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.
Economic Profit
Meta Platforms Inc., economic profit 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 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
= 56,844 – 16.25% × 165,969 = 29,873
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a fluctuating pattern over the observed periods. It increased significantly from 27,980 million USD in 2020 to 40,147 million USD in 2021. However, in 2022 there was a notable decline to 20,828 million USD, followed by a strong recovery in 2023 reaching 38,290 million USD. The upward trend continues into 2024, with NOPAT peaking at 56,844 million USD. This indicates overall growth despite the intermediate dip, suggesting potential operational challenges in 2022 that were subsequently addressed.
- Cost of Capital
- The cost of capital remained relatively stable across the years, oscillating slightly around the 16% mark. It decreased marginally from 16.39% in 2020 to 15.9% in 2022, then rose again to 16.25% in 2024. The limited volatility suggests consistent capital costs despite market or internal changes, providing a relatively stable benchmark for performance evaluation.
- Invested Capital
- Invested capital shows a clear upward trajectory, increasing steadily from 80,951 million USD in 2020 to 165,969 million USD in 2024. The growth accelerated after 2021, suggesting increased investment or asset accumulation. This rise reflects expansion efforts or capital allocation strategies, with invested capital more than doubling over the five-year span.
- Economic Profit
- Economic profit experienced significant variation, mirroring some of the fluctuations seen in NOPAT but at a lower absolute scale. It rose sharply from 14,708 million USD in 2020 to 25,031 million USD in 2021, dropped drastically to 4,644 million USD in 2022, then recovered to 15,402 million USD in 2023 and further increased to 29,873 million USD in 2024. This pattern indicates that while the company was highly profitable relative to its cost of capital in the beginning and end of the period, 2022 represented a year of diminished value creation, possibly due to operational inefficiencies or higher capital charges.
Net Operating Profit after Taxes (NOPAT)
Meta Platforms 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 deferred revenue.
3 Addition of increase (decrease) in accrued severance and other personnel liabilities.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 20,234 × 3.90% = 789
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,504 × 21.00% = 316
7 Addition of after taxes interest expense to net income.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,517 × 21.00% = 529
9 Elimination of after taxes investment income.
- Net Income
- The net income demonstrates variability over the analyzed period. It increased significantly from 29,146 million US dollars in 2020 to 39,370 million US dollars in 2021. However, in 2022, there is a notable decline to 23,200 million US dollars. This downward trend reverses in 2023, with net income rising sharply to 39,098 million US dollars and continuing the upward trajectory to reach 62,360 million US dollars in 2024. Overall, the trend reflects periods of both volatility and robust growth, culminating in a substantial increase by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT follows a similar pattern to net income, with an increase from 27,980 million US dollars in 2020 to 40,147 million US dollars in 2021. Subsequently, it decreases to 20,828 million US dollars in 2022, which aligns with the downturn observed in net income for the same year. In 2023, NOPAT recovers significantly to 38,290 million US dollars, and continues to improve, reaching 56,844 million US dollars in 2024. This trend suggests operational profitability experienced fluctuations but ultimately improved substantially by the end of the period, indicating enhanced operational efficiency or favorable business conditions in the latter years.
Cash Operating Taxes
Meta Platforms 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).
- Provision for Income Taxes
- The provision for income taxes exhibited a fluctuating trend over the analyzed periods. It increased significantly from 4,034 million US dollars in 2020 to 7,914 million US dollars in 2021, indicating higher estimated tax obligations. Subsequently, it declined to 5,619 million in 2022, showing a reduction in estimated tax expense. However, the provision rose again to 8,330 million in 2023 and slightly decreased to 8,303 million in 2024, stabilizing at a higher level compared to earlier years. This pattern suggests variability in taxable income or changes in tax regulations impacting the company's tax liabilities.
- Cash Operating Taxes
- Cash operating taxes demonstrated an overall upward trajectory with some volatility. Beginning at 4,959 million US dollars in 2020, the cash taxes paid increased to 7,290 million in 2021. An increase continued in 2022 reaching 8,950 million, followed by a decrease to 8,095 million in 2023. In 2024, cash operating taxes rose sharply to 12,827 million, marking the highest value in the series. The sharp increase in the final period suggests stronger cash outflows related to tax payments, possibly due to tax timing differences, higher taxable income, or changes in tax payment schedules.
- Comparative Observations
- While the provision for income taxes reflects estimated tax expenses, cash operating taxes represent actual cash paid. The data shows instances where cash taxes surpassed the provision, notably in 2022 and 2024, which may point to timing differences or adjustments based on prior estimates. The significant rise in cash operating taxes in 2024 contrasts with the relatively stable provision, highlighting a potential shift in cash tax management or tax obligations becoming due. Overall, the tax-related expenses and payments show variability but an increasing trend, especially on a cash basis, which could affect the company's liquidity and cash flow management.
