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)
- Over the observed periods, NOPAT exhibited a generally upward trend from 53,447 million USD in 2019 to a peak of 101,652 million USD in 2022. Subsequently, there was a decline to 94,296 million USD in 2023 and a further slight decrease to 91,849 million USD in 2024. This pattern indicates a growth phase through 2022 followed by a moderate reduction in profitability in the latest two years.
- Cost of capital
- The cost of capital steadily increased throughout the entire timeline, starting at 16.27% in 2019 and rising consistently to reach 17.27% by 2024. This upward movement reflects a gradual increase in the required return on investment or the risk premium associated with the company’s capital.
- Invested capital
- The invested capital showed considerable fluctuation over the years. It started at 50,655 million USD in 2019, dropped substantially to 36,252 million USD in 2020, and then climbed again to 42,700 million USD in 2021 and 46,661 million USD in 2022. A significant jump occurred in 2023 to 60,243 million USD before decreasing to 50,072 million USD in 2024. These movements suggest changes in asset base or capital employed which may be linked to strategic investments, divestitures, or operational adjustments.
- Economic profit
- The economic profit followed a growth trajectory similar to NOPAT, rising from 45,207 million USD in 2019 to a peak of 93,715 million USD in 2022. After this peak, economic profit declined to 83,944 million USD in 2023 and slightly further to 83,203 million USD in 2024. Despite the decline, the economic profit remains significantly higher than in 2019, indicating sustained value creation over the analysis period.
- Summary of overall trends
- The company experienced robust growth in operational profitability and economic profit until 2022, with a subsequent moderate decline in both metrics in the last two years. The cost of capital steadily increased, potentially exerting pressure on the company’s valuation and required thresholds for investment returns. Invested capital showed volatility, reflecting dynamic management of capital allocation. Despite the recent decreases in profitability measures, economic profit remains substantially positive, indicating effective value generation in excess of capital 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 showed a consistent upward trend from 2019 to 2022, increasing from 45,207 million US dollars to a peak of 93,715 million US dollars. However, in the subsequent two years, economic profit experienced a decline, dropping to 83,944 million in 2023 and slightly further to 83,203 million in 2024. Despite the recent reduction, the economic profit remains substantially higher than the levels seen in 2019 and 2020.
- Invested Capital
- Invested capital displayed considerable fluctuations across the years. Initially, there was a significant decrease from 50,655 million US dollars in 2019 to 36,252 million in 2020. Following this decline, invested capital gradually increased, reaching 60,243 million in 2023 before retracting to 50,072 million in 2024. Overall, the invested capital in 2024 is near the initial value reported in 2019, indicating some volatility but eventual stabilization.
- Economic Spread Ratio
- The economic spread ratio demonstrated an upward trajectory from 2019 (89.24%) to 2022 (200.84%), indicating increasing profitability relative to the invested capital during this period. However, a marked decline occurred in 2023 to 139.34%, followed by a partial recovery to 166.17% in 2024. Despite this dip, the ratio remains elevated compared to the initial years, suggesting the company sustained a strong economic return on its investments.
- Summary of Trends and Insights
- The company’s financial performance, as measured by economic profit and economic spread ratio, showed significant improvement up to 2022, reflecting enhanced efficiency and profitability. The decline in economic profit and spread ratio after 2022 might indicate challenges such as increased costs, reduced margins, or changes in market conditions. Fluctuations in invested capital could be linked to strategic investments or divestitures influencing the company’s capital base. Despite recent declines, the financial metrics remain robust relative to the earlier years, suggesting a strong underlying economic position with potential areas for addressing recent downward movements.
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 demonstrated significant growth from 2019 to 2022, rising from $45,207 million to a peak of $93,715 million. This reflects a strong increase over these four years. However, there is a noticeable decline thereafter, with economic profit dropping to $83,944 million in 2023 and further slightly decreasing to $83,203 million in 2024. Despite the recent reduction, economic profit remains substantially higher than in 2019, indicating robust profitability over the longer term.
- Adjusted Net Sales
- Adjusted net sales showed an upward trend overall, increasing from $259,474 million in 2019 to $394,828 million in 2022. Although sales slightly declined to $382,985 million in 2023, there was a moderate rebound to $391,735 million in 2024. The data suggests a period of strong revenue growth followed by a mild contraction and a subsequent recovery towards the later period.
- Economic Profit Margin
- The economic profit margin improved consistently from 17.42% in 2019 to a peak of 23.74% in 2022, indicating enhanced efficiency or profitability relative to sales during these years. After this peak, the margin decreased slightly to 21.92% in 2023 and continued a marginal decline to 21.24% in 2024. Despite the recent downturn, the margin remains significantly higher than at the start of the period analyzed.
- Summary of Trends
- Overall, the data reflects a period of strong financial performance characterized by increasing sales, economic profit, and profit margins through 2022. The subsequent two years show a mild contraction in both sales and profitability metrics, yet the company maintains a high level of economic profit and margin relative to earlier years. This suggests resilience and sustained profitability despite recent pressures. The trends warrant monitoring in future periods to assess whether the recent declines represent a temporary adjustment or a longer-term shift.