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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Monolithic Power Systems Inc. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Price to Operating Profit (P/OP) since 2005
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Economic Profit
Monolithic Power Systems Inc., economic profit calculation
US$ in thousands
| 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
= – × =
The analysis of the financial data over the five-year period reveals several notable trends regarding profitability, capital investment, and economic value creation.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a consistent upward trend overall, increasing from approximately $160.3 million in 2020 to about $456.7 million in 2024. There was a particularly strong growth between 2021 and 2022, where NOPAT rose from roughly $248.4 million to $416.6 million. Although there was a slight dip in 2023 to $409.5 million, the figure rebounded in 2024, reaching its highest level in the observed period.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the period, with a marginal variation hovering around 15.07% to 15.08%. This indicates a relatively constant hurdle rate for evaluating investments and economic value added.
- Invested Capital
- Invested capital increased substantially from about $635.3 million at the end of 2020 to roughly $1.69 billion by the end of 2024. The most significant growth occurred between 2021 and 2023, reflecting a considerable injection of resources or asset growth aimed at supporting future operations or expansion. This rise in invested capital suggests increased scale or intensity of the company's asset base over time.
- Economic Profit
- Economic profit, representing the value created above the cost of capital, also showed a marked increase from approximately $64.5 million in 2020 to around $202.0 million in 2024. The peak economic profit was observed in 2022 at $231.0 million, followed by a decline in 2023 to $187.0 million. However, the economic profit rose again in 2024 to $202.0 million, demonstrating resilience despite fluctuations. This pattern indicates that while invested capital grew substantially, the company managed to generate economic returns well above its capital costs, sustaining value creation throughout the period.
In summary, the company has progressively enhanced its profitability and economic value generation, supported by an expanding invested capital base. The steady cost of capital underscores the challenging environment for investment returns, yet the firm’s ability to consistently produce positive and growing economic profits signals effective management of resources and operational efficiency. The slight fluctuations in NOPAT and economic profit in the latter years warrant monitoring to ensure sustained performance momentum.
Net Operating Profit after Taxes (NOPAT)
Monolithic Power Systems Inc., NOPAT calculation
US$ in thousands
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 warranty reserves.
3 Addition of increase (decrease) in equity equivalents to net income.
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.
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
- The net income shows a strong upward trend from 2020 to 2024. Starting at 164,375 thousand US dollars in 2020, it increased significantly to 242,023 thousand in 2021, and then nearly doubled to 437,672 thousand in 2022. A slight decline occurred in 2023 to 427,374 thousand, followed by a substantial jump to 1,786,700 thousand in 2024. This indicates not only robust growth but also notable volatility, especially the sharp rise in 2024.
- Net operating profit after taxes (NOPAT)
- The NOPAT exhibits generally consistent growth with a slight dip in the trend in 2023. The value increased from 160,282 thousand in 2020 to 248,394 thousand in 2021, then further to 416,610 thousand in 2022. It decreased marginally to 409,452 thousand in 2023, before increasing again to 456,676 thousand in 2024. While growth is evident, the increase is more moderate compared to net income, especially in the latest year.
- Comparative insights
- When comparing net income and NOPAT, net income shows higher volatility and more pronounced growth, particularly in 2024, whereas NOPAT demonstrates steadier progress with less sharp fluctuations. The divergence suggests factors impacting net income beyond operating profitability, such as non-operating income or expenses, might be significantly influencing results in the latest period.
Cash Operating Taxes
Monolithic Power Systems Inc., cash operating taxes calculation
US$ in thousands
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).
The financial data reveals notable fluctuations in the income tax-related expenses over the five-year period. The net income tax expense shows a general upward trend from 2020 through 2022, rising from 4,967 thousand US dollars in 2020 to 87,265 thousand US dollars in 2022. However, this is followed by a decline to 78,467 thousand US dollars in 2023 and a significant reversal to a net benefit of -1,213,788 thousand US dollars in 2024, indicating a substantial tax benefit or credit in the latter year.
In contrast, cash operating taxes exhibit a different pattern. From 2020 to 2022, there is a marked increase from 4,486 thousand US dollars to 97,226 thousand US dollars. This is followed by a decrease to 66,188 thousand US dollars in 2023, after which cash operating taxes rise again to 78,589 thousand US dollars in 2024. Unlike the net income tax expense, cash operating taxes remain positive throughout the period, indicating consistent cash outflows related to tax payments.
The divergence between net income tax expense and cash operating taxes, especially evident in 2024, suggests significant non-cash tax adjustments or deferred tax impacts during that year. The large negative net income tax expense implies tax benefits recognized on the income statement that do not correspond to actual cash tax payments, as cash operating taxes remain positive. This could be indicative of tax credits, deferred tax assets, or other tax planning effects influencing the reporting of tax expenses.
Invested Capital
Monolithic Power Systems Inc., invested capital calculation (financing approach)
US$ in thousands
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 warranty reserves.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of debt investments.
