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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

First Solar Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	826,891)	567,988)	214,327)	(94,458)	154,786)
Cost of capital²	16.32%	15.78%	15.68%	15.08%	14.84%
Invested capital³	5,054,301)	5,692,249)	5,111,222)	4,894,577)	4,487,371)

Economic profit⁴	2,280)	(330,269)	(587,105)	(832,770)	(510,945)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 826,891 – 16.32% × 5,054,301 = 2,280

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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.	First Solar Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

First Solar Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income (loss)	(44,166)	468,693)	398,355)	(114,933)	144,326)
Deferred income tax expense (benefit)¹	(6,053)	80,360)	11,538)	(60,411)	52,488)
Increase (decrease) in allowance for credit losses²	378)	(2,345)	1,623)	24)	(617)
Increase (decrease) in deferred revenue³	910,129)	64,079)	(160,923)	216,886)	32,696)
Increase (decrease) in product warranty liability⁴	(18,766)	(42,543)	(34,701)	(90,895)	(3,582)
Increase (decrease) in equity equivalents⁵	885,688)	99,551)	(182,463)	65,604)	80,985)
Interest expense, net	12,225)	13,107)	24,036)	27,066)	25,921)
Interest expense, operating lease liability⁶	2,539)	4,443)	5,888)	5,316)	—)
Adjusted interest expense, net	14,764)	17,550)	29,924)	32,382)	25,921)
Tax benefit of interest expense, net⁷	(3,100)	(3,686)	(6,284)	(6,800)	(5,443)
Adjusted interest expense, net, after taxes⁸	11,663)	13,865)	23,640)	25,581)	20,478)
(Gain) loss on marketable securities	—)	(11,696)	(15,346)	(40,621)	(55,405)
Interest income	(33,284)	(6,179)	(16,559)	(48,886)	(59,788)
Investment income, before taxes	(33,284)	(17,875)	(31,905)	(89,507)	(115,193)
Tax expense (benefit) of investment income⁹	6,990)	3,754)	6,700)	18,796)	24,191)
Investment income, after taxes¹⁰	(26,294)	(14,121)	(25,205)	(70,711)	(91,002)
Net operating profit after taxes (NOPAT)	826,891)	567,988)	214,327)	(94,458)	154,786)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in product warranty liability.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss).

⁶ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 49,782 × 5.10% = 2,539

⁷ 2022 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 14,764 × 21.00% = 3,100

⁸ Addition of after taxes interest expense to net income (loss).

⁹ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 33,284 × 21.00% = 6,990

¹⁰ 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.	First Solar Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

First Solar Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Income tax expense (benefit)	52,764)	103,469)	(107,294)	(5,480)	3,441)
Less: Deferred income tax expense (benefit)	(6,053)	80,360)	11,538)	(60,411)	52,488)
Add: Tax savings from interest expense, net	3,100)	3,686)	6,284)	6,800)	5,443)
Less: Tax imposed on investment income	6,990)	3,754)	6,700)	18,796)	24,191)
Cash operating taxes	54,928)	23,041)	(119,248)	42,935)	(67,794)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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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.	First Solar Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

First Solar Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current portion of long-term debt	—)	3,896)	41,540)	17,510)	5,570)
Long-term debt, noncurrent portion	184,349)	236,005)	237,691)	454,187)	461,221)
Operating lease liability¹	49,782)	158,693)	203,040)	123,617)	146,814)
Total reported debt & leases	234,131)	398,594)	482,271)	595,314)	613,605)
Stockholders’ equity	5,836,055)	5,959,551)	5,520,928)	5,096,767)	5,212,403)
Net deferred tax (assets) liabilities²	(49,751)	(31,463)	(80,428)	(124,278)	(64,641)
Allowance for credit losses³	1,042)	664)	3,009)	1,386)	1,362)
Deferred revenue⁴	1,207,940)	297,811)	233,732)	394,655)	177,769)
Product warranty liability⁵	33,787)	52,553)	95,096)	129,797)	220,692)
Equity equivalents⁶	1,193,018)	319,565)	251,409)	401,560)	335,182)
Accumulated other comprehensive (income) loss, net of tax⁷	191,817)	96,362)	61,726)	79,334)	54,466)
Adjusted stockholders’ equity	7,220,890)	6,375,478)	5,834,063)	5,577,661)	5,602,051)
Construction in progress⁸	(1,121,938)	(461,708)	(419,766)	(243,107)	(405,581)
Marketable securities and restricted marketable securities⁹	(1,278,782)	(620,115)	(785,346)	(1,035,291)	(1,322,704)
Invested capital	5,054,301)	5,692,249)	5,111,222)	4,894,577)	4,487,371)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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 revenue.

