Alphabet Inc. (NASDAQ:GOOG)

The financial ratios presented demonstrate varied trends over the five-year period. Generally, adjusted ratios reveal a slightly different picture than reported figures, suggesting the impact of specific accounting adjustments on the company’s financial performance and position. Several key areas exhibit notable shifts, particularly in profitability and leverage.

Asset Turnover

Both the reported and adjusted total asset turnover ratios initially increased from 2021 to 2023, peaking at 0.79. A subsequent decline is observed in 2025, with the adjusted ratio falling to 0.69. This suggests a decreasing efficiency in utilizing assets to generate revenue in the most recent year, despite initial improvements.

Liquidity

The reported and adjusted current ratios consistently decreased from 2021 to 2024, indicating a weakening short-term liquidity position. However, both ratios show a slight recovery in 2025, though remaining below the levels observed in 2021. The adjustments consistently show a slightly lower current ratio than reported, suggesting adjustments reduce current assets or increase current liabilities.

Leverage

Reported debt to equity and debt to capital ratios remained relatively stable between 2021 and 2024, before increasing in 2025. Conversely, the adjusted debt to equity and debt to capital ratios show a more consistent, albeit modest, increase throughout the period, culminating in higher values in 2025. This indicates that adjustments reveal a greater reliance on debt financing than the reported figures suggest. Financial leverage remained relatively stable, with a slight decrease from 2021 to 2024, followed by a return to the 2021 level in 2025.

Profitability

Reported net profit margin experienced volatility, decreasing from 29.51% in 2021 to 21.20% in 2022, then increasing to 32.81% in 2025. The adjusted net profit margin demonstrates a more pronounced decline in 2022 (to 16.47%) and a stronger increase in 2025 (to 36.00%). This suggests that adjustments significantly impact reported earnings. Both reported and adjusted return on equity (ROE) followed a similar pattern, with a dip in 2022 and subsequent recovery, reaching higher levels in 2025. The adjusted ROE consistently reports lower values than the reported ROE. Return on assets (ROA) also exhibited a similar trend, with adjustments resulting in lower values, particularly in 2022 and 2025.

In summary, while reported ratios indicate a generally stable or improving financial position, the adjusted ratios reveal a more nuanced picture. The increasing adjusted leverage ratios and the impact of adjustments on profitability metrics suggest a potential underlying trend of increasing financial risk and a sensitivity of reported earnings to specific accounting treatments. The decline in asset turnover in the final year warrants further investigation.

The financial performance, as indicated by adjusted total asset turnover, demonstrates a generally stable, though recently declining, trend over the five-year period. Revenues exhibited consistent growth annually, while total assets also increased, though at a varying pace. The adjusted total asset turnover ratio reflects the efficiency with which assets are used to generate revenue.

Adjusted Total Asset Turnover Trend

The adjusted total asset turnover ratio remained relatively consistent between 2021 and 2023, holding at 0.72, 0.79, and 0.79 respectively. A slight increase was observed in 2024, reaching 0.81, indicating improved asset utilization. However, the ratio decreased to 0.69 in 2025, suggesting a potential decline in efficiency.

Revenue Growth

Revenues increased from US$258,436 million in 2021 to US$405,436 million in 2025. The growth rate appears to be accelerating, with larger absolute increases in revenue observed in later years. This suggests strong top-line performance.

Asset Expansion

Adjusted total assets grew from US$358,534 million in 2021 to US$587,092 million in 2025. The rate of asset growth accelerated notably between 2023 and 2025, increasing by US$92,098 million compared to US$12,402 million between 2021 and 2023. This suggests increased investment in assets.

Relationship Between Revenue and Assets

While both revenues and assets increased throughout the period, the decrease in adjusted total asset turnover in 2025 indicates that revenue growth did not keep pace with asset expansion. This could be due to several factors, including investments in long-term projects that have not yet generated returns, or a shift in asset composition towards less efficiently utilized assets. The slower turnover in 2025 warrants further investigation.

In summary, the company demonstrated consistent revenue growth alongside increasing asset levels. The adjusted total asset turnover ratio generally remained stable, but the recent decline in 2025 suggests a potential weakening in the efficiency of asset utilization, which may require further scrutiny.

The adjusted current ratio exhibited fluctuations over the five-year period. Initially, the ratio demonstrated strength, followed by a period of decline, and then a modest recovery. A consistent pattern of increasing current liabilities was observed throughout the period, while current assets showed more variability.

