GOOGL — Alphabet Inc.

Will it survive?

• Can it pay its interest? 175.3×
  Comfortable
  Operating income $129.0B ÷ interest expense $736M

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient — it says solvent, not cheap.

• How heavy is the debt? 0.4×
  Conservative
  Total debt $48.5B ÷ operating income $129.0B

  Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.

• How long is cash tied up? 36d
  Tight
  DSO 57 + DIO 6 − DPO 27 days

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital 25%
  High
  NOPAT $107.4B ÷ invested capital $433.1B (debt + equity − cash)

  The rate the business earns on the money tied up in it — Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high — pair this with Owner Earnings.

• Owner Earnings (free cash) margin 18%
  Cash machine
  Owner Earnings $73.3B = operating cash $164.7B − capex $91.4B

  What an owner could take out without starving the business. That's 18% of revenue. Treating stock comp as the real expense it is (less $25.0B of SBC) leaves $48.3B. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).

• Are earnings backed by cash? 1.25×
  Cash-backed
  Cash from ops $164.7B ÷ net income $132.2B

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy — growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 76%
  Returns about half
  Dividends + buybacks $55.8B ÷ Owner Earnings $73.3B

  Of $73.3B Owner Earnings, $55.8B (76%) went back to shareholders — $10.0B dividends, $45.7B buybacks. Net of $25.0B stock comp, the real buyback was about $20.8B. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway — or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? —
  Not enough data

  The filing data didn't include the inputs for this check.

Durability & moat — 2016–2025

A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says — judgments, not another chart of the numbers.

• Profitable years 10 of 10

  Never lost money over the record — the earnings stability Graham insisted on.

• Return on capital ≥ 15% 7 of 10 yrs

  A moat shows up as a high return on invested capital that holds year after year — not one good vintage.

• Operating margin 25% → 32%

  Margins are widening — pricing power intact or improving.

• Reinvestment — incremental ROIC 38%

  Every extra dollar the company reinvested earned a high return — it is still compounding, not coasting on an old moat.

• Owner earnings growth +13%/yr

  Free cash to owners grew about 13% a year over the record.

• Worst year 2018 · 20.1% op. margin

  Stayed profitable even in its hardest year — the resilience that survives recessions.

• Share count −0.8%/yr

  The share count is shrinking — buybacks are quietly growing your slice of the business.

• Dividend record rising

  Paid and raised the dividend across the record — the continuity Graham prized.