⁵ Addition of product warranty liability.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of marketable securities and restricted 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.	First Solar Inc. invested capital increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

First Solar Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,031,862)	18,031,862)	÷	18,242,630)	=	0.99	0.99	×	16.46%	=	16.27%
Long-term debt, including current maturities³	160,986)	160,986)	÷	18,242,630)	=	0.01	0.01	×	4.96% × (1 – 21.00%)	=	0.03%
Operating lease liability⁴	49,782)	49,782)	÷	18,242,630)	=	0.00	0.00	×	5.10% × (1 – 21.00%)	=	0.01%
Total:	18,242,630)					1.00					16.32%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,040,959)	8,040,959)	÷	8,443,517)	=	0.95	0.95	×	16.46%	=	15.67%
Long-term debt, including current maturities³	243,865)	243,865)	÷	8,443,517)	=	0.03	0.03	×	2.80% × (1 – 21.00%)	=	0.06%
Operating lease liability⁴	158,693)	158,693)	÷	8,443,517)	=	0.02	0.02	×	2.80% × (1 – 21.00%)	=	0.04%
Total:	8,443,517)					1.00					15.78%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,587,018)	8,587,018)	÷	9,087,134)	=	0.94	0.94	×	16.46%	=	15.55%
Long-term debt, including current maturities³	297,076)	297,076)	÷	9,087,134)	=	0.03	0.03	×	2.90% × (1 – 21.00%)	=	0.07%
Operating lease liability⁴	203,040)	203,040)	÷	9,087,134)	=	0.02	0.02	×	2.90% × (1 – 21.00%)	=	0.05%
Total:	9,087,134)					1.00					15.68%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	5,335,103)	5,335,103)	÷	5,962,933)	=	0.89	0.89	×	16.46%	=	14.73%
Long-term debt, including current maturities³	504,213)	504,213)	÷	5,962,933)	=	0.08	0.08	×	4.30% × (1 – 21.00%)	=	0.29%
Operating lease liability⁴	123,617)	123,617)	÷	5,962,933)	=	0.02	0.02	×	4.30% × (1 – 21.00%)	=	0.07%
Total:	5,962,933)					1.00					15.08%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	5,635,985)	5,635,985)	÷	6,252,923)	=	0.90	0.90	×	16.46%	=	14.84%
Long-term debt, including current maturities³	470,124)	470,124)	÷	6,252,923)	=	0.08	0.08	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	146,814)	146,814)	÷	6,252,923)	=	0.02	0.02	×	0.00% × (1 – 21.00%)	=	0.00%
Total:	6,252,923)					1.00					14.84%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

First Solar Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	2,280)	(330,269)	(587,105)	(832,770)	(510,945)
Invested capital²	5,054,301)	5,692,249)	5,111,222)	4,894,577)	4,487,371)
Performance Ratio
Economic spread ratio³	0.05%	-5.80%	-11.49%	-17.01%	-11.39%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	-19.01%	37.72%	11.46%	-6.67%	—
Analog Devices Inc.	-8.26%	-11.53%	-6.58%	-5.05%	-7.83%
Applied Materials Inc.	28.85%	24.38%	12.55%	12.17%	20.25%
Broadcom Inc.	8.01%	-1.37%	-6.92%	-6.62%	-2.41%
Intel Corp.	-6.87%	10.33%	16.00%	14.08%	—
KLA Corp.	27.42%	16.09%	4.93%	6.42%	24.59%
Lam Research Corp.	26.07%	25.54%	8.54%	5.08%	10.24%
Micron Technology Inc.	2.30%	-2.23%	-7.83%	2.35%	24.95%
NVIDIA Corp.	33.23%	13.66%	-0.33%	60.26%	—
ON Semiconductor Corp.	2.25%	-2.10%	-13.41%	-9.95%	—
Qualcomm Inc.	30.15%	27.56%	12.59%	13.98%	-30.68%
Texas Instruments Inc.	36.37%	34.98%	30.13%	29.81%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,280 ÷ 5,054,301 = 0.05%

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.	First Solar Inc. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

First Solar Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	2,280)	(330,269)	(587,105)	(832,770)	(510,945)

Net sales	2,619,319)	2,923,377)	2,711,332)	3,063,117)	2,244,044)
Add: Increase (decrease) in deferred revenue	910,129)	64,079)	(160,923)	216,886)	32,696)
Adjusted net sales	3,529,448)	2,987,456)	2,550,409)	3,280,003)	2,276,740)
Performance Ratio
Economic profit margin²	0.06%	-11.06%	-23.02%	-25.39%	-22.44%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	-47.14%	14.22%	5.12%	-3.38%	—
Analog Devices Inc.	-30.95%	-74.08%	-21.40%	-15.47%	-23.53%
Applied Materials Inc.	16.66%	15.55%	9.55%	8.44%	11.96%
Broadcom Inc.	14.99%	-3.22%	-19.10%	-17.58%	-5.15%
Intel Corp.	-9.66%	11.57%	16.84%	15.77%	—
KLA Corp.	23.18%	15.86%	5.52%	8.97%	15.94%
Lam Research Corp.	18.92%	18.23%	8.36%	4.43%	8.91%
Micron Technology Inc.	3.95%	-3.72%	-15.45%	3.89%	29.07%
NVIDIA Corp.	22.28%	10.68%	-0.43%	24.60%	—
ON Semiconductor Corp.	2.53%	-2.35%	-17.58%	-12.36%	—
Qualcomm Inc.	20.08%	16.60%	9.50%	12.35%	-25.39%
Texas Instruments Inc.	31.89%	31.29%	27.01%	24.99%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 2,280 ÷ 3,529,448 = 0.06%

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.	First Solar Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.

First Solar Inc. (NASDAQ:FSLR)

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