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: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
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Economic Profit
Apple Inc., economic profit calculation
US$ in millions
| 12 months ended: | Sep 28, 2024 | Sep 30, 2023 | Sep 24, 2022 | Sep 25, 2021 | Sep 26, 2020 | Sep 28, 2019 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2024-09-28), 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).
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 net operating profit after taxes experienced a generally increasing trend from 2019 to 2022, rising from 53,447 million US dollars in 2019 to a peak of 101,652 million US dollars in 2022. However, in the subsequent years, 2023 and 2024, there was a decline to 94,296 million and 91,849 million US dollars respectively, indicating a downward adjustment after the previous growth.
- Cost of Capital
- The cost of capital showed a steady upward trend across the observed periods. It increased gradually from 16.1% in 2019 to 17.08% in 2024, reflecting rising capital costs over time. This incremental increase suggests a progressively more expensive investment environment or altered risk assessments.
- Invested Capital
- Invested capital varied significantly over the years. There was a notable decline from 50,655 million US dollars in 2019 to 36,252 million in 2020, followed by an upward trend reaching 60,243 million in 2023. In the last year observed, 2024, invested capital reduced to 50,072 million. This volatility indicates changes in the firm's investment or asset management strategies during the period.
- Economic Profit
- Economic profit exhibited a strong positive trend from 2019 through 2022, increasing from 45,294 million US dollars to a peak of 93,801 million. Despite some fluctuations afterwards, it remained relatively high in 2023 and 2024 at 84,055 million and 83,296 million respectively. The data reflects an overall improvement in value creation above the cost of capital, albeit with a slight stabilization or decrease in the later years.
- Summary of Financial Trends
- The data demonstrates a period of expansion in profitability and economic profit until 2022, followed by moderate declines. Rising cost of capital throughout these years implies increased capital expense pressures. Meanwhile, invested capital shows variability, possibly reflecting shifting investment or divestment decisions. Overall, the company’s economic profit remains strong despite recent decreases in net operating profit and invested capital, suggesting efficient use of capital in the face of higher costs.
Net Operating Profit after Taxes (NOPAT)
Apple Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-09-28), 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).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × 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 exhibits a general upward trend from 2019 through 2022, increasing from 55,256 million USD in 2019 to a peak of 99,803 million USD in 2022. After this peak, net income shows a decline in the subsequent years, dropping to 96,995 million USD in 2023 and further to 93,736 million USD in 2024. Despite the decline in the last two years, the net income remains significantly higher than the initial 2019 figure, indicating overall growth but with recent signs of contraction.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrates a similar pattern to net income. Starting at 53,447 million USD in 2019, it increased steadily to reach 101,652 million USD in 2022, marking the highest value in the series. Subsequently, NOPAT decreased to 94,296 million USD in 2023 and further to 91,849 million USD in 2024. This trend suggests a peak in operating efficiency and profitability in 2022 followed by a notable reduction over the following two years.
- Comparative Analysis
- Both net income and NOPAT reflect an overall increase over the first four years of the analyzed period, indicating improvements in profitability and operating performance. The divergence in the last two years, with both metrics declining, could imply emerging challenges or shifts in operational dynamics. While the peaks in 2022 demonstrate strong financial performance, the decreases in 2023 and 2024 merit further investigation to identify underlying causes. Notably, net income consistently remains slightly higher than NOPAT across all years, as expected due to the difference in calculation bases between the two metrics.
Cash Operating Taxes
Apple Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-09-28), 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).
- Provision for Income Taxes
- The provision for income taxes demonstrates a generally upward trend over the six-year period analyzed. Starting at 10,481 million US dollars in 2019, it slightly decreased in 2020 to 9,680 million but then increased significantly in subsequent years, reaching 29,749 million by 2024. This indicates substantial growth in tax expense provision, with the most pronounced increases occurring between 2021 to 2022 and 2023 to 2024.
- Cash Operating Taxes
- Cash operating taxes also rose substantially over the same timeframe. The value grew from 10,617 million US dollars in 2019 to 32,898 million in 2024. Unlike the provision for income taxes, cash operating taxes show a more consistent year-over-year increase, with a noteworthy acceleration between 2022 to 2023 and 2023 to 2024. There was a marked jump from 19,931 million in 2023 to 32,898 million in 2024.
- Comparative Analysis
- Both provision for income taxes and cash operating taxes exhibit strong growth trends, with cash operating taxes consistently exceeding the provisions. The widening gap in the latter years may suggest changes in tax payment timing, adjustments, or operational tax strategies. The accelerated increase in 2023 and 2024 warrants further examination to understand the underlying causes, such as changes in profitability, tax rates, or regulatory impacts.
Invested Capital
Apple Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-09-28), 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).
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.
