Berkshire Hathaway Financial Report: Financial Ratios and Statements Analyzed
Thanks for visiting my Berkshire Hathaway Financial Report page. On this page, you will be able to find preliminary information about Berkshire Hathaway current financial performance as well as some historical track records and trends.
For a more detailed examination of Berkshire Hathaway's financial performance, please check out the "Financial Report". In this report, written by myself, Paul Borosky, MBA., Doctoral Candidate, and published author, you will find:
- Summarized income statement for the last 5 years.
- Summarized balance sheet for the last 5 years.
- Summary analysis by myself of important income statement, balance sheet, and financial ratio trends and other happenings.
- Five year’s worth of over twenty common financial ratios presented with formulas, calculations, and analysis tips for each ratio.
- Line by line description, explanation, and analysis tip for most financial statement line items and financial ratios.
- Professional financial analysis tips provided in each section to help YOU conduct your OWN financial analysis!
- Each section includes an “in other words” segment. This is were I use plain English to explain concepts.
Enjoy the preliminary information and for a more detailed analysis, buy the financial report!
- Company Report comes with a 7-day Limited 100% MONEY BACK GUARANTEE.
- Free Bonus Downloads: Annual Statements for the Last Five Years (10k reports)!
Sample Financial Report
Berkshire Hathaway: Brief Summary
Berkshire Hathaway Inc. is the traditional business conglomerate that holds ownership stake or full ownership of a multitude of companies. Some of the companies and industries may include insurance, freight railroad transportation, furniture, and even food services. The company’s headquarters is located at 3555 Farnam St. in Omaha, Nebraska. Their defining industry in which they compete would be the insurance industry. Specifically, the financial services sector. As of this writing, Berkshire Hathaway has approximately 391,000 employees working for them.
From a financial perspective, Berkshire Hathaway has two different types of stocks, which are stock A and stock B. For this report, we will focus on the stock price for stock B. At present, the stock price is $187.46. The market share for the company is approximately $455 billion. The beta is .88. This indicates that Berkshire Hathaway, as compared to the overall market, is slightly less risky. Their 52-week stock price range has fluctuated between $159.50 to $231.61. In the last five years, the organization has not paid out any dividends. This indicates that the company is continually able to find investments that will reap rewards for investors.
Berkshire Hathaway Financial Report Sources
“Berkshire Hathaway 2019 Financial Report: Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan. In this report, I used Berkshire's 2018 10k, Berkshire's 2017 10k annual report, Berkshire's 2016 10k annual report, Berkshire's 2015 10k annual report, and Berkshire's 2019 10k annual report as the basis for information gathering.
Section 1: Berkshire Hathaway Income Statement Analyzed 2015 to 2019
In this section, I walk through a broad definition as to what an income statement is and why it is important. From this, I then discuss and define income statement line items, such as revenues, gross profits, etc. in detail. After each line item is defined and discussed, I finally offer a summary analysis of Berkshire Hathaway's important income statement line item trends from 2015 to 2019, in most cases.
In 2015, Berkshire Hathaway had revenues of approximately $110.9 billion. In the next four years, the organization would increase the revenues to about $327.2 billion. On average, this is approximately a 13.1% growth annually. For a mature company such as this, this growth rate is exceptional, to say the least. Further, because of the substantial historical track record for the company, investors should expect this growth rate to continue into the foreseeable future. However, a caveat for this would be if, goodness forbid, the demise of Warren Buffett comes to pass. In this case, substantial volatility should be expected due to the change in leadership.
Berkshire Hathaway’s SG&A has declined over the last five years. In 2015, there SG&A was approximately $42.9 billion. In the next several years, this would decline to $30.6 billion. There are some takeaways that investors may have from this activity. First, this shows that when the organization takes over a company, one of the first activities may be to significantly reduce their overhead. This helps to take a struggling company to profitability in short order. Also, this may indicate that the firm’s executive team realizes that their overhead was substantially higher than needed. From this, internal structuring took place to significantly mitigate the overhead.
Berkshire Hathaway Summary Income Statement 2019
|R & D||-||-||-||-||-|
Section 2: Berkshire Hathaway Balance Sheet Analyzed from 2015 to 2019
For the Berkshire Hathaway balance sheet, I again go through each important line item from the balance sheet. In reviewing each line item, I will define Berkshire Hathaway's balance sheet line items, such as cash, property, plant and equipment, and liabilities between 2015 to 2019. Next, I then offer a summary analysis of Berkshire Hathaway's important balance sheet line items.
Berkshire Hathaway’s cash position ended 2015 at approximately $71.7 billion. This is a substantial cash position for a mature company. In the next year, 2016, the cash position would fall to $28 billion. This indicates that the firm either move some cash from their cash account to short-term investments. Also, this may indicate that the firm embarked on a substantial investment in another company. In the subsequent years, from 2017 to 2019, the organization would continually grow its cash position back up to $64.1 billion in 2019. This may indicate that the firm has not made any more substantial purchases since its 2016 endeavor.
