Analysis of Long-term (Investment) Activity Ratios
Activity ratios measure how efficiently a company performs day-to-day tasks, such us the collection of receivables and management of inventory.
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Long-term Activity Ratios (Summary)
Alphabet Inc., long-term (investment) activity ratios
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Net fixed asset turnover | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset) | ||||||
| Total asset turnover | ||||||
| Equity turnover |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
An examination of long-term investment activity ratios reveals consistent trends across the five-year period. Generally, asset utilization appears to be declining, though at varying rates depending on the specific metric considered. The analysis indicates a potential shift in the company’s asset management strategy or a change in the efficiency with which assets are generating revenue.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio demonstrates a clear downward trend, decreasing from 2.64 in 2021 to 1.63 in 2025. This suggests a diminishing ability to generate sales revenue from its fixed assets. The rate of decline accelerates in later years, with a more substantial decrease between 2023 and 2025 than in earlier periods.
- Net Fixed Asset Turnover (Including Operating Lease, Right-of-Use Asset)
- A similar declining pattern is observed when including operating lease and right-of-use assets in the calculation, moving from 2.33 in 2021 to 1.54 in 2025. While the values are lower than the standard net fixed asset turnover, the trend remains consistent, reinforcing the observation of decreasing efficiency in utilizing fixed assets, even when considering lease obligations. The rate of decline mirrors that of the standard net fixed asset turnover.
- Total Asset Turnover
- The total asset turnover ratio exhibits more moderate fluctuations. It initially increases from 0.72 in 2021 to 0.78 in 2024 before decreasing to 0.68 in 2025. This suggests that while the company initially improved its ability to generate sales from all assets, this improvement stalled and then reversed in the most recent year. The overall trend is relatively stable until the final year, where a noticeable decline occurs.
- Equity Turnover
- The equity turnover ratio shows a slight increase from 1.02 in 2021 to 1.10 in 2022, followed by relative stability at 1.08 in 2023 and 2024, and then a decrease to 0.97 in 2025. This indicates a decreasing ability to generate sales revenue from shareholder equity in the final year. The trend is less pronounced than that of the asset turnover ratios, but still suggests a potential weakening in the relationship between equity and sales.
In summary, the observed trends suggest a gradual decline in asset utilization efficiency across multiple metrics. The accelerating downward trend in the net fixed asset turnover ratios, coupled with the decrease in total and equity turnover in the final year, warrants further investigation to understand the underlying causes and potential implications for future performance.
Net Fixed Asset Turnover
Alphabet Inc., net fixed asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Property and equipment, net | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
| Net Fixed Asset Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Net Fixed Asset Turnover, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover = Revenues ÷ Property and equipment, net
= ÷ =
2 Click competitor name to see calculations.
Analysis of the presented financial information reveals a consistent decline in net fixed asset turnover over the five-year period. Revenues demonstrate a positive trajectory, increasing from US$257,637 million in 2021 to US$402,836 million in 2025. However, property and equipment, net, experienced a more substantial increase, rising from US$97,599 million in 2021 to US$246,597 million in 2025. This disparity in growth rates is the primary driver of the observed trend in the net fixed asset turnover ratio.
- Net Fixed Asset Turnover
- The net fixed asset turnover ratio decreased steadily from 2.64 in 2021 to 1.63 in 2025. This indicates a diminishing efficiency in generating revenue from the company’s fixed assets. While revenue increased over the period, the growth in property and equipment, net, outpaced revenue growth, resulting in a lower ratio. The decline suggests the company is investing heavily in fixed assets, potentially for future growth, but currently, these assets are not being utilized as efficiently to generate sales as they were in 2021.
The most significant decrease in the net fixed asset turnover ratio occurred between 2023 and 2025, dropping from 2.29 to 1.63. This suggests an acceleration in the rate of fixed asset investment relative to revenue generation during this timeframe. Further investigation would be required to determine the specific reasons for this accelerated investment, such as expansion into new markets, technological upgrades, or increased capacity.
The increasing investment in property and equipment, net, coupled with the declining net fixed asset turnover ratio, suggests a potential shift in the company’s strategy. It is possible the company is prioritizing long-term growth and market share over short-term asset utilization efficiency. Monitoring this trend in subsequent periods will be crucial to assess whether the increased investment ultimately translates into improved revenue generation and profitability.
Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset)
Alphabet Inc., net fixed asset turnover (including operating lease, right-of-use asset) calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Property and equipment, net | ||||||
| Operating lease assets | ||||||
| Property and equipment, net (including operating lease, right-of-use asset) | ||||||
| Long-term Activity Ratio | ||||||
| Net fixed asset turnover (including operating lease, right-of-use asset)1 | ||||||
| Benchmarks | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Sector | ||||||
| Media & Entertainment | ||||||
| Net Fixed Asset Turnover (including Operating Lease, Right-of-Use Asset), Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Net fixed asset turnover (including operating lease, right-of-use asset) = Revenues ÷ Property and equipment, net (including operating lease, right-of-use asset)
= ÷ =
2 Click competitor name to see calculations.
Analysis reveals a consistent decline in the net fixed asset turnover ratio over the five-year period. Simultaneously, revenues demonstrate a positive, albeit decelerating, growth trajectory, while the value of property and equipment, net of accumulated depreciation and including operating lease right-of-use assets, exhibits substantial increases.
