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
Gilead Sciences Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 displayed a significant increase from 633 million USD in 2020 to 6,897 million USD in 2021. However, it declined sharply to 3,687 million USD in 2022 before recovering to 5,086 million USD in 2023. In 2024, NOPAT turned negative, reaching -796 million USD, indicating a drastic downturn in operating profitability.
- Cost of Capital
- The cost of capital showed a gradual upward trend over the five-year period. It increased from 5.25% in 2020 to 5.92% in 2024, reflecting a slight rise in the required return for investors and potentially increased risk or market interest rates.
- Invested Capital
- Invested capital steadily decreased across the years, starting from 50,285 million USD in 2020 to 44,333 million USD in 2024. This decline suggests reduced capital deployment within the business, possibly through asset sales, capital efficiency improvements, or divestments.
- Economic Profit
- Economic profit exhibited volatility during the period. It was negative at -2,009 million USD in 2020, turned positive to 4,334 million USD in 2021, then declined to 1,077 million USD in 2022. After a partial recovery to 2,477 million USD in 2023, it fell sharply to -3,422 million USD in 2024. This indicates fluctuating value creation and a significant loss of economic value in the most recent year.
- Overall Analysis
- The data reveals a period of volatility with an initially strong increase in operating efficiency and value creation followed by notable declines. The rising cost of capital alongside decreasing invested capital could reflect strategic shifts or external financial pressures. The negative NOPAT and economic profit in 2024 highlight a challenging environment with diminished profitability and economic value generation.
Net Operating Profit after Taxes (NOPAT)
Gilead Sciences Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for credit losses.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Gilead.
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 attributable to Gilead.
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 attributable to Gilead
- The net income experienced a significant increase from 123 million US dollars in 2020 to 6,225 million in 2021, marking a substantial positive shift. This was followed by a decrease to 4,592 million in 2022. In 2023, net income showed a recovery, increasing to 5,665 million, but then declined sharply to 480 million in 2024. Overall, the data indicates volatility with a peak in 2021, fluctuations thereafter, and a downward trend by the final year.
- Net operating profit after taxes (NOPAT)
- NOPAT followed a somewhat similar pattern initially, rising from 633 million US dollars in 2020 to a peak of 6,897 million in 2021. However, unlike net income, NOPAT declined more sharply to 3,687 million in 2022. It showed an improvement in 2023, rising to 5,086 million, before turning negative in 2024 with a value of -796 million. This negative figure in the last period signals a significant operational challenge or increased expenses resulting in operating losses after taxes.
Cash Operating Taxes
Gilead Sciences Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense displayed a fluctuating pattern over the examined periods. Starting at 1,580 million US dollars in 2020, the expense increased significantly to 2,077 million US dollars in 2021. This was followed by a sharp decline to 1,248 million US dollars in 2022, remaining relatively stable into 2023 with a negligible decrease to 1,247 million US dollars. Notably, in 2024, there was a pronounced drop to 211 million US dollars, marking the lowest point in the time series.
- Cash Operating Taxes
- Cash operating taxes showed a generally increasing trend from 2020 to 2022. Beginning at 2,006 million US dollars in 2020, they rose to 2,403 million US dollars in 2021 and further to a peak of 2,981 million US dollars in 2022. The trend reversed afterward, with a decrease to 2,366 million US dollars in 2023, followed by a continued decline to 2,205 million US dollars in 2024. Despite this reversal, cash operating taxes remained higher in the last two years compared to 2020 levels.
- Comparative Insights
- The data suggests a divergence between income tax expense and cash operating taxes beginning from 2022 onwards. While cash operating taxes peaked in 2022 and then declined, income tax expense sharply decreased in 2024, indicating possible changes in tax planning, accounting practices, or tax regulations impacting reporting differently from cash outflows related to operating taxes. The significant reduction in income tax expense by 2024 suggests a substantial alteration in either taxable income or effective tax rates.
