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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

Adobe Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Net operating profit after taxes (NOPAT)¹	5,413)	5,690)	6,201)	4,082)	3,448)	2,711)
Cost of capital²	16.06%	15.88%	15.98%	15.94%	15.90%	15.77%
Invested capital³	24,970)	21,130)	21,065)	18,837)	17,466)	15,711)

Economic profit⁴	1,402)	2,335)	2,836)	1,080)	670)	233)

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

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
= 5,413 – 16.06% × 24,970 = 1,402

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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. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Net income	5,428)	4,756)	4,822)	5,260)	2,951)	2,591)
Deferred income tax expense (benefit)¹	(422)	326)	192)	(1,504)	5)	(467)
Increase (decrease) in allowances for doubtful accounts²	(7)	7)	(5)	11)	(5)	6)
Increase (decrease) in deferred revenue³	536)	536)	1,119)	258)	447)	559)
Increase (decrease) in equity equivalents⁴	107)	869)	1,306)	(1,235)	446)	98)
Interest expense	113)	112)	113)	116)	157)	89)
Interest expense, operating lease liability⁵	11)	12)	13)	14)	25)	24)
Adjusted interest expense	124)	124)	126)	130)	183)	114)
Tax benefit of interest expense⁶	(26)	(26)	(26)	(27)	(38)	(25)
Adjusted interest expense, after taxes⁷	98)	98)	99)	102)	144)	88)
(Gain) loss on marketable securities	(9)	19)	(16)	(14)	(51)	7)
Interest income	(269)	(61)	(17)	(43)	(68)	(93)
Investment income, before taxes	(278)	(42)	(33)	(57)	(120)	(85)
Tax expense (benefit) of investment income⁸	58)	9)	7)	12)	25)	19)
Investment income, after taxes⁹	(220)	(33)	(26)	(45)	(95)	(66)
Net operating profit after taxes (NOPAT)	5,413)	5,690)	6,201)	4,082)	3,448)	2,711)

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

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 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 446 × 2.50% = 11

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 124 × 21.00% = 26

⁷ Addition of after taxes interest expense to net income.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 278 × 21.00% = 58

⁹ Elimination of after taxes investment income.

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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. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Provision for (benefit from) income taxes	1,371)	1,252)	883)	(1,084)	253)	203)
Less: Deferred income tax expense (benefit)	(422)	326)	192)	(1,504)	5)	(467)
Add: Tax savings from interest expense	26)	26)	26)	27)	38)	25)
Less: Tax imposed on investment income	58)	9)	7)	12)	25)	19)
Cash operating taxes	1,761)	943)	710)	435)	262)	676)

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

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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. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Debt, current portion	—)	500)	—)	—)	3,149)	—)
Debt, excluding current portion	3,634)	3,629)	4,123)	4,117)	989)	4,125)
Operating lease liability¹	446)	504)	550)	591)	597)	569)
Total reported debt & leases	4,080)	4,633)	4,673)	4,708)	4,736)	4,694)
Stockholders’ equity	16,518)	14,051)	14,797)	13,264)	10,530)	9,362)
Net deferred tax (assets) liabilities²	(1,176)	(749)	(1,080)	(1,360)	140)	47)
Allowances for doubtful accounts³	16)	23)	16)	21)	10)	15)
Deferred revenue⁴	5,950)	5,414)	4,878)	3,759)	3,501)	3,054)
Equity equivalents⁵	4,790)	4,688)	3,814)	2,420)	3,651)	3,115)
Accumulated other comprehensive (income) loss, net of tax⁶	285)	293)	137)	158)	188)	148)
Adjusted stockholders’ equity	21,593)	19,032)	18,748)	15,842)	14,369)	12,626)
Capital projects in-progress⁷	(2)	(675)	(402)	(199)	(112)	(23)
Short-term investments⁸	(701)	(1,860)	(1,954)	(1,514)	(1,527)	(1,586)
Invested capital	24,970)	21,130)	21,065)	18,837)	17,466)	15,711)

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

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.

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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. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., cost of capital calculations

Dec 1, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	269,437)	269,437)	÷	273,273)	=	0.99	0.99	×	16.26%	=	16.03%
Debt, including current portion³	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					16.06%

Based on: 10-K (reporting date: 2023-12-01).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 2, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	157,657)	157,657)	÷	162,041)	=	0.97	0.97	×	16.26%	=	15.82%
Debt, including current portion³	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					15.88%

Based on: 10-K (reporting date: 2022-12-02).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 3, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	235,808)	235,808)	÷	240,648)	=	0.98	0.98	×	16.26%	=	15.93%
Debt, including current portion³	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					15.98%

Based on: 10-K (reporting date: 2021-12-03).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Nov 27, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	219,283)	219,283)	÷	224,354)	=	0.98	0.98	×	16.26%	=	15.89%
Debt, including current portion³	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					15.94%

Based on: 10-K (reporting date: 2020-11-27).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Nov 29, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	168,746)	168,746)	÷	173,553)	=	0.97	0.97	×	16.26%	=	15.81%
Debt, including current portion³	4,210)	4,210)	÷	173,553)	=	0.02	0.02	×	4.26% × (1 – 21.00%)	=	0.08%
Operating lease liability⁴	597)	597)	÷	173,553)	=	0.00	0.00	×	4.26% × (1 – 21.00%)	=	0.01%
Total:	173,553)					1.00					15.90%

Based on: 10-K (reporting date: 2019-11-29).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Nov 30, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	119,468)	119,468)	÷	124,176)	=	0.96	0.96	×	16.26%	=	15.64%
Debt, including current portion³	4,138)	4,138)	÷	124,176)	=	0.03	0.03	×	4.26% × (1 – 22.20%)	=	0.11%
Operating lease liability⁴	569)	569)	÷	124,176)	=	0.00	0.00	×	4.26% × (1 – 22.20%)	=	0.02%
Total:	124,176)					1.00					15.77%

Based on: 10-K (reporting date: 2018-11-30).

¹ US$ in millions

² Equity. See details »

³ Debt, including current portion. See details »

⁴ Operating lease liability. See details »

Adobe Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	1,402)	2,335)	2,836)	1,080)	670)	233)
Invested capital²	24,970)	21,130)	21,065)	18,837)	17,466)	15,711)
Performance Ratio
Economic spread ratio³	5.62%	11.05%	13.46%	5.73%	3.84%	1.48%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	6.04%	8.89%	10.73%	11.29%	10.02%	10.26%
International Business Machines Corp.	-1.44%	-9.30%	-4.31%	-4.05%	-0.32%	—
Intuit Inc.	-6.02%	-4.96%	2.79%	6.12%	19.79%	17.49%
Microsoft Corp.	16.07%	24.02%	33.04%	31.05%	26.17%	7.83%
Oracle Corp.	-1.12%	-0.83%	7.22%	1.53%	4.24%	-4.75%
Palo Alto Networks Inc.	14.96%	6.80%	-1.88%	-2.92%	0.32%	-2.50%
Salesforce Inc.	-11.94%	-9.52%	-7.20%	-10.24%	-6.23%	—
ServiceNow Inc.	9.01%	4.48%	5.69%	7.31%	6.72%	—
Synopsys Inc.	-3.54%	3.04%	-2.98%	-2.81%	-5.80%	-7.17%

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,402 ÷ 24,970 = 5.62%

⁴ Click competitor name to see calculations.

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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.	Adobe Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Adobe Inc., economic profit margin calculation, comparison to benchmarks

	Dec 1, 2023	Dec 2, 2022	Dec 3, 2021	Nov 27, 2020	Nov 29, 2019	Nov 30, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	1,402)	2,335)	2,836)	1,080)	670)	233)

Revenue	19,409)	17,606)	15,785)	12,868)	11,171)	9,030)
Add: Increase (decrease) in deferred revenue	536)	536)	1,119)	258)	447)	559)
Adjusted revenue	19,945)	18,142)	16,904)	13,126)	11,618)	9,589)
Performance Ratio
Economic profit margin²	7.03%	12.87%	16.78%	8.23%	5.77%	2.43%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	3.11%	4.28%	5.50%	5.75%	4.63%	4.31%
International Business Machines Corp.	-2.57%	-16.15%	-8.23%	-7.05%	-0.55%	—
Intuit Inc.	-9.86%	-9.55%	3.54%	6.89%	13.19%	11.62%
Microsoft Corp.	18.31%	23.02%	27.42%	23.05%	19.36%	5.55%
Oracle Corp.	-2.17%	-1.53%	14.29%	3.48%	7.73%	-8.59%
Palo Alto Networks Inc.	14.85%	7.92%	-2.53%	-4.74%	0.36%	-3.70%
Salesforce Inc.	-30.42%	-26.42%	-16.51%	-25.20%	-12.26%	—
ServiceNow Inc.	7.25%	3.60%	4.92%	5.96%	4.92%	—
Synopsys Inc.	-4.99%	4.28%	-4.74%	-4.82%	-10.02%	-12.25%

Based on: 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), 10-K (reporting date: 2019-11-29), 10-K (reporting date: 2018-11-30).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 1,402 ÷ 19,945 = 7.03%

³ Click competitor name to see calculations.

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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.	Adobe Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Adobe Inc. (NASDAQ:ADBE)

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