Analysis of Profitability Ratios
Profitability ratios measure the company ability to generate profitable sales from its resources (assets).
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Profitability Ratios (Summary)
Alphabet Inc., profitability ratios
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).
- Gross Profit Margin
- The gross profit margin exhibits an overall upward trend throughout the five-year period. Starting at 53.58% in 2020, it increased steadily, peaking at 58.2% by the end of 2024. There was a slight dip observed in 2022 to 55.38%, but the margin recovered in the subsequent years, indicating improved efficiency in managing direct costs relative to revenue.
- Operating Profit Margin
- The operating profit margin showed significant fluctuations but maintained an overall positive growth trajectory. It rose sharply from 22.59% in 2020 to 30.55% in 2021, followed by a decline to 26.46% in 2022. After modest recovery in 2023 at 27.42%, it again increased substantially in 2024 to 32.11%. This pattern suggests variable operating expenses or changes in operational effectiveness, but ultimately reflects stronger profitability from core operations by the end of the period.
- Net Profit Margin
- The net profit margin demonstrated some volatility over the period. It increased notably from 22.06% in 2020 to 29.51% in 2021, decreased sharply to 21.2% in 2022, then gradually improved to 28.6% by 2024. This variation might indicate the impact of non-operating items, taxes, or interest expenses affecting bottom-line profitability, with a positive trend resuming in the later years.
- Return on Equity (ROE)
- The return on equity showed strong fluctuations with an overall upward movement. It nearly doubled from 18.09% in 2020 to 30.22% in 2021, declined to 23.41% in 2022, and then increased again to 30.8% by 2024. The pattern suggests varying effectiveness in generating profits from shareholders' equity, with a notable recovery and improvement after the 2022 dip.
- Return on Assets (ROA)
- The return on assets reflects a similar trend to ROE, starting at 12.6% in 2020 and rising sharply to 21.16% in 2021. It fell back to 16.42% in 2022 but experienced gradual increases reaching 22.24% by 2024. This trend indicates fluctuating efficiency in utilizing company assets to generate profits, with a significant rebound and strengthening toward the end of the period.
Return on Sales
Return on Investment
Gross Profit Margin
Alphabet Inc., gross profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Gross profit | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Gross profit margin1 | ||||||
| Benchmarks | ||||||
| Gross Profit Margin, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software 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 2024 Calculation
Gross profit margin = 100 × Gross profit ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenue Analysis
- Revenues demonstrate a consistent upward trend over the five-year period, increasing from $182,527 million in 2020 to $350,018 million in 2024. This indicates strong top-line growth, with revenues nearly doubling within this timeframe.
- Gross Profit Analysis
- Gross profit also shows steady growth, rising from $97,795 million in 2020 to $203,712 million in 2024. The absolute increase in gross profit aligns with the growth in revenues, suggesting effective cost management efforts or improvements in product/service mix contributing to higher profitability.
- Gross Profit Margin Analysis
- The gross profit margin has generally trended upward, increasing from 53.58% in 2020 to 58.2% in 2024. Although there was a slight dip in 2022 to 55.38%, the margin recovered thereafter and reached its highest level in 2024. This improvement in margin percentage reflects enhanced operational efficiency or pricing power over the period.
- Overall Trend and Insights
- The combined growth in revenue and gross profit along with improving gross profit margins suggests that the company has been successful in scaling its business while maintaining or improving profitability. The margin fluctuations are relatively modest, indicating stable cost control despite revenue growth. The data point to a positive financial trajectory with increasing capacity to generate profit from its sales.
Operating Profit Margin
Alphabet Inc., operating profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Income from operations | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Operating profit margin1 | ||||||
| Benchmarks | ||||||
| Operating Profit Margin, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Operating Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Operating Profit Margin, Industry | ||||||
| Communication Services | ||||||
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 2024 Calculation
Operating profit margin = 100 × Income from operations ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
- Revenues
- The revenues demonstrate a consistent upward trend over the five-year period. Starting from $182,527 million in 2020, revenues increased significantly to $350,018 million by 2024. The growth suggests a steady expansion in the company's sales or service activities, with the largest annual increase occurring between 2023 and 2024.
- Income from operations
- Income from operations also shows a positive progression, rising from $41,224 million in 2020 to $112,390 million in 2024. After a notable surge in 2021, this metric experienced a slight decline in 2022 but resumed growth thereafter. The overall pattern reflects improved operational efficiency or a scaling business model generating higher operational profits over time.
- Operating profit margin
- The operating profit margin exhibits some fluctuations but generally trends upward. The margin started at 22.59% in 2020, peaked at 30.55% in 2021, then declined to 26.46% in 2022. Subsequently, it increased to 27.42% in 2023 and further to 32.11% in 2024, indicating enhanced profitability relative to revenues. This rise suggests better cost control or an increase in high-margin activities contributing to overall profitability.
Net Profit Margin
Alphabet Inc., net profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| Net profit margin1 | ||||||
| Benchmarks | ||||||
| Net Profit Margin, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| Net Profit Margin, Sector | ||||||
| Media & Entertainment | ||||||
| Net Profit Margin, Industry | ||||||
| Communication Services | ||||||
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 2024 Calculation
Net profit margin = 100 × Net income ÷ Revenues
= 100 × ÷ =
2 Click competitor name to see calculations.
The analysis of the annual financial figures reveals a positive growth trajectory in both revenues and net income over the five-year period under review.