Invested Capital
Gilead Sciences Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 equity equivalents to total Gilead stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable debt securities.
- Total reported debt & leases
- The total reported debt and leases decreased significantly from 32,117 million US dollars in 2020 to 25,808 million US dollars in 2022. This trend indicates a reduction in debt obligations over this period. However, from 2022 to 2023, the debt level remained relatively stable, showing only a slight decrease to 25,658 million US dollars. In 2024, there was an uptick in total debt, increasing to 27,322 million US dollars, suggesting a reversal of the prior debt reduction trend.
- Total Gilead stockholders’ equity
- Stockholders’ equity saw a consistent increase from 18,202 million US dollars in 2020 to a peak of 22,833 million US dollars in 2023. This upward movement reflects a strengthening of the company's equity base during these years. However, in 2024, equity fell notably to 19,330 million US dollars, implying a decrease in net assets attributable to shareholders, which could be due to various factors such as losses, dividends, or share repurchases.
- Invested capital
- Invested capital showed a declining trend throughout the period from 50,285 million US dollars in 2020 to 44,333 million US dollars in 2024. This steady decrease suggests a contraction in the total capital employed in the business, possibly due to asset disposals, changes in financing structure, or operational adjustments.
- Summary
- Overall, the company experienced a reduction in debt from 2020 to 2022, but this trend reversed in 2024. Equity increased notably until 2023, followed by a significant decline in 2024. Invested capital consistently decreased over the five years. These patterns suggest a shifting financial structure, with potential impacts on leverage and capital deployment in the most recent year.
Cost of Capital
Gilead Sciences Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, net3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, net. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Gilead Sciences Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 displayed considerable volatility over the analyzed period. Initially, there was a substantial negative value, indicating a loss in economic profit at the start of the period. This shifted to a significant positive peak in the subsequent year, suggesting improved profitability and value creation. However, the economic profit declined sharply in the following year, rebounding again before falling into negative territory by the end of the period. This pattern indicates inconsistency in the company's ability to generate returns above its cost of capital over these years.
- Invested Capital
- The invested capital demonstrated a gradual downward trend throughout the period. Starting from a high base, the invested capital consistently decreased year-over-year, reflecting either asset disposals, reduced capital expenditures, or other strategic decisions leading to a shrinking asset base. This reduction may influence the company’s operational capacity and future growth potential.
- Economic Spread Ratio
- The economic spread ratio mirrored the fluctuations observed in economic profit. It started with a negative value, improved markedly to a peak exceeding 9% in the following year, then declined to a lower positive rate before registering a moderate increase. The ratio ultimately deteriorated to a negative figure at the end of the analyzed period. This metric suggests that the company experienced variability in generating returns over its cost of capital, with periods of strong performance interrupted by phases of underperformance.
Economic Profit Margin
Gilead Sciences Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Product sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Product sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant volatility over the five-year period. Beginning with a substantial loss of 2,009 million USD in 2020, it improved dramatically to a positive 4,334 million USD in 2021. However, this was followed by a sharp decline to 1,077 million USD in 2022, a recovery to 2,477 million USD in 2023, and a return to a negative figure of -3,422 million USD in 2024. This pattern indicates fluctuating profitability and potential challenges in maintaining consistent value creation.
- Product Sales
- Product sales demonstrated a generally steady upward trend during the period. Starting at 24,355 million USD in 2020, sales increased to 27,008 million USD in 2021. Although sales slightly decreased to 26,982 million USD in 2022 and further to 26,934 million USD in 2023, there was a rebound to 28,610 million USD in 2024, representing an overall growth across the five years.
- Economic Profit Margin
- The economic profit margin mirrored the fluctuations observed in economic profit. It moved from a negative margin of -8.25% in 2020 to a strong positive margin of 16.05% in 2021. This was followed by a drop to 3.99% in 2022, a moderate recovery to 9.2% in 2023, and a sharp decline to -11.96% in 2024. Such variability suggests challenges in sustaining profitability relative to sales.