Apple Inc. (NASDAQ:AAPL)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes shows an overall upward trend from 2019 through 2022, increasing from $53,447 million to a peak of $101,652 million. This represents almost a doubling in four years. However, in the following years, there is a decline with values dropping to $94,296 million in 2023 and further to $91,849 million in 2024, indicating some recent profit pressure or operational challenges.

Cost of Capital

The cost of capital exhibits a gradual increase over the entire period. Starting at 16.16% in 2019, it rose steadily each year to reach 17.15% by 2024. This trend may reflect rising interest rates, increased risk perception, or a combination of factors affecting the company's capital costs.

Invested Capital

Invested capital fluctuates notably across the years. It starts at $50,655 million in 2019, sharply decreases to $36,252 million in 2020, then gradually increases to $60,243 million by 2023 before slightly declining to $50,072 million in 2024. The initial sharp drop followed by growth and a slight dip suggests adjustments in asset base or working capital management that impacted how much capital is deployed in the business.

Economic Profit

Economic profit follows a trend comparable to NOPAT but on a larger absolute scale, starting at $45,261 million in 2019 and increasing significantly each year to a peak of $93,768 million in 2022. This value then decreases to $84,013 million in 2023 and slightly further to $83,261 million in 2024. Despite the decline after 2022, the economic profit remains substantially higher relative to the beginning of the period, indicating strong value creation over the years.

Summary of Trends

Overall, the data shows a period of strong growth in operating profitability and economic profit through 2022, accompanied by increasing costs of capital and varying levels of invested capital. The declines in profitability after 2022 suggest emerging challenges or changes in market conditions impacting returns. The continuous rise in the cost of capital poses an increasing hurdle for investment returns. The company's capital deployment has seen significant change, particularly with a sharp reduction in 2020 followed by a period of higher investment, reflecting strategic shifts or operational realignments.

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 analysis of the annual economic profit, invested capital, and economic spread ratio over the six-year period reveals notable trends in financial performance and capital management.

Economic Profit

The economic profit shows a rising trend from 2019 through 2022, increasing from 45,261 million US dollars to a peak of 93,768 million US dollars. This indicates a significant improvement in profitability during this timeframe. However, in the following years, economic profit declined to 84,013 million in 2023 and further slightly to 83,261 million in 2024, suggesting some challenges or increased costs affecting net economic gains despite remaining at relatively high levels compared to earlier years.

Invested Capital

Invested capital experienced fluctuations across the period. Initially, it decreased sharply from 50,655 million in 2019 to 36,252 million in 2020, which may reflect divestitures, asset write-downs, or changes in capital allocation strategies. After 2020, invested capital gradually increased again, reaching 60,243 million in 2023. In 2024, a decline to 50,072 million occurred, reflecting possible capital structure adjustments or asset disposals. Overall, invested capital remained variable but generally returned closer to the starting magnitude in the latter years.

Economic Spread Ratio

The economic spread ratio, representing the return on invested capital relative to its cost, showed a robust upward trend from 89.35% in 2019 to a high of 200.96% in 2022. This demonstrates enhanced efficiency and return generation on capital employed up to that point. After peaking in 2022, the ratio contracted to 139.46% in 2023 but recovered somewhat to 166.28% in 2024. Although there is volatility, the ratio remains significantly strong overall, indicating sustained value creation exceeding the cost of capital.

In summary, the company exhibited strong growth in economic profit and economic spread until 2022, reflecting improved profitability and capital efficiency. Fluctuations in invested capital suggest active management of asset base and capital deployment. The slight decline in economic profit and spread ratio after 2022 may merit further attention to underlying operational or market factors affecting returns. Despite these challenges, the company maintains a solid economic spread ratio above 100%, indicating ongoing creation of shareholder value.

The financial data reveals several notable trends in performance over the six-year period ending September 28, 2024.

Economic Profit

The economic profit exhibited a generally increasing trend from 2019 through 2022, rising from 45,261 million US dollars in 2019 to a peak of 93,768 million US dollars in 2022. Following this peak, there was a decline in 2023 and 2024, with economic profit decreasing to 84,013 million and 83,261 million US dollars, respectively. Despite the recent decrease, economic profit in 2024 remains substantially higher than the initial value in 2019.

Adjusted Net Sales

Adjusted net sales increased steadily year over year from 2019 to 2022, growing from 259,474 million US dollars to 394,828 million US dollars. In 2023, there was a slight decrease to 382,985 million US dollars. However, sales rebounded somewhat in 2024, reaching 391,735 million US dollars. Overall, the sales figures demonstrate robust growth over the full period, with a minor slowdown and partial recovery in the final two years.

Economic Profit Margin

The economic profit margin, expressed as a percentage, showed consistent improvement from 17.44% in 2019 to a peak of 23.75% in 2022. After 2022, the margin declined to 21.94% in 2023 and further to 21.25% in 2024. This indicates that although profitability ratios increased markedly over the initial four-year period, there was a reduction in profit margin efficiency in the last two years, despite remaining above the levels observed at the start.

In summary, the data indicate a robust expansion phase through 2022 marked by increasing economic profit, sales, and profit margins. Subsequently, a moderate contraction phase is apparent in 2023 and 2024, characterized by declines in economic profit and margin, alongside a small dip and recovery in sales. This pattern suggests that while the company maintained strong profitability and sales growth over the medium term, recent years have introduced challenges that have somewhat dampened these metrics.