Economic Value Added (EVA)
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
Adobe Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 7,363 – 20.25% × 22,203 = 2,868
The financial trajectory from November 2020 to November 2025 reveals significant volatility in economic value creation, characterized by a period of expansion followed by a sharp contraction and a projected recovery.
- Net Operating Profit After Taxes (NOPAT)
- Operational profitability experienced a peak in December 2021 at 6,201 million USD, followed by a steady decline over the subsequent three years, reaching a low of 5,235 million USD by November 2024. However, a substantial recovery is projected for November 2025, with NOPAT expected to rise to 7,363 million USD, marking the highest level in the analyzed period.
- Cost of Capital and Invested Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating within a narrow range between 20.25% and 20.88%. Simultaneously, invested capital showed a general upward trend from 18,837 million USD in 2020 to a peak of 24,970 million USD in December 2023. A subsequent reduction in invested capital is observed starting in 2024, descending to 22,203 million USD by November 2025, suggesting a strategic shift toward capital optimization.
- Economic Profit Analysis
- Economic profit exhibited extreme variance. After a sharp increase to 1,827 million USD in 2021, the value plummeted to 156 million USD by November 2024. This decline coincided with the period where invested capital reached its peak while NOPAT was trending downward, indicating that the returns on invested capital were barely exceeding the high 20% cost of capital threshold. A dramatic reversal is anticipated in November 2025, with economic profit projected to reach 2,868 million USD, driven by the combination of increased operational profit and a leaner capital base.
The overall data suggests a cycle of capital intensification between 2020 and 2023 that did not yield proportional increases in operating profit, thereby eroding economic value. The outlook for 2025 indicates a return to high value creation through improved operational efficiency and reduced capital expenditure.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Adobe Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 438 × 3.30% = 14
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 277 × 21.00% = 58
7 Addition of after taxes interest expense to net income.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 306 × 21.00% = 64
9 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited considerable fluctuation over the observed period. While net income generally increased, NOPAT presented a more complex trajectory, indicating shifts in operational efficiency and cost structures relative to tax obligations.
- Overall Trend
- From 2020 to 2025, NOPAT demonstrated an initial increase, followed by a period of relative stability, and then a substantial rise. The period began with a NOPAT of US$4,082 million in 2020, peaking at US$6,201 million in 2021 before declining to US$5,690 million in 2022. A further decrease to US$5,413 million was noted in 2023, followed by US$5,235 million in 2024. A significant increase to US$7,363 million was observed in 2025.
- Comparison to Net Income
- A consistent difference between net income and NOPAT is apparent throughout the period. NOPAT consistently reports a lower value than net income, reflecting the impact of items such as depreciation, amortization, and other non-cash charges, as well as the effects of accounting for operating leases. The gap between net income and NOPAT varied annually, suggesting changes in the composition of earnings.
- Year-over-Year Changes
- The largest year-over-year increase in NOPAT occurred between 2020 and 2021, with an increase of US$2,119 million. The most substantial decline was observed between 2021 and 2022, decreasing by US$511 million. The period from 2023 to 2024 showed a modest decrease of US$78 million, while the final period from 2024 to 2025 demonstrated a substantial increase of US$2,128 million.
- Recent Performance
- The most recent two years, 2024 and 2025, show a notable shift. After a slight decrease in 2024, NOPAT experienced a significant increase in 2025, exceeding the previous peak observed in 2021. This suggests potential improvements in operational performance or changes in the tax environment during that period.
The fluctuations in NOPAT warrant further investigation to determine the underlying drivers. Analyzing changes in operating expenses, revenue growth, and tax rates would provide a more comprehensive understanding of these trends.
AI Ask an analyst for more
Cash Operating Taxes
Adobe Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
The provision for (benefit from) income taxes exhibited considerable fluctuation over the observed period. Beginning with a significant benefit of approximately negative $1.084 billion in 2020, the provision shifted to a positive value of $883 million in 2021, and continued to increase to $1.252 billion in 2022 and $1.371 billion in 2023. This trend persisted into 2024, remaining stable at $1.371 billion, before increasing further to $1.604 billion in 2025.
Cash operating taxes demonstrated a consistent upward trend throughout the period. Starting at $435 million in 2020, these taxes increased to $710 million in 2021, $943 million in 2022, and a substantial rise to $1.761 billion in 2023. The growth continued, albeit at a slightly moderated pace, reaching $1.795 billion in 2024 and $2.112 billion in 2025.
- Provision for Income Taxes Trend
- The initial benefit in 2020 likely reflects tax loss carryforwards or other tax planning strategies. The subsequent shift to positive provisions indicates increasing profitability and a reduced reliance on such strategies. The consistent increases from 2021 through 2025 suggest sustained and growing taxable income.
