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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Amgen Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) 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 trajectory between 2021 and 2025 reveals a period of significant capital expansion followed by a recovery in value creation. While operational profitability showed overall growth, the expansion of the capital base created a temporary period of economic value destruction before a strong rebound in the final year.
- Net Operating Profit After Taxes (NOPAT)
- Operational profitability remained stable between 2021 and 2022, followed by a significant increase to 7,802 million USD in 2023. A sharp decline occurred in 2024, where NOPAT dropped to 5,377 million USD, marking the lowest point in the five-year period. However, a substantial recovery is observed by December 31, 2025, with NOPAT reaching a peak of 9,219 million USD.
- Invested Capital and Cost of Capital
- Invested capital experienced a dramatic surge in 2023, increasing from 39,722 million USD in 2022 to 69,976 million USD, suggesting a major strategic investment or acquisition. This capital base contracted gradually over the following two years, ending at 58,618 million USD in 2025. Throughout this period, the cost of capital remained relatively stable, fluctuating within a narrow range between 8.71% and 9.30%.
- Economic Profit Analysis
- Economic profit exhibited a downward trend from 2021 to 2024. Despite the increase in NOPAT in 2023, the disproportionate increase in invested capital led to a decrease in economic profit to 1,708 million USD. This trend culminated in a negative economic profit of -236 million USD in 2024, indicating that the operating returns were insufficient to cover the cost of the invested capital. A sharp reversal occurred in 2025, with economic profit rising to 3,767 million USD, the highest level in the analyzed period, driven by both increased NOPAT and a reduced capital base.
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.
An analysis of economic value added metrics reveals a period of significant volatility in capital efficiency and value creation. The trajectory is characterized by a stable initial phase, a period of capital expansion leading to margin compression and temporary value destruction, and a subsequent stage of strong recovery.
- Invested Capital Trends
- Invested capital remained relatively stable between 2021 and 2022, holding near US$ 40 billion. A substantial increase occurred in 2023, where capital surged to US$ 69,976 million, representing a significant expansion of the capital base. This peak was followed by a gradual reduction in 2024 and 2025, ending at US$ 58,618 million.
- Economic Profit Performance
- Economic profit exhibited a downward trajectory from 2021 through 2024. After a stable period of approximately US$ 2.8 billion in 2021 and 2022, profit declined to US$ 1,708 million in 2023 and transitioned to a negative value in 2024, reaching -US$ 236 million. A sharp rebound is observed in 2025, with economic profit rising to US$ 3,767 million, the highest level in the period analyzed.
- Economic Spread Ratio Dynamics
- The economic spread ratio reflects a corresponding pattern of volatility. After maintaining a consistent level of approximately 6.97% in 2021 and 2022, the ratio dropped sharply to 2.44% in 2023 and became negative in 2024 at -0.37%, indicating that the return on invested capital fell below the cost of capital. By 2025, the ratio recovered to 6.43%, nearly returning to its baseline efficiency levels.
The observed data suggests that the spike in invested capital in 2023 initially diluted the economic spread, contributing to the negative economic profit recorded in 2024. The recovery in 2025 indicates a successful realignment of capital or an increase in operational returns, resulting in an absolute economic profit that exceeds the levels seen prior to the capital expansion.
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.
The financial performance from 2021 through 2025 is characterized by a consistent increase in top-line revenue contrasted with significant volatility in economic value creation. While product sales exhibited a steady upward trajectory, economic profit and the corresponding margin experienced a sharp decline, reaching a deficit in 2024 before a robust recovery in 2025.
- Product Sales Trend
- A sustained growth trend is evident in product sales, which increased from US$ 24,297 million in 2021 to US$ 35,148 million by 2025. This represents a continuous expansion of revenue over the five-year period.
- Economic Profit Trajectory
- Economic profit demonstrated a non-linear trend. Following a period of relative stability between 2021 and 2022, a downward trend emerged, with profit falling to US$ 1,708 million in 2023 and contracting to a negative US$ 236 million in 2024. A significant recovery occurred in 2025, with economic profit reaching its period peak of US$ 3,767 million.
- Economic Profit Margin Analysis
- The economic profit margin closely mirrors the volatility of the absolute economic profit. The margin decreased from 11.55% in 2021 to a low of -0.74% in 2024. The fact that the margin declined while product sales increased suggests that the cost of capital or operational expenditures exceeded the returns generated by invested capital during the 2023-2024 period. The subsequent rebound to 10.72% in 2025 indicates a restoration of value creation and improved capital efficiency.