Stock Analysis on Net

Alphabet Inc. (NASDAQ:GOOG)

Return on Capital (ROC)

Microsoft Excel

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.


Return on Invested Capital (ROIC)

Alphabet Inc., ROIC calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 63,082 52,578 77,747 41,262 32,894
Invested capital2 189,763 174,698 148,237 122,733 100,542
Performance Ratio
ROIC3 33.24% 30.10% 52.45% 33.62% 32.72%
Benchmarks
ROIC, Competitors4
Comcast Corp. 7.80% 3.20% 8.38% 6.52% 8.40%
Meta Platforms Inc. 27.09% 20.47% 43.26% 34.56% 27.63%
Netflix Inc. 14.92% 13.33% 17.47% 12.41% 10.33%
Walt Disney Co. 1.96% 3.85% 1.28% -1.18% 9.58%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Invested capital. See details »

3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 63,082 ÷ 189,763 = 33.24%

4 Click competitor name to see calculations.

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Alphabet Inc. ROIC deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Decomposition of ROIC

Alphabet Inc., decomposition of ROIC

Microsoft Excel
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2023 33.24% = 26.55% × 1.62 × 77.14%
Dec 31, 2022 30.10% = 25.43% × 1.62 × 72.91%
Dec 31, 2021 52.45% = 34.97% × 1.74 × 86.03%
Dec 31, 2020 33.62% = 25.81% × 1.49 × 87.22%
Dec 31, 2019 32.72% = 23.20% × 1.61 × 87.54%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Operating profit margin (OPM). See calculations »

2 Turnover of capital (TO). See calculations »

3 Effective cash tax rate (CTR). See calculations »

The primary reason for the increase in return on invested capital (ROIC) over 2023 year is the decrease in effective cash tax rate (CTR).


Operating Profit Margin (OPM)

Alphabet Inc., OPM calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 63,082 52,578 77,747 41,262 32,894
Add: Cash operating taxes2 18,689 19,532 12,624 6,046 4,684
Net operating profit before taxes (NOPBT) 81,771 72,109 90,371 47,308 37,579
 
Revenues 307,394 282,836 257,637 182,527 161,857
Add: Increase (decrease) in deferred revenue 541 684 799 758 86
Adjusted revenues 307,935 283,520 258,436 183,285 161,943
Profitability Ratio
OPM3 26.55% 25.43% 34.97% 25.81% 23.20%
Benchmarks
OPM, Competitors4
Comcast Corp. 20.88% 10.68% 20.21% 18.80% 20.42%
Meta Platforms Inc. 34.35% 25.55% 40.15% 38.27% 34.39%
Netflix Inc. 21.13% 19.29% 22.76% 16.83% 14.43%
Walt Disney Co. 7.31% 10.16% 5.56% -1.10% 24.76%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 81,771 ÷ 307,935 = 26.55%

4 Click competitor name to see calculations.

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Alphabet Inc. OPM deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Turnover of Capital (TO)

Alphabet Inc., TO calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Revenues 307,394 282,836 257,637 182,527 161,857
Add: Increase (decrease) in deferred revenue 541 684 799 758 86
Adjusted revenues 307,935 283,520 258,436 183,285 161,943
 
Invested capital1 189,763 174,698 148,237 122,733 100,542
Efficiency Ratio
TO2 1.62 1.62 1.74 1.49 1.61
Benchmarks
TO, Competitors3
Comcast Corp. 0.58 0.57 0.51 0.46 0.50
Meta Platforms Inc. 0.96 1.15 1.27 1.06 1.08
Netflix Inc. 0.89 0.84 0.86 0.85 0.84
Walt Disney Co. 0.51 0.49 0.39 0.37 0.42

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 Invested capital. See details »

2 2023 Calculation
TO = Adjusted revenues ÷ Invested capital
= 307,935 ÷ 189,763 = 1.62

3 Click competitor name to see calculations.

Efficiency ratio Description The company
TO The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. Alphabet Inc. TO deteriorated from 2021 to 2022 and from 2022 to 2023.

Effective Cash Tax Rate (CTR)

Alphabet Inc., CTR calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 63,082 52,578 77,747 41,262 32,894
Add: Cash operating taxes2 18,689 19,532 12,624 6,046 4,684
Net operating profit before taxes (NOPBT) 81,771 72,109 90,371 47,308 37,579
Tax Rate
CTR3 22.86% 27.09% 13.97% 12.78% 12.46%
Benchmarks
CTR, Competitors4
Comcast Corp. 35.33% 47.01% 18.38% 25.15% 18.36%
Meta Platforms Inc. 17.45% 30.06% 15.37% 15.06% 25.65%
Netflix Inc. 21.00% 17.55% 10.36% 12.87% 14.95%
Walt Disney Co. 47.64% 22.01% 41.25% 7.41%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 18,689 ÷ 81,771 = 22.86%

4 Click competitor name to see calculations.

Tax rate Description The company
CTR Effective cash tax rate on operating income. Alphabet Inc. CTR increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.