22 [24 marks] Honeywell International Inc. (Nasdaq: HON) is a U.S. based, multinational software-industrial company that provides technology solutions. Its key competitors include but are not limited to: Raytheon Technologies, 3M, Siemens, Schneider Electric, MSA Safety Incorporated, and Rockwell Automation. You are provided with supplementary pdf and Excel documents containing extracts from markets.ft.com and from the company's 2021 and 2018 Annual Reports (Form 10-K). Refer to the information in the supplementary documents and below in answering this question. Note: Write all figures, except for per share data, in the unit of million. For example, Net income for fiscal year 2021 should be written as 5,610, ie., as reported in the financial statements because it is reported in the unit of million (dollars). The number of shares data is also reported in the unit of million. Show major steps of computation and indicate the data inputs used; for repeated calculations, show at least one illustrative calculation. State any assumption necessary for carrying out your analysis and explain the basis of the assumption. Required: i. Prepare a vertical analysis to understand the yearly changes in the composition of segment capital expenditures over the period from 2018 to 2020 (i.e., between 2018 and 2019 and between 2019 and 2020). Based on the analysis result, is there anything worth a mention? Describe your observation. [9 marks] ii. Does the analysis result in part (i) suggest any relation with the yearly changes in the segment turnover over the same period? Explain your view clearly. [15 marks] AutoSave OF Z Home Insert Draw Page Layout Poste Calibri B I U v A1 * x fx B BS2203 - Financial Analysis Exam2022_Suppl_Extracts from Honeywell 2021,2018 10K (1) Formulas Data Review View Tell me Share Comments v 11 ' ' Wrap Text General Insert xDelete W A Merge & Centre E %" 00 Conditional Format Cell Formatting as Table Styles Sort & Format v v Filter Find & Select Ideas Sensitivity D E F G H I . K L M N 0 P Q R 5 T U V Vi x Y Z AA FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA A 1 2 3 4 5 6 7 Net Sales 8. Products 10 Services 11 Total 12 Honeywell Building Technologies 13 Products Years Ended December 31, 2021 $ 6,158 4,868 11,026 4,098 1,441 5,539 14 Services 15 Total 16 Performance Materials and Technologies 17 Products 18 Services 8,008 2,005 10,013 19 Total 20 Safety and Productivity Solutions 21 Products 22 Services 23 Total 24 Corporate and All Other 25 Services 26 Total 27 28 Depreciation and amortization 20 30 Honeywell Building Technologies 31 Performance Materials and Technologies 32 Safety and Productivity Solutions 33 Corporate and All Other 34 35 Segment Profit 36 Aerospace 37 Honeywell Building Technologies 38 Performance Materials and Technologies 39 Safety and Productivity Solutions 40 Corporate and All Other 7,379 435 7,814 $ 34,392 $ 278 67 454 237 102 $ 1,138 $ 3,051 1,238 2,120 1,029 (226) $ 7,212 2020 2019 (256) - - 7,194 41 42 43 44 4 2021 IS 2021 BS 2021 CFS 2021 SSE 2021 Segment p. 110 2021 Segment p. 111 2018 Segment p. 91 + # 100% Common stock, par value Additional paid-in capital Beginning balance FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA HONEYWELL INTERNATIONAL INC. CONSOLIDATED STATEMENT OF SHAREOWNERS' EQUITY Years Ended December 31, Issued for employee savings and option plans Stock-based compensation expense Impect of Quantinuum contribution Encing balance Treasury stock Beginning balance 2021 Shares $ 957.6 2020 Shares $ 2019 Shares $ (in millions, except per share amounts) 959 958 957.6 957.6 958 7,292 6.876 184 248 6,452 271 217 169 153 448 8.141 7,292 6,876 (250.8) (27229) 1246.5) Reacquired stock or repurchases of common stock 115.81 Issued for employee savings and option plans 38 (3.390) 147 Encing balance 1272.81 130,462) [20.7) 64 (260.8) (23,835) (3.714 321 27,229 (2280) (26.5) 80 (246.51 (19.771) 14,400) 335 123,836) Retained eamings Beginning balance 39,905 37,693 Net income attributable to Honeywell 5,542 4,779 33,978 6,143 Dividends on common stock 12,620) 12,567 (2,428) Encing balance 42,827 39.905 37.693 Accumulated other comprehensive Income (loss) Beginning belence 3,377) (3,197) (3.437) Foreign exchange translation adjustment 302 1214 143 Pensions and other postretirement benefit edjustments 186 74 66 Changes in fair value of avaliable for sale Investments (31 4 Changes in fair