Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Alphabet Inc. (NASDAQ:GOOG)

Return on Capital (ROC)

Advanced level

Return on Invested Capital (ROIC)

Alphabet Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 32,894  29,841  12,948  19,452  15,883 
Invested capital2 100,427  86,977  65,705  72,287  71,467 
Performance Ratio
ROIC3 32.75% 34.31% 19.71% 26.91% 22.22%
Benchmarks
ROIC, Competitors4
Adobe Inc. 19.74% 17.25% 22.06% 21.03% 11.74%
Autodesk Inc. 0.93% -11.17% -9.45% 8.45% 10.16%
Facebook Inc. 27.51% 36.42% 37.03% 25.08% 9.26%
International Business Machines Corp. 7.84% 8.46% 5.77% 10.53% 13.69%
Intuit Inc. 34.72% 32.34% 36.84% 34.96% 28.34%
Microsoft Corp. 42.06% 21.26% 35.75% 53.10% 29.69%
Oracle Corp. 15.18% 5.88% 13.04% 15.80% 14.73%
salesforce.com inc. 8.95% 9.47% 7.75% 9.27% 6.61%
ServiceNow Inc. 19.88% 15.78% 15.89% -10.81% 0.75%

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).

1 NOPAT. See details »

2 Invested capital. See details »

3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 32,894 ÷ 100,427 = 32.75%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Alphabet Inc.’s ROIC improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019.

Decomposition of ROIC

Alphabet Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2019 32.75% = 23.20% × 1.61 × 87.54%
Dec 31, 2018 34.31% = 23.81% × 1.58 × 91.32%
Dec 31, 2017 19.71% = 24.25% × 1.69 × 47.96%
Dec 31, 2016 26.91% = 26.49% × 1.25 × 81.02%
Dec 31, 2015 22.22% = 25.64% × 1.05 × 82.51%

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).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the decrease in return on invested capital (ROIC) over 2019 year is the increase in effective cash tax rate (CTR).


Operating Profit Margin (OPM)

Alphabet Inc., OPM calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 32,894  29,841  12,948  19,452  15,883 
Add: Cash operating taxes2 4,684  2,838  14,048  4,555  3,366 
Net operating profit before taxes (NOPBT) 37,579  32,678  26,995  24,007  19,249 
 
Revenues 161,857  136,819  110,855  90,272  74,989 
Add: Increase (decrease) in deferred revenue 86  408  471  362  83 
Adjusted revenues 161,943  137,227  111,326  90,634  75,072 
Profitability Ratio
OPM3 23.20% 23.81% 24.25% 26.49% 25.64%
Benchmarks
OPM, Competitors4
Adobe Inc. 31.93% 35.32% 33.91% 31.32% 24.23%
Autodesk Inc. 3.88% -13.37% -9.48% 13.40% 12.87%
Facebook Inc. 34.36% 44.37% 49.93% 44.85% 34.99%
International Business Machines Corp. 16.43% 14.56% 16.13% 16.19% 19.65%
Intuit Inc. 28.32% 25.71% 28.07% 29.36% 24.51%
Microsoft Corp. 36.61% 35.11% 31.99% 30.09% 19.34%
Oracle Corp. 34.21% 35.42% 34.66% 35.32% 35.82%
salesforce.com inc. 18.93% 16.11% 15.00% 15.40% 11.86%
ServiceNow Inc. 14.97% 14.28% 13.97% -7.00% 2.38%

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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 37,579 ÷ 161,943 = 23.20%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Alphabet Inc.’s OPM deteriorated from 2017 to 2018 and from 2018 to 2019.

Turnover of Capital (TO)

Alphabet Inc., TO calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Revenues 161,857  136,819  110,855  90,272  74,989 
Add: Increase (decrease) in deferred revenue 86  408  471  362  83 
Adjusted revenues 161,943  137,227  111,326  90,634  75,072 
 
Invested capital1 100,427  86,977  65,705  72,287  71,467 
Efficiency Ratio
TO2 1.61 1.58 1.69 1.25 1.05
Benchmarks
TO, Competitors3
Adobe Inc. 0.67 0.61 0.77 0.77 0.66
Autodesk Inc. 0.61 0.69 0.67 0.79 0.83
Facebook Inc. 1.08 0.93 0.98 0.71 0.57
International Business Machines Corp. 0.59 0.71 0.73 0.75 0.81
Intuit Inc. 1.50 1.50 1.80 1.77 1.58
Microsoft Corp. 1.49 1.52 1.31 1.94 2.27
Oracle Corp. 0.55 0.55 0.49 0.58 0.57
salesforce.com inc. 0.51 0.63 0.57 0.70 0.65
ServiceNow Inc. 1.36 1.18 1.24 1.33 1.14

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).

1 Invested capital. See details »

2 2019 Calculation
TO = Adjusted revenues ÷ Invested capital
= 161,943 ÷ 100,427 = 1.61

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Alphabet Inc.’s TO deteriorated from 2017 to 2018 but then slightly improved from 2018 to 2019.

Effective Cash Tax Rate (CTR)

Alphabet Inc., CTR calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 32,894  29,841  12,948  19,452  15,883 
Add: Cash operating taxes2 4,684  2,838  14,048  4,555  3,366 
Net operating profit before taxes (NOPBT) 37,579  32,678  26,995  24,007  19,249 
Tax Rate
CTR3 12.46% 8.68% 52.04% 18.98% 17.49%
Benchmarks
CTR, Competitors4
Adobe Inc. 7.06% 19.97% 15.15% 12.85% 26.06%
Autodesk Inc. 60.79% 20.47% 5.36%
Facebook Inc. 25.67% 11.36% 24.12% 21.75% 53.24%
International Business Machines Corp. 18.55% 18.30% 51.29% 13.24% 13.55%
Intuit Inc. 18.38% 16.40% 27.07% 32.70% 26.75%
Microsoft Corp. 22.65% 60.11% 14.62% 9.05% 32.49%
Oracle Corp. 19.20% 70.01% 22.82% 22.47% 27.32%
salesforce.com inc. 7.48% 7.21% 9.36% 13.59% 14.02%
ServiceNow Inc. 2.51% 6.49% 8.20% 72.30%

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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 4,684 ÷ 37,579 = 12.46%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Alphabet Inc.’s CTR decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.