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 – 16.65% × 165,969 = 29,217
The financial data exhibits significant fluctuations and notable trends over the five-year period. Net operating profit after taxes (NOPAT) demonstrates a general upward trajectory with an exception in the year ending 2022. After reaching a peak in 2021, NOPAT declines substantially in 2022, followed by a strong recovery in subsequent years, culminating in the highest value recorded in 2024.
- Net Operating Profit After Taxes (NOPAT)
- Starting at 27,980 million USD in 2020, NOPAT rises sharply to 40,147 million USD in 2021. However, it falls to 20,828 million USD in 2022, representing the lowest point in the period. Recovery ensues with values increasing to 38,290 million USD in 2023 and 56,844 million USD in 2024, demonstrating robust profitability expansion at the end of the timeline.
- Cost of Capital
- The cost of capital remains relatively stable throughout the period, fluctuating slightly between 16.29% and 16.79%. Such consistency suggests steady expectations for the rate of return required by investors without major volatility or systemic changes in the risk profile of the invested capital.
- Invested Capital
- Invested capital shows a continuous and marked increase year over year. From 80,951 million USD in 2020, the invested capital grows steadily to reach 165,969 million USD in 2024, more than doubling over the five-year span. This indicates significant reinvestment or expansion in assets supporting the company's operations.
- Economic Profit
- Economic profit mirrors the pattern observed in NOPAT but with magnified variability. An improvement is observed from 14,384 million USD in 2020 to a peak of 24,662 million USD in 2021. The figure plummets in 2022 to only 4,251 million USD, signaling a sharp dip in value creation above the cost of capital. However, economic profit rebounds strongly in 2023 and 2024 to 14,845 million USD and 29,217 million USD, respectively, indicating enhanced value generation in the latter years of the dataset.
Overall, the analysis reveals a company experiencing a temporary setback in 2022 with respect to profitability and economic profit, despite increasing investments. The trends suggest effective recovery strategies resulting in substantial improvements in financial performance and value creation by 2024. The stable cost of capital supports the interpretation that changes in profitability and economic profit are primarily driven by operational efficiency and asset utilization rather than shifts in the external cost of financing.
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 $165,969 million in 2024. The growth pace accelerates especially after 2021, indicating that the company is increasing its long-term investments and assets base substantially. This could correspond with strategic initiatives to enhance operational capacity, assets acquisition, or overall expansion.
Overall, the data illustrates a company that is increasing its financial leverage considerably while simultaneously growing its equity base and invested capital. This combination may suggest an aggressive growth strategy supported by both debt financing and equity strength, potentially positioning the company for expanded operations or investment in new opportunities. However, the rising debt levels also imply greater financial risk that should be managed carefully.
Cost of Capital
Meta Platforms Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,740,624) | 1,740,624) | ÷ | 1,789,397) | = | 0.97 | 0.97 | × | 17.01% | = | 16.54% | ||
| Long-term debt and finance lease liabilities3 | 28,539) | 28,539) | ÷ | 1,789,397) | = | 0.02 | 0.02 | × | 5.31% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 20,234) | 20,234) | ÷ | 1,789,397) | = | 0.01 | 0.01 | × | 3.90% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 1,789,397) | 1.00 | 16.65% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 | × | 17.01% | = | 16.49% | ||
| 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 | 16.59% | ||||||||||
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 | × | 17.01% | = | 16.15% | ||
| 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 | 16.29% | ||||||||||
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 | × | 17.01% | = | 16.64% | ||
| 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 | 16.68% | ||||||||||
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 | × | 17.01% | = | 16.76% | ||
| 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 | 16.79% | ||||||||||
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 | 29,217) | 14,845) | 4,251) | 24,662) | 14,384) | |
| Invested capital2 | 165,969) | 141,324) | 101,764) | 92,809) | 80,951) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 17.60% | 10.50% | 4.18% | 26.57% | 17.77% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.19% | 19.54% | 11.14% | 30.44% | 13.45% | |
| Charter Communications Inc. | -1.30% | -1.28% | -1.70% | -2.92% | -5.31% | |
| Comcast Corp. | -1.30% | -3.19% | -7.65% | -2.65% | -4.28% | |
| Netflix Inc. | 4.02% | -2.43% | -3.18% | 1.30% | -4.15% | |
| Trade Desk Inc. | -8.90% | -15.57% | -18.23% | -11.42% | 1.18% | |
| Walt Disney Co. | -11.61% | -13.21% | -11.05% | -13.90% | -16.15% | |
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 × 29,217 ÷ 165,969 = 17.60%
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations over the observed periods. Starting at 14,384 million USD in 2020, it increased notably to 24,662 million USD in 2021. However, there was a sharp decline in 2022, plunging to 4,251 million USD. Following this decrease, the economic profit rebounded in 2023 to 14,845 million USD and showed a strong upward trajectory in 2024, reaching 29,217 million USD, the highest in the given timeframe.
