Berkshire Hathaway Financial Report: Financial Ratios and Statements Analyzed

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Hey All,

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!

Sincerely,

Paul, MBA.

Berkshire Hathaway Financial Report by Paul Borosky, MBA.
  • Company Report comes with a 7-day Limited 100% MONEY BACK GUARANTEE.
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Sample Financial Report

Sample Financial Report by Paul Borosky, MBA.
Financial Report Sample 2

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.

Revenue Growth

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.

SG&A

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

Column1 2019 2018 2017 2016 2015
Revenues                  327,223                  225,382                  242,061                  223,604                    210,943
COGS                  122,477                  122,128                  118,374                  121,948                    114,679
Gross Profit                  204,746                  103,254                  123,687                  101,656                      96,264
SG&A                    30,618                    29,879                    29,961                    44,411                      42,959
Depreciation                    10,064                      9,779                      9,188                      8,901                        7,779
R & D                            -                            -                            -                            -                             -
Other                            -                            -                            -                            -                             -
Operating Expenses                  225,703                  219,214                  221,237                  190,860                    175,875
EBIT                  106,657                      7,854                    28,224                    34,522                      35,808
Other Income                            -                            -                            -                            -                             -
Interest Expense                      3,961                      3,853                      4,386                         855                           862
EBT                  102,696                      4,001                    23,838                    33,667                      34,946
Taxes                    20,904                        (321)                   (21,515)                      9,240                      10,532
Net Income                   81,417                     4,021                   44,940                   24,427                    24,414

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.

Cash.

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.

Accounts Receivable.

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

Column1 2019 2018 2017 2016 2015
Cash                      64,175                  30,361                  31,583                  28,048                  71,730
Short Term Investment                    330,534                274,161                263,894                205,605                162,747
Account Receivable                      49,945                  47,844                  42,326                  40,397                  36,075
Inventory                      19,852                  19,069                  16,187                  15,727                  11,916
Other                         -                         -                         -                         -
Current Assets                  464,506              371,435              353,990              289,777              282,468
Net PPE                    159,276                152,408                158,219                152,773                145,166
Goodwill                      81,882                  81,025                  81,258                  79,486                  62,708
Other                              -                         -                         -                         -                         -
Total Assets                  817,729              707,794              702,095              620,854              552,257
Accounts Payable                      42,319                  37,186                  35,903                  35,042                  31,271
Accrued Expense
Accrued Taxes                      66,799                  51,375                  56,607                  77,442                  63,126
Notes Payable                    103,368                  97,490                102,587                101,644                  84,289
LT Debt - Current                              -                         -                         -                         -                         -
Other                              -                         -                         -                         -                         -
Total Current Liabilities                    212,486                186,051                195,097                214,128                178,686
LT Debt                              -                         -                         -                         -                         -
Other                    176,680                169,243                155,044                121,298                114,944
Total Liabilities                  389,166              355,294              350,141              335,426              293,630
Common Stock                      35,666                  35,715                  35,702                  35,689                  35,628
Treasury                        8,125                    3,109                    1,763                    1,763                    1,763
Retained Earnings                    402,493                321,112                255,786                210,846                187,703
Other                              -                         -                         -                         -                         -
Total Equity                  428,563              352,500              351,954              285,428              258,627
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

Ratios 2019 2018 2017 2016 2015
Current Ratio                           2.19                    2.00
Cash Ratio                           0.30                    0.16
Quick Ratio                           2.09                    1.89
Net Working Capital                       24,854                  8,713

Berkshire Hathaway Asset Utilization

Ratios 2019 2018 2017 2016 2015
Total Asset Turnover                           0.40                    0.32
Fixed Asset Turnover                           2.05                    1.48
Days Sales Outstanding                         55.71                  77.48
Inventory Turnover                         16.48                  11.82
Accounts Receivable Turnover                           6.55                    4.71
Working Capital Turnover                         13.17                  25.87
AP Turnover                           7.73                    6.06
Average Days Inventory                           0.05                    0.03
Average Days Payable                           0.02                    0.02

Berkshire Hathaway Profitability Ratios

Ratios 2019 2018 2017 2016 2015
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%
ROCE 17.62% 1.51%
Capital Employed                     605,243              521,743
ROIC 46.13% 5.27%

Berkshire Hathaway Long-term Debt

Ratios 2019 2018 2017 2016 2015
Debt Ratio 0.00% 0.00%
Debt/Equity 0.00% 0.00%
Times Interest Earned                         26.93                    2.04