE = 100 × Net income attributable to Zoetis Inc. ÷ Adjusted total Zoetis Inc. equity
= 100 × 2,344 ÷ 2,238 = 104.74%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as net income divided by adjusted shareholders’ equity.	Zoetis Inc. adjusted ROE improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
As Reported
Selected Financial Data (US$ in millions)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Total assets	14,286)	14,925)	13,900)	13,609)	11,545)
Profitability Ratio
ROA¹	16.41%	14.16%	14.65%	12.04%	12.99%
Adjusted for Goodwill
Selected Financial Data (US$ in millions)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Adjusted total assets	11,527)	12,179)	11,218)	10,915)	8,953)
Profitability Ratio
Adjusted ROA²	20.33%	17.36%	18.16%	15.01%	16.75%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

2023 Calculations

¹ ROA = 100 × Net income attributable to Zoetis Inc. ÷ Total assets
= 100 × 2,344 ÷ 14,286 = 16.41%

² Adjusted ROA = 100 × Net income attributable to Zoetis Inc. ÷ Adjusted total assets
= 100 × 2,344 ÷ 11,527 = 20.33%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as net income divided by adjusted total assets.	Zoetis Inc. adjusted ROA deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Zoetis Inc. (NYSE:ZTS)

Analysis of Goodwill and Intangible Assets

Goodwill and Intangible Asset Disclosure

Adjustments to Financial Statements: Removal of Goodwill

Zoetis Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Goodwill (Summary)

Zoetis Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)