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Economic Value Added (EVA)
Advanced level
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.
Economic Profit
Intuitive Surgical Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
| 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. | Intuitive Surgical Inc.’s economic profit increased from 2017 to 2018 and from 2018 to 2019. |
Net Operating Profit after Taxes (NOPAT)
Intuitive Surgical Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts and sales returns.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Intuitive Surgical, Inc..
5 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Intuitive Surgical, Inc..
8 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
| 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. | Intuitive Surgical Inc.’s NOPAT increased from 2017 to 2018 and from 2018 to 2019. |
Cash Operating Taxes
Intuitive Surgical Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
| 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. | Intuitive Surgical Inc.’s cash operating taxes decreased from 2017 to 2018 but then slightly increased from 2018 to 2019. |
Invested Capital
Intuitive Surgical Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
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 equity equivalents to total Intuitive Surgical, Inc. stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction-in-process.
8 Subtraction of available-for-sale marketable securities.
| Item | Description | The company |
|---|---|---|
| Invested capital | Capital is an approximation of the economic book value of all cash invested in going-concern business activities. | Intuitive Surgical Inc.’s invested capital increased from 2017 to 2018 and from 2018 to 2019. |
Cost of Capital
Intuitive Surgical Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (filing date: 2020-02-07).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (filing date: 2019-02-04).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (filing date: 2018-02-02).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (filing date: 2017-02-06).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (filing date: 2016-02-02).
Economic Spread Ratio
Intuitive Surgical Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Becton, Dickinson & Co. | ||||||
| Boston Scientific Corp. | ||||||
| Danaher Corp. | ||||||
| Medtronic PLC | ||||||
| Stryker Corp. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
1 Economic profit. See details »
2 Invested capital. See details »
3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
| 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. | Intuitive Surgical Inc.’s economic spread ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019. |
Economic Profit Margin
Intuitive Surgical Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Becton, Dickinson & Co. | ||||||
| Boston Scientific Corp. | ||||||
| Danaher Corp. | ||||||
| Medtronic PLC | ||||||
| Stryker Corp. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-04), 10-K (filing date: 2018-02-02), 10-K (filing date: 2017-02-06), 10-K (filing date: 2016-02-02).
1 Economic profit. See details »
2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| Economic profit margin | The ratio of economic profit to sales. It is the company’s 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. | Intuitive Surgical Inc.’s economic profit margin improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |