Microsoft Excel LibreOffice Calc

Alphabet Inc. (GOOG)


Analysis of Operating Leases

Advanced level


Present Value of Future Operating Lease Payments (before Adoption of FASB Topic 842)

Alphabet Inc., future operating lease payments (before adoption of FASB Topic 842)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Total undiscounted future operating lease payments 10,102  8,803  7,970  7,456  6,245 
Discount rate1 2.89% 2.89% 2.89% 1.95% 1.91%
 
Total present value of future operating lease payments 8,872  7,693  6,884  6,710  5,623 

Based on: 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), 10-K (filing date: 2015-02-09).

1 Weighted-average interest rate for Alphabet Inc.’s debt

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.89%
2019 1,319  2019 1,319  1,282 
2020 1,397  2020 1,397  1,320 
2021 1,337  2021 1,337  1,227 
2022 1,153  2022 1,153  1,029 
2023 980  2023 980  850 
2024 and thereafter 3,916  2024 980  826 
2025 980  803 
2026 980  780 
2027 976  755 
Total: 10,102  10,102  8,872 

Based on: 10-K (filing date: 2019-02-05).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.89%
2018 1,175  2018 1,175  1,142 
2019 1,133  2019 1,133  1,070 
2020 1,073  2020 1,073  985 
2021 975  2021 975  870 
2022 831  2022 831  721 
2023 and thereafter 3,616  2023 831  700 
2024 831  681 
2025 831  662 
2026 831  643 
2027 292  220 
Total: 8,803  8,803  7,693 

Based on: 10-K (filing date: 2018-02-06).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 2.89%
2017 843  2017 843  819 
2018 902  2018 902  852 
2019 910  2019 910  835 
2020 854  2020 854  762 
2021 767  2021 767  665 
2022 and thereafter 3,694  2022 767  646 
2023 767  628 
2024 767  611 
2025 767  594 
2026 626  471 
Total: 7,970  7,970  6,884 

Based on: 10-K (filing date: 2017-02-03).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 1.95%
2016 672  2016 672  659 
2017 794  2017 794  764 
2018 796  2018 796  751 
2019 769  2019 769  712 
2020 719  2020 719  653 
2021 and thereafter 3,706  2021 719  640 
2022 719  628 
2023 719  616 
2024 719  604 
2025 719  593 
2026 111  90 
Total: 7,456  7,456  6,710 

Based on: 10-K (filing date: 2016-02-11).

Year Future operating lease payments (as reported) Year Future operating lease payments (estimated) Present value at 1.91%
2015 628  2015 628  616 
2016 643  2016 643  619 
2017 644  2017 644  608 
2018 597  2018 597  553 
2019 576  2019 576  524 
2020 and thereafter 3,157  2020 576  514 
2021 576  505 
2022 576  495 
2023 576  486 
2024 576  477 
2025 277  225 
Total: 6,245  6,245  5,623 

Based on: 10-K (filing date: 2015-02-09).


Adjustments to Financial Statements for Operating Leases

Alphabet Inc., adjustments to financial statements

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Adjustment to Total Assets
Total assets (as reported) 232,792  197,295  167,497  147,461  131,133 
Add: Operating lease right-of-use asset (before adoption of FASB Topic 842)1 8,872  7,693  6,884  6,710  5,623 
Total assets (adjusted) 241,664  204,988  174,381  154,171  136,756 
Adjustment to Total Debt
Total debt (as reported) 4,012  3,969  3,935  5,220  5,237 
Add: Operating lease liability (before adoption of FASB Topic 842)2 8,872  7,693  6,884  6,710  5,623 
Total debt (adjusted) 12,884  11,662  10,819  11,930  10,860 

Based on: 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), 10-K (filing date: 2015-02-09).

1, 2 Equal to total present value of future operating lease payments.


