Apple Inc. (NASDAQ:AAPL)

The financial data reveals several significant trends over the analyzed periods, providing insight into profitability, investment efficiency, and cost factors.

Net Operating Profit After Taxes (NOPAT)

NOPAT showed a generally increasing trend from 2019 through 2022, rising from approximately 53.4 billion to over 101.6 billion US dollars. However, in the last two years, there was a decline, with values dropping to about 94.3 billion in 2023 and further to 91.8 billion in 2024. This suggests that operational profitability peaked in 2022 before experiencing a moderate reduction.

Cost of Capital

The cost of capital exhibited a steady but gradual increase from 15.9% in 2019 to 16.87% in 2024. This incremental rise indicates a progressively higher hurdle rate for investments, which could impact future capital allocation and investment decisions.

Invested Capital

The amount of invested capital demonstrated some fluctuations over the years. Initially, there was a notable decrease from around 50.7 billion in 2019 to 36.3 billion in 2020, followed by consecutive increases up to approximately 60.2 billion in 2023. In 2024, this was followed by a decline to about 50.1 billion. These movements may reflect strategic shifts in asset deployment or divestments.

Economic Profit

Economic profit followed a trajectory similar to NOPAT but was substantially larger in magnitude. Starting at approximately 45.4 billion in 2019, it increased steadily to peak around 93.9 billion in 2022. Afterward, it decreased slightly but remained strong, with values close to 83.4 billion in the latest year. This indicates sustained creation of value above the cost of capital despite recent declines.

Overall, operational profitability and economic profit both surged considerably up to 2022, coinciding with an increasing but moderate rise in invested capital. The cost of capital gradually climbed, possibly exerting pressure on returns. The last two years showed a slight decrease in profitability metrics and invested capital, suggesting potential market or internal challenges affecting performance. Despite these recent declines, the economic profit remains robust, signaling effective capital utilization that exceeds the company’s 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 demonstrates an overall upward trend from 2019 to 2022, increasing from 45,392 million US dollars in 2019 to a peak of 93,896 million US dollars in 2022. However, after reaching this peak, there is a noticeable decline in 2023 to 84,179 million US dollars, followed by a slight further decrease to 83,400 million US dollars in 2024.

Invested Capital

Invested capital shows a contrasting pattern with a significant drop between 2019 and 2020, declining from 50,655 million US dollars to 36,252 million US dollars. From 2020 through 2023, invested capital rises steadily, reaching 60,243 million US dollars by 2023. In 2024, it decreases again to 50,072 million US dollars. This pattern indicates fluctuations in capital allocation or asset base over the period.

Economic Spread Ratio

The economic spread ratio, which reflects the return on invested capital relative to cost, presents a strong increasing trend from 89.61% in 2019 to a high of 201.23% in 2022. After this peak, the ratio declines to 139.73% in 2023 but then rebounds to 166.56% in 2024. Despite the volatility, the ratio remains substantially higher than the 2019 baseline, indicating an improvement in capital efficiency and value creation over the time span analyzed.

Overall Insights

The period from 2019 to 2022 shows increasing economic profit and improving economic spread ratio, suggesting enhanced profitability and effective capital utilization. The fluctuation observed in invested capital, particularly its dip in 2020 and peak in 2023, may reflect strategic investments or divestitures impacting the asset base. Post-2022, while economic profit decreases, the elevated economic spread ratio in 2024 implies that despite a smaller capital base or profit amount, returns remain relatively strong. These patterns highlight a dynamic financial performance with underlying efficiency improvements tempered by varying capital investment levels.

Economic Profit

The economic profit exhibited a generally upward trend from 2019 to 2022, increasing from 45,392 million US dollars to a peak of 93,896 million US dollars. However, following this peak, there was a decline in 2023 and 2024, with economic profit reducing to 84,179 million and then slightly further to 83,400 million US dollars respectively.

Adjusted Net Sales

Adjusted net sales showed consistent growth over the analyzed period. Starting at 259,474 million US dollars in 2019, sales increased steadily each year, reaching 394,828 million US dollars in 2022. In 2023, sales experienced a slight dip to 382,985 million US dollars but then recovered to 391,735 million US dollars in 2024.

Economic Profit Margin

The economic profit margin followed an overall increasing trajectory from 17.49% in 2019 to a high of 23.78% in 2022. This was followed by a decrease in the margin over the two subsequent years, falling to 21.98% in 2023 and further to 21.29% in 2024. Despite the decline after 2022, the margin remains above the levels observed at the start of the period.