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.
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Amazon.com Inc. pages available for free this week:
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Analysis of Revenues
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Economic Profit
Amazon.com Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values exhibited a dynamic pattern over the observed period. Initially, there was a substantial increase from 24,183 million USD in 2020 to a peak of 37,525 million USD in 2021. However, in 2022, the NOPAT sharply declined into negative territory at -5,619 million USD. Recovery was evident in the following years, with values rising back to 31,856 million USD in 2023 and further improving to 58,988 million USD in 2024. This trend indicates volatility in operating profitability with a notable downturn in 2022 but strong rebounds thereafter.
- Cost of Capital
- The cost of capital showed a relatively stable trend with slight fluctuations. It decreased from 15.4% in 2020 to a low of 14.57% in 2022, followed by a moderate increase to 15.2% in 2023 and 15.51% in 2024. This suggests that the company's expense related to financing remained fairly consistent, with minor variations likely influenced by market conditions or risk assessments.
- Invested Capital
- Invested capital demonstrated a continuous and significant upward trend over the five-year span. Starting at 150,160 million USD in 2020, it rose progressively to 202,836 million USD in 2021, 269,358 million USD in 2022, 326,668 million USD in 2023, and reached 375,421 million USD in 2024. This consistent growth reflects ongoing expansion or increased asset investments, underscoring a sizeable increase in the scale of capital utilized by the company.
- Economic Profit
- Economic profit fluctuated markedly throughout the period. It increased from 1,052 million USD in 2020 to 6,818 million USD in 2021, indicating value creation above the cost of capital. This was followed by a sharp decline into significant negative territory with -44,868 million USD in 2022 and a continued negative figure of -17,810 million USD in 2023, reflecting substantial value destruction during these years. By 2024, economic profit returned to a slight positive value of 764 million USD, suggesting a recovery towards creating economic value again, albeit at a modest level relative to invested capital.
- Summary
- The overall financial performance exhibits volatility with a strong growth phase in 2021, followed by a pronounced downturn in 2022 and part of 2023, and recovery in 2024. While invested capital increased substantially every year, returns on this capital, as measured by NOPAT and economic profit, showed instability with a major dip, likely indicating challenges in efficient capital utilization or external factors impacting profitability during the middle years. The cost of capital remained stable, implying that fluctuations in economic profit were driven primarily by operational performance. The recent resurgence in profitability and economic profit may signal an improved operational environment or effective strategic adjustments.
Net Operating Profit after Taxes (NOPAT)
Amazon.com Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 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 (loss).
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss)
- The net income fluctuated significantly over the five-year period. Beginning at $21,331 million in 2020, there was a substantial increase to $33,364 million in 2021. However, 2022 marked a notable downturn with a net loss of $2,722 million. This negative performance rebounded sharply in the subsequent years, reaching $30,425 million in 2023 and further rising to $59,248 million in 2024. The data indicates a strong recovery and growth trajectory after the loss experienced in 2022.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a similar pattern to net income, starting at $24,183 million in 2020 and rising to $37,525 million in 2021. It then experienced a sharp decline to a negative $5,619 million in 2022, deeper than the net income loss in the same year, indicating challenges in operating profitability. However, a significant recovery occurred in 2023 with NOPAT increasing to $31,856 million, followed by a strong increase to $58,988 million in 2024. This suggests an improvement in the company's core operational efficiency and profitability in the last two years.
- Overall Analysis
- The financial results reveal volatility, with a peak in 2021, a pronounced downturn in 2022, and substantial recovery and growth by 2024. The presence of negative figures in 2022 for both net income and NOPAT indicates operational and profitability challenges during that year. The subsequent rebound in 2023 and 2024 demonstrates strong adaptive or strategic measures resulting in enhanced earnings and operating profit, achieving new highs at the end of the evaluated period.
Cash Operating Taxes
Amazon.com Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Provision (benefit) for income taxes, net
- The net provision for income taxes showed considerable volatility over the observed periods. In 2020 and 2021, the provision increased significantly from 2,863 million USD to 4,791 million USD. However, the year 2022 presented an unusual pattern with a net tax benefit of -3,217 million USD, indicating a reversal or tax benefit situation rather than a conventional tax expense. Subsequently, the provision rose again sharply to 7,120 million USD in 2023 and further to 9,265 million USD in 2024, reflecting a substantial increase in tax obligations or adjustments during these years.
