Accenture PLC (NYSE:ACN)

The financial performance, as measured by economic profit, exhibits a fluctuating pattern over the analyzed period. While net operating profit after taxes (NOPAT) generally increased, economic profit itself experienced a decline before a modest recovery. Invested capital consistently rose throughout the period, while the cost of capital remained relatively stable, with a slight decrease in the final year.

NOPAT Trend

Net operating profit after taxes demonstrated an overall upward trajectory, increasing from US$6,009,567 thousand in 2020 to US$9,111,886 thousand in 2025. Growth was particularly strong between 2024 and 2025. A slight decrease in NOPAT was observed between 2022 and 2023.

Cost of Capital

The cost of capital remained consistently around 20% for the majority of the period, fluctuating between 20.00% and 20.13%. A noticeable decrease to 19.52% occurred in 2025, potentially influencing the economic profit calculation.

Invested Capital Growth

Invested capital showed a consistent and substantial increase throughout the period, rising from US$22,846,720 thousand in 2020 to US$45,311,761 thousand in 2025. This indicates ongoing investment in the business operations.

Economic Profit Analysis

Economic profit peaked in 2021 at US$1,494,085 thousand, then declined significantly to US$334,726 thousand in 2023. A minimal increase to US$267,273 thousand was observed in 2025. The decline in economic profit, despite increasing NOPAT, suggests that the growth in invested capital and the relatively stable cost of capital were impacting the overall economic return.

The substantial increase in invested capital appears to have outpaced the growth in NOPAT for a period, leading to the reduction in economic profit. The slight recovery in 2025 coincides with both a further increase in NOPAT and a decrease in the cost of capital.

In summary, while the organization demonstrated growth in net operating profit and continued to invest in its operations, the economic profit metric indicates a period of diminishing returns before a slight improvement in the final year. The relationship between NOPAT, invested capital, and the cost of capital warrants continued monitoring.

Net Income Attributable to Accenture plc

The net income shows a consistent upward trend over the observed periods. Starting at approximately 5.11 billion USD in 2020, it increased each year, reaching about 7.68 billion USD by 2025. This demonstrates steady profit growth with particularly notable increments between 2021 and 2022, and a sustained increase thereafter, suggesting effective management and operational performance.

Net Operating Profit After Taxes (NOPAT)

NOPAT also exhibits a general positive trend, increasing from about 6.01 billion USD in 2020 to over 9.11 billion USD in 2025. The growth, while mostly steady, includes some fluctuations, such as a slight dip in 2023 compared to 2022. Despite this, the overall pattern points to improved operational efficiency and profitability before dividends and other financial considerations.

General Observations

Both net income and NOPAT have increased significantly over the six-year span. The growth in NOPAT outpaces net income in later years, especially from 2023 to 2025, indicating that the company is generating a higher operating profit relative to its net income. This divergence might highlight changes in non-operating factors, taxes, or other income statement elements affecting net income.

The financial data reveals trends in tax-related expenses and cash operating taxes over a six-year period.

Income Tax Expense

The income tax expense shows an overall upward trajectory from 1,589,018 thousand US dollars in 2020 to an estimated 2,437,993 thousand US dollars in 2025. Notably, there was a significant increase in 2022, rising from approximately 1.77 million to 2.21 million thousand US dollars. After a slight decline in 2023, the expense resumes increasing in the subsequent years. This pattern suggests growth in taxable income or adjustments in tax rates impacting the company's tax obligations.

Cash Operating Taxes

Cash operating taxes also demonstrate a growth trend from 1,440,649 thousand US dollars in 2020 to a peak of about 2,446,374 thousand US dollars in 2022. However, unlike income tax expense, cash operating taxes decrease starting in 2023 and continue to decline through 2025, falling to around 2,085,412 thousand US dollars. This divergence may reflect changes in tax payment timing, tax planning strategies, or fluctuations in operating profitability affecting cash tax payments.

Overall, the data indicates increasing tax expenses with a more volatile pattern in cash operating taxes, which could be indicative of evolving tax liabilities versus actual cash payments, potentially influenced by corporate strategies or external economic factors.

Total Reported Debt & Leases

The total reported debt and leases demonstrated a fluctuating trend over the observed periods. Initially, there was a slight increase from 3,485,513 thousand USD in 2020 to 3,506,634 thousand USD in 2021, followed by a gradual decline in the subsequent years to 3,149,034 thousand USD by 2023. However, a significant increase occurred thereafter, with debt rising sharply to 4,120,549 thousand USD in 2024 and nearly doubling to 8,182,866 thousand USD in 2025. This suggests increased leverage or financing activities particularly in the last two years of the analysis period.