- Revenue Trend
- Revenues increased from US$257,637 million in 2021 to US$402,836 million in 2025. However, the rate of growth diminished over time. The largest absolute increase occurred between 2023 and 2024 (US$42,624 million), while the increase from 2024 to 2025 was comparatively smaller (US$52,818 million).
- Property, Plant, and Equipment (PP&E) Trend
- The net value of property and equipment, including operating leases and right-of-use assets, increased steadily from US$110,558 million in 2021 to US$261,818 million in 2025. This represents a significant expansion of the asset base over the period. The largest absolute increase in PP&E occurred between 2024 and 2025 (US$77,194 million), indicating accelerated investment in fixed assets during that year.
- Net Fixed Asset Turnover Ratio Trend
- The net fixed asset turnover ratio, which measures the efficiency with which a company uses its fixed assets to generate revenue, decreased from 2.33 in 2021 to 1.54 in 2025. This indicates a declining trend in asset utilization efficiency. The ratio decreased each year, suggesting that a greater investment in fixed assets is required to generate each dollar of revenue. The most substantial decrease occurred between 2023 and 2024, falling from 2.07 to 1.90, and again between 2024 and 2025, dropping to 1.54.
The combination of increasing PP&E and a decreasing net fixed asset turnover ratio suggests that the company is investing heavily in fixed assets, but these investments are not translating into a proportional increase in revenue. This could be due to a variety of factors, including a shift in business strategy, increased competition, or inefficiencies in asset utilization. Further investigation would be required to determine the underlying causes of this trend.
Total Asset Turnover
Alphabet Inc., total asset turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Total assets | ||||||
| Long-term Activity Ratio | ||||||
| Total asset turnover1 | ||||||
| Benchmarks | ||||||
| Total Asset Turnover, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
| Total Asset Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Total Asset Turnover, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Total asset turnover = Revenues ÷ Total assets
= ÷ =
2 Click competitor name to see calculations.
The total asset turnover ratio exhibits a fluctuating pattern over the five-year period. Initially, the ratio increased from 0.72 in 2021 to 0.77 in 2022, indicating improved efficiency in utilizing assets to generate revenue. This positive trend continued modestly into 2023, reaching 0.76. A further slight increase was observed in 2024, with the ratio reaching 0.78. However, 2025 saw a noticeable decline to 0.68, representing the lowest value within the observed timeframe.
- Total Asset Turnover Trend
- The ratio demonstrates an overall increase from 2021 to 2024, suggesting a growing ability to generate sales from its asset base. However, the decrease in 2025 warrants further investigation. This decline could be attributed to several factors, including a slower growth in revenue relative to asset expansion, or potentially an increase in assets that are not yet contributing significantly to revenue generation.
Revenues consistently increased throughout the period, rising from US$257,637 million in 2021 to US$402,836 million in 2025. Simultaneously, total assets also increased, but at a varying rate. The more substantial increase in total assets in 2025, compared to the revenue increase, likely contributed to the observed decrease in the total asset turnover ratio.
- Relationship between Revenue and Assets
- While revenue growth is positive, the faster growth of total assets in 2025 suggests potential inefficiencies in asset utilization. This could indicate investments in long-term projects or acquisitions that have not yet fully translated into revenue gains. Monitoring this relationship in subsequent periods will be crucial to determine if the 2025 decline is a temporary fluctuation or the beginning of a more sustained trend.
The observed fluctuations in the total asset turnover ratio suggest a dynamic relationship between revenue generation and asset deployment. Continued monitoring of this ratio, alongside a detailed analysis of the underlying asset composition and revenue streams, is recommended to gain a more comprehensive understanding of the company’s operational efficiency.
Equity Turnover
Alphabet Inc., equity turnover calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Stockholders’ equity | ||||||
| Long-term Activity Ratio | ||||||
| Equity turnover1 | ||||||
| Benchmarks | ||||||
| Equity Turnover, Competitors2 | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
| Equity Turnover, Sector | ||||||
| Media & Entertainment | ||||||
| Equity Turnover, Industry | ||||||
| Communication Services | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 2025 Calculation
Equity turnover = Revenues ÷ Stockholders’ equity
= ÷ =
2 Click competitor name to see calculations.
The equity turnover ratio exhibits a fluctuating pattern over the five-year period. Initially, the ratio increased from 2021 to 2022, then stabilized for two years, before declining in the final year observed.
- Equity Turnover
- The equity turnover ratio, which measures how efficiently a company utilizes its stockholders’ equity to generate revenue, began at 1.02 in 2021. An increase to 1.10 was recorded in 2022, indicating improved efficiency in revenue generation relative to equity.
- From 2022 to 2023, the ratio experienced a slight decrease to 1.08. This was followed by a period of stability in 2024, remaining at 1.08.
- In 2025, the ratio decreased to 0.97. This represents a decline in the efficiency with which equity is being used to generate revenue, suggesting a potential shift in operational performance or capital structure.
Revenues demonstrated consistent growth throughout the period, increasing from US$257,637 million in 2021 to US$402,836 million in 2025. Stockholders’ equity also increased over the same timeframe, rising from US$251,635 million to US$415,265 million. The observed decline in equity turnover in 2025 occurred despite continued growth in both revenues and equity, suggesting that the rate of revenue growth did not keep pace with the rate of equity growth.
The stabilization of the equity turnover ratio in 2023 and 2024, coupled with the subsequent decrease in 2025, warrants further investigation. Potential factors contributing to this trend could include changes in asset utilization, increased equity financing, or shifts in the company’s business model.