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.
Paying user area
Try for free
Amgen Inc. pages available for free this week:
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Amgen Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Amgen Inc., economic profit calculation
US$ 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 exhibited a decline from 7,889 million USD in 2020 to 6,412 million USD in 2021, followed by a slight further decrease to 6,399 million USD in 2022. This was succeeded by a recovery to 7,802 million USD in 2023. However, in 2024, there was a sharp decrease to 5,377 million USD, representing the lowest value in the five-year period.
- Cost of Capital
- The cost of capital fluctuated mildly within a narrow range between 8.43% and 8.82%. It decreased slightly from 8.75% in 2020 to 8.66% in 2021. A modest increase occurred in 2022 (8.82%), followed by a decrease in 2023 (8.43%), and then a slight rebound to 8.6% in 2024. Overall, the cost of capital has remained relatively stable.
- Invested Capital
- Invested capital showed a general upward trend from 38,776 million USD in 2020 to 40,247 million USD in 2021. It then remained fairly stable at 39,722 million USD in 2022 before experiencing a significant increase to 69,976 million USD in 2023. This was followed by a decrease to 63,169 million USD in 2024, though the level remained substantially higher than in the earlier years.
- Economic Profit
- Economic profit followed a declining trajectory over the observed period. Starting at 4,497 million USD in 2020, it dropped to 2,928 million USD in 2021 and continued to decrease slightly to 2,896 million USD in 2022. The decline intensified in 2023, with economic profit falling to 1,905 million USD, and by 2024 it moved into negative territory at -52 million USD, indicating that the company did not generate returns above its cost of capital in that year.
- Summary Insights
- The data suggests a challenging financial environment in recent years, especially notable in 2024 where both NOPAT and economic profit declined sharply, and economic profit turned negative. The substantial increase in invested capital in 2023, followed by a slight decline in 2024, indicates possible significant investments or changes in assets that have not yet translated into proportional profitability. The relatively stable cost of capital implies that the shifts in economic profit and NOPAT are more likely attributable to operational performance rather than changes in financing costs. Overall, the trends depict pressures on profitability and returns on invested capital in the latest period observed.
Net Operating Profit after Taxes (NOPAT)
Amgen 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 equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 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.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net Income
- The net income experienced a decline from 7,264 million US dollars in 2020 to 5,893 million US dollars in 2021, representing a notable decrease. It then rebounded moderately to 6,552 million US dollars in 2022, followed by a slight increase to 6,717 million US dollars in 2023. However, net income dropped considerably to 4,090 million US dollars in 2024, the lowest level during the observed period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a decreasing trend from 7,889 million US dollars in 2020 to 6,412 million US dollars in 2021. It remained relatively stable in 2022 at 6,399 million US dollars, then rose significantly to 7,802 million US dollars in 2023, reaching the highest point in the series. In 2024, NOPAT dropped sharply to 5,377 million US dollars, marking a substantial decline compared to the previous year.
- Overall Trends and Insights
- Both net income and NOPAT exhibited volatility throughout the five-year period. After declines in 2021, both metrics partially recovered in 2022 and 2023 before falling steeply in 2024. The divergence between net income and NOPAT in certain years is moderate, with both generally following similar downward and upward moves. The steep drops in 2024 for both indicators may suggest operational or external challenges impacting profitability during that year.
Cash Operating Taxes
Amgen 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 for Income Taxes
- The provision for income taxes initially decreased from 869 million USD in 2020 to 808 million USD in 2021, followed by a further slight decline to 794 million USD in 2022. However, there was a noticeable increase in 2023, reaching 1,138 million USD, before dropping significantly to 519 million USD in 2024. This pattern indicates some volatility, with a peak in 2023 before a steep reduction in the latest year.
- Cash Operating Taxes
- Cash operating taxes showed a consistent upward trend from 1,493 million USD in 2020 to 1,497 million USD in 2021, then sharply increased to 2,368 million USD in 2022 and further to 2,963 million USD in 2023. However, in 2024, the amount fell to 2,426 million USD, indicating a partial decline after a period of substantial growth. Overall, cash operating taxes more than doubled over the five-year period despite the slight drop in the final year.
- General Insights
- The data reveals a divergence between provision for income taxes and cash operating taxes. While provision for income taxes fluctuated with a peak in 2023 and a marked decline in 2024, cash operating taxes demonstrated a generally strong upward trajectory with a moderate pullback towards the end. This could suggest variations in tax management strategies, timing differences, or changes in taxable income and cash tax payments over the periods analyzed.
Invested Capital
Amgen 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 equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases show a general upward trend from 2020 to 2024. Beginning at 33,445 million USD in 2020, the figure rises slightly to 33,979 million USD in 2021, followed by a more pronounced increase to 39,640 million USD in 2022. A significant surge occurs in 2023, reaching 65,423 million USD, before slightly declining to 60,879 million USD in 2024. This pattern indicates increased leverage, particularly in 2023, potentially reflecting elevated borrowing or lease obligations during that period.
- Stockholders’ equity
- Stockholders’ equity demonstrates a declining trend over the analyzed years. Starting at 9,409 million USD in 2020, equity decreases sharply to 6,700 million USD in 2021 and continues downward to 3,661 million USD in 2022. A recovery is observed in 2023 with equity rising to 6,232 million USD, followed by a slight decrease to 5,877 million USD in 2024. Overall, the substantial reduction early in the period suggests diminished net assets, while the partial rebound in 2023 may indicate some restoration of equity value.
- Invested capital
- Invested capital remains relatively stable from 2020 through 2022, starting at 38,776 million USD in 2020, increasing slightly to 40,247 million USD in 2021, then marginally decreasing to 39,722 million USD in 2022. A significant increase occurs in 2023, with invested capital reaching 69,976 million USD, before declining to 63,169 million USD in 2024. This growth in 2023 aligns with the increase in reported debt and leases, suggesting substantial capital investment or acquisition activities funded by increased liabilities.
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: 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 »
| 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: 2020-12-31).
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, 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 | ||||||
| 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: 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 demonstrated a declining trend over the analyzed periods. Starting at 4,497 million US dollars in 2020, it decreased substantially to 2,928 million in 2021 and then showed a marginal drop to 2,896 million in 2022. The decline intensified in 2023, with economic profit falling to 1,905 million, and further transitioned into a negative value of -52 million US dollars in 2024. This indicates a diminishing generation of profit above the cost of capital, culminating in a slight economic loss by the end of the final period.
- Invested Capital
- The invested capital experienced overall growth from 38,776 million US dollars in 2020 to 40,247 million in 2021. A slight decrease occurred in 2022, lowering the figure to 39,722 million. However, a significant increase was observed in 2023 when invested capital rose sharply to 69,976 million, followed by a reduction to 63,169 million in 2024. The marked volatility in invested capital, particularly the spike in 2023, suggests substantial investments or asset acquisitions during that period, potentially impacting the company’s return dynamics.
- Economic Spread Ratio
- The economic spread ratio declined consistently throughout the periods. Starting at a favorable 11.6% in 2020, it fell to 7.28% in 2021 and remained relatively steady at 7.29% in 2022. In 2023, the ratio dropped sharply to 2.72%, signaling a much lower return on invested capital relative to its cost. By 2024, the ratio reached a negative value of -0.08%, indicating that the returns generated were insufficient to cover the cost of capital, reflecting potential operational or market challenges affecting profitability.
- Summary
- The data reveals a downward trajectory in the company’s economic profitability over the five-year span. Despite fluctuations and a significant increase in invested capital in 2023, returns have eroded, as evidenced by both the negative economic profit in 2024 and the declining economic spread ratio. The trends suggest increased capital deployment has not translated into commensurate economic gains, highlighting potential inefficiencies or adverse shifts in business conditions affecting value creation.
Economic Profit Margin
Amgen 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 | ||||||
| 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: 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 ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a declining trend over the five-year period. It began at a high of 4,497 million US dollars in 2020 and decreased to 2,928 million in 2021. The value remained relatively stable in 2022 at 2,896 million but then fell to 1,905 million in 2023. By 2024, it turned negative, registering a loss of 52 million US dollars. This trajectory indicates weakening profitability in terms of economic profit, culminating in a marginally negative return in the most recent period.
- Product Sales
- Product sales demonstrate consistent growth throughout the analyzed years. Starting at 24,240 million US dollars in 2020, sales increased slightly to 24,297 million in 2021 and continued to rise to 24,801 million in 2022. The upward trend accelerated in 2023, reaching 26,910 million, and further surged to 32,026 million by 2024. This steady and significant increase in sales highlights strong revenue expansion over the period despite the decline seen in economic profit.
- Economic Profit Margin
- The economic profit margin has steadily decreased from 18.55% in 2020 to -0.16% in 2024. The margin dropped to 12.05% in 2021 and further decreased to 11.68% in 2022. A sharper decline occurred in 2023, where the margin fell to 7.08%, and in 2024, it turned slightly negative. This downward trend suggests that the company’s economic efficiency in converting sales into economic profit has deteriorated over the period, despite increasing product sales.
- Summary Insights
- The analysis reveals a divergence between revenue and profitability metrics. Product sales have shown robust growth, increasing by approximately 32% from 2020 to 2024. However, economic profit and economic profit margin have moved in the opposite direction, showing substantial declines and turning negative by 2024. This pattern indicates rising costs, inefficiencies, or other financial challenges adversely impacting profitability. The negative economic profit in the most recent year signals a potential concern regarding value creation despite higher sales volumes.