Alphabet (Google) Inc. Financial Statements and Financial Ratios Analyzed from 2014 to 2018

 “Alphabet Inc. (Google) 2018 Financial Statements and Financial Ratios: Defined, Discussed, and Analyzed for 5 Years” was written by, Paul Borosky, MBA. and owner of Quality Business Plan.  In this book, the author selected Alphabet's 2018 10k, Alphabet's 2017 10k annual report, Alphabet's 2016 10k annual report, Alphabet's 2015 10k annual report, and Alphabet's 2014 10k annual report as the basis for information gathering.  Once all Alphabet's 10k annual statements were collected, the author then inserted Alphabet's income statement information and Alphabet's balance sheet information into a customized financial template. 

In this template, various graphs and charts were generated showing changes to Alphabet's revenues, profits, and other financial statement changes.  With this complete, a brief analysis was done for each of Alphabet's important financial statement line items.  Further, in the book, we also supply financial ratios for Alphabet's . for the last five years.  Each financial ratio has a formula supplied.  This allows you to better understand how the calculations were performed.  On a final note, for each financial statement line item and financial ratio, we offer a brief analysis of the company’s trends and what the changes mean in relations to the financial statements and financial ratios.

Alphabet Inc.: Brief Summary

Alphabet is located at 1600 Amphitheatre Parkway in Mountain View, CA. The company competes in the technological sector.  Their industry is related to Internet content and information.  Most recent estimates of the company’s employee count is about 98,000.  The firm is led by Lawrence Page.  Other members of their executive team would include Sergey Brin, Ruth Porat, and David Drummond.

Alphabet Inc., commonly known as Google, offers Internet content and advertising services to residents and businesses in the United States, European Union, Middle East, Africa, Canada, and several other countries.  Popular services provided by the firm include advertisements, digital content, cloud services, home connectivity, and other products and software services.  The firm was established in 1998.

Section 1: Alphabet Inc. Income Statement Analyzed 2014 to 2018

In this section, I walk through a broad definition as to what an income statement is and why it is important.  From this, I then discuss each of Alphabet's important income statement line items, such as revenues, gross profits, etc. in detail.  After each line item is defined and discussed, I then offer an analysis of Alphabet's income statement line item from 2014 to 2018, in most cases.

Alphabet Income Statement 2018

Column1 2018 2017 2016 2015 2014
Revenues            136,819            110,855              90,272              74,989               66,001
COGS              59,549              45,583              35,138              28,164               25,691
Gross Profit              77,270              65,272              55,134              46,825               40,310
SG&A              24,459              19,765              17,470              15,183               13,982
Depreciation                    -                    -                    -                    -                     -
R & D              21,419              16,625              13,948              12,282                 9,832
Other                    -                    -                    -                    -                     -
Operating Expenses            110,498              84,709              66,556              55,629               49,505
EBIT              26,321              26,146              23,716              19,360               16,496
Other Income                8,592                1,047                  434                  291                   763
Interest Expense                  114                  109                  124                  104                     -
EBT              34,913              27,193              24,150              18,965               17,259
Taxes                4,177              14,531                4,672                3,303                 3,639
Net Income            30,736            12,662            19,478            16,348             14,136

Section 2: Alphabet Inc. Balance Sheet Analyzed from 2014 to 2018

For Alphabet Inc. balance sheet, I again go through each important line item from the balance sheet.  In reviewing each line item, I will define the Alphabet's balance sheet line item, such as cash, property, plant and equipment, and liabilities between 2014 to 2018.  Next, I then offer an analysis of Alphabet's balance sheet line item.

