EVA is registered trademark of Stern Stewart.

Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Costco Wholesale Corp., economic profit calculation

US$ in millions

12 months ended:	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Net operating profit after taxes (NOPAT)¹	5,694)	6,421)	5,292)	4,254)	3,979)	3,353)
Cost of capital²	11.41%	11.32%	11.23%	11.12%	11.18%	11.02%
Invested capital³	34,903)	31,671)	28,508)	29,043)	23,959)	20,758)

Economic profit⁴	1,711)	2,836)	2,089)	1,025)	1,300)	1,066)

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,694 – 11.41% × 34,903 = 1,711

Download chart

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Costco Wholesale Corp. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Costco Wholesale Corp., NOPAT calculation

US$ in millions

12 months ended:	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Net income attributable to Costco	6,292)	5,844)	5,007)	4,002)	3,659)	3,134)
Deferred income tax expense (benefit)¹	33)	(57)	61)	90)	150)	(50)
Increase (decrease) in LIFO reserve²	(438)	438)	—)	—)	—)	64)
Increase (decrease) in equity equivalents³	(405)	381)	61)	90)	150)	14)
Interest expense	160)	158)	171)	160)	150)	159)
Interest expense, operating lease liability⁴	65)	61)	62)	62)	134)	131)
Adjusted interest expense	225)	219)	233)	222)	284)	290)
Tax benefit of interest expense⁵	(47)	(46)	(49)	(47)	(60)	(74)
Adjusted interest expense, after taxes⁶	178)	173)	184)	176)	225)	216)
Interest income	(470)	(61)	(41)	(89)	(126)	(75)
Investment income, before taxes	(470)	(61)	(41)	(89)	(126)	(75)
Tax expense (benefit) of investment income⁷	99)	13)	9)	19)	26)	19)
Investment income, after taxes⁸	(371)	(48)	(32)	(70)	(100)	(56)
Net income (loss) attributable to noncontrolling interest	—)	71)	72)	57)	45)	45)
Net operating profit after taxes (NOPAT)	5,694)	6,421)	5,292)	4,254)	3,979)	3,353)

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in LIFO reserve. See details »

³ Addition of increase (decrease) in equity equivalents to net income attributable to Costco.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,646 × 2.47% = 65

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 225 × 21.00% = 47

⁶ Addition of after taxes interest expense to net income attributable to Costco.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 470 × 21.00% = 99

⁸ Elimination of after taxes investment income.

Download chart

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Costco Wholesale Corp. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Costco Wholesale Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Provision for income taxes	2,195)	1,925)	1,601)	1,308)	1,061)	1,263)
Less: Deferred income tax expense (benefit)	33)	(57)	61)	90)	150)	(50)
Add: Tax savings from interest expense	47)	46)	49)	47)	60)	74)
Less: Tax imposed on investment income	99)	13)	9)	19)	26)	19)
Cash operating taxes	2,111)	2,015)	1,580)	1,246)	944)	1,368)

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

Download chart

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Costco Wholesale Corp. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Costco Wholesale Corp., invested capital calculation (financing approach)

US$ in millions

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Current portion of long-term debt	1,081)	73)	799)	95)	1,699)	90)
Current finance lease liabilities	129)	245)	72)	31)	26)	7)
Long-term debt, excluding current portion	5,377)	6,484)	6,692)	7,514)	5,124)	6,487)
Long-term finance lease liabilities	1,303)	1,383)	980)	657)	395)	390)
Operating lease liability¹	2,646)	2,721)	2,864)	2,789)	1,882)	1,825)
Total reported debt & leases	10,536)	10,906)	11,407)	11,086)	9,126)	8,799)
Total Costco stockholders’ equity	25,058)	20,642)	17,564)	18,284)	15,243)	12,799)
Net deferred tax (assets) liabilities²	304)	279)	310)	259)	145)	1)
LIFO reserve³	—)	438)	—)	—)	—)	—)
Equity equivalents⁴	304)	717)	310)	259)	145)	1)
Accumulated other comprehensive (income) loss, net of tax⁵	1,805)	1,829)	1,137)	1,297)	1,436)	1,199)
Noncontrolling interests	—)	5)	514)	421)	341)	304)
Adjusted total Costco stockholders’ equity	27,167)	23,193)	19,525)	20,261)	17,165)	14,303)
Construction in progress⁶	(1,266)	(1,582)	(1,507)	(1,276)	(1,272)	(1,140)
Short-term investments⁷	(1,534)	(846)	(917)	(1,028)	(1,060)	(1,204)
Invested capital	34,903)	31,671)	28,508)	29,043)	23,959)	20,758)

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of LIFO reserve. See details »

⁴ Addition of equity equivalents to total Costco stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of short-term investments.