Alphabet Inc., Financial Data: Reported vs. Adjusted


Adjusted Financial Ratios for Operating Leases (Summary)

Alphabet Inc., adjusted financial ratios

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Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Total Asset Turnover1
Reported total asset turnover 0.59 0.56 0.54 0.51 0.50
Adjusted total asset turnover 0.57 0.54 0.52 0.49 0.48
Debt to Equity2
Reported debt to equity 0.02 0.03 0.03 0.04 0.05
Adjusted debt to equity 0.07 0.08 0.08 0.10 0.10
Return on Assets3 (ROA)
Reported ROA 13.20% 6.42% 11.63% 11.09% 11.01%
Adjusted ROA 12.72% 6.18% 11.17% 10.60% 10.56%

Based on: 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), 10-K (filing date: 2015-02-09).

Financial ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Alphabet Inc.’s adjusted total asset turnover ratio improved from 2016 to 2017 and from 2017 to 2018.
Adjusted debt to equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Alphabet Inc.’s adjusted debt to equity ratio improved from 2016 to 2017 and from 2017 to 2018.
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Alphabet Inc.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Alphabet Inc., Financial Ratios: Reported vs. Adjusted


Adjusted Total Asset Turnover

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Revenues 136,819  110,855  90,272  74,989  66,001 
Total assets 232,792  197,295  167,497  147,461  131,133 
Activity Ratio
Total asset turnover1 0.59 0.56 0.54 0.51 0.50
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Revenues 136,819  110,855  90,272  74,989  66,001 
Adjusted total assets 241,664  204,988  174,381  154,171  136,756 
Activity Ratio
Adjusted total asset turnover2 0.57 0.54 0.52 0.49 0.48

Based on: 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), 10-K (filing date: 2015-02-09).

2018 Calculations

1 Total asset turnover = Revenues ÷ Total assets
= 136,819 ÷ 232,792 = 0.59

2 Adjusted total asset turnover = Revenues ÷ Adjusted total assets
= 136,819 ÷ 241,664 = 0.57

Activity ratio Description The company
Adjusted total asset turnover An activity ratio calculated as total revenue divided by adjusted total assets. Alphabet Inc.’s adjusted total asset turnover ratio improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Debt to Equity

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Total debt 4,012  3,969  3,935  5,220  5,237 
Stockholders’ equity 177,628  152,502  139,036  120,331  104,500 
Solvency Ratio
Debt to equity1 0.02 0.03 0.03 0.04 0.05
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Adjusted total debt 12,884  11,662  10,819  11,930  10,860 
Stockholders’ equity 177,628  152,502  139,036  120,331  104,500 
Solvency Ratio
Adjusted debt to equity2 0.07 0.08 0.08 0.10 0.10

Based on: 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), 10-K (filing date: 2015-02-09).

2018 Calculations

1 Debt to equity = Total debt ÷ Stockholders’ equity
= 4,012 ÷ 177,628 = 0.02

2 Adjusted debt to equity = Adjusted total debt ÷ Stockholders’ equity
= 12,884 ÷ 177,628 = 0.07

Solvency ratio Description The company
Adjusted debt-to-equity A solvency ratio calculated as adjusted total debt divided by total shareholders’ equity. Alphabet Inc.’s adjusted debt-to-equity ratio improved from 2016 to 2017 and from 2017 to 2018.

Adjusted Return on Assets (ROA)

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
As Reported
Selected Financial Data (US$ in millions)
Net income 30,736  12,662  19,478  16,348  14,444 
Total assets 232,792  197,295  167,497  147,461  131,133 
Profitability Ratio
ROA1 13.20% 6.42% 11.63% 11.09% 11.01%
Adjusted for Operating Leases
Selected Financial Data (US$ in millions)
Net income 30,736  12,662  19,478  16,348  14,444 
Adjusted total assets 241,664  204,988  174,381  154,171  136,756 
Profitability Ratio
Adjusted ROA2 12.72% 6.18% 11.17% 10.60% 10.56%

Based on: 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), 10-K (filing date: 2015-02-09).

2018 Calculations

1 ROA = 100 × Net income ÷ Total assets
= 100 × 30,736 ÷ 232,792 = 13.20%

2 Adjusted ROA = 100 × Net income ÷ Adjusted total assets
= 100 × 30,736 ÷ 241,664 = 12.72%

Profitability ratio Description The company
Adjusted ROA A profitability ratio calculated as net income divided by adjusted total assets. Alphabet Inc.’s adjusted ROA deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.