Apple Inc. (NASDAQ:AAPL)

The financial data reveals several notable trends over the period from 2019 to 2024. The Net Operating Profit After Taxes (NOPAT) demonstrates a general upward trajectory from 2019 through 2022, increasing from approximately 53,447 million US dollars to a peak of 101,652 million US dollars. However, this trend reverses in the subsequent years, with NOPAT declining to 94,296 million in 2023 and further to 91,849 million in 2024, indicating a potential challenge in maintaining profit growth in the most recent periods.

The Cost of Capital shows a steady incremental increase year-over-year, starting at 16.06% in 2019 and rising to 17.05% by 2024. This gradual rise suggests increasing capital costs, which could exert downward pressure on profitability if not offset by sufficient returns.

Invested Capital figures fluctuate across the years. After a sharp decline from 50,655 million in 2019 to 36,252 million in 2020, invested capital rebounds in 2021 and continues to increase, peaking at 60,243 million in 2023 before falling again to 50,072 million in 2024. This volatility may reflect changes in asset allocation, divestitures, or investment strategies over the timeframe.

The Economic Profit, representing the value creation beyond the cost of capital, follows a pattern broadly mirroring NOPAT but with even more pronounced changes. It rises markedly from 45,310 million in 2019 to 93,816 million in 2022, then decreases to 84,075 million in 2023 and slightly declines further to 83,313 million in 2024. This suggests strong value creation in the middle years, although the tapering in the latter years signals potential challenges in maintaining elevated levels of economic profit.

Overall, the period shows robust growth in profitability and economic profit through 2022, with increasing costs of capital and fluctuating invested capital suggesting dynamic operational and investment conditions. The declines observed in NOPAT and economic profit in the most recent years warrant attention as indicators of potential moderation in performance.

Net Operating Profit After Taxes (NOPAT)

Increased significantly from 2019 to 2022, then declined in 2023 and 2024.

Cost of Capital

Consistently rose each year, indicating increasing expenses related to financing and investment risks.

Invested Capital

Displayed fluctuations with a sharp drop in 2020, followed by growth peaking in 2023, then a decline in 2024.

Economic Profit

Strong growth through 2022 followed by moderate decreases in 2023 and 2024, highlighting changes in excess returns after accounting for the cost of capital.

Net Income

The net income exhibits a general upward trend from 2019 through 2022, increasing from 55,256 million USD in 2019 to a peak of 99,803 million USD in 2022. After this peak, net income shows a decline in the subsequent years, dropping to 96,995 million USD in 2023 and further to 93,736 million USD in 2024. Despite the decline in the last two years, the net income remains significantly higher than the initial 2019 figure, indicating overall growth but with recent signs of contraction.

Net Operating Profit After Taxes (NOPAT)

NOPAT demonstrates a similar pattern to net income. Starting at 53,447 million USD in 2019, it increased steadily to reach 101,652 million USD in 2022, marking the highest value in the series. Subsequently, NOPAT decreased to 94,296 million USD in 2023 and further to 91,849 million USD in 2024. This trend suggests a peak in operating efficiency and profitability in 2022 followed by a notable reduction over the following two years.

Comparative Analysis

Both net income and NOPAT reflect an overall increase over the first four years of the analyzed period, indicating improvements in profitability and operating performance. The divergence in the last two years, with both metrics declining, could imply emerging challenges or shifts in operational dynamics. While the peaks in 2022 demonstrate strong financial performance, the decreases in 2023 and 2024 merit further investigation to identify underlying causes. Notably, net income consistently remains slightly higher than NOPAT across all years, as expected due to the difference in calculation bases between the two metrics.

Provision for Income Taxes

The provision for income taxes demonstrates a generally upward trend over the six-year period analyzed. Starting at 10,481 million US dollars in 2019, it slightly decreased in 2020 to 9,680 million but then increased significantly in subsequent years, reaching 29,749 million by 2024. This indicates substantial growth in tax expense provision, with the most pronounced increases occurring between 2021 to 2022 and 2023 to 2024.

Cash Operating Taxes

Cash operating taxes also rose substantially over the same timeframe. The value grew from 10,617 million US dollars in 2019 to 32,898 million in 2024. Unlike the provision for income taxes, cash operating taxes show a more consistent year-over-year increase, with a noteworthy acceleration between 2022 to 2023 and 2023 to 2024. There was a marked jump from 19,931 million in 2023 to 32,898 million in 2024.