- Cash Operating Taxes Trend
- The steady increase in cash operating taxes directly correlates with the increasing provision for income taxes, but also suggests a growing tax burden as a percentage of pre-tax income. The magnitude of the increase in cash taxes is greater than the increase in the provision, potentially indicating changes in deferred tax assets or liabilities.
- Relationship between Provision and Cash Taxes
- A divergence exists between the provision for income taxes and cash operating taxes. While both generally trend upwards, the cash taxes consistently represent a smaller proportion of the total tax expense recognized in the income statement. This difference is typical, as the provision includes both current and deferred tax components, while cash taxes represent actual cash outflows.
The observed trends suggest a strengthening financial position with increasing taxable income. However, the growing cash tax burden warrants continued monitoring to assess its impact on future cash flows and overall financial performance.
AI Ask an analyst for more
Invested Capital
Adobe Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of capital projects in-progress.
8 Subtraction of short-term investments.
The invested capital of the company demonstrates an overall increasing trend between 2020 and 2023, followed by a slight decrease in the most recent two periods. A closer examination of the components reveals fluctuations in both total reported debt & leases and stockholders’ equity, which contribute to the observed patterns in invested capital.
- Invested Capital Trend
- Invested capital increased from US$18,837 million in 2020 to US$24,970 million in 2023, representing a cumulative growth of approximately 32.5%. This indicates an expansion of the company’s asset base funded by both debt and equity. However, in 2024, invested capital decreased slightly to US$24,709 million, and further decreased to US$22,203 million in 2025. This recent decline suggests a potential shift in capital allocation strategy or a reduction in investment activities.
- Debt & Leases
- Total reported debt & leases exhibited a relatively stable pattern between 2020 and 2023, decreasing from US$4,708 million to US$4,080 million. This suggests a focus on debt reduction during this period. However, a significant increase is observed in 2024, rising to US$6,056 million, and continuing to US$6,648 million in 2025. This substantial increase in debt could be attributed to financing new investments, acquisitions, or share repurchases.
- Stockholders’ Equity
- Stockholders’ equity generally increased from US$13,264 million in 2020 to US$16,518 million in 2023, reflecting retained earnings and potentially new equity issuances. However, a decrease is noted in 2024, falling to US$14,105 million, and a more pronounced decrease in 2025 to US$11,623 million. This decline in stockholders’ equity could be due to share repurchases, dividend payments, or unrealized losses.
The interplay between debt and equity significantly influences the overall invested capital. While debt decreased initially, the recent increase, coupled with the decline in stockholders’ equity, contributes to the observed stabilization and subsequent decrease in invested capital in the latest reporting periods. Further investigation into the specific uses of the increased debt and the reasons for the equity decline would be necessary for a more comprehensive understanding.
AI Ask an analyst for more
Cost of Capital
Adobe Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 124,829) | 124,829) | ÷ | 131,447) | = | 0.95 | 0.95 | × | 21.15% | = | 20.08% | ||
| Senior notes3 | 6,180) | 6,180) | ÷ | 131,447) | = | 0.05 | 0.05 | × | 4.16% × (1 – 21.00%) | = | 0.15% | ||
| Operating lease liability4 | 438) | 438) | ÷ | 131,447) | = | 0.00 | 0.00 | × | 3.30% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 131,447) | 1.00 | 20.25% | ||||||||||
Based on: 10-K (reporting date: 2025-11-28).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 177,820) | 177,820) | ÷ | 183,758) | = | 0.97 | 0.97 | × | 21.15% | = | 20.47% | ||
| Senior notes3 | 5,510) | 5,510) | ÷ | 183,758) | = | 0.03 | 0.03 | × | 3.56% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 428) | 428) | ÷ | 183,758) | = | 0.00 | 0.00 | × | 2.69% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 183,758) | 1.00 | 20.56% | ||||||||||
Based on: 10-K (reporting date: 2024-11-29).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 269,437) | 269,437) | ÷ | 273,273) | = | 0.99 | 0.99 | × | 21.15% | = | 20.85% | ||
| Senior notes3 | 3,390) | 3,390) | ÷ | 273,273) | = | 0.01 | 0.01 | × | 2.77% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 446) | 446) | ÷ | 273,273) | = | 0.00 | 0.00 | × | 2.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 273,273) | 1.00 | 20.88% | ||||||||||
Based on: 10-K (reporting date: 2023-12-01).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 157,657) | 157,657) | ÷ | 162,041) | = | 0.97 | 0.97 | × | 21.15% | = | 20.58% | ||
| Senior notes3 | 3,880) | 3,880) | ÷ | 162,041) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 504) | 504) | ÷ | 162,041) | = | 0.00 | 0.00 | × | 2.37% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 162,041) | 1.00 | 20.63% | ||||||||||
Based on: 10-K (reporting date: 2022-12-02).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 235,808) | 235,808) | ÷ | 240,648) | = | 0.98 | 0.98 | × | 21.15% | = | 20.72% | ||
| Senior notes3 | 4,290) | 4,290) | ÷ | 240,648) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 550) | 550) | ÷ | 240,648) | = | 0.00 | 0.00 | × | 2.28% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 240,648) | 1.00 | 20.77% | ||||||||||
Based on: 10-K (reporting date: 2021-12-03).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 219,283) | 219,283) | ÷ | 224,354) | = | 0.98 | 0.98 | × | 21.15% | = | 20.67% | ||
| Senior notes3 | 4,480) | 4,480) | ÷ | 224,354) | = | 0.02 | 0.02 | × | 2.67% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 591) | 591) | ÷ | 224,354) | = | 0.00 | 0.00 | × | 2.32% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 224,354) | 1.00 | 20.72% | ||||||||||
Based on: 10-K (reporting date: 2020-11-27).
