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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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 NOPAT demonstrated an overall upward trend from 2019 through 2022, increasing from 53,447 million US dollars in 2019 to a peak of 101,652 million US dollars in 2022. However, a decline is observed in the subsequent years, with values decreasing to 94,296 million US dollars in 2023 and further to 91,849 million US dollars in 2024.
- Cost of Capital
- The cost of capital shows a gradual but steady increase each year, starting at 15.86% in 2019 and rising to 16.83% in 2024. This suggests a growing expense related to the financing of invested capital over the period.
- Invested Capital
- Invested capital exhibits some volatility across the years. Initially, there is a notable drop from 50,655 million US dollars in 2019 to 36,252 million US dollars in 2020, followed by a recovery and increase to 60,243 million US dollars by 2023. In 2024, invested capital decreases again to 50,072 million US dollars. These fluctuations may indicate periods of capital restructuring or changes in investment strategy.
- Economic Profit
- Economic profit experienced a robust increase up to 2022, growing from 45,413 million US dollars in 2019 to a peak of 93,916 million US dollars. After 2022, economic profit declines to 84,206 million US dollars in 2023 and slightly further to 83,422 million US dollars in 2024. Despite the decline in later years, economic profit remains significantly higher than at the beginning of the observed period, indicating sustained value generation beyond the cost of capital.
- Summary of Trends
- Overall, the data reveals strong growth in operating profitability and economic profit through the first four years, accompanied by increasing capital costs. The volatility in invested capital suggests adjustments in investment levels or asset base management. The decline in both NOPAT and economic profit after 2022 could signal emerging challenges or changes in operational efficiency or market conditions that warrant further investigation.
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 a generally increasing trend from 2019 through 2022, rising from 45,413 million US dollars to a peak of 93,916 million US dollars. However, in 2023 and 2024, there is a notable decline to 84,206 million and 83,422 million US dollars respectively, indicating a reduction after the peak year.
- Invested capital
- Invested capital shows some variability over the years. Initially, there is a decline from 50,655 million US dollars in 2019 to 36,252 million US dollars in 2020. Subsequently, invested capital increases consistently through 2023, reaching 60,243 million US dollars, before decreasing again to 50,072 million US dollars in 2024. This suggests fluctuations in the capital base, with significant capital deployment in the period between 2020 and 2023, followed by a contraction.
- Economic spread ratio
- The economic spread ratio exhibits an upward trend with notable growth from 89.65% in 2019 to a high of 201.27% in 2022, indicating improving returns relative to invested capital. After 2022, the ratio decreases to 139.78% in 2023 but recovers to 166.6% in 2024. Despite some volatility, the overall spread remains considerably higher than at the start of the period, reflecting sustained operational efficiency or profitability enhancements relative to the invested capital.
- General insights
- The data reflect a period of strong financial performance, peaking in 2022 with maximum economic profit and economic spread ratio, alongside a rising invested capital base. The subsequent decline in economic profit alongside the decrease in invested capital in 2024 may suggest strategic restructuring, capital reallocation, or external factors impacting profitability. The economic spread ratio, while reduced after 2022, remains elevated, indicating that profitability relative to capital maintained a strong position even amidst adjustments in invested capital and economic profit.
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 shows a generally increasing trend from 2019 to 2022, rising from $45,413 million to a peak of $93,916 million. However, there is a decline observed in the subsequent years, dropping to $84,206 million in 2023 and slightly further to $83,422 million in 2024. This pattern indicates a strong growth phase followed by a moderate contraction or stabilization in economic profit.
- Adjusted Net Sales
- Adjusted net sales exhibit consistent growth over the six-year period, increasing from $259,474 million in 2019 to $391,735 million in 2024. Despite minor fluctuations, particularly a slight decrease noted in 2023 compared to 2022, the overall sales trend points to expanding revenue generation capabilities with a robust upward trajectory.
- Economic Profit Margin
- The economic profit margin improved steadily from 17.5% in 2019 to a high of 23.79% in 2022, suggesting enhanced profitability relative to sales. Post-2022, the margin decreases to 21.99% in 2023 and 21.3% in 2024, reflecting a slight weakening in profit efficiency. Nonetheless, the margin remains significantly above the initial 2019 level, indicating sustained profitability despite recent margin compression.
- Summary of Trends
- The data reveals a period of strong economic profit growth and margin improvement up to 2022, accompanied by consistent sales expansion. Following this peak, both economic profit and margin experience a mild decline, while adjusted net sales maintain an overall upward trend. These shifts may suggest external or internal factors influencing profitability, despite continued revenue growth.