Income Tax Expense (Benefit)
Effective Income Tax Rate (EITR)
Components of Deferred Tax Assets and Liabilities
Deferred Tax Assets and Liabilities, Classification
Adjustments to Financial Statements: Removal of Deferred Taxes
Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)
Adjusted Net Profit Margin
Adjusted Total Asset Turnover
Adjusted Financial Leverage
Adjusted Return on Equity (ROE)
Adjusted Return on Assets (ROA)

Zoetis Inc., income tax expense (benefit), continuing operations

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Federal	341)	514)	311)	232)	192)
State and local	35)	81)	35)	36)	28)
U.S. tax provision	376)	595)	346)	268)	220)
International	281)	235)	188)	154)	161)
Current income taxes	657)	830)	534)	422)	381)
Federal	(40)	(198)	(84)	(29)	(5)
State and local	25)	(49)	(10)	(14)	(15)
U.S. tax provision	(15)	(247)	(94)	(43)	(20)
International	(46)	(38)	14)	(19)	(60)
Deferred income taxes	(61)	(285)	(80)	(62)	(80)
Provision for taxes on income	596)	545)	454)	360)	301)

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
Current income taxes	Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations.	Zoetis Inc. current income taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.
Deferred income taxes	Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations.	Zoetis Inc. deferred income taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.
Provision for taxes on income	Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Zoetis Inc. provision for taxes on income increased from 2021 to 2022 and from 2022 to 2023.

Zoetis Inc., effective income tax rate (EITR) reconciliation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
U.S. statutory income tax rate	21.00%	21.00%	21.00%	21.00%	21.00%
State and local taxes, net of federal benefits	1.60%	0.90%	0.80%	0.90%	0.60%
Unrecognized tax benefits and tax settlements and resolution of certain tax positions	0.90%	0.10%	0.10%	0.10%	0.50%
Foreign Derived Intangible Income	-0.70%	-0.20%	-1.10%	0.00%	-0.60%
U.S. Research and Development Tax Credit	-0.70%	-0.70%	-0.60%	-0.70%	-0.70%
Share-based payments	-0.30%	-0.60%	-0.90%	-1.30%	-1.00%
Non-deductible/non-taxable items	0.20%	0.10%	0.30%	0.40%	0.40%
Taxation of non-U.S. operations	-0.80%	-0.40%	-1.30%	-1.60%	-3.10%
All other, net	-0.90%	0.30%	-0.10%	-0.80%	-0.40%
Effective tax rate	20.30%	20.50%	18.20%	18.00%	16.70%

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).

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Item	Description	The company
Effective tax rate	Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.	Zoetis Inc. effective tax rate increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Zoetis Inc., components of deferred tax assets and liabilities

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Prepaid/deferred items	72)	192)	109)	64)	42)
Inventories	30)	22)	10)	15)	(1)
Capitalized R&D for tax	224)	111)	—)	—)	—)
Identifiable intangible assets	(154)	(154)	(187)	(237)	(296)
Property, plant and equipment	(199)	(204)	(183)	(168)	(149)
Employee benefits	62)	61)	58)	59)	61)
Restructuring and other charges	(1)	1)	3)	3)	4)
Legal and product liability reserves	12)	14)	14)	15)	14)
Net operating loss/credit carryforwards	133)	112)	132)	127)	118)
Unremitted earnings	(4)	(4)	(7)	(6)	(2)
All other	16)	9)	5)	1)	(1)
Subtotal	191)	160)	(46)	(127)	(210)
Valuation allowance	(131)	(129)	(174)	(157)	(136)
Net deferred tax asset (liability)	60)	31)	(220)	(284)	(346)

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
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.	Zoetis Inc. net deferred tax asset (liability) increased from 2021 to 2022 and from 2022 to 2023.

Zoetis Inc., deferred tax assets and liabilities, classification

US$ in millions

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
	Noncurrent deferred tax assets	206)	173)	100)	94)	88)
	Noncurrent deferred tax liabilities	146)	142)	320)	378)	434)

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
Noncurrent 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.	Zoetis Inc. noncurrent deferred tax assets increased from 2021 to 2022 and from 2022 to 2023.
Noncurrent deferred tax liabilities	Amount, after deferred tax asset, of deferred tax liability attributable to taxable differences, with jurisdictional netting and classified as noncurrent.	Zoetis Inc. noncurrent deferred tax liabilities decreased from 2021 to 2022 but then slightly increased 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: Noncurrent deferred tax assets, net	206)	173)	100)	94)	88)
Total assets (adjusted)	14,080)	14,752)	13,800)	13,515)	11,457)
Adjustment to Total Liabilities
Total liabilities (as reported)	9,295)	10,522)	9,356)	9,836)	8,837)
Less: Noncurrent deferred tax liabilities, net	146)	142)	320)	378)	434)
Total liabilities (adjusted)	9,149)	10,380)	9,036)	9,458)	8,403)
Adjustment to Total Zoetis Inc. Equity
Total Zoetis Inc. equity (as reported)	4,997)	4,405)	4,543)	3,769)	2,708)
Less: Net deferred tax assets (liabilities)	60)	31)	(220)	(284)	(346)
Total Zoetis Inc. equity (adjusted)	4,937)	4,374)	4,763)	4,053)	3,054)
Adjustment to Net Income Attributable To Zoetis Inc.
Net income attributable to Zoetis Inc. (as reported)	2,344)	2,114)	2,037)	1,638)	1,500)
Add: Deferred income tax expense (benefit)	(61)	(285)	(80)	(62)	(80)
Net income attributable to Zoetis Inc. (adjusted)	2,283)	1,829)	1,957)	1,576)	1,420)

