Stock Analysis on Net

Alphabet Inc. (NASDAQ:GOOG)

DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin 

Microsoft Excel LibreOffice Calc

Two-Component Disaggregation of ROE

Alphabet Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = ROA × Financial Leverage
Dec 31, 2021 30.22% = 21.16% × 1.43
Dec 31, 2020 18.09% = 12.60% × 1.44
Dec 31, 2019 17.05% = 12.45% × 1.37
Dec 31, 2018 17.30% = 13.20% × 1.31
Dec 31, 2017 8.30% = 6.42% × 1.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in profitability measured by return on assets ratio (ROA).


Three-Component Disaggregation of ROE

Alphabet Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Net Profit Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 30.22% = 29.51% × 0.72 × 1.43
Dec 31, 2020 18.09% = 22.06% × 0.57 × 1.44
Dec 31, 2019 17.05% = 21.22% × 0.59 × 1.37
Dec 31, 2018 17.30% = 22.46% × 0.59 × 1.31
Dec 31, 2017 8.30% = 11.42% × 0.56 × 1.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in profitability measured by net profit margin ratio.


Five-Component Disaggregation of ROE

Alphabet Inc., decomposition of ROE

Microsoft Excel LibreOffice Calc
ROE = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover × Financial Leverage
Dec 31, 2021 30.22% = 0.84 × 1.00 × 35.35% × 0.72 × 1.43
Dec 31, 2020 18.09% = 0.84 × 1.00 × 26.42% × 0.57 × 1.44
Dec 31, 2019 17.05% = 0.87 × 1.00 × 24.54% × 0.59 × 1.37
Dec 31, 2018 17.30% = 0.88 × 1.00 × 25.60% × 0.59 × 1.31
Dec 31, 2017 8.30% = 0.47 × 1.00 × 24.63% × 0.56 × 1.29

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on equity ratio (ROE) over 2021 year is the increase in operating profitability measured by EBIT margin ratio.


Two-Component Disaggregation of ROA

Alphabet Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Net Profit Margin × Asset Turnover
Dec 31, 2021 21.16% = 29.51% × 0.72
Dec 31, 2020 12.60% = 22.06% × 0.57
Dec 31, 2019 12.45% = 21.22% × 0.59
Dec 31, 2018 13.20% = 22.46% × 0.59
Dec 31, 2017 6.42% = 11.42% × 0.56

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in profitability measured by net profit margin ratio.


Four-Component Disaggregation of ROA

Alphabet Inc., decomposition of ROA

Microsoft Excel LibreOffice Calc
ROA = Tax Burden × Interest Burden × EBIT Margin × Asset Turnover
Dec 31, 2021 21.16% = 0.84 × 1.00 × 35.35% × 0.72
Dec 31, 2020 12.60% = 0.84 × 1.00 × 26.42% × 0.57
Dec 31, 2019 12.45% = 0.87 × 1.00 × 24.54% × 0.59
Dec 31, 2018 13.20% = 0.88 × 1.00 × 25.60% × 0.59
Dec 31, 2017 6.42% = 0.47 × 1.00 × 24.63% × 0.56

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in return on assets ratio (ROA) over 2021 year is the increase in operating profitability measured by EBIT margin ratio.


Disaggregation of Net Profit Margin

Alphabet Inc., decomposition of net profit margin ratio

Microsoft Excel LibreOffice Calc
Net Profit Margin = Tax Burden × Interest Burden × EBIT Margin
Dec 31, 2021 29.51% = 0.84 × 1.00 × 35.35%
Dec 31, 2020 22.06% = 0.84 × 1.00 × 26.42%
Dec 31, 2019 21.22% = 0.87 × 1.00 × 24.54%
Dec 31, 2018 22.46% = 0.88 × 1.00 × 25.60%
Dec 31, 2017 11.42% = 0.47 × 1.00 × 24.63%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The primary reason for the increase in net profit margin ratio over 2021 year is the increase in operating profitability measured by EBIT margin ratio.