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.

Adobe Inc., economic profit calculation

US$ in thousands

	12 months ended	Nov 29, 2019	Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =

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.	Adobe Inc.’s economic profit decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Adobe Inc., NOPAT calculation

US$ in thousands

	12 months ended	Nov 29, 2019	Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowances for doubtful accounts²
	Increase (decrease) in deferred revenue³
	Increase (decrease) in equity equivalents⁴
	Interest expense
	Interest expense, operating lease liability⁵
	Adjusted interest expense
	Tax benefit of interest expense⁶
	Adjusted interest expense, after taxes⁷
	(Gain) loss on marketable securities
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁸
	Investment income, after taxes⁹
	Net operating profit after taxes (NOPAT)

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 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

⁶ 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

⁷ Addition of after taxes interest expense to net income.

⁸ 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

⁹ Elimination of after taxes investment income.

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.	Adobe Inc.’s NOPAT increased from 2017 to 2018 and from 2018 to 2019.

Adobe Inc., cash operating taxes calculation

US$ in thousands

	12 months ended	Nov 29, 2019	Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014
	Provision for income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense
	Less: Tax imposed on investment income
	Cash operating taxes

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.	Adobe Inc.’s cash operating taxes increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Adobe Inc., invested capital calculation (financing approach)

US$ in thousands

		Nov 29, 2019	Nov 30, 2018	Dec 1, 2017	Dec 2, 2016	Nov 27, 2015	Nov 28, 2014
	Debt, current portion
	Debt, excluding current portion
	Operating lease liability¹
	Total reported debt & leases
	Stockholders’ equity
	Net deferred tax (assets) liabilities²
	Allowances for doubtful accounts³
	Deferred revenue⁴
	Equity equivalents⁵
	Accumulated other comprehensive (income) loss, net of tax⁶
	Adjusted stockholders’ equity
	Capital projects in-progress⁷
	Short-term investments⁸
	Invested capital

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.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Adobe Inc.’s invested capital increased from 2017 to 2018 and from 2018 to 2019.

Adobe Inc., cost of capital calculations


Equity²	÷	=	×		=
Debt and capital lease obligations, including current portion³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

¹ US$ in thousands