1 US$ in millions
2 Equity. See details »
3 Senior notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Adobe Inc., economic spread ratio calculation, comparison to benchmarks
| Nov 28, 2025 | Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,868) | 156) | 199) | 1,330) | 1,827) | 180) | |
| Invested capital2 | 22,203) | 24,709) | 24,970) | 21,130) | 21,065) | 18,837) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 12.92% | 0.63% | 0.80% | 6.29% | 8.67% | 0.95% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | 0.45% | 0.09% | 0.87% | 3.74% | 5.56% | 6.16% | |
| AppLovin Corp. | 27.63% | -0.08% | -21.14% | -27.18% | -30.70% | — | |
| Cadence Design Systems Inc. | -1.35% | -2.95% | 7.10% | 6.51% | 6.73% | — | |
| CrowdStrike Holdings Inc. | -13.49% | -8.55% | -4.81% | -8.11% | -10.36% | — | |
| Datadog Inc. | -9.04% | -9.73% | -6.26% | -12.01% | -4.19% | — | |
| International Business Machines Corp. | -0.70% | -7.54% | -3.50% | -11.25% | -6.11% | — | |
| Intuit Inc. | -5.39% | -9.06% | -11.10% | -9.95% | -2.42% | 1.03% | |
| Microsoft Corp. | 5.98% | 7.86% | 10.91% | 18.89% | 27.93% | — | |
| Oracle Corp. | -7.36% | -7.24% | -8.07% | -7.11% | 1.09% | — | |
| Palantir Technologies Inc. | 41.25% | -12.66% | -9.39% | -33.12% | -40.58% | — | |
| Palo Alto Networks Inc. | -4.17% | 5.03% | 11.17% | 3.22% | -5.48% | -6.31% | |
| Salesforce Inc. | -12.69% | -14.50% | -17.93% | -14.81% | -12.67% | — | |
| ServiceNow Inc. | 2.61% | 5.89% | 5.18% | 0.68% | 1.89% | — | |
| Synopsys Inc. | -12.51% | -8.28% | -7.58% | -0.98% | -7.00% | -6.81% | |
| Workday Inc. | -11.85% | -13.26% | -19.48% | -14.31% | -19.56% | — | |
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,868 ÷ 22,203 = 12.92%
4 Click competitor name to see calculations.
The financial data indicates a period of significant volatility in value creation, characterized by fluctuating levels of economic profit and a variable economic spread ratio. A cyclical pattern is evident, with two distinct peaks in profitability and capital efficiency occurring in 2021 and 2025, contrasted by periods of minimal value generation in 2020, 2023, and 2024.
- Economic Profit Trends
- Economic profit experienced a sharp increase from 180 million USD in 2020 to 1,827 million USD in 2021. This was followed by a steady decline over the next three years, reaching a low of 156 million USD in 2024. However, a substantial recovery occurred in 2025, with economic profit surging to 2,868 million USD, the highest level within the analyzed period.
- Invested Capital Dynamics
- The capital base showed a general upward trajectory from 2020 to 2023, rising from 18,837 million USD to a peak of 24,970 million USD. Subsequently, a trend of capital optimization or contraction is observed, with invested capital decreasing to 24,709 million USD in 2024 and further declining to 22,203 million USD by 2025.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the excess return over the cost of capital, mirrors the volatility of economic profit. The ratio rose from 0.95% in 2020 to 8.67% in 2021, before retreating to a low of 0.63% in 2024. The period concludes with a significant expansion in the spread to 12.92% in 2025, suggesting a marked improvement in the efficiency of capital utilization and a higher rate of value creation relative to the cost of financing.
