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Microsoft Excel LibreOffice Calc

Zoetis Inc. (NYSE:ZTS)

Analysis of Income Taxes

Advanced level

Income Tax Expense (Benefit)

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

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Federal
State and local
U.S. tax provision
International
Current income taxes
Federal
State and local
U.S. tax provision
International
Deferred income taxes
Provision for taxes on income

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

Item Description The company
Current income taxes Amount of current income tax expense (benefit) pertaining to taxable income (loss) from continuing operations. Zoetis Inc.’s current income taxes decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Deferred income taxes Amount of deferred income tax expense (benefit) pertaining to income (loss) from continuing operations. Zoetis Inc.’s deferred income taxes decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.
Provision for taxes on income Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Zoetis Inc.’s provision for taxes on income decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.

Effective Income Tax Rate (EITR)

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

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
U.S. statutory income tax rate
State and local taxes, net of federal benefits
Unrecognized tax benefits and tax settlements and resolution of certain tax positions
Venezuela revaluation
U.S. Research and Development Tax Credit and U.S. Domestic Production Activities deduction
Share-based compensation
Non-deductible/non-taxable items
Taxation of non-U.S. operations
Annulment of Belgium Excess Profit Ruling
All other, net
Effective tax rate, before impact of the Tax Act and Tax Accounting Method Changes
Impact of the Tax Act
Impact of Tax Accounting Method Changes
Effective tax rate

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

Item Description The company
Effective tax rate, before impact of the Tax Act and Tax Accounting Method Changes Percentage of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations. Zoetis Inc.’s effective tax rate, before impact of the Tax Act and Tax Accounting Method Changes decreased from 2017 to 2018 and from 2018 to 2019.

Components of Deferred Tax Assets and Liabilities

Zoetis Inc., components of deferred tax assets and liabilities

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Prepaid/deferred items
Inventories
Intangibles
Property, plant and equipment
Employee benefits
Restructuring and other charges
Legal and product liability reserves
Net operating loss/credit carryforwards
Unremitted earnings
All other
Subtotal
Valuation allowance
Net deferred tax asset (liability)

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

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.’s net deferred tax asset (liability) decreased from 2017 to 2018 but then increased from 2018 to 2019 not reaching 2017 level.

Deferred Tax Assets and Liabilities, Classification

Zoetis Inc., deferred tax assets and liabilities, classification

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Noncurrent deferred tax assets
Noncurrent deferred tax liabilities

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

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.’s noncurrent deferred tax assets decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.
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.’s noncurrent deferred tax liabilities increased from 2017 to 2018 but then slightly decreased from 2018 to 2019.

Adjustments to Financial Statements: Removal of Deferred Taxes

Zoetis 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)
Less: Noncurrent deferred tax assets, net
Total assets (adjusted)
Adjustment to Total Liabilities
Total liabilities (as reported)
Less: Noncurrent deferred tax liabilities, net
Total liabilities (adjusted)
Adjustment to Total Zoetis Inc. Equity
Total Zoetis Inc. equity (as reported)
Less: Net deferred tax assets (liabilities)
Total Zoetis Inc. equity (adjusted)
Adjustment to Net Income Attributable To Zoetis
Net income attributable to Zoetis (as reported)
Add: Deferred income tax expense (benefit)
Net income attributable to Zoetis (adjusted)

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

Zoetis Inc., Financial Data: Reported vs. Adjusted

Adjusted Financial Ratios: Removal of Deferred Taxes (Summary)

Zoetis Inc., adjusted financial ratios

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net Profit Margin
Reported net profit margin
Adjusted net profit margin
Total Asset Turnover
Reported total asset turnover
Adjusted total asset turnover
Financial Leverage
Reported financial leverage
Adjusted financial leverage
Return on Equity (ROE)
Reported ROE
Adjusted ROE
Return on Assets (ROA)
Reported ROA
Adjusted ROA

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

Financial ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Zoetis Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Zoetis Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.
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.’s adjusted financial leverage ratio increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Zoetis Inc.’s adjusted ROE improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by adjusted total assets. Zoetis Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Zoetis Inc., Financial Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

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 attributable to Zoetis
Revenue
Profitability Ratio
Net profit margin1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis
Revenue
Profitability Ratio
Adjusted net profit margin2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Net profit margin = 100 × Net income attributable to Zoetis ÷ Revenue
= 100 × ÷ =

2 Adjusted net profit margin = 100 × Adjusted net income attributable to Zoetis ÷ Revenue
= 100 × ÷ =

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by total revenue. Zoetis Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

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
Total assets
Activity Ratio
Total asset turnover1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Revenue
Adjusted total assets
Activity Ratio
Adjusted total asset turnover2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Total asset turnover = Revenue ÷ Total assets
= ÷ =

2 Adjusted total asset turnover = Revenue ÷ Adjusted total assets
= ÷ =

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Zoetis Inc.’s adjusted total asset turnover ratio deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Adjusted Financial Leverage

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 assets
Total Zoetis Inc. equity
Solvency Ratio
Financial leverage1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted total assets
Adjusted total Zoetis Inc. equity
Solvency Ratio
Adjusted financial leverage2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

2019 Calculations

1 Financial leverage = Total assets ÷ Total Zoetis Inc. equity
= ÷ =

2 Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Zoetis Inc. equity
= ÷ =

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.’s adjusted financial leverage ratio increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Adjusted Return on Equity (ROE)

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 attributable to Zoetis
Total Zoetis Inc. equity
Profitability Ratio
ROE1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis
Adjusted total Zoetis Inc. equity
Profitability Ratio
Adjusted ROE2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

2019 Calculations

1 ROE = 100 × Net income attributable to Zoetis ÷ Total Zoetis Inc. equity
= 100 × ÷ =

2 Adjusted ROE = 100 × Adjusted net income attributable to Zoetis ÷ Adjusted total Zoetis Inc. equity
= 100 × ÷ =

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by adjusted shareholders’ equity. Zoetis Inc.’s adjusted ROE improved from 2017 to 2018 but then deteriorated significantly 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 attributable to Zoetis
Total assets
Profitability Ratio
ROA1
Adjusted for Deferred Taxes
Selected Financial Data (US$ in millions)
Adjusted net income attributable to Zoetis
Adjusted total assets
Profitability Ratio
Adjusted ROA2

Based on: 10-K (filing date: 2020-02-13), 10-K (filing date: 2019-02-14), 10-K (filing date: 2018-02-15), 10-K (filing date: 2017-02-16), 10-K (filing date: 2016-02-24).

2019 Calculations

1 ROA = 100 × Net income attributable to Zoetis ÷ Total assets
= 100 × ÷ =

2 Adjusted ROA = 100 × Adjusted net income attributable to Zoetis ÷ Adjusted total assets
= 100 × ÷ =

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