value of cash flow hedges (3) (44) 11 Encing balance (2,895) (3,377) 3,197) Noncontrolling interest Beginning balance 241 212 178 Acquisitions, divestitures, and other 397 151 (3) Net income attributable to noncontrolling interest 68 85 87 Foreign exchange translation adjustment (4) 3 (5) Dividends paid Contributions from noncontrolling interest holders Encing balance Total shareowners' equity Cash dividends per share of common stock (33) 4 673 241 684.8 19,242 696.8 17,790 711.1 $ 3.770 $ 3.630 212 18,706 $3.360 (54 145) FINANCIAL STATEMENTS AN HONEYWELL INTERNATIONAL INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in tables in millions, except per share amounts) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIE ACCOUNTING PRINCIPLES The financial statements and accompanying notes are prepared in accordance with accounting principles ger United States of America. The following is a description of Honeywell's significant accounting policies. PRINCIPLES OF CONSOLIDATION The Consolidated Financial Statements include the accounts of Honeywell International Inc. and all of its subs which a controlling Interest is maintained. The Company's consolidation policy requires equity investme exercises significant influence over but do not control the investee end are not the primary beneficiary of the be accounted for using the equity method. Investments through which the Company is not able to exercise sig the Investee and which the Company does not have readily determinable fair values are accounted for unde Intercompany transactions and balances are eliminated in consolidation. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to the current year presentation. RECENT ACCOUNTING PRONOUNCEMENTS The Company considers the applicability and impact of all Accounting Standards Updates (ASUS) issued by th Standards Board (FASB). ASUS not listed below were assessed and determined to be either not applicable of minimal impact on the Company's consolidated statement of operations, balance sheet and cash flows (0 Statements). In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. The standard" changes in various subtopics of accounting for income taxes including, but not limited to, accounting for "hy basis step-up in goodwill obtained in a transaction that is not a business combination, intraperiod tax a Incremental approach, ownership changes in investments, interim-period accounting for enacted changes in date loss limitation in Interim-period tax accounting. Effective January 1, 2021, the Company adopted this star this standard did not have a material impact on the Company's Consolidated Financial Statements. In March 2020, the FASB issued ASU 2020-04, Reference Rule Reform (Topic 848): Facilitation of the Effe Reform on Financial Reporting, which provides optional expedients and exceptions for applying generally principles to contracts, hedging relationships, and other transactions affected by the transition away from ref to be discontinued to alternative reference rates. In January 2021, the FASB issued ASU 2021-01, Referend 848): Scope, to expand the scope of this guidance to include derivatives. The guidance was effective upon applied prospectively to contract modifications made and hedging relationships entered into on or before Do Company will apply the guidance to Impacted transactions during the transition period. The Company does n of this standard to have a material impact on the Company's Consolidated Financial Statements. In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805) - Accounting for Contros Liabilities from Contracts with Customers, which requires contract assets and contract liabilities acquired in a to be recognized and measured by the acquirer on the acquisition date in accordance with ASC 606, Reven Customers. This ASU should be applied prospectively to acquisitions occurring on or after the effective cate and early adoption is permitted. The Company is currently evaluating the impacts of this guidance on the Co Financial Statements. The Company does not expect the adoption of this standard to have a meterial imp Consolidated Financial Statements. rospace, Honeywell Building Technologies, e remainder of Honeywell's operations is ncial information related to our segments is tements. The major products and services, tomers, uses and key competitors of each of FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA HONEYWELL INTERNATIONAL INC. CONSOLIDATED STATEMENT OF OPERATIONS Product sales Service sales Net sales Costs, expenses and other Years Ended December 31, 2021 2020 (Dollars in millions, 2019 except per share amounts) $25,643 $24,737 $27,629 8,749 7,900 9,080 34,392 32,637 36,709 Cost of products sold 18,344 17,638 19,269 Cost of services sold 5,050 4,531 5,070 23,394 22,169 24,339 Selling, general and administrative expenses 4,798 4,772 5,519 Other (Income) expense (1,378) (675) (1,065) Interest and other financial charges 343 359 357 27,157 26,625 29,150 Income before taxes Tax expense 7,235 6,012 7,559 1,625 1,147 1,329 Net Income 5,610 4,865 6,230 Less: Net income attributable to the noncontrolling interest 68 86 87 Net income attributable to Honeywell $ 5,542 $ 4,779 $ 6,143 Earnings per share of common stock-basic $ 8.01 $ 6.79 $ 8.52 Earnings per share of common stock-assuming dilution $ 7.91 $ 6.72 $ 8.41 HONEYWELL INTERNATIONAL INC. CONSOLIDATED BALANCE SHEET HONEYWELL INTERNATIONAL INC. CONSOLIDATED STATEMENT OF CASH FLOWS FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA December 31, 2021 2020 (Dallas in millions) Cash flows from operating activities: Net income Years Ended December 31, 2021 2019 2020 (Dollars in millions) $5.610 5230 R E= $10.959 Less: Net income attributable to the noncontrolling interest Net income attributable to Honeywel Adjustments to recente e come attributable to Honeywell to net cash prodded by operating act Depreciation Amortization (Cain) loss on sale of non-strategic business and assets Repositioning and other charges Net payments for repositioning and other charges Pension and other postretirement Income Pension and other postaremat bant payments Stock comparation par Deferred Income taxes Reimbursement receivables charge Other Changes in assets and leblities, net of the effects of acquisitions and divestitures: Accounts receivable Inventories Other current a Accounts payable Accrued leblities Net cash provided by (used for) operating activities Cash flows from investing activities Expenditures for property, planted equipment Proceeds from disposals of property, plant and equipmen Increase in investments Decrease in investments Receipts from Garrett Motion Inc. Receipts payments) from settlements of derivative contracts Cash paid for acquisitions, nat of cash acquired Proceeds from sales of businesses, net of fees paid Net cash provided by (used for) investing activities Cash flows from financing activities: Proceeds from issuance of commercial paper and other short-term borrowings Payments of commercial paper and other short-term borrowings Proceeds from issuance of common stock Proceeds from issuance of long-term debt Payments of long term debt Repurchases of common stock Cash dividends seld ASSETS Curs: Cash and cresh equivalent Short-mismana Accounts receivable, less allowances of $177 and $202, respectively Inventories Other current assets Total current sets Investments and long-term receive Property, plant and equipment not Goodwil Other intangible assets-net Insurance cries for asbestos related bites Deferred Income taxes Other s LIABLITIES Total assets Current Tables: Accounts payable Commercial paper and other short-term bawings Current matures of long-term debe Accrued liabilities Total current liabilities Long-term ciebt Deered income Pestretament benefit obligations other than pensions Asbestos related lates Other abilities Redeemable noncontrolling interest SHAREOWNERS' EQUITY Caphal-common stock issued -additional paid-in capital Common stock held in treasury, at cost Accumulated other comprehensive income (loss) Retained earnings Noncontrolling Interest Total Honeywell shareowners' equity Total shareowners' equity Total liabilities, redeemable noncontrolling interest and shareowners' equity 6,484 564 6,830 1881 25,372 1222 5.562 17.756 3221 489 10.134 $64,470 1,803 7,679 19,508 14.254 2,364 208 1,800 7.087 958 130,4621 42,827 18,569 673 19,242 $64,470 Net cash provided by (used for) financing activities Effect of foreign exchange rate changes on cash and cash equivalents Not increase (decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period The Notes to Consolidated Financial Statements are an integral pert of this statement. The Notes to Consolidated Financial Statements are an integral part of this statement. Honeywell International Inc. 55 56 Honeywell Intemational Inc