- Total reported debt & leases
- The total reported debt and lease obligations exhibited fluctuations over the five-year period. The amount increased from 3,099 thousand USD at the end of 2020 to 5,807 thousand USD by the end of 2021, indicating a notable rise. This was followed by a decline to 3,797 thousand USD in 2022. Subsequently, debt levels increased again, reaching 7,868 thousand USD in 2023 and significantly rising to 15,793 thousand USD by the end of 2024. Overall, the trend shows increasing leverage with intermittent reductions.
- Stockholders’ equity
- Stockholders' equity demonstrated consistent and strong growth throughout the observed period. Starting at 966,587 thousand USD in 2020, equity increased steadily each year: reaching 1,243,985 thousand USD in 2021, 1,668,602 thousand USD in 2022, 2,049,939 thousand USD in 2023, and culminating at 3,145,767 thousand USD in 2024. This upward trend reflects ongoing accumulation of retained earnings or equity injections, contributing to a stronger capital base.
- Invested capital
- Invested capital showed a generally increasing pattern as well, though with more variability compared to equity. The value started at 635,280 thousand USD in 2020 and grew modestly to 683,433 thousand USD in 2021. Between 2021 and 2022, invested capital nearly doubled to 1,231,421 thousand USD, indicating significant capital deployment or acquisition. Growth continued in the following years but at a slower pace, reaching 1,475,541 thousand USD by 2023 and 1,689,877 thousand USD in 2024. This suggests progressive expansion of the company's capital assets or operational investment over time.
Cost of Capital
Monolithic Power Systems 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 (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
Economic Spread Ratio
Monolithic Power Systems 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 thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments 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 exhibited a strong upward trajectory from 2020 to 2022, increasing from 64,508 thousand US dollars to a peak of 230,962 thousand US dollars. However, a decline occurred in 2023, falling to 187,006 thousand US dollars, followed by a moderate recovery in 2024 reaching 201,976 thousand US dollars. This pattern suggests a period of rapid growth followed by a partial correction, though the profit remains substantially higher than the 2020 baseline.
- Invested Capital
- Invested capital demonstrated steady and substantial growth over the five-year period. Starting from 635,280 thousand US dollars in 2020, it rose consistently each year to reach 1,689,877 thousand US dollars in 2024. This continuous increase indicates an expanding asset base or higher capital deployment to support the company's operations and growth initiatives.
- Economic Spread Ratio
- The economic spread ratio initially improved significantly from 10.15% in 2020 to 21.27% in 2021, implying enhanced returns on invested capital relative to cost. Subsequently, it declined to 18.76% in 2022 and then trended downward more sharply to 12.67% in 2023 and 11.95% in 2024. This decline signals a reduced margin between the return on invested capital and the cost of capital, indicating that while profitability in absolute terms remains strong, efficiency or value creation relative to capital cost has diminished in recent years.
- Summary
- Overall, the company experienced robust economic profit growth in the early part of the observed period, supported by significant increases in invested capital. However, the economic spread ratio's downward trend from 2021 onward suggests increasing challenges in maintaining profitable returns relative to the capital invested. The decline in economic profit in 2023, followed by a partial rebound in 2024, combined with continued capital investment, may reflect market or operational adjustments affecting profitability dynamics. Continuous monitoring of the economic spread ratio is advisable to assess the sustainability of value creation amid expanding capital deployment.
Economic Profit Margin
Monolithic Power Systems 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 thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments 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 ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenue Analysis
- The revenue demonstrated a consistent upward trend over the observed periods. Beginning at approximately 844 million US dollars, there was a marked increase to nearly 1.21 billion US dollars in the following year, representing robust growth. This positive trajectory continued with revenue rising to about 1.79 billion, then slightly increasing to 1.82 billion, and subsequently reaching around 2.21 billion US dollars by the latest period. This pattern indicates steady and substantial expansion in sales.
- Economic Profit Trends
- Economic profit showed significant growth from 64.5 million US dollars initially to approximately 145.4 million US dollars in the subsequent year, illustrating an improvement in value creation. The upward trend persisted, peaking at about 231 million US dollars before experiencing a decline in the next period to roughly 187 million US dollars. However, it rebounded slightly to around 202 million US dollars in the most recent period. This fluctuation suggests some volatility in profitability despite the overall positive trend.
- Economic Profit Margin Behavior
- The economic profit margin increased from 7.64% to 12.04% in the second period, indicating enhanced efficiency and profitability relative to revenue. It further improved to 12.87%, its highest level during the timeline. Subsequent periods saw a decline, with margins decreasing to 10.27% and then to 9.15%. This downward movement, despite rising revenues, implies potential margin pressure possibly due to increased costs or changing operational dynamics.
- Summary Insights
- Overall, the financial data reveals strong revenue growth alongside significant improvements in economic profit initially. However, the economic profit and its margin exhibit some volatility and a downward trend in later periods, suggesting challenges in sustaining profitability ratios. The divergence between increasing revenues and declining profit margins warrants further examination of cost structures and operational efficiency to ensure lasting value creation.