Intel Financial Statements and Financial Ratios

Intel: Brief Summary

Intel Incorporated is one of the most sought-after stocks in the world.  The company’s legendary founder, Gordon Moore, is world-renowned.  Intel Inc. continues to innovate and disrupt its industry under the current leadership of Bob Swan. 

These circumstances have resulted in the organization becoming an industry leader.  For some, these facts alone are reason enough to buy stock in the company.

Intel Financial Report Sources

“Intel 2019 Company Analysis: 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 book, the author selected Intel's 2019 10k, 2017 10k annual report, 2016 10k annual report, 2015 10k annual report, and Intel's 2019 10k annual report as the basis for information gathering. 

 

 

Section 1: Intel Income Statement Analyzed

In this section, I walk through a broad definition of 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 Inte's important income statement line item trends from 2015 to 2019, in most cases.

Revenue Growth:  Intel’s revenues ended 2015 at $55 billion.  Over the next five years, the company increased its revenues to approximately 71.9 billion.  This is an average growth rate of about 7%.  However, the slowest annual growth rate was 1.6% from 2018 to 2019.  If this trend continues, then investors should expect the company to initiate cost-cutting measures to best optimize operations to account for slower revenue growth.

SG&A:  The company’s SG&A was 14.3% of revenues in 2015.  In 2019, this line item fell to 8.5% of revenues.  This indicates that the company has taken measures to reduce its overall costs as compared to revenues.  As revenue growth continues to slow, investors should expect this practice to continue.

Intel 2019 Income Statement
Column1	2019	2018	2017	2016	2015
Revenues	71,965	70,848	62,761	59,387	55,355
COGS	29,825	27,111	23,663	23,154	20,676
Gross Profit	42,140	43,737	39,098	36,233	34,679
SG&A	6,150	6,750	7,452	8,377	7,930
Depreciation	200	200	177	294	265
R & D	13,362	13,543	13,035	12,685	12,128
Other
Operating Expenses	20,105	20,421	21,048	23,100	20,677
EBIT	22,035	23,316	18,050	13,133	14,002
Other Income
Interest Expense	484	(126)	349	703	105
EBT	24,058	23,317	20,352	12,936	14,212
Taxes	3,010	2,264	10,751	2,620	2,792
Net Income	21,048	21,053	9,601	10,316	11,420
Tax Rate	12.5%	9.7%	52.8%	20.3%	19.6%

 

Section 2: Intel Balance Sheet Analyzed

For Intel's balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define Intel's balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2015 to 2019.  Next, I then offer a summary analysis of Intel’s important balance sheet line items.

Cash:  Intel’s cash position fell from $15.3 billion in 2015 to $4.2 billion in 2019.  This decrease in cash may indicate that the company is better at using its short-term investment opportunities.  Because the cash level seems to be trending down on an annual basis, and the net income tends to be going up, this indicates that asset reallocation is probably a safe guess.

Short-term Investments:  The organization's short-term investments ended 2015 at $2.7 billion.  Over the next five years, the organization decreases its short-term investments to approximately $1 billion.  This indicates that the company is using its short-term investment reserves for either acquisition or for operations purposes.

Intel 2019 Summary Balance Sheet
Column1	2019	2018	2017	2016	2015
Cash	4,194	3,019	3,433	5,560	15,308
Short Term Investment	1,082	2,788	1,814	3,225	2,682
Account Receivable	7,659	6,722	5,607	4,690	4,784
Inventory	8,744	7,253	6,983	5,553	5,167
Other
Current Assets	31,239	28,787	29,500	35,508	38,320
Net PPE	55,386	48,976	41,109	36,171	31,858
Goodwill	26,276	24,513	24,389	14,099	11,332
Other
Total Assets	136,524	127,963	123,249	113,327	101,459
Accounts Payable	4,128	3,824	2,928	2,475	2,063
Accrued Expense	3,853	3,622	3,526	3,465	3,138
Accrued Taxes
Notes Payable	3,693	1,261	1,776	4,634	2,634
LT Debt - Current
Other
Total Current Liabilities	22,310	16,626	17,421	20,302	15,646
LT Debt	25,308	25,098	25,037	20,649	20,036
Other
Total Liabilities	59,020	53,400	54,230	47,101	40,374
Common Stock	25,261	25,365	26,074	25,373	23,411
Treasury
Retained Earnings	53,523	50,172	42,083	40,747	37,614
Other
Total Equity	77,504	74,563	69,019	66,226	61,085
Total Equity & Liability	136,524	127,963	123,249	113,327	101,459

 

Section 3: Intel Financial Ratios Analyzed

For this section, I have chosen several different financial ratios to review for Intel from 2015 to 2019.  In reviewing each of Intel'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 Intel’s Important Financial ratios. 

Intel Current Ratio

Intel’s current ratio fell from 2.4 in 2015 to 1.4 and 2019.  Also, this decline has been periodic over the last five years.  This shows that the company has taken steps to better utilize its cash.  A cautionary note, if their current ratio falls below 1.0, investors should become concerned about short-term liquidity.

Intel Fixed Asset Turnover

The fixed asset turnover for the firm ended 2015 at 1.74.  Over the next five years, the company’s ratio would steadily fall to 1.3.  This indicates that the company is using its fixed assets less optimally over time.  This problem falls square upon the shoulders of the executive and management team.  To mitigate this issue, the organization should take action to liquidate some fixed assets that are not being fully utilized.

Intel Return on Equity

Intel’s return on equity ended 2015 at 18.7%.  Over the next few years, this would grow to approximately 27.2%.  Their return on equity growth may be spurred by their increased use of debt.  Regardless, as long as their risk is not elevated too much, this is an excellent strategy.

Intel Debt Ratio

Intel’s debt ratio had fallen from 19.75% in 2015 to 18.5% in 2019.  In reviewing technology competitors, their debt ratio seems to be well below average.  A better strategy would be for the organization to take on debt to about a 30 to 40% ratio.  With these additional funds, the company may be able to acquire other companies, payout dividends, or initiate a stock buyback strategy.

Intel Liquidity Ratios 2019
Ratios	2019	2018	2017	2016	2015
Current Ratio	1.40	1.73
Cash Ratio	0.19	0.18
Quick Ratio	1.01	1.30
Net Working Capital	12,616	9,548
Intel Asset Utilization 2019
Ratios	2019	2018	2017	2016	2015
Total Asset Turnover	0.53	0.55
Fixed Asset Turnover	1.30	1.45
Days Sales Outstanding	38.85	34.63
Inventory Turnover	8.23	9.77
Accounts Receivable Turnover	9.40	10.54
Working Capital Turnover	5.70	7.42
AP Turnover	17.43	18.53
Average Days Inventory	0.02	0.03
Average Days Payable	0.05	0.05
Intel Profitability Ratios 2019
Ratios	2019	2018	2017	2016	2015
Return on Assets	15.42%	16.45%
Return on Equity	27.16%	28.24%
Net Profit Margin	29.25%	29.72%
Gross Profit Margin	58.56%	61.73%
Operating Profit Margin	30.62%	32.91%
Basic Earning Power	16.14%	18.22%
ROCE	19.29%	20.94%
Capital Employed	114,214	111,337
ROIC	28.35%	35.97%
Market Measures
Price/Earning Ratio	#DIV/0!
Earnings per common Share	-	-	-	-	-
Dividend Payout
MVA
EVA
Intel Long-term Debt 2019
Ratios	2019	2018	2017	2016	2015
Debt Ratio	18.54%	19.61%
Debt/Equity	32.65%	33.66%
Times Interest Earned	45.53	(185.05)