- Cash operating taxes
- Cash operating taxes exhibited a steadily increasing trend from 3,844 million USD in 2020 to 5,646 million USD in 2021, followed by a more moderate rise to 5,689 million USD in 2022. In 2023, there was a notable surge to 13,583 million USD, nearly doubling the previous year's amount. This upward momentum continued in 2024 with cash operating taxes reaching 14,023 million USD. The substantial increase observed in the last two years suggests significant growth in actual tax payments, potentially correlated with rising taxable income or changes in tax rates and regulations.
Invested Capital
Amazon.com Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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.
- Total reported debt & leases
-
Over the five-year period, total reported debt and leases exhibited an overall increasing trend from 100,504 million US dollars in 2020 to a peak of 154,972 million in 2022. This increase suggests a significant rise in the company's leverage or obligations during these years. However, this peak level of debt was relatively maintained in 2023, with a slight decrease to 154,556 million, followed by a further moderate reduction to 147,838 million in 2024. The slight decline in the last two years might indicate strategic deleveraging or improved debt management efforts.
- Stockholders’ equity
-
Stockholders' equity demonstrated strong and consistent growth throughout the period under review. Starting at 93,404 million US dollars in 2020, equity levels increased markedly year over year, reaching 138,245 million in 2021 and continuing upward to 146,043 million in 2022. This growth accelerated significantly during 2023 and 2024, culminating in a sizable equity base of 285,970 million by the end of 2024. The substantial rise in equity in the final years suggests enhanced retained earnings, possible equity issuances, or asset revaluations, which strengthen the company's net asset position and financial stability.
- Invested capital
-
Invested capital showed a continuous and pronounced increase across the five years. Beginning at 150,160 million US dollars in 2020, it increased substantially to 202,836 million in 2021, then accelerated its upward trajectory to 269,358 million in 2022. The growth sustained momentum through 2023 and 2024, reaching 326,668 million and 375,421 million respectively. This pattern indicates significant expansion in the company's total capital employed in operations, possibly due to investments in long-term assets, acquisitions, or business growth initiatives.
Cost of Capital
Amazon.com Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits significant volatility over the examined period. Starting with a positive value of $1,052 million in 2020, it substantially increased to $6,818 million in 2021. However, the company faced a sharp reversal in 2022, with economic profit plunging to a negative $44,868 million. This negative trend slightly improved in 2023, though it remained deeply negative at -$17,810 million. By 2024, economic profit returned to a positive figure of $764 million, indicating a recovery phase but still modest compared to earlier years.
- Invested Capital
- The invested capital demonstrates a continuous and marked increase throughout the period. Beginning at $150,160 million in 2020, it rose consistently each year, reaching $202,836 million in 2021, $269,358 million in 2022, $326,668 million in 2023, and culminating at $375,421 million by the end of 2024. This upward trend highlights significant ongoing investment, suggesting expansion or increased asset deployment over time.
- Economic Spread Ratio
- The economic spread ratio closely mirrors the fluctuations observed in economic profit. It started at a low positive value of 0.7% in 2020 before increasing markedly to 3.36% in 2021. Subsequently, it deteriorated dramatically, turning negative at -16.66% in 2022. Although still negative, it improved to -5.45% in 2023 and further to 0.2% in 2024, indicating a gradual restoration towards profitability and better capital efficiency.
Economic Profit Margin
Amazon.com Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- There is a consistent upward trend in adjusted net sales over the periods, with figures increasing from 387,482 million US dollars in 2020 to 641,635 million US dollars in 2024. This indicates steady revenue growth year over year.
- Economic Profit
- Economic profit shows significant volatility during the analyzed timeframe. It started at 1,052 million US dollars in 2020, increased substantially to 6,818 million US dollars in 2021, then sharply declined to a large negative value of -44,868 million in 2022. Though it improved in 2023 to -17,810 million, it remained negative but turned positive again in 2024, reaching 764 million US dollars. This pattern suggests considerable challenges affecting profitability during 2022 and 2023, followed by partial recovery in the most recent period.
- Economic Profit Margin
- The economic profit margin echoes the trends observed in economic profit. It increased from 0.27% in 2020 to 1.44% in 2021, then plummeted to -8.69% in 2022 and -3.07% in 2023 before a slight recovery to 0.12% in 2024. This indicates that despite increasing sales volumes, profitability relative to sales deteriorated significantly in the middle periods before showing signs of normalization.
- Overall Analysis
- While adjusted net sales demonstrate strong and consistent growth, economic profit and its margin reveal that increased sales were not accompanied by proportional profitability during 2022 and 2023. The sharp negative economic profit suggests elevated costs or other factors that outweighed revenue gains in those years. The modest recovery in 2024 indicates initial progress towards restoring economic value, but profitability remains fragile relative to the scale of sales. The company appears to be navigating a challenging environment with improving but still limited returns on its expanded sales base.