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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- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Automatic Data Processing Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
Net Operating Profit after Taxes (NOPAT)
Automatic Data Processing Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenues.
4 Addition of increase (decrease) in equity equivalents to net earnings.
5 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net earnings.
8 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
- Net Earnings
- The net earnings exhibited an overall increasing trend from 2016 to 2021. Starting at $1,492,500 thousand in 2016, the figure rose to $1,733,400 thousand in 2017 before experiencing a slight decline to $1,620,800 thousand in 2018. After this dip, net earnings showed a significant increase to $2,292,800 thousand in 2019, continuing upward to $2,466,500 thousand in 2020 and reaching $2,598,500 thousand in 2021. This pattern suggests a strong recovery and consistent growth momentum in recent years despite minor fluctuations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values closely mirror the net earnings trend with increasing values from 2016 through 2020 followed by a decline in 2021. Initially, NOPAT rose from $1,527,436 thousand in 2016 to $1,771,847 thousand in 2017 but then decreased to $1,628,778 thousand in 2018. It rebounded substantially to $2,290,136 thousand in 2019 and increased further to a peak of $2,508,856 thousand in 2020. In 2021, however, NOPAT declined to $2,334,712 thousand. This decline in 2021 contrasts with the continued rise in net earnings, highlighting potential changes in operational efficiency, tax impacts, or adjustments in operating expenses.
- Comparative Insights
- Both metrics demonstrate a pattern of growth punctuated by a downturn in 2018, followed by robust increases through 2020. The divergence observed in 2021, where net earnings continued to grow but NOPAT decreased, may require further investigation. This discrepancy could point to factors such as non-operating income influences on net earnings, changes in tax structures, or operational cost shifts affecting NOPAT independently of net profits. Overall, the financial data shows resilience with strong profitability gains over the period analyzed.
Cash Operating Taxes
Automatic Data Processing Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
- Provision for Income Taxes
- The provision for income taxes showed fluctuations over the period under review. It initially increased from 741,300 thousand US dollars in mid-2016 to 797,700 thousand US dollars by mid-2017. This was followed by a notable decline to 550,300 thousand US dollars in mid-2018. Subsequently, the provision rose again, reaching 712,800 thousand US dollars in 2019 and remaining relatively stable around 716,100 thousand US dollars in 2020. By mid-2021, it increased slightly to 762,700 thousand US dollars. Overall, the data indicate some volatility with a general tendency towards recovery and growth in the latter years.
- Cash Operating Taxes
- Cash operating taxes mirrored the trends of provision for income taxes, reflecting a general correlation between the two metrics. Starting at 744,765 thousand US dollars in 2016, cash operating taxes slightly decreased to 794,364 thousand US dollars in 2017 before falling significantly to 559,875 thousand US dollars in 2018. Subsequently, there was an increase to 713,664 thousand US dollars in 2019. In 2020, there was a slight decrease to 694,262 thousand US dollars, followed by a substantial jump to 1,018,322 thousand US dollars in 2021. The sharp increase in 2021 suggests a possible change in tax obligations or operational cash flows impacting tax payments.
- Comparative Insights
- Both the provision for income taxes and cash operating taxes show some alignment in their patterns with synchronous ups and downs over the years. However, cash operating taxes experienced a more pronounced increase in 2021 compared to the provision for income taxes, indicating either an adjustment in timing or recognition of actual cash tax payments vis-à-vis accounting provisions. This divergence in the final year could warrant further investigation to understand underlying causes such as changes in tax policy, fiscal adjustments, or operational factors.
Invested Capital
Automatic Data Processing Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
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 deferred revenues.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases figures indicate some fluctuations over the analyzed periods. Initially, the debt remained relatively stable between 2016 and 2018, with values just above 2.4 billion US dollars. In 2019, there was a noticeable increase to approximately 2.81 billion, followed by a decrease in 2020 to around 2.46 billion. However, by 2021, the debt sharply increased to approximately 3.45 billion, representing the highest level within the given timeframe.
- Stockholders’ equity
- The stockholders’ equity showed a declining trend from 2016 to 2018, dropping from about 4.48 billion to around 3.46 billion US dollars. A significant recovery is observed in 2019, with equity rising sharply to approximately 5.4 billion, continuing to increase moderately in 2020 to about 5.75 billion. In 2021, there was a slight decrease to roughly 5.67 billion, though equity remained well above the levels seen in the initial years.
- Invested capital
- Invested capital experienced a downward trend from 2016 through 2018, declining from approximately 7.92 billion to about 7.29 billion US dollars. In 2019, invested capital increased markedly to roughly 9.46 billion, and then grew slightly in 2020 to approximately 9.58 billion. The upward movement continued into 2021, reaching around 10.15 billion, the highest level in the period examined.
- Overall analysis
- The data reflect a period of contraction in both equity and invested capital through 2018, followed by a phase of robust growth starting in 2019. The sudden increase in total debt in 2021, coupled with the continued growth in invested capital, suggests increased leverage and investment activity during that year. Despite the spike in debt in 2021, stockholders’ equity remained relatively strong compared to earlier years, indicating a potentially balanced approach to financing growth with a mix of debt and equity.
Cost of Capital
Automatic Data Processing Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 28.10%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 28.10%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2016-06-30).
1 US$ in thousands
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Automatic Data Processing Inc., economic spread ratio calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Oracle Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| Workday Inc. | |||||||
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
Economic Profit Margin
Automatic Data Processing Inc., economic profit margin calculation, comparison to benchmarks
| Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | Jun 30, 2018 | Jun 30, 2017 | Jun 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | |||||||
| Revenues | |||||||
| Add: Increase (decrease) in deferred revenues | |||||||
| Adjusted revenues | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Oracle Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| Workday Inc. | |||||||
Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.