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
Amgen 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
= 9,219 – 9.48% × 58,618 = 3,662
Economic profit exhibited significant volatility over the five-year period, characterized by a period of decline and a temporary lapse into negative value creation before reaching a peak in 2025. The trajectory of economic profit was primarily driven by a substantial expansion in the invested capital base and fluctuating levels of net operating profit after taxes (NOPAT).
- Net Operating Profit After Taxes (NOPAT)
- NOPAT remained relatively stable between 2021 and 2022, followed by a notable increase to 7,802 million US$ in 2023. A sharp contraction occurred in 2024, where NOPAT fell to 5,377 million US$, the lowest level in the analyzed period. However, 2025 marked a strong recovery, with NOPAT ascending to 9,219 million US$, representing a substantial increase in operational efficiency and earnings power.
- Invested Capital and Cost of Capital
- Invested capital remained stable at approximately 40 billion US$ through 2022, but experienced a dramatic surge to 69,976 million US$ in 2023. This spike suggests a major capital allocation event, such as a significant acquisition or large-scale infrastructure investment. From 2024 to 2025, this capital base steadily contracted, ending at 58,618 million US$. Meanwhile, the cost of capital remained relatively consistent, fluctuating within a narrow range between 8.87% and 9.48%.
- Economic Profit Trends
- Economic profit remained steady between 2021 and 2022, but declined in 2023 despite an increase in NOPAT. This decline resulted from the increased capital charge associated with the surge in invested capital. The trend culminated in a negative economic profit of -341 million US$ in 2024, as a decrease in NOPAT coincided with a high capital base, indicating that the company failed to generate returns above its cost of capital during that year. The trend reversed sharply in 2025, with economic profit rising to 3,662 million US$, driven by the simultaneous achievement of peak NOPAT and a reduced invested capital base.
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Net Operating Profit after Taxes (NOPAT)
Amgen Inc., NOPAT calculation
US$ 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
= 831 × 4.00% = 33
5 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 2,788 × 21.00% = 586
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$1,508 million.
The substantial increase in NOPAT in 2025 suggests improved operational efficiency or a change in the company’s capital structure. The decline in 2024 warrants further investigation to determine the underlying causes, such as increased operating expenses or changes in tax rates. The consistent difference between NOPAT and net income indicates the presence of non-operating items impacting net income.
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Cash Operating Taxes
Amgen Inc., cash operating taxes calculation
US$ 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$2,551 million in 2025. The cash tax figures generally remained above the provision for income taxes throughout the period.
- Relationship between Provision and Cash Taxes
- A consistent difference exists between the provision for income taxes and cash operating taxes. Cash operating taxes are consistently higher than the provision for income taxes across all reported years. This disparity could be attributed to several factors, including timing differences between when income is recognized for accounting purposes versus when taxes are paid, the utilization of tax loss carryforwards, or differences related to stock-based compensation. The widening gap in 2022 and 2023, followed by a narrowing in 2024 and 2025, warrants further investigation to understand the underlying drivers.
The observed trends suggest a dynamic tax profile. Further analysis, incorporating details regarding changes in tax legislation, deferred tax items, and the company’s overall income structure, would be necessary to provide a more comprehensive understanding of these fluctuations.
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Invested Capital
Amgen Inc., invested capital calculation (financing approach)
US$ 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$8.66 billion. The fluctuations suggest changes in profitability, share repurchases, or other equity-related activities.
The interplay between debt and equity significantly influenced the overall invested capital. The increase in invested capital in 2023 was primarily driven by the substantial increase in debt, while the subsequent decrease in invested capital in 2024 and 2025 was influenced by both debt reduction and, to a lesser extent, fluctuations in stockholders’ equity.
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Cost of Capital
Amgen Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 199,018) | 199,018) | ÷ | 252,649) | = | 0.79 | 0.79 | × | 11.08% | = | 8.73% | ||
| Borrowings3 | 52,800) | 52,800) | ÷ | 252,649) | = | 0.21 | 0.21 | × | 4.50% × (1 – 21.00%) | = | 0.74% | ||
| Operating lease liability4 | 831) | 831) | ÷ | 252,649) | = | 0.00 | 0.00 | × | 4.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 252,649) | 1.00 | 9.48% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 156,413) | 156,413) | ÷ | 213,893) | = | 0.73 | 0.73 | × | 11.08% | = | 8.10% | ||
| Borrowings3 | 56,700) | 56,700) | ÷ | 213,893) | = | 0.27 | 0.27 | × | 4.49% × (1 – 21.00%) | = | 0.94% | ||
| Operating lease liability4 | 780) | 780) | ÷ | 213,893) | = | 0.00 | 0.00 | × | 3.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 213,893) | 1.00 | 9.05% | ||||||||||
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 | 155,454) | 155,454) | ÷ | 219,464) | = | 0.71 | 0.71 | × | 11.08% | = | 7.85% | ||
| Borrowings3 | 63,200) | 63,200) | ÷ | 219,464) | = | 0.29 | 0.29 | × | 4.45% × (1 – 21.00%) | = | 1.01% | ||
| Operating lease liability4 | 810) | 810) | ÷ | 219,464) | = | 0.00 | 0.00 | × | 3.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 219,464) | 1.00 | 8.87% | ||||||||||
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 | 128,154) | 128,154) | ÷ | 163,849) | = | 0.78 | 0.78 | × | 11.08% | = | 8.66% | ||
| Borrowings3 | 35,000) | 35,000) | ÷ | 163,849) | = | 0.21 | 0.21 | × | 3.74% × (1 – 21.00%) | = | 0.63% | ||
| Operating lease liability4 | 695) | 695) | ÷ | 163,849) | = | 0.00 | 0.00 | × | 2.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 163,849) | 1.00 | 9.31% | ||||||||||
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 | 124,028) | 124,028) | ÷ | 162,598) | = | 0.76 | 0.76 | × | 11.08% | = | 8.45% | ||
| Borrowings3 | 37,900) | 37,900) | ÷ | 162,598) | = | 0.23 | 0.23 | × | 3.66% × (1 – 21.00%) | = | 0.67% | ||
| Operating lease liability4 | 670) | 670) | ÷ | 162,598) | = | 0.00 | 0.00 | × | 2.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 162,598) | 1.00 | 9.13% | ||||||||||
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 | 3,662) | (341) | 1,595) | 2,702) | 2,736) | |
| Invested capital2 | 58,618) | 63,169) | 69,976) | 39,722) | 40,247) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 6.25% | -0.54% | 2.28% | 6.80% | 6.80% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.72% | -2.22% | -3.93% | 5.49% | 4.87% | |
| Bristol-Myers Squibb Co. | 5.66% | -22.01% | 1.55% | -1.21% | 1.09% | |
| Danaher Corp. | -10.71% | -10.87% | -11.64% | -6.63% | -5.80% | |
| Eli Lilly & Co. | 30.14% | 14.49% | 1.42% | 8.52% | 10.19% | |
| Gilead Sciences Inc. | 12.61% | -10.47% | 2.85% | -0.27% | 6.76% | |
| Johnson & Johnson | 11.55% | 1.88% | 0.03% | 5.29% | 10.35% | |
| Merck & Co. Inc. | 10.49% | 13.36% | -8.94% | 11.24% | 11.41% | |
| Pfizer Inc. | -3.69% | -3.37% | -9.48% | 17.97% | 11.14% | |
| Regeneron Pharmaceuticals Inc. | 13.82% | 16.64% | 13.44% | 18.80% | 62.56% | |
| Thermo Fisher Scientific Inc. | -7.45% | -8.25% | -8.72% | -6.97% | -4.95% | |
| Vertex Pharmaceuticals Inc. | 20.79% | -22.86% | 11.09% | 13.84% | 15.05% | |
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 × 3,662 ÷ 58,618 = 6.25%
4 Click competitor name to see calculations.
The analysis of the economic value added metrics reveals a period of significant volatility characterized by a sharp contraction in value creation followed by a strong recovery. Between 2021 and 2022, the organization maintained a stable economic spread ratio and consistent economic profit. However, a substantial increase in invested capital starting in 2023 coincided with a precipitous decline in the economic spread ratio, culminating in a negative value in 2024 before a significant rebound in 2025.
- Economic Spread Ratio Trends
- A consistent spread of 6.80% was maintained through 2022, indicating that returns on capital effectively exceeded the cost of capital. This ratio collapsed to 2.28% in 2023 and reached a deficit of -0.54% in 2024. This negative spread indicates that during 2024, the return on invested capital fell below the required rate of return, resulting in the destruction of economic value. A recovery to 6.25% in 2025 suggests a restoration of efficiency and a return to value creation nearly reaching previous benchmarks.
- Invested Capital and Economic Profit Correlation
- A significant expansion in invested capital is observed in 2023, where the figure rose from approximately 39.7 billion to nearly 70 billion. This surge in capital deployment is inversely correlated with economic profit, which dropped from 2.7 billion in 2022 to 1.6 billion in 2023 and eventually turned negative in 2024. The subsequent reduction in invested capital toward 58.6 billion by 2025, coupled with the rebound of economic profit to 3.66 billion, suggests a successful optimization of the asset base or the realization of returns from the prior capital investment.
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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 | 3,662) | (341) | 1,595) | 2,702) | 2,736) | |
| Product sales | 35,148) | 32,026) | 26,910) | 24,801) | 24,297) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 10.42% | -1.06% | 5.93% | 10.90% | 11.26% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 0.72% | -2.73% | -4.94% | 7.77% | 8.31% | |
| Bristol-Myers Squibb Co. | 6.96% | -28.55% | 2.33% | -1.87% | 1.88% | |
| Danaher Corp. | -32.81% | -33.56% | -38.22% | -16.48% | -14.50% | |
| Eli Lilly & Co. | 22.94% | 11.51% | 1.22% | 7.25% | 9.40% | |
| Gilead Sciences Inc. | 18.67% | -16.23% | 4.86% | -0.46% | 11.95% | |
| Johnson & Johnson | 16.94% | 2.25% | 0.03% | 6.34% | 10.83% | |
| Merck & Co. Inc. | 15.81% | 16.54% | -10.41% | 14.02% | 16.57% | |
| Pfizer Inc. | -8.24% | -7.17% | -24.66% | 19.67% | 11.89% | |
| Regeneron Pharmaceuticals Inc. | 12.76% | 14.59% | 12.26% | 18.93% | 42.30% | |
| Thermo Fisher Scientific Inc. | -15.75% | -15.79% | -17.42% | -12.85% | -10.07% | |
| Vertex Pharmaceuticals Inc. | 18.34% | -18.76% | 14.88% | 20.42% | 18.65% | |
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 × 3,662 ÷ 35,148 = 10.42%
3 Click competitor name to see calculations.
The analysis of financial performance between 2021 and 2025 reveals a significant divergence between revenue growth and economic value creation. While product sales exhibited a consistent upward trajectory, the economic profit margin experienced a period of sharp decline and volatility, culminating in a temporary loss of economic value before a strong recovery in the final period.
- Product Sales Growth
- A steady increase in product sales is observed throughout the five-year period. Revenue grew from 24,297 million USD in 2021 to 35,148 million USD by 2025. A notable acceleration occurred between 2023 and 2024, where sales increased by approximately 19%, indicating strong top-line expansion.
- Economic Profit and Margin Volatility
- In contrast to sales growth, economic profit showed a declining trend from 2021 through 2024. The economic profit margin compressed from 11.26% in 2021 to 10.90% in 2022, followed by a steep drop to 5.93% in 2023. This downward trend reached a critical point in 2024, where economic profit turned negative at -341 million USD, resulting in a negative economic profit margin of -1.06%.
- Analysis of the 2024 Economic Deficit
- The transition to a negative economic profit margin in 2024, despite record sales of 32,026 million USD, suggests that the cost of capital exceeded the net operating profit during this period. This indicates a phase where the company failed to generate returns above its weighted average cost of capital, potentially due to significant capital expenditures, increased operational costs, or strategic investments that had not yet yielded economic returns.
- Recovery and Value Restoration
- A sharp reversal is observed in 2025, with economic profit rebounding to 3,662 million USD, the highest level in the analyzed period. The economic profit margin recovered to 10.42%, nearly returning to the levels seen in 2021 and 2022. This recovery demonstrates a successful restoration of value creation and suggests that the investments or operational challenges of 2024 were effectively resolved or began to generate substantial returns.
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