Adjusted Current Ratio - Overall Trend

The adjusted current ratio began at 3.10 in 2021, decreased to a low of 1.96 in 2024, and then increased slightly to 2.15 in 2025. This suggests a diminishing ability to cover short-term liabilities with short-term assets during the 2021-2024 timeframe, followed by a minor improvement in the most recent year.

Adjusted Current Assets

Adjusted current assets increased from US$188,693 million in 2021 to US$206,962 million in 2025. However, this increase was not linear. A decrease was noted from 2021 to 2022 (US$165,549 million), followed by a slight increase in 2023, a further decrease in 2024, and then a substantial increase in 2025.

Adjusted Current Liabilities

Adjusted current liabilities consistently increased throughout the period, rising from US$60,966 million in 2021 to US$96,167 million in 2025. This steady increase in short-term obligations likely contributed to the downward pressure on the adjusted current ratio observed between 2021 and 2024.

Comparison to Reported Current Ratio

The adjusted current ratio consistently exceeded the reported current ratio across all years. The difference between the two ratios remained relatively stable, suggesting that the adjustments made to current assets and liabilities had a consistent impact on the overall liquidity position. The adjustments appear to provide a more comprehensive view of the company’s short-term liquidity.

The recovery in the adjusted current ratio in 2025, while modest, may indicate a stabilization of the short-term liquidity position. However, continued monitoring of both current assets and current liabilities is warranted, particularly given the ongoing increase in liabilities.

The adjusted debt to equity ratio exhibits a fluctuating pattern over the five-year period. While the reported debt to equity ratio remained relatively stable at 0.06 and 0.05 for most of the period, the adjusted figures present a different picture. Total debt and stockholders’ equity both increased consistently from 2021 to 2025, but the adjusted values show a more pronounced impact on the debt to equity calculation.

Adjusted Debt to Equity Ratio - Overall Trend

The adjusted debt to equity ratio increased from 0.11 in 2021 to 0.16 in 2025. This indicates a growing reliance on debt financing relative to equity over the observed timeframe. The most significant increase occurred between 2024 and 2025, jumping from 0.10 to 0.16.

Adjusted Debt to Equity Ratio - Year-over-Year Changes

From 2021 to 2022, the adjusted debt to equity ratio rose from 0.11 to 0.12, suggesting a slight increase in financial leverage. A minor decrease was observed from 2022 to 2023, with the ratio falling to 0.11. The ratio then decreased slightly to 0.10 in 2024 before increasing substantially to 0.16 in 2025. This final increase is driven by a larger increase in adjusted total debt than in adjusted stockholders’ equity.

Adjusted Total Debt and Stockholders’ Equity

Adjusted total debt increased steadily from US$28,508 million in 2021 to US$66,996 million in 2025. Adjusted stockholders’ equity also increased, moving from US$259,981 million in 2021 to US$416,595 million in 2025. However, the rate of increase in adjusted total debt accelerated in the later years, contributing to the rising adjusted debt to equity ratio.

The divergence between the reported and adjusted debt to equity ratios suggests that the adjustments made to total debt and stockholders’ equity are material and significantly impact the assessment of the company’s financial leverage. The substantial increase in the adjusted debt to equity ratio in 2025 warrants further investigation to understand the underlying drivers of the increased debt and their potential implications.

The reported debt to capital ratio demonstrates relative stability between 2021 and 2023, holding at 0.06 and 0.05 respectively, before increasing to 0.11 in 2025. However, analysis of the adjusted debt to capital ratio reveals a different pattern. This ratio consistently remains higher than the reported ratio across all observed periods, suggesting the adjustments made to both debt and capital significantly impact the leverage picture.

Adjusted Debt to Capital Ratio - Trend Analysis

The adjusted debt to capital ratio exhibited a consistent value of 0.10 for the years 2021, 2022, and 2023. A slight decrease to 0.09 was observed in 2024, followed by a notable increase to 0.14 in 2025. This indicates a growing reliance on debt financing relative to capital as of the end of 2025.

Examining the underlying components, adjusted total debt increased substantially from US$30,437 million in 2024 to US$66,996 million in 2025. Simultaneously, adjusted total capital also increased, from US$345,940 million to US$483,591 million, but not at the same rate as the adjusted debt. This disparity is the primary driver of the increased adjusted debt to capital ratio in 2025.

