Fortinet, Inc. 10-K form for the fiscal year ended 2023-12-31, page 71: FORTINET, INC. 

CONSOLIDATED BALANCE SHEETS

(in millions, except per share amounts)

|    |                                                                                                                                                            |                  |         |                  |           |    |         |
|---:|:-----------------------------------------------------------------------------------------------------------------------------------------------------------|:-----------------|:--------|:-----------------|:----------|:---|:--------|
|  1 |                                                                                                                                                            | December 31,2023 |         | December 31,2022 |           |    |         |
|  2 | ASSETS                                                                                                                                                     |                  |         |                  |           |    |         |
|  3 | CURRENT ASSETS:                                                                                                                                            |                  |         |                  |           |    |         |
|  4 | Cash and cash equivalents                                                                                                                                  | $                | 1,397.9 |                  |           | $  | 1,682.9 |
|  5 | Short-term investments                                                                                                                                     | 1,021.5          |         |                  | 502.6     |    |         |
|  6 | Marketable equity securities                                                                                                                               | 21.0             |         |                  | 25.5      |    |         |
|  7 | Accounts receivable-Net of allowance for credit losses of $8.2 million and $3.6 million at December 31, 2023 and 2022, respectively                        | 1,402.0          |         |                  | 1,261.7   |    |         |
|  8 | Inventory                                                                                                                                                  | 484.8            |         |                  | 264.6     |    |         |
|  9 | Prepaid expenses and other current assets                                                                                                                  | 101.1            |         |                  | 73.1      |    |         |
| 10 | Total current assets                                                                                                                                       | 4,428.3          |         |                  | 3,810.4   |    |         |
| 11 | LONG-TERM INVESTMENTS                                                                                                                                      | -                |         |                  | 45.5      |    |         |
| 12 | PROPERTY AND EQUIPMENT-NET                                                                                                                                 | 1,044.4          |         |                  | 898.5     |    |         |
| 13 | DEFERRED CONTRACT COSTS                                                                                                                                    | 605.6            |         |                  | 518.2     |    |         |
| 14 | DEFERRED TAX ASSETS                                                                                                                                        | 868.8            |         |                  | 569.4     |    |         |
| 15 | GOODWILL                                                                                                                                                   | 126.5            |         |                  | 128.0     |    |         |
| 16 | OTHER INTANGIBLE ASSETS-NET                                                                                                                                | 35.3             |         |                  | 56.0      |    |         |
| 17 | OTHER ASSETS                                                                                                                                               | 150.0            |         |                  | 202.0     |    |         |
| 18 | TOTAL ASSETS                                                                                                                                               | $                | 7,258.9 |                  |           | $  | 6,228.0 |
| 20 | LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                      |                  |         |                  |           |    |         |
| 21 | CURRENT LIABILITIES:                                                                                                                                       |                  |         |                  |           |    |         |
| 22 | Accounts payable                                                                                                                                           | $                | 204.3   |                  |           | $  | 243.4   |
| 23 | Accrued liabilities                                                                                                                                        | 423.7            |         |                  | 266.3     |    |         |
| 24 | Accrued payroll and compensation                                                                                                                           | 242.3            |         |                  | 219.4     |    |         |
| 25 | Deferred revenue                                                                                                                                           | 2,848.7          |         |                  | 2,349.3   |    |         |
| 26 | Total current liabilities                                                                                                                                  | 3,719.0          |         |                  | 3,078.4   |    |         |
| 27 | DEFERRED REVENUE                                                                                                                                           | 2,886.3          |         |                  | 2,291.0   |    |         |
| 28 | LONG-TERM DEBT                                                                                                                                             | 992.3            |         |                  | 990.4     |    |         |
| 29 | OTHER LIABILITIES                                                                                                                                          | 124.7            |         |                  | 149.8     |    |         |
| 30 | Total liabilities                                                                                                                                          | 7,722.3          |         |                  | 6,509.6   |    |         |
| 31 | COMMITMENTS AND CONTINGENCIES (Note 12)                                                                                                                    |                  |         |                  |           |    |         |
| 32 | STOCKHOLDERS' DEFICIT:                                                                                                                                     |                  |         |                  |           |    |         |
| 33 | Common stock, $0.001 par value-1,500.0 shares authorized; 761.0 shares and 781.5 shares issued and outstanding at December 31, 2023 and 2022, respectively | 0.8              |         |                  | 0.8       |    |         |
| 34 | Additional paid-in capital                                                                                                                                 | 1,416.4          |         |                  | 1,284.2   |    |         |
| 35 | Accumulated other comprehensive loss                                                                                                                       | (18.9)           |         |                  | (20.2)    |    |         |
| 36 | Accumulated deficit                                                                                                                                        | (1,861.7)        |         |                  | (1,546.4) |    |         |
| 37 | Total stockholders' deficit                                                                                                                                | (463.4)          |         |                  | (281.6)   |    |         |
| 40 | TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                                                                                | $                | 7,258.9 |                  |           | $  | 6,228.0 |
See notes to consolidated financial statements.
71




