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Microsoft Excel LibreOffice Calc

Micron Technology Inc. (NASDAQ:MU)

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

Micron Technology Inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

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. Micron Technology Inc.’s economic profit increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Net Operating Profit after Taxes (NOPAT)

Micron Technology Inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Net income (loss) attributable to Micron
Deferred income tax expense (benefit)1
Increase (decrease) in equity equivalents2
Interest expense
Interest expense, operating lease liability3
Adjusted interest expense
Tax benefit of interest expense4
Adjusted interest expense, after taxes5
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income6
Investment income, after taxes7
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Micron.

3 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

4 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

5 Addition of after taxes interest expense to net income (loss) attributable to Micron.

6 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

7 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. Micron Technology Inc.’s NOPAT increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.

Cash Operating Taxes

Micron Technology Inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Income tax provision (benefit)
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

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. Micron Technology Inc.’s cash operating taxes increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Invested Capital

Micron Technology Inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Current debt
Long-term debt
Operating lease liability1
Total reported debt & leases
Total Micron shareholders’ equity
Net deferred tax (assets) liabilities2
Equity equivalents3
Accumulated other comprehensive (income) loss, net of tax4
Redeemable noncontrolling interest
Noncontrolling interests in subsidiaries
Adjusted total Micron shareholders’ equity
Construction in progress5
Marketable debt and equity investments6
Invested capital

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

1 Addition of capitalized operating leases.

2 Elimination of deferred taxes from assets and liabilities. See details »

3 Addition of equity equivalents to total Micron shareholders’ equity.

4 Removal of accumulated other comprehensive income.

5 Subtraction of construction in progress.

6 Subtraction of marketable debt and equity investments.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Micron Technology Inc.’s invested capital increased from 2017 to 2018 and from 2018 to 2019.

Cost of Capital

Micron Technology Inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2019-10-17).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 25.70%) =
Operating lease liability4 ÷ = × × (1 – 25.70%) =
Total:

Based on: 10-K (filing date: 2018-10-15).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2017-10-26).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2016-10-28).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2015-10-27).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt instruments3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2014-10-27).

1 US$ in millions

2 Equity. See details »

3 Debt instruments. See details »

4 Operating lease liability. See details »

Economic Spread Ratio

Micron Technology Inc., economic spread ratio calculation

Microsoft Excel LibreOffice Calc
Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

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. Micron Technology Inc.’s economic spread ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Economic Profit Margin

Micron Technology Inc., economic profit margin calculation

Microsoft Excel LibreOffice Calc
Aug 29, 2019 Aug 30, 2018 Aug 31, 2017 Sep 1, 2016 Sep 3, 2015 Aug 28, 2014
Selected Financial Data (US$ in millions)
Economic profit1
Revenue
Performance Ratio
Economic profit margin2

Based on: 10-K (filing date: 2019-10-17), 10-K (filing date: 2018-10-15), 10-K (filing date: 2017-10-26), 10-K (filing date: 2016-10-28), 10-K (filing date: 2015-10-27), 10-K (filing date: 2014-10-27).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × ÷ =

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. Micron Technology Inc.’s economic profit margin improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.