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 – 20.96% × 475,175 = -8,738
The financial performance between 2021 and 2025 is characterized by aggressive capital expansion and a significant recovery in operational profitability, although the company failed to achieve positive economic profit throughout the period. While net operating profit after taxes recovered and grew substantially after a sharp decline in 2022, the magnitude of invested capital increased at a rate that continued to exceed the returns required to cover the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A volatile trend is observed in NOPAT, which plummeted from 37,525 million USD in 2021 to a deficit of 5,619 million USD in 2022. Following this trough, a strong upward trajectory was established, with profits rising to 31,856 million USD in 2023, 58,988 million USD in 2024, and reaching a peak of 90,849 million USD by 2025.
- Invested Capital and Cost of Capital
- Invested capital grew consistently and substantially over the five-year period, increasing from 202,836 million USD in 2021 to 475,175 million USD in 2025, representing more than a doubling of the capital base. Concurrently, the cost of capital remained relatively stable, fluctuating within a narrow range between 19.85% and 21.19%.
- Economic Profit Analysis
- Economic profit remained negative across all analyzed years, indicating that the company did not generate returns in excess of its cost of capital. The deficit peaked in 2022 at 59,085 million USD, coinciding with the decline in NOPAT. Although a recovery trend is evident from 2023 onward, with the economic loss narrowing to 8,738 million USD by 2025, the persistent negative values suggest that the return on invested capital has remained below the weighted average cost of capital.
AI Ask an analyst for more
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$90,849 million in 2025. NOPAT consistently exceeded net income in 2021, 2023, 2024, and 2025, suggesting the impact of non-operating items on overall net income.
- Relationship between Net Income and NOPAT
- The divergence between net income and NOPAT in 2022 indicates that non-operating items significantly contributed to the overall net loss. The increasing gap between NOPAT and net income in later years suggests a growing influence of non-operating activities on reported net income. The consistent positive NOPAT values, even during the net income loss in 2022, highlight the underlying operational profitability of the business.
The substantial growth in both metrics from 2023 to 2025 suggests improved operational efficiency and/or increased revenue generation. The 2022 results warrant further investigation to understand the specific factors contributing to the loss.
AI Ask an analyst for more
Cash Operating Taxes
Amazon.com Inc., cash operating taxes calculation
US$ 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$7,866 million.
- Relationship between Provision for Income Taxes and Cash Operating Taxes
- The difference between the provision for income taxes, net, and cash operating taxes suggests timing differences in recognizing income tax expense. In 2022, the negative provision for income taxes contrasts with positive cash operating taxes, indicating deferred tax assets were realized or tax loss carryforwards utilized. The increasing gap between the two metrics from 2023 to 2024 suggests a growing divergence between book and tax accounting, potentially due to increased non-cash expenses or changes in tax regulations. The narrowing of this gap in 2025, driven by the decrease in cash operating taxes, could indicate a reversal of some of these timing differences.
The substantial increase in both the provision for income taxes, net, and cash operating taxes from 2022 to 2023 and 2024 warrants further investigation. This could be attributable to increased profitability, changes in the tax rate, or adjustments to deferred tax liabilities. The decline in cash operating taxes in 2025, despite the continued increase in the provision for income taxes, net, suggests a potential shift in the composition of taxable income or the utilization of tax credits.
- Trend Analysis - Cash Operating Taxes
- From 2021 to 2024, cash operating taxes increased by approximately 148.8%. The subsequent decrease of approximately 43.8% in 2025 represents a significant shift and requires further scrutiny to determine the underlying causes. This fluctuation could be linked to changes in business operations, tax planning strategies, or external economic factors.
AI Ask an analyst for more
Invested Capital
Amazon.com Inc., invested capital calculation (financing approach)
US$ 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$411,065 million in 2025. This represents a cumulative increase of approximately 197.8% from 2021 to 2025. The growth in stockholders’ equity is a primary driver of the overall increase in invested capital.
- Relationship between Components and Invested Capital
- The growth in invested capital is largely attributable to the significant increase in stockholders’ equity. While debt & leases fluctuate, the consistent expansion of equity provides the primary impetus for the overall upward trend in invested capital. The increasing proportion of equity financing within the capital structure is apparent.
The observed trends suggest a strengthening financial position, characterized by increasing investment in the business and a growing reliance on equity funding. Further analysis would be required to determine the efficiency with which this invested capital is being utilized to generate returns.