, Fortinet, Inc. 10-K form for the fiscal year ended 2023-12-31, page 72: FORTINET, INC. 

CONSOLIDATED STATEMENTS OF INCOME

(in millions, except per share amounts)

|    |                                                                                              |                         |         |         |    |         |         |    |         |
|---:|:---------------------------------------------------------------------------------------------|:------------------------|:--------|:--------|:---|:--------|:--------|:---|:--------|
|  1 |                                                                                              | Year Ended December 31, |         |         |    |         |         |    |         |
|  2 | 2023                                                                                         |                         | 2022    | 2021    |    |         |         |    |         |
|  3 | REVENUE:                                                                                     |                         |         |         |    |         |         |    |         |
|  4 | Product                                                                                      | $                       | 1,927.3 |         | $  | 1,780.5 |         | $  | 1,255.0 |
|  5 | Service                                                                                      | 3,377.5                 |         | 2,636.9 |    |         | 2,087.2 |    |         |
|  6 | Total revenue                                                                                | 5,304.8                 |         | 4,417.4 |    |         | 3,342.2 |    |         |
|  7 | COST OF REVENUE:                                                                             |                         |         |         |    |         |         |    |         |
|  8 | Product                                                                                      | 763.6                   |         | 691.3   |    |         | 487.7   |    |         |
|  9 | Service                                                                                      | 473.6                   |         | 393.6   |    |         | 295.3   |    |         |
| 10 | Total cost of revenue                                                                        | 1,237.2                 |         | 1,084.9 |    |         | 783.0   |    |         |
| 11 | GROSS PROFIT:                                                                                |                         |         |         |    |         |         |    |         |
| 12 | Product                                                                                      | 1,163.7                 |         | 1,089.2 |    |         | 767.3   |    |         |
| 13 | Service                                                                                      | 2,903.9                 |         | 2,243.3 |    |         | 1,791.9 |    |         |
| 14 | Total gross profit                                                                           | 4,067.6                 |         | 3,332.5 |    |         | 2,559.2 |    |         |
| 15 | OPERATING EXPENSES:                                                                          |                         |         |         |    |         |         |    |         |
| 16 | Research and development                                                                     | 613.8                   |         | 512.4   |    |         | 424.2   |    |         |
| 17 | Sales and marketing                                                                          | 2,006.0                 |         | 1,686.1 |    |         | 1,345.7 |    |         |
| 18 | General and administrative                                                                   | 211.3                   |         | 169.0   |    |         | 143.5   |    |         |
| 19 | Gain on intellectual property matter                                                         | (4.6)                   |         | (4.6)   |    |         | (4.6)   |    |         |
| 20 | Total operating expenses                                                                     | 2,826.5                 |         | 2,362.9 |    |         | 1,908.8 |    |         |
| 21 | OPERATING INCOME                                                                             | 1,241.1                 |         | 969.6   |    |         | 650.4   |    |         |
| 22 | INTEREST INCOME                                                                              | 119.7                   |         | 17.4    |    |         | 4.5     |    |         |
| 23 | INTEREST EXPENSE                                                                             | (21.0)                  |         | (18.0)  |    |         | (14.9)  |    |         |
| 24 | OTHER EXPENSE-NET                                                                            | (6.1)                   |         | (13.5)  |    |         | (11.6)  |    |         |
| 25 | INCOME BEFORE INCOME TAXES AND LOSS FROM EQUITY METHOD INVESTMENTS                           | 1,333.7                 |         | 955.5   |    |         | 628.4   |    |         |
| 26 | PROVISION FOR INCOME TAXES                                                                   | 143.8                   |         | 30.8    |    |         | 14.1    |    |         |
| 27 | LOSS FROM EQUITY METHOD INVESTMENTS                                                          | (42.1)                  |         | (68.1)  |    |         | (7.6)   |    |         |
| 28 | NET INCOME INCLUDING NON-CONTROLLING INTERESTS                                               | 1,147.8                 |         | 856.6   |    |         | 606.7   |    |         |
| 29 | LESS: NET LOSS ATTRIBUTABLE TO NON-CONTROLLING INTERESTS, NET OF TAX                         | -                       |         | (0.7)   |    |         | (0.1)   |    |         |
| 30 | NET INCOME ATTRIBUTABLE TO FORTINET, INC.                                                    | $                       | 1,147.8 |         | $  | 857.3   |         | $  | 606.8   |
| 31 | Net income per share attributable to Fortinet, Inc. (Note 9):                                |                         |         |         |    |         |         |    |         |
| 32 | Basic                                                                                        | $                       | 1.47    |         | $  | 1.08    |         | $  | 0.74    |
| 33 | Diluted                                                                                      | $                       | 1.46    |         | $  | 1.06    |         | $  | 0.73    |
| 34 | Weighted-average shares used to compute net income per share attributable to Fortinet, Inc.: |                         |         |         |    |         |         |    |         |
| 35 | Basic                                                                                        | 778.6                   |         | 791.4   |    |         | 816.1   |    |         |
| 36 | Diluted                                                                                      | 788.2                   |         | 805.3   |    |         | 835.3   |    |         |
See notes to consolidated financial statements.
72