Comparative Analysis

Both provision for income taxes and cash operating taxes exhibit strong growth trends, with cash operating taxes consistently exceeding the provisions. The widening gap in the latter years may suggest changes in tax payment timing, adjustments, or operational tax strategies. The accelerated increase in 2023 and 2024 warrants further examination to understand the underlying causes, such as changes in profitability, tax rates, or regulatory impacts.

Total reported debt & leases

Over the period from September 2019 to September 2024, total reported debt and leases exhibited a fluctuating but overall slightly decreasing trend. The debt increased from approximately $116.6 billion in 2019 to a peak of about $136.5 billion in 2021. Following this peak, a downward trend is observed with debt reducing to roughly $119.1 billion by 2024, indicating a moderate deleveraging or improved debt management in the later years.

Shareholders’ equity

Shareholders' equity showed a declining pattern over the six-year span. Starting at around $90.5 billion in 2019, it declined sharply to approximately $65.3 billion in 2020 and continued a gradual decrease, reaching a low of about $50.7 billion in 2022. A partial recovery is seen in 2023 with equity rising to $62.1 billion, but it declined again to $56.9 billion by 2024. This trend indicates erosion in net assets attributable to shareholders, reflecting potential challenges in profitability, retained earnings, or possible share repurchases.

Invested capital

The invested capital figures demonstrate variability with an overall increase followed by a decline. Beginning at roughly $50.7 billion in 2019, it fell sharply to about $36.3 billion in 2020, likely reflecting reduced investment or asset base changes during that period. Subsequently, a recovery trend is apparent, with invested capital rising to nearly $60.2 billion by 2023. However, it decreased again to approximately $50.1 billion in 2024. These fluctuations suggest changes in operational efficiency, capital expenditures, or asset turnover impacting the capital invested in the business.

Economic Profit

The economic profit showed an overall increasing trend from 2019 to 2022, starting at 45,310 million US dollars and peaking at 93,816 million in 2022. However, in the subsequent years, it slightly decreased to 84,075 million in 2023 and remained relatively stable at 83,313 million in 2024, indicating a plateauing phase after significant growth.

Invested Capital

The invested capital fluctuated over the period. It decreased sharply from 50,655 million in 2019 to 36,252 million in 2020, then increased gradually to 60,243 million by 2023. In 2024, it fell again to 50,072 million. This shows some volatility in the capital invested, with a notable dip in 2020 followed by recovery and subsequent reduction.

Economic Spread Ratio

The economic spread ratio exhibited strong growth from 89.45% in 2019 to over 200% in 2021 and 2022, indicating improving efficiency or profitability relative to invested capital during those years. After reaching this high point, the ratio declined to 139.56% in 2023 but rebounded to 166.39% in 2024, reflecting some variability but maintaining a higher spread compared to the initial years.

Summary of Patterns

Initially, there is clear growth in economic profit and economic spread ratio, suggesting enhanced value creation and efficient use of capital. The volatility in invested capital suggests adjustments in asset base or financed capital. Despite the dip in economic profit and economic spread ratio after 2022, the levels remain significantly above those seen at the beginning of the period, indicating sustained strong financial performance. The data points to a mature phase with high profitability but some fluctuations in capital deployment and efficiency metrics.

Economic Profit

The economic profit exhibited a significant upward trend from 2019 to 2022, starting at 45,310 million US$ in 2019 and reaching a peak of 93,816 million US$ in 2022. However, after this peak, economic profit showed a decline in 2023 to 84,075 million US$ and remained relatively stable but slightly lower at 83,313 million US$ in 2024.

Adjusted Net Sales

Adjusted net sales increased steadily from 259,474 million US$ in 2019 to 394,828 million US$ in 2022. After reaching this highest point in 2022, there was a slight decrease in 2023 to 382,985 million US$, followed by a moderate recovery in 2024 to 391,735 million US$.

Economic Profit Margin

The economic profit margin improved consistently from 17.46% in 2019 to a peak of 23.76% in 2022. Subsequently, it decreased to 21.95% in 2023 and further to 21.27% in 2024, indicating a slight reduction in profitability relative to net sales despite the high absolute economic profit levels.

Overall, the data reveals strong growth in both economic profit and adjusted net sales over the first four years, peaking in 2022. The declines in economic profit and margin in the last two years suggest challenges in maintaining peak profitability levels amid fluctuating sales figures. Despite these declines, profitability remains robust in 2024 compared to the earlier years.