Invested Capital
Meta Platforms 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 deferred revenue.
4 Addition of accrued severance and other personnel liabilities.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The financial data reveals notable trends in the company’s leverage, equity base, and invested capital over the five-year period from 2020 to 2024.
- Total Reported Debt & Leases
- This item exhibits a substantial and accelerating increase over the years. From $11,177 million in 2020, the debt and leases almost doubled by 2022 to $27,278 million and then continued to rise sharply to reach $49,769 million in 2024. This trend indicates a significant expansion in the company's liabilities, suggesting increased borrowing or leasing commitments, which could be aimed at financing growth, acquisitions, or capital expenditures.
- Stockholders’ Equity
- Stockholders' equity shows some fluctuations initially, with a slight decrease from $128,290 million in 2020 to $124,879 million in 2021, then a small rise to $125,713 million in 2022. From 2022 onwards, there is a strong upward trend, culminating in a value of $182,637 million in 2024. This pattern reflects an overall strengthening in the company’s net asset base, which may result from retained earnings growth, successful profitability, or equity issuances.
- Invested Capital
- Invested capital consistently grows over the period, increasing from $80,951 million in 2020 to $165,969 million in 2024. The growth pace accelerates especially after 2021, indicating that the company is increasing its long-term investments and assets base substantially. This could correspond with strategic initiatives to enhance operational capacity, assets acquisition, or overall expansion.
Overall, the data illustrates a company that is increasing its financial leverage considerably while simultaneously growing its equity base and invested capital. This combination may suggest an aggressive growth strategy supported by both debt financing and equity strength, potentially positioning the company for expanded operations or investment in new opportunities. However, the rising debt levels also imply greater financial risk that should be managed carefully.
Cost of Capital
Meta Platforms Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,740,624) | 1,740,624) | ÷ | 1,789,397) | = | 0.97 | 0.97 | × | 16.60% | = | 16.15% | ||
| Long-term debt and finance lease liabilities3 | 28,539) | 28,539) | ÷ | 1,789,397) | = | 0.02 | 0.02 | × | 5.31% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 20,234) | 20,234) | ÷ | 1,789,397) | = | 0.01 | 0.01 | × | 3.90% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 1,789,397) | 1.00 | 16.25% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,210,942) | 1,210,942) | ÷ | 1,248,961) | = | 0.97 | 0.97 | × | 16.60% | = | 16.10% | ||
| Long-term debt and finance lease liabilities3 | 19,170) | 19,170) | ÷ | 1,248,961) | = | 0.02 | 0.02 | × | 4.61% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 18,849) | 18,849) | ÷ | 1,248,961) | = | 0.02 | 0.02 | × | 3.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 1,248,961) | 1.00 | 16.20% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 489,413) | 489,413) | ÷ | 515,398) | = | 0.95 | 0.95 | × | 16.60% | = | 15.76% | ||
| Long-term debt and finance lease liabilities3 | 9,317) | 9,317) | ÷ | 515,398) | = | 0.02 | 0.02 | × | 4.06% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 16,668) | 16,668) | ÷ | 515,398) | = | 0.03 | 0.03 | × | 3.20% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 515,398) | 1.00 | 15.90% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 647,169) | 647,169) | ÷ | 661,623) | = | 0.98 | 0.98 | × | 16.60% | = | 16.24% | ||
| Long-term debt and finance lease liabilities3 | 581) | 581) | ÷ | 661,623) | = | 0.00 | 0.00 | × | 2.70% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 13,873) | 13,873) | ÷ | 661,623) | = | 0.02 | 0.02 | × | 2.80% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 661,623) | 1.00 | 16.29% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 754,633) | 754,633) | ÷ | 765,810) | = | 0.99 | 0.99 | × | 16.60% | = | 16.36% | ||
| Long-term debt and finance lease liabilities3 | 523) | 523) | ÷ | 765,810) | = | 0.00 | 0.00 | × | 2.90% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 10,654) | 10,654) | ÷ | 765,810) | = | 0.01 | 0.01 | × | 3.10% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 765,810) | 1.00 | 16.39% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Meta Platforms 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 | 29,873) | 15,402) | 4,644) | 25,031) | 14,708) | |
| Invested capital2 | 165,969) | 141,324) | 101,764) | 92,809) | 80,951) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 18.00% | 10.90% | 4.56% | 26.97% | 18.17% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.52% | 19.86% | 11.46% | 30.77% | 13.77% | |
| Comcast Corp. | -1.11% | -2.97% | -7.44% | -2.43% | -4.07% | |
| Netflix Inc. | 4.44% | -2.02% | -2.78% | 1.69% | -3.75% | |
| Walt Disney Co. | -11.24% | -12.85% | -10.70% | -13.53% | -15.79% | |
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 × 29,873 ÷ 165,969 = 18.00%
4 Click competitor name to see calculations.
The analyzed financial data over the five-year span presents significant fluctuations and trends in the company's economic profit, invested capital, and economic spread ratio.
