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
Amazon.com Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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
= 90,849 – 20.61% × 475,175 = -7,094
The financial performance from 2021 to 2025 is characterized by a period of aggressive capital expansion and a volatile but recovering operational profit profile. While economic profit remained negative throughout the analyzed timeframe, there is a distinct trend toward value creation as the deficit narrowed significantly in the later years.
- Net Operating Profit After Taxes (NOPAT)
- Operational profitability experienced a severe contraction in 2022, falling to a deficit of 5,619 million US$. This was followed by a strong recovery and sustained growth, with NOPAT reaching 90,849 million US$ by 2025. The substantial increase in the final three years suggests a significant improvement in operating margins and scale efficiencies.
- Invested Capital
- A consistent upward trend is observed in invested capital, which grew from 202,836 million US$ in 2021 to 475,175 million US$ by 2025. This represents a more than twofold increase in the capital base, indicating heavy investment in long-term assets or strategic growth initiatives.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating within a narrow band between 19.52% and 20.84%. This stability indicates that the cost of funding and the risk premium associated with the company's capital structure did not shift significantly despite the massive increase in total invested capital.
- Economic Profit Trajectory
- Economic profit remained in negative territory for all five years, reflecting that NOPAT was insufficient to cover the capital charge. The deepest deficit occurred in 2022 at 58,208 million US$, coinciding with the drop in NOPAT. However, a steady recovery is evident from 2023 onward, with the economic loss narrowing to 7,094 million US$ by 2025. This convergence toward zero suggests that the rapid growth in operational profits is successfully offsetting the increasing cost of the expanded capital base.
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Net Operating Profit after Taxes (NOPAT)
Amazon.com Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in unearned revenue.
4 Addition of increase (decrease) in equity equivalents to net income (loss).
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 89,252 × 3.70% = 3,302
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 5,576 × 21.00% = 1,171
7 Addition of after taxes interest expense to net income (loss).
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 4,392 × 21.00% = 922
9 Elimination of after taxes investment income.
Net income and net operating profit after taxes (NOPAT) exhibited significant fluctuations over the five-year period. While both metrics generally trended upwards, a substantial loss was recorded in 2022 before returning to positive figures and demonstrating accelerating growth in subsequent years.
- Overall Trend
- Both net income and NOPAT demonstrate a recovery from a loss in 2022, followed by substantial growth through 2025. The period is characterized by volatility, particularly in 2022, but concludes with strong positive performance.
- Net Income
- Net income reached US$33,364 million in 2021. A significant loss of US$2,722 million was recorded in 2022. Subsequent years saw a return to profitability, with net income increasing to US$30,425 million in 2023, US$59,248 million in 2024, and reaching US$77,670 million in 2025. This represents a considerable upward trajectory following the 2022 downturn.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a similar pattern to net income. It stood at US$37,525 million in 2021, experienced a loss of US$5,619 million in 2022, and then increased to US$31,856 million in 2023. Growth accelerated in 2024 to US$58,988 million, culminating in US$90,849 million in 2025. NOPAT consistently exceeded net income in 2021, 2023, 2024, and 2025, suggesting the impact of non-operating items on overall net income.
- Relationship between Net Income and NOPAT
- The divergence between net income and NOPAT in 2022 indicates that non-operating items significantly contributed to the overall net loss. The increasing gap between NOPAT and net income in later years suggests a growing influence of non-operating activities on reported net income. The consistent positive NOPAT values, even during the net income loss in 2022, highlight the underlying operational profitability of the business.
The substantial growth in both metrics from 2023 to 2025 suggests improved operational efficiency and/or increased revenue generation. The 2022 results warrant further investigation to understand the specific factors contributing to the loss.
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Cash Operating Taxes
Amazon.com Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The provision for income taxes, net, exhibits significant volatility over the observed period. A positive value of US$4,791 million in 2021 transitioned to a substantial negative value of US$3,217 million in 2022, indicating a tax benefit was recognized. This was followed by positive values in subsequent years, increasing to US$7,120 million in 2023, US$9,265 million in 2024, and reaching US$19,087 million in 2025.
Cash operating taxes demonstrate an overall increasing trend, though with fluctuations. Beginning at US$5,646 million in 2021, the figure rose to US$5,689 million in 2022, remaining relatively stable. A considerable increase is then observed, reaching US$13,583 million in 2023 and US$14,023 million in 2024. A notable decrease occurs in 2025, with cash operating taxes falling to US$7,866 million.
- Relationship between Provision for Income Taxes and Cash Operating Taxes
- The difference between the provision for income taxes, net, and cash operating taxes suggests timing differences in recognizing income tax expense. In 2022, the negative provision for income taxes contrasts with positive cash operating taxes, indicating deferred tax assets were realized or tax loss carryforwards utilized. The increasing gap between the two metrics from 2023 to 2024 suggests a growing divergence between book and tax accounting, potentially due to increased non-cash expenses or changes in tax regulations. The narrowing of this gap in 2025, driven by the decrease in cash operating taxes, could indicate a reversal of some of these timing differences.