, Rapid7, Inc. 10-K form for the fiscal year ended 2023-12-31, page 61: 
Table of Contents


RAPID7, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)|    |                                                                                                                                                                                                                                                                                     |                   |           |                   |           |    |           |
|---:|:------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|:------------------|:----------|:------------------|:----------|:---|:----------|
|  1 |                                                                                                                                                                                                                                                                                     | December 31, 2023 |           | December 31, 2022 |           |    |           |
|  2 | Assets                                                                                                                                                                                                                                                                              |                   |           |                   |           |    |           |
|  3 | Current assets:                                                                                                                                                                                                                                                                     |                   |           |                   |           |    |           |
|  4 | Cash and cash equivalents                                                                                                                                                                                                                                                           | $                 | 213,629   |                   |           | $  | 207,287   |
|  5 | Short-term investments                                                                                                                                                                                                                                                              | 169,544           |           |                   | 84,162    |    |           |
|  6 | Accounts receivable, net of allowance for credit losses of $951 and $2,299 at December 31, 2023 and December 31, 2022, respectively                                                                                                                                                 | 164,862           |           |                   | 152,045   |    |           |
|  7 | Deferred contract acquisition and fulfillment costs, current portion                                                                                                                                                                                                                | 45,008            |           |                   | 34,906    |    |           |
|  8 | Prepaid expenses and other current assets                                                                                                                                                                                                                                           | 41,407            |           |                   | 31,907    |    |           |
|  9 | Total current assets                                                                                                                                                                                                                                                                | 634,450           |           |                   | 510,307   |    |           |
| 10 | Long-term investments                                                                                                                                                                                                                                                               | 56,171            |           |                   | 9,756     |    |           |
| 11 | Property and equipment, net                                                                                                                                                                                                                                                         | 39,642            |           |                   | 57,891    |    |           |
| 12 | Operating lease right-of-use assets                                                                                                                                                                                                                                                 | 54,693            |           |                   | 79,342    |    |           |
| 13 | Deferred contract acquisition and fulfillment costs, non-current portion                                                                                                                                                                                                            | 76,601            |           |                   | 68,169    |    |           |
| 14 | Goodwill                                                                                                                                                                                                                                                                            | 536,351           |           |                   | 515,631   |    |           |
| 15 | Intangible assets, net                                                                                                                                                                                                                                                              | 94,546            |           |                   | 101,269   |    |           |
| 16 | Other assets                                                                                                                                                                                                                                                                        | 12,894            |           |                   | 16,626    |    |           |
| 17 | Total assets                                                                                                                                                                                                                                                                        | $                 | 1,505,348 |                   |           | $  | 1,358,991 |
| 18 | Liabilities and Stockholders' Equity (Deficit)                                                                                                                                                                                                                                      |                   |           |                   |           |    |           |
| 19 | Current liabilities:                                                                                                                                                                                                                                                                |                   |           |                   |           |    |           |
