Stock Analysis on Net

Alphabet Inc. (NASDAQ:GOOG)

$24.99

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Paying user area


We accept:

Visa Mastercard American Express Maestro Discover JCB PayPal Google Pay
Visa Secure Mastercard Identity Check American Express SafeKey

Economic Profit

Alphabet Inc., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The NOPAT showed a significant increase from 2020 to 2021, rising from 41,262 million US dollars to 77,747 million US dollars. However, this was followed by a decline in 2022 to 52,578 million US dollars. Subsequently, there was a recovery in 2023, with NOPAT increasing to 65,370 million US dollars, and this positive trend continued into 2024, where it reached the highest level in the period at 93,781 million US dollars.
Cost of Capital
The cost of capital remained relatively stable throughout the period, with minor fluctuations in a narrow range between approximately 14.73% and 14.84%. This suggests a consistent cost structure in terms of capital financing.
Invested Capital
The invested capital increased steadily from 145,844 million US dollars in 2020 to 171,408 million in 2021, continuing to grow to 202,355 million in 2022. There was a slight decrease in 2023 to 189,779 million US dollars, followed by a renewed increase in 2024 to the highest level in the period at 227,952 million US dollars. Overall, the invested capital shows a strong upward trend with a minor dip in 2023.
Economic Profit
The economic profit experienced a sharp rise from 19,779 million US dollars in 2020 to 52,372 million US dollars in 2021. This was followed by a decline in 2022 to 22,758 million US dollars, mirroring the pattern seen in NOPAT. In 2023, economic profit increased again to 37,294 million US dollars and further grew substantially in 2024 to 59,956 million US dollars, indicating improved value creation over the last two years.
Summary of Trends
Overall, the data reveals that the company experienced significant fluctuations in profitability metrics such as NOPAT and economic profit, with notable peaks in 2021 and 2024. Despite these fluctuations, the cost of capital remained almost unchanged, providing a stable benchmark. Invested capital shows an overall upward trend, suggesting continued investment and asset growth, with a temporary reduction in 2023. The interplay between these factors indicates periods of variable profitability and value creation, with the latest year showing strong positive results across most metrics.

Net Operating Profit after Taxes (NOPAT)

Alphabet Inc., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for credit losses on accounts receivable2
Increase (decrease) in deferred revenue3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
(Gain) loss on marketable securities
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net operating profit after taxes (NOPAT)

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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for credit losses on accounts receivable.

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in equity equivalents to net income.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.


The financial data indicates a fluctuating yet generally positive trend in profitability over the observed periods. Net income shows substantial growth from 40,269 million US dollars at the end of 2020 to 76,033 million in 2021, marking a significant increase. However, there is a notable decline in 2022 to 59,972 million, followed by a recovery in 2023 to 73,795 million and further growth reaching 100,118 million by the end of 2024. This pattern suggests some volatility but an overall upward trajectory in net income over the five-year span.

Similarly, the Net Operating Profit After Taxes (NOPAT) mirrors this trend with initial growth from 41,262 million US dollars in 2020 to 77,747 million in 2021. This is followed by a decrease in 2022 to 52,578 million, reflecting a sharper drop compared to net income. The subsequent years in 2023 and 2024 show a recovery and increase to 65,370 million and 93,781 million respectively. This indicates a similar pattern of variability but with a strong recuperation in operating profitability after taxes.

Overall Trends
Both net income and NOPAT experienced high growth in the early years, a decline in the middle period (2022), and recovery with substantial growth towards the end of the timeline (2023-2024).
Volatility and Recovery
The mid-period decrease in both measures suggests external or internal challenges impacting profitability, but the rebound in later years indicates effective management or favorable market conditions leading to enhanced earnings.
Profitability Insights
The data suggests that despite periods of decreased profitability, the company's financial health and earnings capacity improved significantly by 2024, reaching the highest recorded values in both net income and NOPAT within the given timeframe.

Cash Operating Taxes

Alphabet Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

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 financial data indicates significant fluctuations and trends in the provisions and payments related to income taxes over the examined five-year period.

Provision for Income Taxes
This item shows an overall increasing trend from 2020 to 2024. It more than doubled from approximately $7.8 billion in 2020 to nearly $14.7 billion in 2021, followed by a decline in 2022 to about $11.4 billion. Subsequently, the provision slightly increased in 2023 to approximately $11.9 billion and then escalated sharply to almost $19.7 billion in 2024. This pattern suggests volatility in tax provisions with a recent marked increase.
Cash Operating Taxes
Cash taxes paid display a steady and significant upward trend throughout the entire period. Starting at around $6.0 billion in 2020, the cash operating taxes rose sharply to about $12.6 billion in 2021 and continued to climb to $19.5 billion in 2022. The 2023 figure slightly declined to approximately $19.3 billion but rebounded in 2024 to reach its highest value, about $24.4 billion. This demonstrates a consistent increase in actual cash outflows for tax payments, with minor fluctuation in 2023.

In summary, while provision for income taxes has shown volatility with notable increases and decreases, the cash operating taxes have generally increased robustly over the period. The substantial rise in cash paid taxes indicates increasing tax obligations or payments, which may reflect higher profitability, changes in tax regulation, or shifts in the company’s taxable income profile. The divergence and patterns between provisions and cash taxes merit further examination to understand their drivers and implications on financial strategy and tax planning.


