Apple Inc. (NASDAQ:AAPL)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a general upward trend from 2019 to 2022, increasing significantly from 53,447 million US dollars in 2019 to a peak of 101,652 million US dollars in 2022. However, there was a decline thereafter, with values decreasing to 94,296 million US dollars in 2023 and further to 91,849 million US dollars in 2024. This indicates strong growth in operating profitability up to 2022, followed by a recent downward adjustment.

Cost of Capital

The cost of capital exhibited a gradual increasing trend across the periods. Starting at 15.84% in 2019, it rose steadily each year, reaching 16.8% in 2024. The consistent increase in the cost of capital reflects a rising expense of funding the company's investments, which may impact profitability and investment decisions.

Invested Capital

The invested capital fluctuated notably during the period. Beginning at 50,655 million US dollars in 2019, it dropped sharply to 36,252 million US dollars in 2020. It then recovered and increased gradually over the next three years, peaking at 60,243 million US dollars in 2023 before decreasing to 50,072 million US dollars in 2024. This indicates a phase of substantial divestment or asset reduction in 2020, followed by expansion and a subsequent reduction in investment levels most recently.

Economic Profit

Economic profit demonstrated a parallel trend to NOPAT but at higher absolute levels. It rose from 45,424 million US dollars in 2019 to a high of 93,928 million US dollars in 2022, reflecting increasing value creation over these years. After 2022, economic profit declined to 84,221 million US dollars in 2023 and slightly further to 83,435 million US dollars in 2024. Despite the decrease, economic profit remains substantially elevated compared to earlier years, suggesting sustained above-cost-of-capital performance.

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.

The financial data reveals several notable trends over the six-year period under review.

Economic Profit

Economic profit exhibited a generally increasing trajectory from 2019 through 2022, rising from 45,424 million US dollars in 2019 to a peak of 93,928 million US dollars in 2022. However, this was followed by a decline in 2023 to 84,221 million US dollars and a marginal further decrease in 2024 to 83,435 million US dollars. This pattern indicates strong profitability growth up to 2022, with subsequent stabilization and slight contraction in the last two years.

Invested Capital

Invested capital fluctuated across the observed years. It initially decreased sharply from 50,655 million US dollars in 2019 to 36,252 million US dollars in 2020, suggesting a contraction or asset reallocation during that period. Subsequently, it increased gradually to 46,661 million in 2022 and surged to 60,243 million in 2023, before decreasing again to 50,072 million in 2024. This volatility indicates active management or restructuring of the capital base.

Economic Spread Ratio

The economic spread ratio, expressed as a percentage, showed a significant upward trend starting at 89.67% in 2019. It more than doubled by 2021 and 2022, reaching approximately 198% and 201%, respectively. This was followed by a decline to 139.8% in 2023, then a rebound to 166.63% in 2024. The overall pattern reflects an improvement in the return generated over the cost of invested capital, peaking in 2022, with some volatility thereafter but maintaining levels well above those of 2019.

In summary, the data reflects strong profit growth accompanied by fluctuations in invested capital and a generally improving economic spread ratio over the years. The peak of economic profit and spread ratio in 2022 suggests particularly effective capital usage during that period, whereas the contractions observed in subsequent years may warrant further investigation to understand underlying factors impacting profitability and capital investment efficiency.

Economic Profit

The economic profit exhibited a strong upward trend from 2019 to 2022, increasing from 45,424 million US dollars to a peak of 93,928 million US dollars. However, in the following two years, there was a decline. By 2023, economic profit had decreased to 84,221 million US dollars and slightly further to 83,435 million US dollars in 2024, indicating a stabilization phase after the peak.

Adjusted Net Sales

Adjusted net sales showed continuous growth overall. Starting at 259,474 million US dollars in 2019, the figure rose steadily each year, reaching a high of 394,828 million US dollars in 2022. Despite a minor decrease in 2023 to 382,985 million US dollars, sales rebounded in 2024 to 391,735 million US dollars, signaling resilient revenue generation capabilities despite fluctuations.

Economic Profit Margin

The economic profit margin followed a positive trajectory from 2019 through 2022, moving from 17.51% to a peak of 23.79%. After reaching the maximum margin in 2022, the profitability ratio decreased to 21.99% in 2023 and further to 21.3% in 2024. This suggests that, although the company maintained strong profitability, there was a slight contraction in profit efficiency relative to net sales in the most recent periods.