The substantial increase in both the provision for income taxes, net, and cash operating taxes from 2022 to 2023 and 2024 warrants further investigation. This could be attributable to increased profitability, changes in the tax rate, or adjustments to deferred tax liabilities. The decline in cash operating taxes in 2025, despite the continued increase in the provision for income taxes, net, suggests a potential shift in the composition of taxable income or the utilization of tax credits.
- Trend Analysis - Cash Operating Taxes
- From 2021 to 2024, cash operating taxes increased by approximately 148.8%. The subsequent decrease of approximately 43.8% in 2025 represents a significant shift and requires further scrutiny to determine the underlying causes. This fluctuation could be linked to changes in business operations, tax planning strategies, or external economic factors.
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Invested Capital
Amazon.com Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 unearned revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The invested capital of the company demonstrates a consistent upward trend over the five-year period. Simultaneously, changes are observed in the components contributing to this invested capital, namely total reported debt & leases and stockholders’ equity.
- Invested Capital Trend
- Invested capital increased from US$202,836 million in 2021 to US$475,175 million in 2025. This represents a cumulative increase of 134.1% over the period. The rate of increase appears to be accelerating, with larger absolute increases observed in later years.
- Debt & Leases
- Total reported debt & leases exhibited an initial increase from US$132,318 million in 2021 to US$154,972 million in 2022. It then decreased slightly to US$154,556 million in 2023, followed by a further decrease to US$147,838 million in 2024. However, a notable increase to US$169,934 million is observed in 2025. While fluctuations occur, the debt level remains relatively stable overall, with the 2025 value being approximately 28.4% higher than the 2021 value.
- Stockholders’ Equity
- Stockholders’ equity shows a substantial and consistent increase throughout the period. Starting at US$138,245 million in 2021, it rises to US$201,875 million in 2023, then significantly to US$285,970 million in 2024, and culminates at US$411,065 million in 2025. This represents a cumulative increase of approximately 197.8% from 2021 to 2025. The growth in stockholders’ equity is a primary driver of the overall increase in invested capital.
- Relationship between Components and Invested Capital
- The growth in invested capital is largely attributable to the significant increase in stockholders’ equity. While debt & leases fluctuate, the consistent expansion of equity provides the primary impetus for the overall upward trend in invested capital. The increasing proportion of equity financing within the capital structure is apparent.
The observed trends suggest a strengthening financial position, characterized by increasing investment in the business and a growing reliance on equity funding. Further analysis would be required to determine the efficiency with which this invested capital is being utilized to generate returns.
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Cost of Capital
Amazon.com Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,257,769) | 2,257,769) | ÷ | 2,421,243) | = | 0.93 | 0.93 | × | 21.88% | = | 20.40% | ||
| Debt and finance leases3 | 74,222) | 74,222) | ÷ | 2,421,243) | = | 0.03 | 0.03 | × | 4.12% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 89,252) | 89,252) | ÷ | 2,421,243) | = | 0.04 | 0.04 | × | 3.70% × (1 – 21.00%) | = | 0.11% | ||
| Total: | 2,421,243) | 1.00 | 20.61% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,428,470) | 2,428,470) | ÷ | 2,568,868) | = | 0.95 | 0.95 | × | 21.88% | = | 20.69% | ||
| Debt and finance leases3 | 60,802) | 60,802) | ÷ | 2,568,868) | = | 0.02 | 0.02 | × | 3.74% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 79,596) | 79,596) | ÷ | 2,568,868) | = | 0.03 | 0.03 | × | 3.50% × (1 – 21.00%) | = | 0.09% | ||
| Total: | 2,568,868) | 1.00 | 20.84% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,784,656) | 1,784,656) | ÷ | 1,933,686) | = | 0.92 | 0.92 | × | 21.88% | = | 20.20% | ||
| Debt and finance leases3 | 73,391) | 73,391) | ÷ | 1,933,686) | = | 0.04 | 0.04 | × | 3.76% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 75,639) | 75,639) | ÷ | 1,933,686) | = | 0.04 | 0.04 | × | 3.30% × (1 – 21.00%) | = | 0.10% | ||
| Total: | 1,933,686) | 1.00 | 20.41% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,059,464) | 1,059,464) | ÷ | 1,206,729) | = | 0.88 | 0.88 | × | 21.88% | = | 19.21% | ||
| Debt and finance leases3 | 78,225) | 78,225) | ÷ | 1,206,729) | = | 0.06 | 0.06 | × | 3.63% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 69,040) | 69,040) | ÷ | 1,206,729) | = | 0.06 | 0.06 | × | 2.80% × (1 – 21.00%) | = | 0.13% | ||
| Total: | 1,206,729) | 1.00 | 19.52% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,604,285) | 1,604,285) | ÷ | 1,740,471) | = | 0.92 | 0.92 | × | 21.88% | = | 20.17% | ||
| Debt and finance leases3 | 77,856) | 77,856) | ÷ | 1,740,471) | = | 0.04 | 0.04 | × | 3.12% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 58,330) | 58,330) | ÷ | 1,740,471) | = | 0.03 | 0.03 | × | 2.20% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 1,740,471) | 1.00 | 20.34% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Amazon.com Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (7,094) | (19,255) | (34,817) | (58,208) | (3,728) | |
| Invested capital2 | 475,175) | 375,421) | 326,668) | 269,358) | 202,836) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.49% | -5.13% | -10.66% | -21.61% | -1.84% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Home Depot Inc. | 6.89% | 12.88% | 16.94% | 21.39% | 12.23% | |
| Lowe’s Cos. Inc. | 15.91% | 18.68% | 13.68% | 21.65% | 9.20% | |
| TJX Cos. Inc. | 7.41% | 7.14% | 4.20% | 4.22% | -12.63% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -7,094 ÷ 475,175 = -1.49%
4 Click competitor name to see calculations.
Over the five-year period ending December 31, 2025, a consistent and aggressive expansion of invested capital is observed, paired with a volatile yet recovering trajectory in economic profit. While the entity remained in a state of economic value destruction throughout the period, the trend indicates a significant reversal of the losses incurred during a period of peak inefficiency.
- Invested Capital Growth
- A continuous upward trend in invested capital is evident, increasing from 202,836 million US dollars in 2021 to 475,175 million US dollars by 2025. This represents a steady scaling of the asset base and capital deployment over the five-year duration.
- Economic Profit Volatility
- Economic profit experienced a severe contraction in 2022, reaching a low of -58,208 million US dollars. Following this trough, a consistent recovery is observed, with losses narrowing to -34,817 million in 2023, -19,255 million in 2024, and -7,094 million by the end of 2025.
- Economic Spread Ratio Performance
- The economic spread ratio reflects the efficiency of the invested capital relative to its cost. A sharp decline occurred in 2022, where the ratio dropped to -21.61%. Subsequent years show a steady improvement in capital efficiency, with the ratio climbing to -10.66% in 2023, -5.13% in 2024, and nearly reaching a break-even point at -1.49% in 2025.
The convergence of a rising economic spread ratio and narrowing economic losses, despite the continuous increase in invested capital, suggests an improving ability to generate returns that approach the required cost of capital. The transition from a -21.61% spread in 2022 to -1.49% in 2025 indicates a strong positive shift in the operational efficiency of the capital deployed.
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Economic Profit Margin
Amazon.com Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (7,094) | (19,255) | (34,817) | (58,208) | (3,728) | |
| Net sales | 716,924) | 637,959) | 574,785) | 513,983) | 469,822) | |
| Add: Increase (decrease) in unearned revenue | 373) | 3,676) | 4,800) | 2,100) | 2,419) | |
| Adjusted net sales | 717,297) | 641,635) | 579,585) | 516,083) | 472,241) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -0.99% | -3.00% | -6.01% | -11.28% | -0.79% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Home Depot Inc. | 3.15% | 4.72% | 5.95% | 6.80% | 4.60% | |
| Lowe’s Cos. Inc. | 5.00% | 5.61% | 3.49% | 5.89% | 2.91% | |
| TJX Cos. Inc. | 2.97% | 2.78% | 1.72% | 1.71% | -8.79% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -7,094 ÷ 717,297 = -0.99%
3 Click competitor name to see calculations.
An analysis of the economic profit and margin trends from 2021 to 2025 reveals a period of significant volatility followed by a consistent recovery toward economic breakeven. While adjusted net sales exhibited uninterrupted growth throughout the period, economic profit experienced a severe contraction in 2022 before trending upward.
- Economic Profit Trends
- The absolute economic profit reached its lowest point in 2022 at -58,208 million USD, representing a substantial increase in economic loss compared to the -3,728 million USD recorded in 2021. Following this trough, a consistent recovery is observed, with losses narrowing to -34,817 million USD in 2023, -19,255 million USD in 2024, and reaching -7,094 million USD by the end of 2025.
- Adjusted Net Sales Growth
- Revenue trajectories remained positive over the five-year period. Adjusted net sales grew steadily from 472,241 million USD in 2021 to 717,297 million USD in 2025. This indicates a consistent expansion of the scale of operations, providing a growing base for potential value creation despite the negative economic profit figures.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the absolute profit trends, dropping from -0.79% in 2021 to a peak deficit of -11.28% in 2022. This sharp decline indicates that the cost of capital significantly outweighed the operating returns during that period. From 2023 onward, the margin showed a sustained upward trajectory, improving to -6.01% in 2023, -3.00% in 2024, and -0.99% in 2025, signaling a trend toward achieving a positive economic value added.
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