- Revenues
- Revenues increased steadily from US$182,527 million in 2020 to US$350,018 million in 2024. This represents a near doubling over the period, highlighting consistent top-line growth with an accelerating trend particularly visible in the later years.
- Net Income
- Net income also exhibited an upward trend, rising from US$40,269 million in 2020 to US$100,118 million in 2024. Despite a decline in 2022 compared to 2021, net income generally increased year-over-year, suggesting improved profitability and effective cost management.
- Net Profit Margin
- The net profit margin fluctuated across the years. It peaked at 29.51% in 2021, declined sharply to 21.2% in 2022, and then recovered to 28.6% by 2024. This variability indicates periods of changing cost structures or pricing strategies, but the margin recovered to near earlier high levels, confirming strong profitability.
Overall, the data indicates robust financial performance characterized by strong revenue growth, a recovering and solid profit margin, and rising net income. The fluctuations in net profit margin warrant further analysis to understand the drivers behind the 2022 dip and subsequent recovery. Nonetheless, the upward trends signify effective business expansion and profitability enhancement efforts.
Return on Equity (ROE)
Alphabet Inc., ROE calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Stockholders’ equity | ||||||
| Profitability Ratio | ||||||
| ROE1 | ||||||
| Benchmarks | ||||||
| ROE, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| ROE, Sector | ||||||
| Media & Entertainment | ||||||
| ROE, Industry | ||||||
| Communication Services | ||||||
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 2024 Calculation
ROE = 100 × Net income ÷ Stockholders’ equity
= 100 × ÷ =
2 Click competitor name to see calculations.
The financial data reveals several key trends over the observed five-year period.
- Net Income
- Net income demonstrates overall growth with fluctuations throughout the years. It increased significantly from 40,269 million US dollars in 2020 to 76,033 million in 2021. A decline followed in 2022, dropping to 59,972 million, before rebounding again to 73,795 million in 2023 and reaching the highest value of 100,118 million in 2024. This pattern indicates a strong recovery and robust profitability in the most recent year.
- Stockholders’ Equity
- Stockholders' equity shows a consistent upward trend each year. Beginning at 222,544 million US dollars in 2020, it increased steadily across the period to 325,084 million in 2024. This gradual accumulation reflects ongoing capital growth and reinforced financial stability.
- Return on Equity (ROE)
- ROE exhibits a general fluctuation but remains strong throughout. It started at 18.09% in 2020, rose sharply to 30.22% in 2021, then declined to 23.41% in 2022. Subsequently, it improved again to 26.04% in 2023 and further increased to 30.8% in 2024. This indicates the company’s varying efficiency in generating returns on shareholder equity, with a notable improvement in the last two years.
Overall, the data reflects a company with growing equity and profitability, experiencing some volatility in income and efficiency measures, but showing strength and improvement in the latest periods. The significant increase in net income and ROE in 2024 suggests enhanced operational performance and effective use of equity capital during that year.
Return on Assets (ROA)
Alphabet Inc., ROA calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net income | ||||||
| Total assets | ||||||
| Profitability Ratio | ||||||
| ROA1 | ||||||
| Benchmarks | ||||||
| ROA, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Take-Two Interactive Software Inc. | ||||||
| Walt Disney Co. | ||||||
| ROA, Sector | ||||||
| Media & Entertainment | ||||||
| ROA, Industry | ||||||
| Communication Services | ||||||
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 2024 Calculation
ROA = 100 × Net income ÷ Total assets
= 100 × ÷ =
2 Click competitor name to see calculations.
- Net Income
- The net income demonstrates a fluctuating but overall upward trend during the periods analyzed. Starting at 40,269 million US dollars in 2020, it nearly doubled to 76,033 million in 2021, followed by a decline to 59,972 million in 2022. The following years show recovery and growth, reaching 73,795 million in 2023 and peaking at 100,118 million in 2024. This pattern indicates variability, but a strong positive trajectory by the end of the period.
- Total Assets
- Total assets exhibit steady growth throughout the timeframe. The value increased from 319,616 million US dollars in 2020 to 359,268 million in 2021, with continuous growth each subsequent year, culminating in 450,256 million in 2024. This steady expansion of assets suggests ongoing investment and asset accumulation.
- Return on Assets (ROA)
- The ROA percentage fluctuates in alignment with net income changes, indicating variations in profitability relative to asset base. It showed improvement from 12.6% in 2020 to a peak of 21.16% in 2021, then declined to 16.42% in 2022. The ROA increased again to 18.34% in 2023 and further to 22.24% in 2024, reflecting a strong ability to generate profit from assets in the later years.
- Summary Insights
- The data reveals an overall positive performance trend with some volatility in net income and ROA. Total assets consistently grow, supporting business expansion and potentially underpinning future earnings capacity. The increasing ROA towards the end of the period underscores improved operational efficiency and profitability relative to the asset base.