Apple Inc. (NASDAQ:AAPL)

The financial data reveals several notable trends across the examined periods.

Net Operating Profit After Taxes (NOPAT)

NOPAT shows a consistent upward trend from 2019 to 2022, increasing from 53,447 million USD to 101,652 million USD. However, this growth slows and slightly reverses in the following years, with NOPAT decreasing to 94,296 million USD in 2023 and further to 91,849 million USD in 2024.

Cost of Capital

The cost of capital gradually rises over the period, starting at 15.9% in 2019 and steadily increasing to 16.87% in 2024. This incremental increase indicates higher financing costs or risk premiums over time.

Invested Capital

Invested capital fluctuates significantly. It declines sharply from 50,655 million USD in 2019 to 36,252 million USD in 2020, then recovers somewhat over the next few years, peaking at 60,243 million USD in 2023 before declining again to 50,072 million USD in 2024. This pattern suggests variable capital deployment or asset base adjustments within the periods.

Economic Profit

Economic profit follows a pattern similar to NOPAT, increasing substantially from 45,393 million USD in 2019 to a high of 93,897 million USD in 2022. Subsequently, economic profit declines to 84,181 million USD in 2023 and marginally decreases to 83,402 million USD in 2024. Despite the slight downturn, the economic profit remains significantly higher than the starting value, reflecting sustained value creation over the analyzed periods.

Overall, the data indicates a period of strong profitability growth until 2022, followed by a mild downturn in both profitability and economic profit. The gradual rise in the cost of capital over the years may exert pressure on returns, while the fluctuation in invested capital suggests strategic shifts or operational adjustments impacting capital deployment. The company maintains substantial economic profit throughout, signifying ongoing efficient use of capital despite the recent decreases.

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 exhibited an overall upward trend from 2019 to 2022, starting at 45,393 million US dollars in 2019 and reaching a peak of 93,897 million US dollars in 2022. However, a decline is observed after 2022, with values decreasing to 84,181 million US dollars in 2023 and further to 83,402 million US dollars in 2024.

Invested Capital

The invested capital displayed a fluctuating pattern over the examined period. It notably dropped from 50,655 million US dollars in 2019 to 36,252 million US dollars in 2020, followed by a gradual increase to 60,243 million in 2023. In 2024, the invested capital declined again to 50,072 million US dollars. This variation suggests periods of both divestment and reinvestment.

Economic Spread Ratio

The economic spread ratio showed a substantially positive trend, increasing from 89.61% in 2019 to a high of 201.23% in 2022. After this peak, the ratio declined to 139.74% in 2023 but rebounded to 166.56% in 2024. This indicates the company's ability to maintain a significant return over its cost of capital, with some volatility in the later years.

Overall Analysis

From 2019 to 2022, the data reveal strong growth in economic profit and a simultaneous increase in the economic spread ratio, alongside a fluctuating invested capital. After 2022, economic profit and economic spread ratio both declined, although the spread ratio improved slightly in 2024. The trends suggest that while profitability and returns on invested capital reached high levels by 2022, there was a subsequent contraction or normalization phase. The changes in invested capital imply strategic adjustments in asset deployment, potentially reflecting market or operational shifts during these years.

Economic Profit

Economic profit demonstrated a consistent upward trajectory from 2019 through 2022, increasing from approximately 45,393 million US dollars in 2019 to a peak of 93,897 million US dollars in 2022. This growth was followed by a decline in 2023 and 2024, where economic profit decreased to 84,181 million and 83,402 million US dollars respectively, indicating a slight reduction in value creation after its 2022 high.

Adjusted Net Sales

Adjusted net sales showed a steady increase during the period analyzed, rising from 259,474 million US dollars in 2019 to 394,828 million US dollars in 2022. There was a minor decrease in 2023 to 382,985 million US dollars, but the sales recovered to 391,735 million US dollars in 2024. Overall, the trend reflects robust revenue growth over the six-year span.

Economic Profit Margin

The economic profit margin enhanced steadily from 17.49% in 2019 to a peak of 23.78% in 2022, suggesting improving efficiency and profitability per unit of sales. However, this margin contracted slightly in subsequent years, dropping to 21.98% in 2023 and further to 21.29% in 2024. Despite the decrease, the margin remains higher than the initial values, indicating sustained profitability but with some pressure on margin after 2022.

Summary

The data indicates a pattern of strong growth in both economic profit and adjusted net sales from 2019 through 2022, with economic profit margins simultaneously improving, highlighting increased value generation and operational efficiency. Post-2022, a modest decline in economic profit and margin suggests challenges in maintaining peak profitability levels, while adjusted net sales experienced slight fluctuations but broadly maintained an upward trend. These insights may imply external or internal factors influencing profitability despite stable revenue, necessitating further investigation into cost structures or market conditions impacting economic profit beyond 2022.