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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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
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Economic Profit
Amgen Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial performance between 2021 and 2025 is characterized by significant volatility in economic profit, driven by a substantial expansion of the capital base and fluctuating operating returns. While the period began and ended with positive value creation, a notable period of value destruction occurred in 2024, where the cost of capital exceeded the net operating profit.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability remained relatively stable between 2021 and 2022, followed by a peak in 2023 at 7,802 million US$. A sharp contraction is observed in 2024, with NOPAT falling to 5,377 million US$, before rebounding strongly to a period high of 9,219 million US$ by the end of 2025.
- Invested Capital and Capital Charge
- A dramatic increase in invested capital occurred in 2023, rising from 39,722 million US$ to 69,976 million US$. This expansion significantly increased the capital charge required to generate a return. Following this peak, invested capital trended downward over the subsequent two years, reaching 58,618 million US$ in 2025.
- Cost of Capital
- The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a narrow band between 8.71% and 9.30%. This suggests a consistent risk profile and financing environment, meaning changes in economic profit were primarily driven by NOPAT and the total amount of invested capital rather than changes in the rate of return required.
- Economic Profit Trends
- Economic profit experienced a downward trajectory from 2021 to 2024. The substantial increase in invested capital in 2023, coupled with the decline in NOPAT in 2024, led to a negative economic profit of -233 million US$ in 2024, indicating that the company failed to cover its cost of capital during that year. However, 2025 saw a comprehensive recovery, with economic profit reaching its highest level in the period at 3,769 million US$, facilitated by the simultaneous increase in NOPAT and the reduction of invested capital.
Net Operating Profit after Taxes (NOPAT)
Amgen Inc., NOPAT calculation
US$ 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 equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
Net operating profit after taxes (NOPAT) exhibited fluctuations over the five-year period. While net income demonstrated an overall positive trend, NOPAT presented a more complex pattern. Initial stability was followed by a significant increase and then a subsequent decline before recovering strongly in the final year.
- Overall Trend
- NOPAT began at US$6,412 million in 2021, experienced a slight decrease to US$6,399 million in 2022, then increased substantially to US$7,802 million in 2023. A decrease was then observed in 2024, with NOPAT falling to US$5,377 million, before a considerable recovery to US$9,219 million in 2025.
- Year-over-Year Changes
- The period from 2021 to 2022 showed a minimal decrease in NOPAT. The most significant year-over-year change occurred between 2022 and 2023, with an increase of US$1,403 million. The largest decline occurred between 2023 and 2024, representing a decrease of US$2,425 million. Finally, 2024 to 2025 saw a substantial increase of US$3,842 million.
- Relationship to Net Income
- While both NOPAT and net income generally moved in the same direction, the magnitudes of change differed. NOPAT’s fluctuations were more pronounced than those of net income. In 2021, NOPAT exceeded net income by US$519 million. This difference narrowed in 2022 to US$153 million. In 2023, NOPAT exceeded net income by US$1,085 million. The gap widened again in 2024, with NOPAT exceeding net income by US$1,287 million, and then further increased in 2025 to US$1,508 million.
The substantial increase in NOPAT in 2025 suggests improved operational efficiency or a change in the company’s capital structure. The decline in 2024 warrants further investigation to determine the underlying causes, such as increased operating expenses or changes in tax rates. The consistent difference between NOPAT and net income indicates the presence of non-operating items impacting net income.
Cash Operating Taxes
Amgen Inc., cash operating taxes calculation
US$ 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 and cash operating taxes exhibited distinct patterns over the five-year period. A review of these figures reveals fluctuations in both reported tax expense and actual cash outflows for tax obligations.
- Provision for Income Taxes
- The provision for income taxes initially decreased from US$808 million in 2021 to US$794 million in 2022. A substantial increase was then observed in 2023, reaching US$1,138 million, before declining significantly to US$519 million in 2024. The provision increased again in 2025, closing at US$1,265 million. This suggests potential volatility influenced by changes in taxable income, tax rates, or the recognition of deferred tax assets or liabilities.
- Cash Operating Taxes
- Cash operating taxes demonstrated an upward trend from US$1,497 million in 2021 to US$2,368 million in 2022, representing a considerable increase. This growth continued into 2023, with cash taxes reaching US$2,963 million. A decrease was then noted in 2024, with cash taxes reported at US$2,426 million, followed by a slight increase to US$2,551 million in 2025. The cash tax figures generally remained above the provision for income taxes throughout the period.
- Relationship between Provision and Cash Taxes
- A consistent difference exists between the provision for income taxes and cash operating taxes. Cash operating taxes are consistently higher than the provision for income taxes across all reported years. This disparity could be attributed to several factors, including timing differences between when income is recognized for accounting purposes versus when taxes are paid, the utilization of tax loss carryforwards, or differences related to stock-based compensation. The widening gap in 2022 and 2023, followed by a narrowing in 2024 and 2025, warrants further investigation to understand the underlying drivers.