Total Accenture plc Shareholders’ Equity

Shareholders’ equity consistently increased throughout the entire timeframe. The equity value grew steadily from 17,000,536 thousand USD in 2020 to 19,529,454 thousand USD in 2021 and continued this upward trajectory each year, reaching 31,195,446 thousand USD in 2025. This consistent rise indicates a strengthening capital base and potentially retained earnings or equity issuances contributing to shareholder value over time.

Invested Capital

Invested capital showed a clear and sustained upward trend across the periods examined. Starting at 22,846,720 thousand USD in 2020, it increased steadily each year, culminating at 45,311,761 thousand USD in 2025. The growth in invested capital outpaced the growth in shareholders’ equity, reflecting expansion or reinvestment in operational assets, possibly funded by the increased debt observed towards the end of the period.

The economic spread ratio demonstrates a consistent decline over the observed period, beginning in 2020 and continuing through 2024, before showing a slight recovery in 2025. This trend is coupled with increasing invested capital, while economic profit fluctuates significantly.

Economic Spread Ratio Trend

The economic spread ratio decreased from 6.30% in 2020 to 5.70% in 2021, indicating a slight reduction in the value created relative to invested capital. The decline accelerated in 2022, falling to 3.88%, and continued sharply in 2023 to 1.01%. This represents a substantial erosion of the spread. A minimal increase to 0.23% was observed in 2024, representing the lowest point in the period. A modest recovery to 0.59% occurred in 2025, though still significantly below the levels seen in earlier years.

Relationship with Economic Profit

Economic profit peaked in 2021 at US$1,494,085 thousand, before decreasing to US$1,155,796 thousand in 2022 and falling dramatically to US$334,726 thousand in 2023. This decline mirrors the decreasing economic spread ratio. While economic profit experienced a slight increase to US$83,819 thousand in 2024, it remained exceptionally low. A further increase to US$267,273 thousand was noted in 2025, but still remains well below the 2020 and 2021 levels.

Invested Capital Trend

Invested capital consistently increased throughout the period, rising from US$22,846,720 thousand in 2020 to US$45,311,761 thousand in 2025. This growth in invested capital occurred concurrently with the decline in the economic spread ratio, suggesting that the company is deploying more capital with diminishing returns in terms of value creation relative to that capital.

The combination of a declining economic spread ratio and increasing invested capital suggests a potential issue with capital allocation efficiency. While economic profit remains positive throughout the period, the decreasing spread indicates that the company is generating less value for each dollar invested. The slight recovery in both economic profit and the economic spread ratio in 2025 may indicate a stabilization, but further monitoring is warranted to determine if this represents a sustained trend.

The economic profit margin demonstrates a consistent decline over the observed period, beginning in 2020 and reaching its lowest point in 2023 before a slight recovery in 2025. While adjusted revenues have generally increased, the growth in economic profit has not kept pace, resulting in the diminishing margin.

Economic Profit Margin Trend

The economic profit margin decreased from 3.21% in 2020 to 2.92% in 2021, representing a modest initial decline. The rate of decline accelerated in 2022, falling to 1.87%. A significant drop occurred in 2023, with the margin reaching 0.52%. A minimal increase to 0.13% was observed in 2024, followed by a partial recovery to 0.38% in 2025, though still substantially below the levels seen in earlier years.

Relationship to Adjusted Revenues

Adjusted revenues exhibited a generally upward trend throughout the period, increasing from US$44,900,652 thousand in 2020 to US$70,572,494 thousand in 2025. However, the growth in adjusted revenues did not translate proportionally into economic profit. The divergence between revenue growth and economic profit growth is a key driver of the declining economic profit margin.

Economic Profit Trend

Economic profit peaked in 2021 at US$1,494,085 thousand, before decreasing substantially to US$1,155,796 thousand in 2022. The most dramatic reduction occurred between 2022 and 2023, with economic profit falling to US$334,726 thousand. A further decrease to US$83,819 thousand was seen in 2024, before a modest increase to US$267,273 thousand in 2025. This pattern directly contributes to the observed margin compression.

The substantial decline in economic profit margin warrants further investigation to determine the underlying causes. Potential factors could include increased operating costs, changes in the cost of capital, or a shift in the revenue mix towards lower-margin products or services. The slight recovery in 2025 suggests potential stabilization, but continued monitoring is necessary to assess the sustainability of this trend.