Invested Capital

Alphabet Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current portion of finance lease liabilities
Short-term debt
Long-term debt, excluding current portion
Long-term portion of finance lease liabilities
Operating lease liability1
Total reported debt & leases
Stockholders’ equity
Net deferred tax (assets) liabilities2
Allowance for credit losses on accounts receivable3
Deferred revenue4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Adjusted stockholders’ equity
Assets not yet in service7
Marketable securities8
Invested capital

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).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of allowance for doubtful accounts receivable.

4 Addition of deferred revenue.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of assets not yet in service.

8 Subtraction of marketable securities.


Total reported debt & leases

The total reported debt and leases have exhibited a gradual increase over the observed period. Starting from approximately 27.9 billion US dollars at the end of 2020, this figure rose steadily to reach about 30.4 billion dollars by the end of 2024. The increase is relatively moderate and consistent, without significant fluctuations, indicating stable debt management practices.

Stockholders’ equity

Stockholders’ equity has shown a strong upward trend throughout the years. Beginning at roughly 222.5 billion dollars in 2020, equity increased each year, reaching approximately 325.1 billion dollars by the end of 2024. The growth is particularly notable in the last two years, suggesting either retained earnings accumulation, additional equity infusions, or positive revaluation impacts. This trend points to a strengthening financial position from an equity perspective.

Invested capital

Invested capital experienced initial growth from 145.8 billion dollars in 2020 to over 202.3 billion dollars in 2022. However, there was a decline in 2023, dropping to about 189.8 billion dollars, followed by a substantial rise back to around 228.0 billion dollars in 2024. This pattern indicates some volatility in capital investment or asset base management, with a brief contraction before a strong recovery in the most recent year.

General observations

Overall, the financial data indicates increasing capital structure strength with growing stockholders’ equity outpacing the moderate rise in debt and leases. The company's invested capital shows some fluctuations but trends upwards over the longer term. The stable debt levels alongside rising equity suggest improving solvency and financial robustness. The recent increase in invested capital may reflect new investments or asset expansion initiatives.


Cost of Capital

Alphabet Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt and finance lease liabilities3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Alphabet Inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Charter Communications Inc.
Comcast Corp.
Meta Platforms Inc.
Netflix Inc.
Walt Disney Co.

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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit
The economic profit demonstrates significant fluctuations over the five-year period. Starting at 19,779 million US dollars in 2020, it increased sharply to 52,372 million in 2021, indicating a substantial rise in value generation that year. This was followed by a notable decline in 2022 to 22,758 million, before recovering to 37,294 million in 2023. The upward trajectory continued in 2024 with economic profit reaching 59,956 million, the highest in the observed period, suggesting an overall strong improvement by the end of 2024.
Invested Capital
Invested capital shows a general increasing trend, indicating growing asset investment or expansion over time. Beginning at 145,844 million US dollars in 2020, it rose steadily to 171,408 million in 2021 and further to 202,355 million in 2022. There was a slight dip in 2023 to 189,779 million, which could imply some divestments or asset optimization. However, the invested capital rebounded to a new peak of 227,952 million in 2024, reflecting continued overall capital growth.
Economic Spread Ratio
The economic spread ratio shows considerable variation throughout the period. It started at 13.56% in 2020 and nearly doubled to 30.55% in 2021, coinciding with the peak in economic profit that year. This ratio then dropped to 11.25% in 2022, reflecting the economic profit decrease. Subsequent years saw a recovery with 19.65% in 2023 and a further increase to 26.3% in 2024, indicating an improvement in returns relative to the cost of capital and signaling enhanced profitability efficiency by 2024.
Summary
Overall, the data reveals that despite some volatility, the company experienced growth in both economic profit and invested capital over the five-year span. The economic spread ratio correlates closely with economic profit trends, highlighting fluctuations in profitability efficiency. The recent years show a recovery and strengthening of profitability metrics, suggesting effective management of invested capital to generate higher economic value.

Economic Profit Margin

Alphabet Inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
 
Revenues
Add: Increase (decrease) in deferred revenue
Adjusted revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Charter Communications Inc.
Comcast Corp.
Meta Platforms Inc.
Netflix Inc.
Walt Disney Co.

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).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =

3 Click competitor name to see calculations.


Adjusted Revenues
The adjusted revenues showed a consistent upward trend over the five-year period. Starting from $183,285 million in 2020, the revenues increased each year, reaching $350,970 million by 2024. This reflects steady growth and an expanding scale of operations.
Economic Profit
Economic profit experienced fluctuations throughout the period. It grew substantially from $19,779 million in 2020 to $52,372 million in 2021, then declined to $22,758 million in 2022. Afterward, it recovered to $37,294 million in 2023 and further increased to $59,956 million in 2024. Despite the dip in 2022, there is a general upward trajectory, particularly strong in the most recent year.
Economic Profit Margin
The economic profit margin, representing the efficiency in generating economic profit relative to revenues, followed a similar fluctuating pattern. It rose significantly from 10.79% in 2020 to 20.27% in 2021, dropped to 8.03% in 2022, then improved to 12.11% in 2023, and further increased to 17.08% in 2024. This indicates variability in profitability efficiency, with notable recovery and improvement in the latter years.
Overall Analysis
While the company’s revenues demonstrated steady growth, economic profit and profit margins displayed volatility, with a peak in 2021 followed by a substantial decline in 2022. Despite this, the last two years showed significant recovery and enhancement in economic profitability and margin. This suggests that the company managed to improve operational effectiveness and value creation after a challenging period.