The observed trends suggest a dynamic tax profile. Further analysis, incorporating details regarding changes in tax legislation, deferred tax items, and the company’s overall income structure, would be necessary to provide a more comprehensive understanding of these fluctuations.
Invested Capital
Amgen Inc., invested capital calculation (financing approach)
US$ 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 equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable securities.
The reported invested capital exhibited fluctuations over the five-year period. Total reported debt & leases and stockholders’ equity are the components used to calculate invested capital, and both experienced considerable changes during this timeframe.
- Invested Capital Trend
- Invested capital remained relatively stable between 2021 and 2022, at approximately US$40 billion. A significant increase was observed in 2023, rising to nearly US$70 billion. Subsequently, invested capital decreased in both 2024 and 2025, reaching US$58.6 billion by the end of 2025. This suggests a period of substantial capital deployment followed by a reduction in capital employed.
- Debt & Leases
- Total reported debt & leases increased from US$33.98 billion in 2021 to US$39.64 billion in 2022. A substantial rise occurred in 2023, reaching US$65.42 billion. This was followed by a decrease to US$60.88 billion in 2024 and a further reduction to US$55.44 billion in 2025. The pattern indicates increased reliance on debt financing in 2023, followed by a deliberate effort to reduce debt levels.
- Stockholders’ Equity
- Stockholders’ equity experienced a notable decline from US$6.7 billion in 2021 to US$3.66 billion in 2022. A recovery was seen in 2023, with equity rising to US$6.23 billion. This trend continued modestly in 2024, reaching US$5.88 billion, and then increased significantly in 2025 to US$8.66 billion. The fluctuations suggest changes in profitability, share repurchases, or other equity-related activities.
The interplay between debt and equity significantly influenced the overall invested capital. The increase in invested capital in 2023 was primarily driven by the substantial increase in debt, while the subsequent decrease in invested capital in 2024 and 2025 was influenced by both debt reduction and, to a lesser extent, fluctuations in stockholders’ equity.
Cost of Capital
Amgen Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Amgen 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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The financial performance regarding economic value added exhibits significant volatility over the observed period, characterized by a substantial contraction in value creation between 2023 and 2024, followed by a robust recovery in 2025.
- Economic Profit Trends
- Economic profit remained relatively stable between 2021 and 2022, but experienced a steep decline starting in 2023. This downward trajectory culminated in a negative economic profit of -233 million US$ in 2024, indicating a failure to generate returns above the cost of capital. A sharp reversal occurred in 2025, with economic profit rising to 3,769 million US$, the highest level within the five-year sequence.
- Invested Capital Dynamics
- A major expansion in the capital base is evident in 2023, where invested capital surged from 39,722 million US$ to 69,976 million US$. This spike suggests a significant investment or acquisition phase. Following this peak, invested capital trended downward over the next two years, decreasing to 63,169 million US$ in 2024 and further to 58,618 million US$ by 2025.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained consistent at approximately 7% through 2022. This ratio declined precipitously to 2.44% in 2023 and turned negative in 2024 at -0.37%. The negative spread in 2024 confirms that the capital employed during that period did not generate a sufficient return to cover its costs. The ratio rebounded strongly to 6.43% in 2025, indicating a return to efficient value creation and an improvement in operational productivity relative to the invested capital.
Economic Profit Margin
Amgen 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 | ||||||
| Product sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
An analysis of the financial performance from 2021 to 2025 reveals a divergence between consistent revenue growth and volatile economic profitability. While product sales increased steadily throughout the period, economic profit experienced a significant decline, entering negative territory in 2024 before achieving a strong recovery in 2025.
- Product Sales Trend
- A consistent upward trajectory in product sales is observed, rising from 24,297 million US$ in 2021 to 35,148 million US$ by 2025. This represents sustained growth in top-line performance, with the most significant acceleration occurring between 2023 and 2024.
- Economic Profit Volatility
- Economic profit exhibited a downward trend for several consecutive years, decreasing from 2,808 million US$ in 2021 to a deficit of 233 million US$ in 2024. However, this trend reversed sharply in 2025, with economic profit rebounding to 3,769 million US$, the highest level recorded in the five-year period.
- Economic Profit Margin Analysis
- The economic profit margin closely mirrored the volatility of the absolute profit figures. The margin contracted from 11.56% in 2021 to a low of -0.73% in 2024, indicating a period where the return on capital did not exceed the cost of capital. By 2025, the margin recovered to 10.72%, nearly returning to the baseline levels observed at the start of the period despite the substantial increase in total sales.
The data indicates that while the organization successfully scaled its operations and increased sales, it faced a period of diminished economic value creation peaking in 2024. The sharp recovery in 2025 suggests a successful realignment of costs or a significant increase in capital efficiency relative to the cost of capital.