- Invested Capital
- Invested capital displayed a consistent upward trend throughout the periods analyzed. It rose steadily from 80,951 million USD in 2020 to 165,969 million USD by 2024. The most notable increments occurred between 2022 and 2023, and again into 2024, reflecting substantial growth in capital employed by the company.
- Economic Spread Ratio
- The economic spread ratio, representing the return spread over the cost of capital, showed variable performance. It peaked at 26.57% in 2021 after starting at 17.77% in 2020, indicating enhanced profitability relative to invested capital during this period. However, a significant contraction occurred in 2022, with the ratio dropping to 4.18%. Recovery began in 2023 with the ratio rising to 10.5%, and further improvement was observed in 2024, reaching 17.6%, approaching the initial levels seen in 2020.
- Summary Insights
- The data reveal a pattern of strong growth in invested capital accompanied by considerable volatility in economic profit and economic spread ratio. The sharp dip in economic profit and spread in 2022 contrasts with earlier and later periods of heightened profitability. The recovery in 2023 and 2024 suggests a rebound in operational efficiency and value creation. Overall, while capital investment increased steadily, profitability metrics indicate periods of both challenge and recovery, reflecting dynamic shifts in the company’s economic performance.
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 | 29,217) | 14,845) | 4,251) | 24,662) | 14,384) | |
| 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 | 17.75% | 10.99% | 3.65% | 20.87% | 16.71% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 17.01% | 12.04% | 7.95% | 20.19% | 10.70% | |
| Charter Communications Inc. | -3.22% | -3.15% | -4.13% | -7.40% | -14.70% | |
| Comcast Corp. | -2.25% | -5.51% | -13.53% | -5.21% | -9.24% | |
| Netflix Inc. | 4.19% | -2.71% | -3.79% | 1.52% | -4.90% | |
| Trade Desk Inc. | -8.94% | -14.11% | -21.55% | -14.69% | 1.50% | |
| Walt Disney Co. | -21.12% | -25.79% | -22.75% | -35.41% | -43.43% | |
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 × 29,217 ÷ 164,598 = 17.75%
3 Click competitor name to see calculations.
- Adjusted Revenue
- The adjusted revenue exhibits an overall upward trend from 86,066 million USD in 2020 to 164,598 million USD in 2024. After a significant increase between 2020 and 2021, revenue remains relatively stable in 2022 before resuming growth in the subsequent years. This suggests a period of consolidation or slight stagnation followed by renewed growth momentum.
- Economic Profit
- The economic profit shows considerable fluctuations over the five-year period. Starting at 14,384 million USD in 2020, it rises sharply to 24,662 million USD in 2021. However, there is a pronounced decline in 2022 to 4,251 million USD, indicating a substantial drop in profitability despite stable revenue that year. Profitability rebounds in 2023 and again more strongly in 2024, reaching the highest value of 29,217 million USD. This volatility might reflect changing cost structures or investments affecting profit generation.
- Economic Profit Margin
- The economic profit margin, which is the ratio of economic profit to adjusted revenue, follows a similar pattern to economic profit. After increasing from 16.71% in 2020 to 20.87% in 2021, it falls sharply to 3.65% in 2022, indicating reduced profitability efficiency. The margin improves in the following years, reaching 17.75% in 2024, close to prior peak levels. This pattern suggests operational or economic challenges in 2022, with recovery and improved profitability efficiency in subsequent years.
- Overall Insights
- Despite steady growth in revenue, the company's profitability has experienced a marked dip in the middle of the observed period, particularly in 2022. The recovery in economic profit and margin in the last two years indicates successful adjustments or favorable conditions that restored profitability levels. The relationship between revenue stability and pronounced profit fluctuations could warrant further investigation into cost management, investment impacts, or market conditions during the period of decline.