Common-Size Income Statement
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- Analysis of Profitability Ratios
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- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Total Asset Turnover since 2005
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- Price to Sales (P/S) since 2005
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Alphabet Inc., common-size consolidated income statement
Based on: 10-K (reporting date: 2025-12-31), 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).
The common-size income statement reveals several noteworthy trends over the five-year period. Revenues are consistently represented as 100%, allowing for a clear view of expense and profit margins as percentages of sales. A general trend of improving profitability is observed, particularly in the later years of the period.
- Gross Profit
- Gross profit as a percentage of revenues initially declined from 56.94% in 2021 to 55.38% in 2022, before exhibiting a consistent upward trend, reaching 59.65% in 2025. This suggests improving efficiency in managing the cost of revenues.
- Operating Expenses
- Research and development expenses have steadily increased as a percentage of revenues, rising from 12.25% in 2021 to 15.16% in 2025. Sales and marketing expenses decreased from 8.89% to 7.12% over the same period, indicating a potential shift in marketing strategy or improved efficiency. General and administrative expenses also show a decrease from 5.24% to 4.05% in 2024, but then increased to 5.33% in 2025.
- Income from Operations
- Income from operations experienced a decline from 30.55% in 2021 to 26.46% in 2022, mirroring the initial dip in gross profit. However, it then demonstrated substantial improvement, reaching 32.11% in 2024 and remaining relatively stable at 32.03% in 2025. This improvement is likely attributable to both the increasing gross profit margin and the decreasing sales and marketing and general and administrative expenses.
- Non-Operating Items
- Several non-operating items exhibit volatility. Interest income increased from 0.58% to 1.26% before stabilizing around 1.08%. Interest expense remained relatively consistent at a low percentage of revenues. Gains and losses on equity securities show significant fluctuations, with a notable gain in 2021 (4.81%) followed by a loss in 2022 (-1.22%) and a substantial gain in 2025 (5.98%). Other income (expense), net, also demonstrates considerable variability, increasing significantly from 0.42% in 2022 to 7.39% in 2025.
- Net Income
- Net income as a percentage of revenues follows a similar pattern to income from operations, declining initially to 21.20% in 2022, then increasing steadily to 32.81% in 2025. This indicates a strong overall improvement in profitability, driven by both operational efficiencies and favorable non-operating items in the later years.
- Provision for Income Taxes
- The provision for income taxes as a percentage of revenues decreased from 5.71% in 2021 to 4.02% in 2022, then remained relatively stable before increasing to 6.62% in 2025, likely corresponding to the increased net income.
In summary, the financial performance demonstrates a recovery and improvement trend. While initial years show some decline in key profitability metrics, the later years exhibit strong growth in gross profit, operating income, and net income, suggesting effective cost management and potentially successful investment strategies.