Alphabet Balance Sheet 2018

Column1 2018 2017 2016 2015 2014
Cash               16,701            10,715            12,918            16,549            18,347
Short Term Investment               92,439            91,156            73,415            56,517            46,048
Account Receivable               20,838            18,336            14,137            11,556              9,383
Inventory                 1,107                749                268                491                  -
Other                 4,236              2,983                  -                  -                  -
Current Assets            135,676        124,308        105,408          90,114          80,685
Net PPE               59,719            42,383            34,234            29,016            23,883
Goodwill               17,888            16,747            16,468            15,869            15,599
Other                 2,693              2,672                  -                  -                  -
Total Assets            232,792        197,295        167,497        147,461        131,133
Accounts Payable                 4,378              3,137              2,041              1,931              1,715
Accrued Expense               26,142            18,733            13,062            10,636              9,455
Accrued Taxes                     69                881                554                302                  96
Notes Payable                     -                  -                  -              3,225              2,009
LT Debt - Current                     -                  -                  -                  -                  -
Other                     -                  -                  -                  -                  -
Total Current Liabilities               34,620            24,183            16,756            19,310            16,805
LT Debt                 4,012              3,969              3,935              1,995              3,228
Other                 3,545              3,059              2,665              1,822              1,118
Total Liabilities              55,164          44,793          28,461          27,130          26,633
Common Stock               45,049            40,247            36,307            32,982            28,767
Treasury                     -                  -                  -                  -                  -
Retained Earnings             134,885          113,247          105,131            89,223            75,706
Other                     -                  -                  -                  -                  -
Total Equity            177,628        152,502        139,036        120,331        104,500
Total Equity & Liability            232,792        197,295        167,497        147,461        131,133

Section 3: Alphabet Inc. Financial Ratios Analyzed from 2014 to 2018

For this section, I have chosen about 16 different financial ratios to review for Apple Inc from 2014 to 2018.  In reviewing each of Alphabet's financial ratios, I first start with defining the financial ratio.  Next, I supply the financial formula for calculating the specific ratio.  Finally, I offer a brief analysis of Alphabet's Financial ratio.  Ratios calculated and analyzed for the last five years include:

  • Alphabet's current ratio for 2014 to 2018
  • Alphabet's quick ratio for 2014 to 2018
  • Alphabet's cash ratio for 2014 to 2018
  • Alphabet's total asset turnover for 2014 to 2018
  • Alphabet's fixed asset turnover for 2014 to 2018
  • Alphabet's Days Sales Outstanding for 2014 to 2018
  • Alphabet's Inventory Turnover for 2014 to 2018
  • Alphabet's Accounts Receivable Turnover for 2014 to 2018
  • Alphabet's accounts payable turnover for 2014 to 2018
  • Alphabet's return on assets (ROA) for 2014 to 2018
  • Alphabet's return on equity (ROE) for 2014 to 2018
  • Alphabet's profit margin for 2014 to 2018
  • Alphabet's gross profit margin for 2014 to 2018
  • Alphabet's operating profit margin for 2014 to 2018
  • Alphabet's long-term debt ratio for 2014 to 2018
  • Alphabet's debt to equity ratio for 2014 to 2018
  • Alphabet's times interest earned for 2014 to 2018

Alphabet 2018 Liquidity Ratios

Ratios 2018 2017 2016 2015 2014
Current Ratio                   3.92              5.14              6.29              4.67              4.80
Cash Ratio                   0.48              0.44              0.77              0.86              1.09
Quick Ratio                   3.89              5.11              6.27              4.64              4.80
Net Working Capital                 8,057            7,049           11,666           15,727           16,464

Alphabet 2018 Asset Utilization

Ratios 2018 2017 2016 2015 2014
Total Asset Turnover                   0.59              0.56              0.54              0.51              0.50
Fixed Asset Turnover                   2.29              2.62              2.64              2.58              2.76
Days Sales Outstanding                 55.59            60.37            57.16            56.25            51.89
Inventory Turnover               123.59          148.00          336.84          152.73 #DIV/0!
Accounts Receivable Turnover                   6.57              6.05              6.39              6.49              7.03
Working Capital Turnover                 16.98            15.73              7.74              4.77              4.01
AP Turnover                 31.25            35.34            44.23            38.83            38.48
Average Days Inventory                   0.34              0.41              0.92              0.42 #DIV/0!
Average Days Payable                   0.09              0.10              0.12              0.11              0.11

Alphabet 2018 - Profitability Ratios

Ratios 2018 2017 2016 2015 2014
Return on Assets 13.20% 6.42% 11.63% 11.09% 10.78%
Return on Equity 17.30% 8.30% 14.01% 13.59% 13.53%
Net Profit Margin 22.46% 11.42% 21.58% 21.80% 21.42%
Gross Profit Margin 56.48% 58.88% 61.08% 62.44% 61.07%
Operating Profit Margin 19.24% 23.59% 26.27% 25.82% 24.99%
Basic Earning Power 11.31% 13.25% 14.16% 13.13% 12.58%
ROCE 13.28% 15.10% 15.73% 15.11% 14.43%
Capital Employed              198,172         173,112         150,741         128,151         114,328
ROIC 34.19% 24.63% 41.67% 35.73% 32.26%

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