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
Net Profit Margin
Reported net profit margin	27.43%	26.16%	26.20%	24.54%	23.96%
Adjusted net profit margin	26.72%	22.64%	25.17%	23.61%	22.68%
Total Asset Turnover
Reported total asset turnover	0.60	0.54	0.56	0.49	0.54
Adjusted total asset turnover	0.61	0.55	0.56	0.49	0.55
Financial Leverage
Reported financial leverage	2.86	3.39	3.06	3.61	4.26
Adjusted financial leverage	2.85	3.37	2.90	3.33	3.75
Return on Equity (ROE)
Reported ROE	46.91%	47.99%	44.84%	43.46%	55.39%
Adjusted ROE	46.24%	41.82%	41.09%	38.88%	46.50%
Return on Assets (ROA)
Reported ROA	16.41%	14.16%	14.65%	12.04%	12.99%
Adjusted ROA	16.21%	12.40%	14.18%	11.66%	12.39%

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 net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Zoetis Inc. adjusted net profit margin ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.
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 adjusted net income divided by adjusted shareholders’ equity.	Zoetis Inc. adjusted ROE improved from 2021 to 2022 and from 2022 to 2023.
Adjusted ROA	A profitability ratio calculated as adjusted 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)
Net income attributable to Zoetis Inc.	2,344)	2,114)	2,037)	1,638)	1,500)
Revenue	8,544)	8,080)	7,776)	6,675)	6,260)
Profitability Ratio
Net profit margin¹	27.43%	26.16%	26.20%	24.54%	23.96%
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis Inc.	2,283)	1,829)	1,957)	1,576)	1,420)
Revenue	8,544)	8,080)	7,776)	6,675)	6,260)
Profitability Ratio
Adjusted net profit margin²	26.72%	22.64%	25.17%	23.61%	22.68%

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 Net profit margin = 100 × Net income attributable to Zoetis Inc. ÷ Revenue
= 100 × 2,344 ÷ 8,544 = 27.43%

² Adjusted net profit margin = 100 × Adjusted net income attributable to Zoetis Inc. ÷ Revenue
= 100 × 2,283 ÷ 8,544 = 26.72%

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Profitability ratio	Description	The company
Adjusted net profit margin	An indicator of profitability, calculated as adjusted net income divided by total revenue.	Zoetis Inc. adjusted net profit margin 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)
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 Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue	8,544)	8,080)	7,776)	6,675)	6,260)
Adjusted total assets	14,080)	14,752)	13,800)	13,515)	11,457)
Activity Ratio
Adjusted total asset turnover²	0.61	0.55	0.56	0.49	0.55

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 ÷ 14,080 = 0.61

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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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets	14,080)	14,752)	13,800)	13,515)	11,457)
Adjusted total Zoetis Inc. equity	4,937)	4,374)	4,763)	4,053)	3,054)
Solvency Ratio
Adjusted financial leverage²	2.85	3.37	2.90	3.33	3.75

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 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
= 14,080 ÷ 4,937 = 2.85

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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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis Inc.	2,283)	1,829)	1,957)	1,576)	1,420)
Adjusted total Zoetis Inc. equity	4,937)	4,374)	4,763)	4,053)	3,054)
Profitability Ratio
Adjusted ROE²	46.24%	41.82%	41.09%	38.88%	46.50%

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 × Adjusted net income attributable to Zoetis Inc. ÷ Adjusted total Zoetis Inc. equity
= 100 × 2,283 ÷ 4,937 = 46.24%

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Profitability ratio	Description	The company
Adjusted ROE	A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity.	Zoetis Inc. adjusted ROE improved from 2021 to 2022 and 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 Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis Inc.	2,283)	1,829)	1,957)	1,576)	1,420)
Adjusted total assets	14,080)	14,752)	13,800)	13,515)	11,457)
Profitability Ratio
Adjusted ROA²	16.21%	12.40%	14.18%	11.66%	12.39%

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 × Adjusted net income attributable to Zoetis Inc. ÷ Adjusted total assets
= 100 × 2,283 ÷ 14,080 = 16.21%

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Profitability ratio	Description	The company
Adjusted ROA	A profitability ratio calculated as adjusted 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 Income Taxes

Income Tax Expense (Benefit)

Effective Income Tax Rate (EITR)

Components of Deferred Tax Assets and Liabilities

Deferred Tax Assets and Liabilities, Classification

Adjustments to Financial Statements: Removal of Deferred Taxes

Zoetis Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Zoetis Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

Adjusted Total Asset Turnover

Adjusted Financial Leverage

Adjusted Return on Equity (ROE)

Adjusted Return on Assets (ROA)