AI Ask an analyst for more
Cost of Capital
Amazon.com Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 2,257,769) | 2,257,769) | ÷ | 2,421,243) | = | 0.93 | 0.93 | × | 22.25% | = | 20.75% | ||
| Debt and finance leases3 | 74,222) | 74,222) | ÷ | 2,421,243) | = | 0.03 | 0.03 | × | 4.12% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 89,252) | 89,252) | ÷ | 2,421,243) | = | 0.04 | 0.04 | × | 3.70% × (1 – 21.00%) | = | 0.11% | ||
| Total: | 2,421,243) | 1.00 | 20.96% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 22.25% | = | 21.04% | ||
| 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 | 21.19% | ||||||||||
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 | × | 22.25% | = | 20.54% | ||
| 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 | 20.75% | ||||||||||
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 | × | 22.25% | = | 19.54% | ||
| 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 | 19.85% | ||||||||||
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 | × | 22.25% | = | 20.51% | ||
| 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 | 20.68% | ||||||||||
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 | (8,738) | (20,571) | (35,935) | (59,085) | (4,422) | |
| Invested capital2 | 475,175) | 375,421) | 326,668) | 269,358) | 202,836) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.84% | -5.48% | -11.00% | -21.94% | -2.18% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Home Depot Inc. | 6.79% | 12.77% | 16.84% | 21.29% | 12.13% | |
| Lowe’s Cos. Inc. | 15.81% | 18.58% | 13.58% | 21.55% | 9.10% | |
| TJX Cos. Inc. | 7.43% | 7.16% | 4.22% | 4.24% | -12.61% | |
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 × -8,738 ÷ 475,175 = -1.84%
4 Click competitor name to see calculations.
An analysis of the economic value added metrics reveals a period of aggressive capital expansion coupled with a volatile but recovering economic spread. While the organization has consistently increased its invested capital base, it has operated with a negative economic profit throughout the period, although the magnitude of these losses has diminished significantly since 2022.
- Invested Capital Trends
- A consistent upward trajectory is observed in invested capital, which increased from 202,836 million US dollars in 2021 to 475,175 million US dollars by 2025. This steady growth indicates a sustained commitment to capital deployment and infrastructure expansion over the five-year period.
- Economic Profit Trajectory
- Economic profit exhibited significant volatility, beginning at -4,422 million US dollars in 2021 before experiencing a sharp decline to -59,085 million US dollars in 2022. Following this trough, a sustained recovery pattern is evident, with the deficit narrowing to -35,935 million US dollars in 2023, -20,571 million US dollars in 2024, and -8,738 million US dollars by 2025.
- Economic Spread Ratio Dynamics
- The economic spread ratio remained negative across all reporting periods, signifying that the return on invested capital did not exceed the cost of capital. The ratio reached a minimum of -21.94% in 2022, mirroring the peak in economic losses. However, a consistent improvement is observed in subsequent years, with the ratio rising to -11.00% in 2023, -5.48% in 2024, and reaching -1.84% by 2025, suggesting a trend toward achieving a positive economic spread.
AI Ask an analyst for more
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 | (8,738) | (20,571) | (35,935) | (59,085) | (4,422) | |
| 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 | -1.22% | -3.21% | -6.20% | -11.45% | -0.94% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Home Depot Inc. | 3.10% | 4.68% | 5.92% | 6.77% | 4.57% | |
| Lowe’s Cos. Inc. | 4.97% | 5.58% | 3.47% | 5.86% | 2.88% | |
| TJX Cos. Inc. | 2.98% | 2.79% | 1.72% | 1.72% | -8.78% | |
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 × -8,738 ÷ 717,297 = -1.22%
3 Click competitor name to see calculations.
Analysis of the economic value added trends reveals a period of significant volatility followed by a consistent recovery trajectory. While adjusted net sales demonstrated uninterrupted growth over the five-year period, economic profit remained negative, indicating that the returns on invested capital did not exceed the cost of capital during this timeframe.
- Revenue Trajectory
- Adjusted net sales exhibited a steady upward trend, increasing from 472,241 million USD in 2021 to 717,297 million USD by 2025. This represents consistent top-line expansion throughout the analyzed period.
- Economic Profit Volatility
- A sharp deterioration in economic profit occurred in 2022, where losses expanded from 4,422 million USD in 2021 to a peak deficit of 59,085 million USD. Following this trough, a progressive recovery is observed, with losses narrowing to 35,935 million USD in 2023, 20,571 million USD in 2024, and finally 8,738 million USD in 2025.
- Economic Profit Margin Recovery
- The economic profit margin mirrored the volatility of the absolute economic profit. After a significant drop to -11.45% in 2022, the margin improved sequentially to -6.20% in 2023, -3.21% in 2024, and -1.22% in 2025. This trend indicates an improving relationship between operational earnings and the cost of capital, signaling a movement toward economic break-even.
AI Ask an analyst for more