- Economic Profit
- The economic profit exhibits a non-linear trend characterized by an initial substantial increase from 14,708 million US dollars in 2020 to 25,031 million US dollars in 2021. This is followed by a sharp decline to 4,644 million US dollars in 2022. Subsequently, economic profit recovers to 15,402 million US dollars in 2023 and further increases to 29,873 million US dollars in 2024. This pattern suggests volatility in profitability with a notable dip in 2022, but overall a strong recovery by 2024, exceeding earlier peak levels.
- Invested Capital
- Invested capital shows a consistent and steady upward trend over the five-year period. It rises from 80,951 million US dollars in 2020 to 92,809 million US dollars in 2021, then continues to increase to 101,764 million US dollars in 2022, followed by a more pronounced increase to 141,324 million US dollars in 2023, and reaching 165,969 million US dollars in 2024. This reflects a progressive expansion in the company's asset base or investments over time, with particularly significant growth observed after 2022.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, mirrors the pattern seen in economic profit but with notable variations. Starting at 18.17% in 2020, it rises sharply to 26.97% in 2021, indicating improved returns relative to cost of capital. However, it falls steeply to 4.56% in 2022, aligning with the drop in economic profit. A recovery phase follows with the ratio increasing to 10.9% in 2023 and further rising to 18% in 2024. This fluctuation signifies changing efficiency or profitability in relation to invested capital, highlighting a significant slowdown in 2022 and gradual improvement thereafter.
In summary, the data reveals a pattern of substantial capital investment growth alongside volatility in economic profitability and efficiency. The dip in 2022 stands out as a critical period of reduced profitability and economic spread, despite rising invested capital. The subsequent recovery and growth in 2023 and 2024 indicate an overall positive trajectory, with economic profits and spread ratios returning to and exceeding early period levels. Such trends may warrant further investigation into the drivers behind the 2022 performance decline and the factors contributing to the robust recovery thereafter.
Economic Profit Margin
Meta Platforms 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 | 29,873) | 15,402) | 4,644) | 25,031) | 14,708) | |
| Revenue | 164,501) | 134,902) | 116,609) | 117,929) | 85,965) | |
| Add: Increase (decrease) in deferred revenue | 97) | 149) | (70) | 225) | 101) | |
| Adjusted revenue | 164,598) | 135,051) | 116,539) | 118,154) | 86,066) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 18.15% | 11.40% | 3.98% | 21.19% | 17.09% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 17.22% | 12.24% | 8.18% | 20.41% | 10.96% | |
| Comcast Corp. | -1.93% | -5.14% | -13.15% | -4.78% | -8.78% | |
| Netflix Inc. | 4.63% | -2.26% | -3.32% | 1.97% | -4.43% | |
| Walt Disney Co. | -20.46% | -25.09% | -22.02% | -34.47% | -42.46% | |
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 ÷ Adjusted revenue
= 100 × 29,873 ÷ 164,598 = 18.15%
3 Click competitor name to see calculations.
The annual financial data reveals notable fluctuations and trends in economic profit, adjusted revenue, and economic profit margin over the five-year period ending in 2024.
- Economic Profit
- The economic profit demonstrated significant variability, increasing from 14,708 million US dollars in 2020 to a peak of 25,031 million in 2021.
- Subsequently, a sharp decline occurred in 2022, with economic profit dropping to 4,644 million.
- Following this downturn, there was a recovery trend with economic profit rising to 15,402 million in 2023 and further improving to 29,873 million in 2024, the highest value observed in the period.
- Adjusted Revenue
- Adjusted revenue showed a general upward trend across the period.
- Starting at 86,066 million US dollars in 2020, the revenue increased substantially to 118,154 million in 2021, followed by a slight decrease to 116,539 million in 2022.
- The revenue then continued its ascent, reaching 135,051 million in 2023 and culminating at 164,598 million in 2024.
- Economic Profit Margin
- The economic profit margin mirrored the fluctuations observed in economic profit.
- The margin rose from 17.09% in 2020 to a peak of 21.19% in 2021, before declining sharply to 3.98% in 2022.
- It then improved to 11.4% in 2023 and further to 18.15% in 2024, though the margin in 2024 remained below the 2021 peak.
Overall, the data indicates strong revenue growth with some volatility in economic profit and its margin, particularly a significant dip in 2022 followed by recovery and improvement in the subsequent years.