Analysis of Debt
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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
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Total Debt (Carrying Amount)
Alphabet Inc., balance sheet: debt
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The analysis of the annual debt-related data reveals several notable trends over the five-year period ending December 31, 2024.
- Current Portion of Finance Lease Liabilities
- This financial item appears only in the latest year, 2024, with a reported value of $235 million. There is no recorded data for previous years, indicating either a new recognition or reclassification in that year.
- Short-term Debt
- Short-term debt exhibits significant fluctuations throughout the period. After a sharp decrease from $1,100 million in 2020 to $113 million in 2021, the figure rises to $298 million in 2022, followed by a substantial increase to $1,363 million in 2023, and finally reaching a notable peak of $3,299 million in 2024. This pattern suggests increasingly active management of short-term borrowing, with a marked growth in reliance on short-term debt during the last two years.
- Long-term Debt, Excluding Current Portion
- Long-term debt shows a gradual decline over the period. Starting at $13,932 million in 2020, it increased slightly in 2021 to $14,817 million, then remained relatively stable at $14,701 million in 2022. From 2022 onward, there is a clear downward trend, with balances decreasing to $13,253 million in 2023 and further to $10,883 million in 2024. This decreasing trend may reflect repayments or refinancing activities affecting long-term obligations.
- Long-term Portion of Finance Lease Liabilities
- Similar to the current portion of finance lease liabilities, this item is only present in 2024, reported at $1,442 million. The absence of data in earlier years could suggest new lease accounting standards adoption or changes in lease structuring.
- Total Debt and Finance Lease Liabilities (Carrying Amount)
- The total debt and finance lease liabilities carry a relatively stable profile with some variability. Starting at $15,032 million in 2020, the total slightly decreased to $14,930 million in 2021, then increased marginally to $14,999 million in 2022. In 2023, it fell to $14,616 million, followed by an increase to $15,859 million in 2024. Despite the significant rise in short-term debt and the introduction of finance lease liabilities classifications in 2024, the total debt remained approximately within a $1 billion range across the period, suggesting overall controlled leverage levels.
In summary, the data indicates a shift in the debt structure, with a considerable increase in short-term debt and the emergence of finance lease liabilities in the latest reporting year. Concurrently, there is a steady reduction in long-term debt excluding current portions. The total debt balance remains stable, reflecting possible strategic refinancing and capital structure optimization efforts over the examined timeframe.
Total Debt (Fair Value)
| Dec 31, 2024 | |
|---|---|
| Selected Financial Data (US$ in millions) | |
| Commercial paper | |
| Outstanding notes, including current portion | |
| Other debt | |
| Finance lease liabilities | |
| Total debt and finance lease liabilities (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2024-12-31).
Weighted-average Interest Rate on Debt
Weighted-average effective interest rate on debt and finance lease liabilities:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Alphabet Inc., interest costs incurred
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Interest capitalized | |||||||||||
| Interest costs incurred |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
The data exhibits the annual interest costs incurred over a five-year period, encompassing interest expense, interest capitalized, and the total interest costs incurred. Several trends and fluctuations can be observed in these components.
- Interest Expense
-
The interest expense shows a notable increase from 135 million US$ in 2020 to a peak of 357 million US$ in 2022. This increase is followed by a decline over the next two years, reaching 268 million US$ by 2024. The pattern suggests a rising cost of borrowed funds or changes in debt structure up to 2022, subsequently mitigated or optimized in later years.
- Interest Capitalized
-
Interest capitalized starts at 218 million US$ in 2020 and declines to 128 million US$ by 2022. After this trough, the capitalized interest rises again to 194 million US$ in 2024. This fluctuation indicates changes in the level of capital projects or asset development activities eligible for capitalization, with a reduction of such activities or a change in capitalization policy during 2021-2022, followed by renewed or increased capital expenditure subsequently.
- Interest Costs Incurred
-
The overall interest costs incurred, combining both interest expense and capitalized interest, increase from 353 million US$ in 2020 to a peak of 509 million US$ in 2021. The figure then shows a gradual decline to 462 million US$ by 2024. This suggests that although direct interest expenses rose and then fell, the total borrowing costs remained elevated, reflecting sustained debt levels or borrowing costs despite changing compositions between expense and capitalization.
In summary, the data indicates a dynamic interest cost environment over the five years, with total costs rising sharply early on, then moderating slightly. Changes in the balance between capitalized and expensed interest reflect shifts in capital investment strategies or accounting treatments. The decreasing trend in interest expense after 2022 suggests potential debt management efforts or improved financing conditions, while capitalized interest's resurgence hints at renewed investment activity.
Adjusted Interest Coverage Ratio
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
2024 Calculations
1 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
The financial data reveals notable fluctuations in both the interest coverage ratio without capitalized interest and the adjusted interest coverage ratio with capitalized interest over the five-year period.
- Interest Coverage Ratio (without capitalized interest)
- The ratio starts at a high level of 357.16 as of December 31, 2020, then declines significantly to 263.24 by the end of 2021. The downward trend continues into 2022, reaching 200.8. However, in 2023, the ratio reverses direction, improving to 279.3, and by the end of 2024, it rises sharply to 448.07. This pattern suggests that the company's ability to cover interest expenses from operating earnings experienced a moderate decline in the initial years, followed by a strong recovery and improvement in the most recent periods, indicating enhanced profitability or reduced interest expenses.
- Adjusted Interest Coverage Ratio (with capitalized interest)
- This ratio shows a different, yet related trend. It begins at 136.59 as of December 31, 2020, increases substantially to 178.94 in 2021, but then declines to 147.8 in 2022. The ratio again improves in 2023 to 175.92 and reaches 259.92 by the end of 2024. Despite overall fluctuations, the adjusted ratio demonstrates an upward trajectory in the last two years, suggesting an improvement in earnings relative to interest obligations when accounting for capitalized interest. This may indicate better operational efficiency or effective management of capitalized interest impacting the interest obligations.
Overall, both ratios reflect variability but end with a significantly stronger capacity to meet interest expenses by the end of 2024 compared to the starting point in 2020. The adjustments for capitalized interest consistently show lower figures than the unadjusted interest coverage ratio, highlighting the impact of capitalized interest on the company’s interest expense evaluation. The upward trend in the later years is a positive indicator of financial health, specifically in terms of the ability to comfortably cover interest costs from earnings.