- Total reported debt & leases
- Over the period from September 2019 to September 2024, total reported debt and leases exhibited a fluctuating but overall slightly decreasing trend. The debt increased from approximately $116.6 billion in 2019 to a peak of about $136.5 billion in 2021. Following this peak, a downward trend is observed with debt reducing to roughly $119.1 billion by 2024, indicating a moderate deleveraging or improved debt management in the later years.
- Shareholders’ equity
- Shareholders' equity showed a declining pattern over the six-year span. Starting at around $90.5 billion in 2019, it declined sharply to approximately $65.3 billion in 2020 and continued a gradual decrease, reaching a low of about $50.7 billion in 2022. A partial recovery is seen in 2023 with equity rising to $62.1 billion, but it declined again to $56.9 billion by 2024. This trend indicates erosion in net assets attributable to shareholders, reflecting potential challenges in profitability, retained earnings, or possible share repurchases.
- Invested capital
- The invested capital figures demonstrate variability with an overall increase followed by a decline. Beginning at roughly $50.7 billion in 2019, it fell sharply to about $36.3 billion in 2020, likely reflecting reduced investment or asset base changes during that period. Subsequently, a recovery trend is apparent, with invested capital rising to nearly $60.2 billion by 2023. However, it decreased again to approximately $50.1 billion in 2024. These fluctuations suggest changes in operational efficiency, capital expenditures, or asset turnover impacting the capital invested in the business.
Cost of Capital
Apple Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-09-28).
1 US$ in millions
2 Equity. See details »
3 Commercial paper, term debt, and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Commercial paper, term debt, and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
Economic Spread Ratio
Apple Inc., economic spread ratio calculation, comparison to benchmarks
| Sep 28, 2024 | Sep 30, 2023 | Sep 24, 2022 | Sep 25, 2021 | Sep 26, 2020 | Sep 28, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2024-09-28), 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).
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 demonstrates an overall upward trend from 45,294 million US dollars in 2019 to a peak of 93,801 million US dollars in 2022. However, after 2022, there is a decline to 84,055 million in 2023 and a slight further decrease to 83,296 million in 2024. Despite this recent dip, the economic profit remains significantly higher compared to 2019 levels.
- Invested Capital
- Invested capital fluctuates across the periods observed. It starts at 50,655 million US dollars in 2019, then decreases sharply to 36,252 million in 2020. It recovers gradually over the next years to 60,243 million in 2023, before declining again to 50,072 million in 2024. The pattern indicates periods of reinvestment followed by divestitures or capital reductions.
- Economic Spread Ratio
- The economic spread ratio shows a general increase over the years, starting at 89.42% in 2019 and reaching a maximum of 201.03% in 2022. This indicates improving efficiency in capital use relative to the cost of capital up to that point. Although there is a decrease to 139.53% in 2023, the ratio rebounds to 166.35% in 2024, reflecting a recovery in economic value generation relative to the invested capital.
- Summary
- Overall, the data suggests strong economic profitability with significant improvements in capital efficiency up to 2022. The subsequent slight declines in economic profit and economic spread ratio in the last two years may indicate emerging challenges or strategic adjustments. Invested capital levels have varied, reflecting shifts in investment strategy or asset base management over the period.
Economic Profit Margin
Apple Inc., economic profit margin calculation, comparison to benchmarks
| Sep 28, 2024 | Sep 30, 2023 | Sep 24, 2022 | Sep 25, 2021 | Sep 26, 2020 | Sep 28, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Dell Technologies Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2024-09-28), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit has exhibited a general upward trend from 2019 through 2022, increasing from $45,294 million to a peak of $93,801 million. However, in the subsequent years, 2023 and 2024, a decline is observed, with values dropping to $84,055 million and $83,296 million respectively, indicating a slight reduction in profitability after reaching its highest point in 2022.
- Adjusted Net Sales
- Adjusted net sales show a consistent upward trajectory over the six-year period. Starting at $259,474 million in 2019, sales gradually increased each year except for a minor decrease in 2023. The highest recorded sales are $394,828 million in 2022, with a slight decline to $382,985 million in 2023 followed by a recovery to $391,735 million in 2024. This trend suggests overall growth with some volatility in the latter years.
- Economic Profit Margin
- The economic profit margin demonstrates steady improvement from 17.46% in 2019 to a peak of 23.76% in 2022, reflecting enhanced operational efficiency and profitability relative to sales. Post-2022, the margin decreases to 21.95% in 2023 and further to 21.26% in 2024, showing a reduction in profitability per unit of sales despite high absolute profit levels.
- Summary
- Overall, the data indicates strong growth in both sales and economic profit through 2022, accompanied by increasing profit margins, signifying effective management and operational performance improvements over this period. However, a decline in economic profit and margin from 2023 onwards suggests emerging challenges affecting profitability despite sustained net sales. These trends may warrant further investigation into cost management, market conditions, or other external factors influencing the financial outcomes in the recent years.