Debt and Capital Components

Total debt remained relatively stable between 2021 and 2024, fluctuating between US$14,616 million and US$15,859 million, before experiencing a significant increase to US$51,043 million in 2025. Total capital consistently increased throughout the period, moving from US$266,565 million in 2021 to US$466,308 million in 2025.

The difference between reported and adjusted debt and capital figures suggests the adjustments involve reclassifications or inclusion of items not initially categorized as debt or capital. Further investigation into the nature of these adjustments would be necessary to fully understand their impact.

The increase in the adjusted debt to capital ratio in 2025 warrants further scrutiny. While the capital base is expanding, the proportionally larger increase in adjusted debt suggests a shift in the company’s financial structure and potentially increased financial risk. The stability of the adjusted ratio prior to 2025 indicates that the 2025 change is a significant departure from the recent past.

An examination of the financial information reveals trends in adjusted financial leverage alongside changes in the underlying balance sheet components. Total assets exhibited a consistent increase over the five-year period, growing from US$359,268 million in 2021 to US$595,281 million in 2025. Stockholders’ equity also demonstrated growth, albeit at a slightly slower pace, increasing from US$251,635 million to US$415,265 million over the same timeframe.

Reported Financial Leverage

Reported financial leverage remained relatively stable between 2021 and 2025, fluctuating between 1.39 and 1.43. A slight decrease was observed from 1.43 in 2021 to 1.39 in 2024, followed by a return to 1.43 in 2025. This suggests a consistent capital structure from a reported perspective.

Adjusted Total Assets

Adjusted total assets mirrored the trend of total assets, increasing steadily from US$358,534 million in 2021 to US$587,092 million in 2025. The adjusted figures are consistently close to the reported total assets, indicating that adjustments are not materially impacting the overall asset base.

Adjusted Stockholders’ Equity

Adjusted stockholders’ equity also increased over the period, moving from US$259,981 million in 2021 to US$416,595 million in 2025. There was a slight decrease from 2021 to 2022, but subsequent years showed consistent growth. The adjusted equity values are generally higher than the reported equity values in the earlier years, but converge towards similar levels in the later years.

Adjusted Financial Leverage

Adjusted financial leverage exhibited a similar pattern to the reported leverage, remaining relatively stable between 1.38 and 1.41. It began at 1.38 in 2021, increased to 1.41 in 2022 and 2023, decreased to 1.38 in 2024, and then rose again to 1.41 in 2025. The adjustments appear to have a minor dampening effect on the leverage ratio compared to the reported figures, but the overall trend remains consistent. The consistency in both reported and adjusted leverage suggests a stable financial structure throughout the analyzed period.

In summary, both reported and adjusted financial leverage remained relatively constant over the five-year period, despite significant growth in both assets and equity. The adjustments made to the balance sheet items did not fundamentally alter the overall leverage profile of the entity.

The adjusted net profit margin exhibited fluctuations over the five-year period. Initial values were strong, followed by a significant decline, and then a recovery culminating in substantial growth. A detailed examination of the trends is presented below.

Adjusted Net Profit Margin - Overall Trend

The adjusted net profit margin began at 29.49% in 2021. It experienced a considerable decrease to 16.47% in 2022 before initiating an upward trajectory. This upward trend continued through 2023 (22.68%) and 2024 (27.22%), culminating in a notable increase to 36.00% in 2025. This indicates improving profitability as measured by adjusted figures.

Adjusted Net Profit Margin - 2021-2022

A marked decline in the adjusted net profit margin occurred between 2021 and 2022, decreasing from 29.49% to 16.47%. This represents a decrease of approximately 13 percentage points. This shift suggests a potential increase in adjusted costs relative to adjusted revenues, or a change in the revenue mix towards lower-margin products or services.

Adjusted Net Profit Margin - 2022-2025

From 2022 to 2025, the adjusted net profit margin demonstrated consistent growth. The margin increased from 16.47% to 36.00%, representing an increase of approximately 19.53 percentage points. This recovery and subsequent growth suggest successful implementation of cost control measures, improved operational efficiency, or a shift towards higher-margin revenue streams.

Relationship to Adjusted Revenues and Adjusted Net Income

The growth in the adjusted net profit margin from 2022 to 2025 occurred in tandem with increases in both adjusted revenues and adjusted net income. Adjusted revenues increased from US$283,520 million to US$405,436 million, while adjusted net income rose from US$46,682 million to US$145,949 million. This suggests that the margin improvement was not solely due to cost reductions, but also benefited from revenue growth.

The substantial increase in the adjusted net profit margin in 2025 warrants further investigation to determine the key drivers behind this performance. The recovery from the 2022 decline indicates a successful turnaround in profitability.

The period between 2021 and 2025 demonstrates fluctuating performance in key financial metrics. Net income experienced a decline from 2021 to 2022, followed by recovery and substantial growth through 2025. Stockholders’ equity consistently increased over the five-year period, though at varying rates. Reported return on equity (ROE) mirrored the net income trend, initially decreasing, then recovering, and showing moderate growth. Analysis of the adjusted figures reveals a similar, yet distinct, pattern.

Adjusted Return on Equity (ROE)

Adjusted ROE began at 29.32% in 2021, representing a slight decrease from the reported ROE of 30.22%. A significant decline was observed in 2022, with adjusted ROE falling to 18.19%, substantially lower than the reported 23.41%. This suggests adjustments to net income or equity had a more pronounced negative impact than the standard calculation. From 2022 to 2025, adjusted ROE exhibited a consistent upward trend, reaching 35.03% in 2025. This growth outpaced the reported ROE increase over the same period, indicating that the adjustments made to net income and equity positively influenced the return on equity calculation in later years.

The difference between reported and adjusted ROE varied across the period. The largest divergence occurred in 2022, where the adjustments resulted in a notably lower ROE. In contrast, 2025 saw the adjusted ROE exceed the reported ROE, suggesting the adjustments positively impacted the return calculation. The adjusted net income and adjusted stockholders’ equity figures consistently influenced the overall ROE, demonstrating the importance of understanding the nature of these adjustments when evaluating the company’s financial performance.

Net Income and Stockholders’ Equity Impact

The increase in stockholders’ equity from 2021 to 2025 contributed to the overall increase in both reported and adjusted ROE. However, the fluctuations in net income, particularly the decline in 2022 and subsequent recovery, had a more direct impact on the ROE values. The adjusted net income figures show a more pronounced decrease in 2022 than the reported net income, which explains the larger drop in adjusted ROE for that year. The substantial growth in adjusted net income from 2023 to 2025, exceeding the growth in reported net income, drove the accelerated increase in adjusted ROE during those years.

Overall, the analysis indicates that while the company experienced growth in stockholders’ equity, its profitability, as reflected in net income, was subject to fluctuations. The adjustments made to net income and equity significantly impacted the calculated ROE, particularly in 2022 and 2025, highlighting the need for further investigation into the nature of these adjustments to fully understand the company’s financial performance.

The adjusted return on assets (ROA) exhibited fluctuations over the five-year period. While generally remaining in a relatively narrow band, a discernible upward trend emerges towards the end of the observed timeframe. Initial values were strong, followed by a significant decline, and then a recovery culminating in the highest observed value.

Adjusted ROA Trend

In 2021, the adjusted ROA stood at 21.26%. A substantial decrease was noted in 2022, falling to 12.94%. The following year, 2023, saw a partial recovery to 17.86%. Further improvement occurred in 2024, reaching 22.01%, and continued into 2025, with the adjusted ROA increasing to 24.86%. This represents the highest value within the analyzed period.

Relationship to Adjusted Net Income

The adjusted ROA’s decline in 2022 correlates with a decrease in adjusted net income, which fell from US$76,220 million in 2021 to US$46,682 million in 2022. Conversely, the subsequent increases in adjusted ROA in 2024 and 2025 align with increases in adjusted net income, reaching US$95,524 million and US$145,949 million respectively. This suggests a strong relationship between profitability and the efficiency with which assets are utilized.

Relationship to Adjusted Total Assets

Adjusted total assets increased consistently throughout the period, from US$358,534 million in 2021 to US$587,092 million in 2025. Despite this consistent growth in asset base, the adjusted ROA was able to improve significantly in the later years, indicating that the increases in assets were effectively deployed to generate higher returns. The initial decline in adjusted ROA in 2022 occurred despite a modest increase in adjusted total assets, suggesting that the decrease in adjusted net income was the primary driver of the lower return.

The observed trend suggests improving efficiency in asset utilization and profitability towards the end of the period. The substantial increase in adjusted ROA in 2025, coupled with the growth in both adjusted net income and adjusted total assets, indicates a positive trajectory.