| 20 | Accounts payable                                                                                                                                                                                                                                                                    | $                 | 15,812    |                   |           | $  | 10,255    |
| 21 | Accrued expenses                                                                                                                                                                                                                                                                    | 84,489            |           |                   | 80,306    |    |           |
| 22 | Operating lease liabilities, current portion                                                                                                                                                                                                                                        | 13,452            |           |                   | 12,444    |    |           |
| 23 | Deferred revenue, current portion                                                                                                                                                                                                                                                   | 455,503           |           |                   | 426,599   |    |           |
| 24 | Other current liabilities                                                                                                                                                                                                                                                           | 536               |           |                   | 1,663     |    |           |
| 25 | Total current liabilities                                                                                                                                                                                                                                                           | 569,792           |           |                   | 531,267   |    |           |
| 26 | Convertible senior notes, net                                                                                                                                                                                                                                                       | 929,996           |           |                   | 815,948   |    |           |
| 27 | Operating lease liabilities, non-current portion                                                                                                                                                                                                                                    | 81,130            |           |                   | 85,946    |    |           |
| 28 | Deferred revenue, non-current portion                                                                                                                                                                                                                                               | 32,577            |           |                   | 31,040    |    |           |
| 29 | Other long-term liabilities                                                                                                                                                                                                                                                         | 10,032            |           |                   | 14,864    |    |           |
| 30 | Total liabilities                                                                                                                                                                                                                                                                   | $                 | 1,623,527 |                   |           | $  | 1,479,065 |
| 31 | Stockholders' deficit:                                                                                                                                                                                                                                                              |                   |           |                   |           |    |           |
| 32 | Preferred stock, $0.01 par value per share; 10,000,000 shares authorized at December 31, 2023 and 2022; 0 shares issued and outstanding at December 31, 2023 and 2022                                                                                                               | $                 | -         |                   |           | $  | -         |
| 33 | Common stock, $0.01 par value per share; 100,000,000 shares authorized at December 31, 2023 and 2022; 62,283,630 and 60,206,277 shares issued at December 31, 2023 and 2022, respectively; 61,714,051 and 59,719,469 shares outstanding at December 31, 2023 and 2022, respectively | 617               |           |                   | 597       |    |           |
| 34 | Treasury stock, at cost, 569,579 and 486,808 shares at December 31, 2023 and December 31, 2022, respectively                                                                                                                                                                        | (4,765)           |           |                   | (4,764)   |    |           |
| 35 | Additional paid-in-capital                                                                                                                                                                                                                                                          | 894,630           |           |                   | 746,249   |    |           |
| 36 | Accumulated other comprehensive (loss) income                                                                                                                                                                                                                                       | 1,344             |           |                   | (1,411)   |    |           |
| 37 | Accumulated deficit                                                                                                                                                                                                                                                                 | (1,010,005)       |           |                   | (860,745) |    |           |
| 38 | Total stockholders' deficit                                                                                                                                                                                                                                                         | (118,179)         |           |                   | (120,074) |    |           |
| 39 | Total liabilities and stockholders' deficit                                                                                                                                                                                                                                         | $                 | 1,505,348 |                   |           | $  | 1,358,991 |
See accompanying notes to consolidated financial statements.
61




, Rapid7, Inc. 10-K form for the fiscal year ended 2023-12-31, page 62: 
Table of Contents


RAPID7, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share data)|    |                                                               |                         |            |           |      |            |      |           |            |    |           |
|---:|:--------------------------------------------------------------|:------------------------|:-----------|:----------|:-----|:-----------|:-----|:----------|:-----------|:---|:----------|
|  1 |                                                               | Year Ended December 31, |            |           |      |            |      |           |            |    |           |
|  2 |                                                               |                         | 2023       |           | 2022 |            | 2021 |           |            |    |           |
|  3 | Revenue:                                                      |                         |            |           |      |            |      |           |            |    |           |
|  4 | Products                                                      |                         | $          | 740,168   |      |            | $    | 647,535   |            | $  | 500,843   |
|  5 | Professional services                                         |                         | 37,539     |           |      | 37,548     |      |           | 34,561     |    |           |
|  6 | Total revenue                                                 |                         | 777,707    |           |      | 685,083    |      |           | 535,404    |    |           |
|  7 | Cost of revenue:                                              |                         |            |           |      |            |      |           |            |    |           |
|  8 | Products                                                      |                         | 202,904    |           |      | 182,212    |      |           | 140,773    |    |           |
|  9 | Professional services                                         |                         | 28,837     |           |      | 32,137     |      |           | 28,175     |    |           |
| 10 | Total cost of revenue                                         |                         | 231,741    |           |      | 214,349    |      |           | 168,948    |    |           |
| 11 | Total gross profit                                            |                         | 545,966    |           |      | 470,734    |      |           | 366,456    |    |           |
| 12 | Operating expenses:                                           |                         |            |           |      |            |      |           |            |    |           |
| 13 | Research and development                                      |                         | 176,776    |           |      | 189,970    |      |           | 160,779    |    |           |
| 14 | Sales and marketing                                           |                         | 312,636    |           |      | 307,409    |      |           | 247,453    |    |           |
| 15 | General and administrative                                    |                         | 84,276     |           |      | 84,969     |      |           | 78,289     |    |           |
| 16 | Impairment of long-lived assets                               |                         | 30,784     |           |      | -          |      |           | -          |    |           |
| 17 | Restructuring                                                 |                         | 22,227     |           |      | -          |      |           | -          |    |           |
| 18 | Total operating expenses                                      |                         | 626,699    |           |      | 582,348    |      |           | 486,521    |    |           |
| 19 | Loss from operations                                          |                         | (80,733)   |           |      | (111,614)  |      |           | (120,065)  |    |           |
| 20 | Other income (expense), net:                                  |                         |            |           |      |            |      |           |            |    |           |
| 21 | Interest income                                               |                         | 10,177     |           |      | 1,813      |      |           | 365        |    |           |
| 22 | Interest expense                                              |                         | (64,700)   |           |      | (10,982)   |      |           | (14,292)   |    |           |
| 23 | Other income (expense), net                                   |                         | (14,522)   |           |      | (1,522)    |      |           | (1,921)    |    |           |
| 24 | Loss before income taxes                                      |                         | (149,778)  |           |      | (122,305)  |      |           | (135,913)  |    |           |
| 25 | (Benefit from) provision for income taxes                     |                         | (518)      |           |      | 2,412      |      |           | 10,421     |    |           |
| 26 | Net loss                                                      |                         | $          | (149,260) |      |            | $    | (124,717) |            | $  | (146,334) |
| 27 | Net loss per share, basic and diluted                         |                         | $          | (2.46)    |      |            | $    | (2.13)    |            | $  | (2.65)    |
| 28 | Weighted-average common shares outstanding, basic and diluted |                         | 60,756,087 |           |      | 58,552,065 |      |           | 55,270,998 |    |           |
See accompanying notes to consolidated financial statements.
62






Question: Compare the efficiency ratios of Fortinet Inc. and Rapid7 Inc. for the year 2023.
Answer: Efficiency ratios, such as the asset turnover ratio, measure how effectively a company uses its assets to generate revenue. 
The asset turnover ratio can be calculated in two ways.
Method 1: 
The asset turnover ratio is calculated as total revenue divided by total assets.For Fortinet Inc.:Total Revenue (2023): $5,304.8 million, Total Assets (2023): $7,258.9 million--> Asset Turnover Ratio (2023): 5,304.8 / 7,258.9 = 0.73. For Rapid7 Inc.: Total Revenue (2023): $777,707 thousand, Total Assets (2023): $1,505,348 thousand-->Asset Turnover Ratio (2023): 777,707 / 1,505,348 = 0.52.
Method 2:
The asset turnover ratio is calculated as total revenue divided by average total assets.For Fortinet Inc.:Total Revenue (2023): $5,304.8 million, Total Assets (2023): $7,258.9 million, Total assets (2022): $6,228.0 million--> Asset Turnover Ratio (2023): 5,304.8 / (7,258.9+6,228.0)+J54 = 0.73. For Rapid7 Inc.: Total Revenue (2023): $777,707 thousand, Total Assets (2023): $1,505,348 thousand-->Asset Turnover Ratio (2023): 777,707 / 1,505,348 = 0.54.

Comparing the two, Fortinet Inc. has a higher asset turnover ratio of 0.73 compared to Rapid7 Inc.'s 0.52 (0.73 vs. 0.52 for Method 1, 0.79 vs. 0.54 for Method 2). This indicates that Fortinet Inc. is more efficient in using its assets to generate revenue. A higher asset turnover ratio suggests that Fortinet Inc. is better at converting its investment in assets into sales, which can positively impact overall profitability.