Download chart

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Costco Wholesale Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Costco Wholesale Corp., cost of capital calculations

Sep 3, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	250,379)	250,379)	÷	260,195)	=	0.96	0.96	×	11.78%	=	11.34%
Long-term debt, including current portion and finance lease liabilities³	7,170)	7,170)	÷	260,195)	=	0.03	0.03	×	2.48% × (1 – 21.00%)	=	0.05%
Operating lease liability⁴	2,646)	2,646)	÷	260,195)	=	0.01	0.01	×	2.47% × (1 – 21.00%)	=	0.02%
Total:	260,195)					1.00					11.41%

Based on: 10-K (reporting date: 2023-09-03).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Aug 28, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	212,592)	212,592)	÷	222,974)	=	0.95	0.95	×	11.78%	=	11.23%
Long-term debt, including current portion and finance lease liabilities³	7,661)	7,661)	÷	222,974)	=	0.03	0.03	×	2.42% × (1 – 21.00%)	=	0.07%
Operating lease liability⁴	2,721)	2,721)	÷	222,974)	=	0.01	0.01	×	2.26% × (1 – 21.00%)	=	0.02%
Total:	222,974)					1.00					11.32%

Based on: 10-K (reporting date: 2022-08-28).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Aug 29, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	198,529)	198,529)	÷	210,137)	=	0.94	0.94	×	11.78%	=	11.13%
Long-term debt, including current portion and finance lease liabilities³	8,744)	8,744)	÷	210,137)	=	0.04	0.04	×	2.42% × (1 – 21.00%)	=	0.08%
Operating lease liability⁴	2,864)	2,864)	÷	210,137)	=	0.01	0.01	×	2.16% × (1 – 21.00%)	=	0.02%
Total:	210,137)					1.00					11.23%

Based on: 10-K (reporting date: 2021-08-29).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Aug 30, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	160,175)	160,175)	÷	171,639)	=	0.93	0.93	×	11.78%	=	10.99%
Long-term debt, including current portion and finance lease liabilities³	8,675)	8,675)	÷	171,639)	=	0.05	0.05	×	2.43% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	2,789)	2,789)	÷	171,639)	=	0.02	0.02	×	2.23% × (1 – 21.00%)	=	0.03%
Total:	171,639)					1.00					11.12%

Based on: 10-K (reporting date: 2020-08-30).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Sep 1, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	130,842)	130,842)	÷	140,142)	=	0.93	0.93	×	11.78%	=	11.00%
Long-term debt, including current portion and finance lease liabilities³	7,418)	7,418)	÷	140,142)	=	0.05	0.05	×	2.61% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	1,882)	1,882)	÷	140,142)	=	0.01	0.01	×	7.14% × (1 – 21.00%)	=	0.08%
Total:	140,142)					1.00					11.18%

Based on: 10-K (reporting date: 2019-09-01).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Sep 2, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	95,613)	95,613)	÷	104,327)	=	0.92	0.92	×	11.78%	=	10.80%
Long-term debt, including current portion and finance lease liabilities³	6,889)	6,889)	÷	104,327)	=	0.07	0.07	×	2.60% × (1 – 25.60%)	=	0.13%
Operating lease liability⁴	1,825)	1,825)	÷	104,327)	=	0.02	0.02	×	7.17% × (1 – 25.60%)	=	0.09%
Total:	104,327)					1.00					11.02%

Based on: 10-K (reporting date: 2018-09-02).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Costco Wholesale Corp., economic spread ratio calculation, comparison to benchmarks

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	1,711)	2,836)	2,089)	1,025)	1,300)	1,066)
Invested capital²	34,903)	31,671)	28,508)	29,043)	23,959)	20,758)
Performance Ratio
Economic spread ratio³	4.90%	8.95%	7.33%	3.53%	5.42%	5.13%
Benchmarks
Economic Spread Ratio, Competitors⁴
Target Corp.	0.48%	13.43%	3.89%	2.43%	2.62%	—
Walmart Inc.	1.28%	1.82%	3.20%	3.24%	-2.04%	—

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,711 ÷ 34,903 = 4.90%

⁴ Click competitor name to see calculations.

Download chart

Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Costco Wholesale Corp. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Costco Wholesale Corp., economic profit margin calculation, comparison to benchmarks

	Sep 3, 2023	Aug 28, 2022	Aug 29, 2021	Aug 30, 2020	Sep 1, 2019	Sep 2, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	1,711)	2,836)	2,089)	1,025)	1,300)	1,066)
Net sales	237,710)	222,730)	192,052)	163,220)	149,351)	138,434)
Performance Ratio
Economic profit margin²	0.72%	1.27%	1.09%	0.63%	0.87%	0.77%
Benchmarks
Economic Profit Margin, Competitors³
Target Corp.	0.14%	3.87%	1.29%	0.86%	0.92%	—
Walmart Inc.	0.32%	0.50%	0.95%	1.04%	-0.63%	—

Based on: 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01), 10-K (reporting date: 2018-09-02).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 1,711 ÷ 237,710 = 0.72%

³ Click competitor name to see calculations.

Download chart

Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Costco Wholesale Corp. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Costco Wholesale Corp. (NASDAQ:COST)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin