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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Apple Inc., economic profit calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Net operating profit after taxes (NOPAT)¹	94,296)	101,652)	91,407)	58,673)	53,447)	25,278)
Cost of capital²	15.32%	15.17%	15.05%	14.90%	14.53%	14.29%
Invested capital³	60,243)	46,661)	42,700)	36,252)	50,655)	26,376)

Economic profit⁴	85,064)	94,576)	84,981)	53,270)	46,089)	21,508)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 94,296 – 15.32% × 60,243 = 85,064

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Apple Inc. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Apple Inc., NOPAT calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Net income	96,995)	99,803)	94,680)	57,411)	55,256)	59,531)
Deferred income tax expense (benefit)¹	(3,024)	895)	(4,774)	(215)	(340)	(32,590)
Increase (decrease) in deferred revenue²	(300)	500)	1,700)	2,100)	(700)	(44)
Increase (decrease) in equity equivalents³	(3,324)	1,395)	(3,074)	1,885)	(1,040)	(32,634)
Interest expense	3,933)	2,931)	2,645)	2,873)	3,576)	3,240)
Interest expense, operating lease liability⁴	355)	264)	219)	184)	381)	321)
Adjusted interest expense	4,288)	3,195)	2,864)	3,057)	3,957)	3,561)
Tax benefit of interest expense⁵	(900)	(671)	(601)	(642)	(831)	(873)
Adjusted interest expense, after taxes⁶	3,387)	2,524)	2,263)	2,415)	3,126)	2,689)
(Gain) loss on marketable securities	253)	205)	(273)	(82)	31)	(20)
Interest and dividend income	(3,750)	(2,825)	(2,843)	(3,763)	(4,961)	(5,686)
Investment income, before taxes	(3,497)	(2,620)	(3,116)	(3,845)	(4,930)	(5,706)
Tax expense (benefit) of investment income⁷	734)	550)	654)	807)	1,035)	1,398)
Investment income, after taxes⁸	(2,763)	(2,070)	(2,462)	(3,038)	(3,895)	(4,308)
Net operating profit after taxes (NOPAT)	94,296)	101,652)	91,407)	58,673)	53,447)	25,278)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net income.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 11,818 × 3.00% = 355

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 4,288 × 21.00% = 900

⁶ Addition of after taxes interest expense to net income.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 3,497 × 21.00% = 734

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Apple Inc. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Apple Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Provision for income taxes	16,741)	19,300)	14,527)	9,680)	10,481)	13,372)
Less: Deferred income tax expense (benefit)	(3,024)	895)	(4,774)	(215)	(340)	(32,590)
Add: Tax savings from interest expense	900)	671)	601)	642)	831)	873)
Less: Tax imposed on investment income	734)	550)	654)	807)	1,035)	1,398)
Cash operating taxes	19,931)	18,526)	19,248)	9,729)	10,617)	45,437)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Apple Inc. cash operating taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Apple Inc., invested capital calculation (financing approach)

US$ in millions

	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Current portion of finance leases	165)	129)	79)	24)	—)	—)
Commercial paper	5,985)	9,982)	6,000)	4,996)	5,980)	11,964)
Current portion of term debt	9,822)	11,128)	9,613)	8,773)	10,260)	8,784)
Non-current portion of term debt	95,281)	98,959)	109,106)	98,667)	91,807)	93,735)
Non-current portion of finance leases	859)	812)	769)	637)	—)	—)
Operating lease liability¹	11,818)	11,470)	10,955)	9,181)	8,535)	7,973)
Total reported debt & leases	123,930)	132,480)	136,522)	122,278)	116,582)	122,456)
Shareholders’ equity	62,146)	50,672)	63,090)	65,339)	90,488)	107,147)
Net deferred tax (assets) liabilities²	(17,251)	(14,537)	(13,073)	(8,157)	(8,045)	(5,834)
Deferred revenue³	12,100)	12,400)	11,900)	10,200)	8,100)	10,340)
Equity equivalents⁴	(5,151)	(2,137)	(1,173)	2,043)	55)	4,506)
Accumulated other comprehensive (income) loss, net of tax⁵	11,452)	11,109)	(163)	406)	584)	3,454)
Adjusted shareholders’ equity	68,447)	59,644)	61,754)	67,788)	91,127)	115,107)
Marketable securities⁶	(132,134)	(145,463)	(155,576)	(153,814)	(157,054)	(211,187)
Invested capital	60,243)	46,661)	42,700)	36,252)	50,655)	26,376)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of deferred revenue.

⁴ Addition of equity equivalents to shareholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Apple Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Apple Inc., cost of capital calculations

Sep 30, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	2,747,394)	2,747,394)	÷	2,857,021)	=	0.96	0.96	×	15.74%	=	15.14%
Commercial paper, term debt, and finance leases³	97,809)	97,809)	÷	2,857,021)	=	0.03	0.03	×	6.53% × (1 – 21.00%)	=	0.18%
Operating lease liability⁴	11,818)	11,818)	÷	2,857,021)	=	0.00	0.00	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	2,857,021)					1.00					15.32%

Based on: 10-K (reporting date: 2023-09-30).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Sep 24, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	2,477,530)	2,477,530)	÷	2,598,723)	=	0.95	0.95	×	15.74%	=	15.01%
Commercial paper, term debt, and finance leases³	109,723)	109,723)	÷	2,598,723)	=	0.04	0.04	×	4.53% × (1 – 21.00%)	=	0.15%
Operating lease liability⁴	11,470)	11,470)	÷	2,598,723)	=	0.00	0.00	×	2.30% × (1 – 21.00%)	=	0.01%
Total:	2,598,723)					1.00					15.17%

Based on: 10-K (reporting date: 2022-09-24).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Sep 25, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	2,457,678)	2,457,678)	÷	2,600,781)	=	0.94	0.94	×	15.74%	=	14.87%
Commercial paper, term debt, and finance leases³	132,148)	132,148)	÷	2,600,781)	=	0.05	0.05	×	4.16% × (1 – 21.00%)	=	0.17%
Operating lease liability⁴	10,955)	10,955)	÷	2,600,781)	=	0.00	0.00	×	2.00% × (1 – 21.00%)	=	0.01%
Total:	2,600,781)					1.00					15.05%

Based on: 10-K (reporting date: 2021-09-25).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Sep 26, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,850,816)	1,850,816)	÷	1,982,754)	=	0.93	0.93	×	15.74%	=	14.69%
Commercial paper, term debt, and finance leases³	122,757)	122,757)	÷	1,982,754)	=	0.06	0.06	×	4.16% × (1 – 21.00%)	=	0.20%
Operating lease liability⁴	9,181)	9,181)	÷	1,982,754)	=	0.00	0.00	×	2.00% × (1 – 21.00%)	=	0.01%
Total:	1,982,754)					1.00					14.90%

Based on: 10-K (reporting date: 2020-09-26).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Sep 28, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,105,307)	1,105,307)	÷	1,227,322)	=	0.90	0.90	×	15.74%	=	14.18%
Commercial paper, term debt, and finance leases³	113,480)	113,480)	÷	1,227,322)	=	0.09	0.09	×	4.46% × (1 – 21.00%)	=	0.33%
Operating lease liability⁴	8,535)	8,535)	÷	1,227,322)	=	0.01	0.01	×	4.46% × (1 – 21.00%)	=	0.02%
Total:	1,227,322)					1.00					14.53%

Based on: 10-K (reporting date: 2019-09-28).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Sep 29, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	956,672)	956,672)	÷	1,079,810)	=	0.89	0.89	×	15.74%	=	13.95%
Commercial paper, term debt, and finance leases³	115,164)	115,164)	÷	1,079,810)	=	0.11	0.11	×	4.03% × (1 – 24.50%)	=	0.32%
Operating lease liability⁴	7,973)	7,973)	÷	1,079,810)	=	0.01	0.01	×	4.03% × (1 – 24.50%)	=	0.02%
Total:	1,079,810)					1.00					14.29%

Based on: 10-K (reporting date: 2018-09-29).

¹ US$ in millions

² Equity. See details »

³ Commercial paper, term debt, and finance leases. See details »

⁴ Operating lease liability. See details »

Apple Inc., economic spread ratio calculation, comparison to benchmarks

	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	85,064)	94,576)	84,981)	53,270)	46,089)	21,508)
Invested capital²	60,243)	46,661)	42,700)	36,252)	50,655)	26,376)
Performance Ratio
Economic spread ratio³	141.20%	202.69%	199.02%	146.94%	90.99%	81.54%
Benchmarks
Economic Spread Ratio, Competitors⁴
Arista Networks Inc.	28.63%	24.09%	39.08%	21.43%	26.92%	—
Cisco Systems Inc.	8.47%	8.36%	7.61%	11.83%	6.04%	-9.27%
Super Micro Computer Inc.	10.38%	0.69%	-6.75%	-9.53%	-4.43%	-2.04%

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 85,064 ÷ 60,243 = 141.20%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Apple Inc. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Apple Inc., economic profit margin calculation, comparison to benchmarks

	Sep 30, 2023	Sep 24, 2022	Sep 25, 2021	Sep 26, 2020	Sep 28, 2019	Sep 29, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	85,064)	94,576)	84,981)	53,270)	46,089)	21,508)

Net sales	383,285)	394,328)	365,817)	274,515)	260,174)	265,595)
Add: Increase (decrease) in deferred revenue	(300)	500)	1,700)	2,100)	(700)	(44)
Adjusted net sales	382,985)	394,828)	367,517)	276,615)	259,474)	265,551)
Performance Ratio
Economic profit margin²	22.21%	23.95%	23.12%	19.26%	17.76%	8.10%
Benchmarks
Economic Profit Margin, Competitors³
Arista Networks Inc.	21.66%	16.63%	22.95%	16.75%	19.80%	—
Cisco Systems Inc.	8.43%	9.38%	8.48%	12.34%	6.37%	-9.22%
Super Micro Computer Inc.	3.52%	0.29%	-2.43%	-3.53%	-1.43%	-0.66%

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-24), 10-K (reporting date: 2021-09-25), 10-K (reporting date: 2020-09-26), 10-K (reporting date: 2019-09-28), 10-K (reporting date: 2018-09-29).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 85,064 ÷ 382,985 = 22.21%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Apple Inc. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Apple Inc. (NASDAQ:AAPL)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin