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 – 20.83% × 475,175 = -8,123
The financial performance between 2021 and 2025 is characterized by a significant expansion of the capital base and a volatile but ultimately strong recovery in operational profitability. While the organization has consistently failed to generate positive economic profit during this period, the trajectory indicates a narrowing gap between net operating profit after taxes and the cost of invested capital.
- Net Operating Profit After Taxes (NOPAT)
- A highly volatile trend is observed in NOPAT, which experienced a sharp decline into negative territory in 2022 before initiating a strong recovery. From 2023 through 2025, NOPAT grew aggressively, increasing from $31,856 million to $90,849 million, suggesting a substantial improvement in operational efficiency and earnings power.
- Invested Capital
- A consistent and steep upward trend in invested capital is evident, with the total growing from $202,836 million in 2021 to $475,175 million in 2025. This represents an aggressive investment strategy, with the capital base more than doubling over the five-year period.
- Cost of Capital
- The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a narrow range between 19.73% and 21.06%. This stability indicates that the hurdle rate for investments remained constant despite the significant increase in the volume of capital deployed.
- Economic Profit
- Economic profit remained negative across all years, indicating that the returns generated were insufficient to cover the cost of the capital employed. A critical low was reached in 2022 at -$58,757 million. However, a steady recovery pattern is observable from 2023 onward, with the economic loss reducing to -$8,123 million by 2025, signaling that the organization is approaching a break-even point in terms of economic value addition.
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Net Operating Profit after Taxes (NOPAT)
Amazon.com Inc., NOPAT calculation
US$ 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$411,065 million in 2025. This represents a cumulative increase of approximately 197.8% from 2021 to 2025. The growth in stockholders’ equity is a primary driver of the overall increase in invested capital.
- Relationship between Components and Invested Capital
- The growth in invested capital is largely attributable to the significant increase in stockholders’ equity. While debt & leases fluctuate, the consistent expansion of equity provides the primary impetus for the overall upward trend in invested capital. The increasing proportion of equity financing within the capital structure is apparent.
The observed trends suggest a strengthening financial position, characterized by increasing investment in the business and a growing reliance on equity funding. Further analysis would be required to determine the efficiency with which this invested capital is being utilized to generate returns.
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Cost of Capital
Amazon.com Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,257,769) | 2,257,769) | ÷ | 2,421,243) | = | 0.93 | 0.93 | × | 22.11% | = | 20.62% | ||
| Debt and finance leases3 | 74,222) | 74,222) | ÷ | 2,421,243) | = | 0.03 | 0.03 | × | 4.12% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 89,252) | 89,252) | ÷ | 2,421,243) | = | 0.04 | 0.04 | × | 3.70% × (1 – 21.00%) | = | 0.11% | ||
| Total: | 2,421,243) | 1.00 | 20.83% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 22.11% | = | 20.91% | ||
| 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 | 21.06% | ||||||||||
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 | × | 22.11% | = | 20.41% | ||
| 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 | 20.62% | ||||||||||
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 | × | 22.11% | = | 19.42% | ||
| 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 | 19.73% | ||||||||||
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 | × | 22.11% | = | 20.38% | ||
| 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 | 20.55% | ||||||||||
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 | (8,123) | (20,079) | (35,517) | (58,757) | (4,162) | |
| Invested capital2 | 475,175) | 375,421) | 326,668) | 269,358) | 202,836) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.71% | -5.35% | -10.87% | -21.81% | -2.05% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Home Depot Inc. | 6.81% | 12.79% | 16.86% | 21.31% | 12.15% | |
| Lowe’s Cos. Inc. | 15.83% | 18.60% | 13.60% | 21.57% | 9.12% | |
| TJX Cos. Inc. | 7.39% | 7.13% | 4.19% | 4.21% | -12.64% | |
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 × -8,123 ÷ 475,175 = -1.71%
4 Click competitor name to see calculations.
The analysis reveals a period of significant financial volatility followed by a consistent recovery trend in economic value generation. While the entity maintained an aggressive investment strategy throughout the five-year period, the relationship between invested capital and economic profit shifted from a sharp decline to a steady convergence toward positive value creation.
- Economic Profit Trends
- A substantial contraction in economic profit occurred in 2022, reaching a trough of -58,757 million US$. Following this decline, the subsequent three years demonstrate a consistent upward trajectory, with losses narrowing significantly to -8,123 million US$ by the end of 2025. This progression indicates a steady improvement in the ability to generate returns that exceed the implicit cost of capital.
- Invested Capital Growth
- Invested capital grew monotonically from 202,836 million US$ in 2021 to 475,175 million US$ in 2025. This continuous expansion reflects a sustained commitment to capital expenditure and resource allocation, with the capital base more than doubling over the analyzed timeframe.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of economic profit, experiencing a sharp decline to -21.81% in 2022. From that low point, the ratio improved steadily to -10.87% in 2023, -5.35% in 2024, and finally -1.71% in 2025. The convergence toward 0% suggests that the return on invested capital is increasingly aligning with the required cost of capital, signaling a recovery in overall economic efficiency.
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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 | (8,123) | (20,079) | (35,517) | (58,757) | (4,162) | |
| 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 | -1.13% | -3.13% | -6.13% | -11.39% | -0.88% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Home Depot Inc. | 3.11% | 4.69% | 5.92% | 6.77% | 4.57% | |
| Lowe’s Cos. Inc. | 4.97% | 5.59% | 3.47% | 5.87% | 2.89% | |
| TJX Cos. Inc. | 2.96% | 2.77% | 1.71% | 1.71% | -8.80% | |
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 × -8,123 ÷ 717,297 = -1.13%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a period of significant economic value erosion followed by a consistent and sustained recovery toward a break-even state. While economic profit remained negative throughout the five-year period, the trend indicates an improving capacity to generate returns relative to the cost of capital.
- Economic Profit Trends
- A substantial decline in economic profit occurred in 2022, where losses widened from -4,162 million US$ to -58,757 million US$. This peak in economic loss suggests a period where the cost of capital significantly exceeded the net operating profit after tax. However, a steady recovery followed, with economic losses narrowing to -35,517 million US$ in 2023, -20,079 million US$ in 2024, and reaching -8,123 million US$ by 2025.
- Adjusted Net Sales Performance
- Adjusted net sales demonstrated uninterrupted growth over the analyzed period. Revenue increased from 472,241 million US$ in 2021 to 717,297 million US$ in 2025. This consistent upward trend indicates a successful expansion of the top-line scale, providing a foundation for the subsequent recovery in economic profit.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility observed in absolute economic profit. The margin experienced a sharp contraction in 2022, dropping to -11.39%. Subsequent years show a progressive improvement in efficiency, with the margin ascending to -6.13% in 2023, -3.13% in 2024, and concluding at -1.13% in 2025. This trajectory suggests that the company is effectively narrowing the gap between its return on invested capital and its weighted average cost of capital.
In summary, the data reveals a recovery phase initiated after 2022. The convergence of the economic profit margin toward zero, coupled with steady revenue growth, indicates an improving trend in economic value creation, moving the organization closer to generating positive economic value added.
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