The convergence of decreasing invested capital and increasing economic profit in 2025 suggests a highly efficient operational phase. The expansion of the economic spread ratio to 12.92% indicates that the entity is generating returns significantly above its cost of capital, reversing the trend of marginal value creation observed between 2023 and 2024.
AI Ask an analyst for more
Economic Profit Margin
Adobe Inc., economic profit margin calculation, comparison to benchmarks
| Nov 28, 2025 | Nov 29, 2024 | Dec 1, 2023 | Dec 2, 2022 | Dec 3, 2021 | Nov 27, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,868) | 156) | 199) | 1,330) | 1,827) | 180) | |
| Revenue | 23,769) | 21,505) | 19,409) | 17,606) | 15,785) | 12,868) | |
| Add: Increase (decrease) in deferred revenue | 771) | 309) | 536) | 536) | 1,119) | 258) | |
| Adjusted revenue | 24,540) | 21,814) | 19,945) | 18,142) | 16,904) | 13,126) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 11.69% | 0.72% | 1.00% | 7.33% | 10.81% | 1.37% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | 0.29% | 0.05% | 0.45% | 1.80% | 2.85% | 3.13% | |
| AppLovin Corp. | 28.40% | -0.08% | -28.94% | -50.89% | -61.46% | — | |
| Cadence Design Systems Inc. | -2.03% | -4.52% | 7.08% | 6.50% | 6.83% | — | |
| CrowdStrike Holdings Inc. | -22.19% | -13.41% | -6.46% | -12.70% | -21.54% | — | |
| Datadog Inc. | -5.36% | -8.83% | -3.91% | -8.30% | -3.32% | — | |
| International Business Machines Corp. | -1.24% | -13.33% | -6.22% | -19.48% | -11.62% | — | |
| Intuit Inc. | -6.97% | -13.93% | -18.18% | -19.15% | -3.07% | 1.16% | |
| Microsoft Corp. | 8.91% | 10.99% | 12.42% | 18.10% | 23.18% | — | |
| Oracle Corp. | -14.76% | -13.78% | -15.61% | -13.05% | 2.15% | — | |
| Palantir Technologies Inc. | 21.37% | -10.99% | -5.04% | -55.57% | -66.84% | — | |
| Palo Alto Networks Inc. | -4.94% | 5.34% | 11.09% | 3.75% | -7.37% | -10.24% | |
| Salesforce Inc. | -27.39% | -33.50% | -45.34% | -41.11% | -29.06% | — | |
| ServiceNow Inc. | 2.88% | 4.84% | 4.17% | 0.54% | 1.64% | — | |
| Synopsys Inc. | -73.02% | -13.87% | -10.69% | -1.38% | -11.14% | -11.69% | |
| Workday Inc. | -12.59% | -14.76% | -23.89% | -19.39% | -25.52% | — | |
Based on: 10-K (reporting date: 2025-11-28), 10-K (reporting date: 2024-11-29), 10-K (reporting date: 2023-12-01), 10-K (reporting date: 2022-12-02), 10-K (reporting date: 2021-12-03), 10-K (reporting date: 2020-11-27).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 2,868 ÷ 24,540 = 11.69%
3 Click competitor name to see calculations.
The financial performance between November 2020 and November 2025 is characterized by a consistent expansion in adjusted revenue contrasted with significant volatility in economic value creation.
- Adjusted Revenue Growth
- A steady upward trajectory is observed in adjusted revenue, which grew from US$ 13,126 million in 2020 to US$ 24,540 million in 2025. This reflects a continuous increase in the scale of operations over the analyzed period.
- Economic Profit Fluctuations
- Economic profit exhibited substantial instability. After a sharp increase from US$ 180 million in 2020 to US$ 1,827 million in 2021, values declined steadily over the following three years, reaching a minimum of US$ 156 million in 2024. A significant recovery occurred in 2025, with economic profit reaching a peak of US$ 2,868 million.
- Economic Profit Margin Trends
- The economic profit margin mirrored the volatility of absolute economic profit. The margin peaked at 10.81% in 2021 before experiencing a prolonged contraction, falling to a low of 0.72% in 2024. This suggests a period where the returns on capital closely converged with the cost of capital. The trend reversed sharply in 2025, with the margin ascending to 11.69%, the highest level in the period recorded.
The divergence between the linear growth of adjusted revenue and the cyclical nature of the economic profit margin indicates that top-line growth did not consistently translate into proportional economic value. The sharp recovery in 2025 suggests a substantial improvement in capital efficiency or a significant reduction in the cost of capital relative to earnings.
AI Ask an analyst for more