Stock Analysis on Net
Stock Analysis on Net
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Alphabet Inc. (NASDAQ:GOOG)

Analysis of Investments

Advanced level

Adjustment to Net Income (Loss): Mark to Market Available-for-sale Securities

Alphabet Inc., adjustment to net income

US$ in millions

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12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income (as reported) 34,343  30,736  12,662  19,478  16,348 
Add: Net change in available-for-sale investments, net of tax effect 1,500  (823) 412  (93) (507)
Net income (adjusted) 35,843  29,913  13,074  19,385  15,841 

Based on: 10-K (filing date: 2020-02-04), 10-K (filing date: 2019-02-05), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-11).

Adjusted Profitability Ratios: Mark to Market Available-for-sale Securities (Summary)

Alphabet Inc., adjusted profitability ratios

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net Profit Margin
Reported net profit margin 21.22% 22.46% 11.42% 21.58% 21.80%
Adjusted net profit margin 22.14% 21.86% 11.79% 21.47% 21.12%
Return on Equity (ROE)
Reported ROE 17.05% 17.30% 8.30% 14.01% 13.59%
Adjusted ROE 17.79% 16.84% 8.57% 13.94% 13.16%
Return on Assets (ROA)
Reported ROA 12.45% 13.20% 6.42% 11.63% 11.09%
Adjusted ROA 12.99% 12.85% 6.63% 11.57% 10.74%

Based on: 10-K (filing date: 2020-02-04), 10-K (filing date: 2019-02-05), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-11).

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Alphabet Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Alphabet Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Alphabet Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.

Alphabet Inc., Profitability Ratios: Reported vs. Adjusted

Adjusted Net Profit Margin

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 34,343  30,736  12,662  19,478  16,348 
Revenues 161,857  136,819  110,855  90,272  74,989 
Profitability Ratio
Net profit margin1 21.22% 22.46% 11.42% 21.58% 21.80%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 35,843  29,913  13,074  19,385  15,841 
Revenues 161,857  136,819  110,855  90,272  74,989 
Profitability Ratio
Adjusted net profit margin2 22.14% 21.86% 11.79% 21.47% 21.12%

Based on: 10-K (filing date: 2020-02-04), 10-K (filing date: 2019-02-05), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-11).

2019 Calculations

1 Net profit margin = 100 × Net income ÷ Revenues
= 100 × 34,343 ÷ 161,857 = 21.22%

2 Adjusted net profit margin = 100 × Adjusted net income ÷ Revenues
= 100 × 35,843 ÷ 161,857 = 22.14%

Profitability ratio Description The company
Adjusted net profit margin An indicator of profitability, calculated as adjusted net income divided by revenue. Alphabet Inc.’s adjusted net profit margin ratio improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Equity (ROE)

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Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 34,343  30,736  12,662  19,478  16,348 
Stockholders’ equity 201,442  177,628  152,502  139,036  120,331 
Profitability Ratio
ROE1 17.05% 17.30% 8.30% 14.01% 13.59%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 35,843  29,913  13,074  19,385  15,841 
Stockholders’ equity 201,442  177,628  152,502  139,036  120,331 
Profitability Ratio
Adjusted ROE2 17.79% 16.84% 8.57% 13.94% 13.16%

Based on: 10-K (filing date: 2020-02-04), 10-K (filing date: 2019-02-05), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-11).

2019 Calculations

1 ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × 34,343 ÷ 201,442 = 17.05%

2 Adjusted ROE = 100 × Adjusted net income ÷ Stockholders’ equity
= 100 × 35,843 ÷ 201,442 = 17.79%

Profitability ratio Description The company
Adjusted ROE A profitability ratio calculated as adjusted net income divided by shareholders’ equity. Alphabet Inc.’s adjusted ROE improved from 2017 to 2018 and from 2018 to 2019.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
As Reported
Selected Financial Data (US$ in millions)
Net income 34,343  30,736  12,662  19,478  16,348 
Total assets 275,909  232,792  197,295  167,497  147,461 
Profitability Ratio
ROA1 12.45% 13.20% 6.42% 11.63% 11.09%
Adjusted: Mark to Market Available-for-sale Securities
Selected Financial Data (US$ in millions)
Adjusted net income 35,843  29,913  13,074  19,385  15,841 
Total assets 275,909  232,792  197,295  167,497  147,461 
Profitability Ratio
Adjusted ROA2 12.99% 12.85% 6.63% 11.57% 10.74%

Based on: 10-K (filing date: 2020-02-04), 10-K (filing date: 2019-02-05), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-03), 10-K (filing date: 2016-02-11).

2019 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 34,343 ÷ 275,909 = 12.45%

2 Adjusted ROA = 100 × Adjusted net income ÷ Total assets
= 100 × 35,843 ÷ 275,909 = 12.99%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as adjusted net income divided by total assets. Alphabet Inc.’s adjusted ROA improved from 2017 to 2018 and from 2018 to 2019.