As for Accounts Receivable, the organization ended 2015 with approximately $36 billion in accounts receivable. This was about 17% of sales. In 2016, Berkshire Hathaway’s accounts receivable increased to $40.4 billion. This was approximately 18.1% of sales. In the next three years, the firm would eventually substantially increase their Accounts Receivable to approximately $49.9 billion. However, this is only 15.3% of sales. This shows that the company was able to grow the revenues at a faster pace as compared to Accounts Receivable.
Berkshire Hathaway's Summary Balance Sheet 2019
|Short Term Investment||330,534||274,161||263,894||205,605||162,747|
|LT Debt - Current||-||-||-||-||-|
|Total Current Liabilities||212,486||186,051||195,097||214,128||178,686|
|Total Equity & Liability||817,729||707,794||702,095||620,854||552,257|
Section 3: Berkshire Hathaway Financial Ratios Analyzed from 2015 to 2019
For this section, I have chosen several different financial ratios to review for Berkshire Hathaway from 2015 to 2019. In reviewing each of Berkshire Hathaway's financial ratios, I first start with defining the financial ratio. Next, I supply the financial formula for calculating the specific ratio. Finally, I offer a brief analysis of Berkshire Hathaway's Important Financial ratios.
Berkshire Hathaway Current Ratio:
Berkshire Hathaway’s current ratio ended 2015 at 1.58. This indicates that the company has enough cash, and other current assets, to cover its current liabilities for the next 12 months. Further, in the next four years, the organization would substantially increase the cash ratio to 2.19. This indicates that the firm has too much cash on hand. A better strategy would be for the company to move some of its cash into short-term investments. Or, here’s a thought, how about paying out some dividends to investors that have been loyal for a decade or several decades for that matter.
Berkshire Hathaway Total Asset Turnover:
In 2015, Berkshire Hathaway ended 2015 with a total asset turnover of approximately .38. In the next three years, the company would substantially reduce their total asset turnover to .32 in 2018. This decline indicates that the company is underutilizing its assets continuously. A better strategy would be to divest some fixed assets to improve this ratio. Or, by paying out dividends, the firm may also be able to improve its total asset turnover.
Berkshire Hathaway Fixed Asset Turnover:
Berkshire Hathaway ended 2015 with a 1.45 fixed asset turnover. In the next several years, the organization would continually improve its fixed asset turnover resulting in a 2.05 ratio in 2019. This shows that the company is continually improving the usage of their fixed assets. Also, this shows that the company is underutilizing its cash position substantially.
Berkshire Hathaway Return on Assets:
Berkshire Hathaway’s return on asset ended 2015 at 4.4%. In the next three years, the return on assets would fluctuate between 6.4% in 2017 to .57% in 2018. In 2019 though, the company would substantially improve the return on assets to about 10%. This shows that the firm has struggled to find business models that are optimal regarding the usage of their assets. If the organization is able to maintain a 10% return on assets are better, then investors may be able to rest assured that a workable business model was identified. Until this happens, expect significant fluctuation with this financial ratio.
Berkshire Hathaway Return on Equity:
In 2015, Berkshire Hathaway ended with 9.44% in its return on equity financial ratio calm. In the next year, their return on equity would fall slightly to 8.56%. In the next two years, this ratio fluctuating between 12.77% and 1.44%. Again, in 2019, the company seems to have attained workable business models to ensure an adequate return on equity, which resulted in a 19% return on equity. As with the return on assets, if the company is able to maintain a 19% return on equity is higher, then investors may feel confident with management’s new direction.
Berkshire Hathaway Debt ratio.
Berkshire Hathaway, in my financial model, which uses only long-term or short-term debt, identified no debt for the organization. This shows that the company is missing out on tax and other opportunities for utilizing debt. However, a benefit for no debt would be that the organization has little risk of insolvency.
Berkshire Hathaway Liquidity Ratios
|Net Working Capital||24,854||8,713|
Berkshire Hathaway Asset Utilization
|Total Asset Turnover||0.40||0.32|
|Fixed Asset Turnover||2.05||1.48|
|Days Sales Outstanding||55.71||77.48|
|Accounts Receivable Turnover||6.55||4.71|
|Working Capital Turnover||13.17||25.87|
|Average Days Inventory||0.05||0.03|
|Average Days Payable||0.02||0.02|
Berkshire Hathaway Profitability Ratios
|Return on Assets||9.96%||0.57%|
|Return on Equity||19.00%||1.14%|
|Net Profit Margin||24.88%||1.78%|
|Gross Profit Margin||62.57%||45.81%|
|Operating Profit Margin||32.59%||3.48%|
|Basic Earning Power||13.04%||1.11%|
Berkshire Hathaway Long-term Debt
|Times Interest Earned||26.93||2.04|