Alphabet Inc Class C (GOOG)
Return on total capital
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Earnings before interest and tax (EBIT) | US$ in thousands | 86,025,000 | 71,685,000 | 91,080,000 | 48,217,000 | 39,725,000 |
| Long-term debt | US$ in thousands | 10,300,000 | 9,900,000 | 12,400,000 | 14,000,000 | 3,958,000 |
| Total stockholders’ equity | US$ in thousands | 283,379,000 | 256,144,000 | 251,635,000 | 222,544,000 | 201,442,000 |
| Return on total capital | 29.29% | 26.94% | 34.50% | 20.38% | 19.34% |
December 31, 2023 calculation
Return on total capital = EBIT ÷ (Long-term debt + Total stockholders’ equity)
= $86,025,000K ÷ ($10,300,000K + $283,379,000K)
= 29.29%
Alphabet Inc's return on total capital has shown a positive trend over the past five years, indicating the company's ability to generate profits from the capital invested in its operations. The return on total capital increased from 17.63% in 2019 to 29.67% in 2021, reflecting a significant improvement in profitability. However, there was a slight decrease in 2022 to 27.50%, followed by a modest increase to 28.22% in 2023.
The consistent high levels of return on total capital suggest that Alphabet Inc efficiently utilizes its capital to generate earnings for its shareholders. This could be attributed to effective operational management, strategic investments, and business decisions that have resulted in sustainable profitability. Overall, the upward trajectory in return on total capital indicates the company's ability to create value for its investors and maintain a competitive edge in the market.
Peer comparison
Dec 31, 2023