Economic Value Added (EVA)
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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:
- Income Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Return on Assets (ROA) 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
= – × =
A comprehensive analysis of the economic value added indicates a period of significant growth and capital expansion from 2020 through 2024. While the organization consistently generated positive economic profit, the relationship between operating returns and the cost of invested capital shifted over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trajectory is observed in NOPAT, which increased from 160,282 thousand US$ in 2020 to 456,676 thousand US$ by 2024. The most rapid growth occurred between 2020 and 2022, followed by a slight contraction in 2023 and a subsequent recovery in 2024. This suggests a general increase in operational efficiency and profitability over the long term.
- Invested Capital and Cost of Capital
- Invested capital expanded aggressively, growing from 635,280 thousand US$ in 2020 to 1,689,877 thousand US$ in 2024. A notable surge in capital investment occurred between 2021 and 2022, where the base nearly doubled. Throughout this period, the cost of capital remained virtually static at approximately 17.6%, indicating a stable hurdle rate for investments.
- Economic Profit Trends
- Economic profit grew substantially from 48,419 thousand US$ in 2020 to a peak of 199,775 thousand US$ in 2022. This growth was driven by NOPAT increasing at a rate that significantly outpaced the capital charge. However, a decline is observed in 2023, with economic profit falling to 149,639 thousand US$, as the continued increase in invested capital outweighed the stagnation in NOPAT. A modest recovery occurred in 2024, bringing the economic profit to 159,196 thousand US$.
- Value Creation Synthesis
- The organization successfully created value in every reported year, as economic profit remained positive. However, the divergence between NOPAT growth and invested capital growth since 2022 indicates that recent capital expenditures have not yet yielded the same proportional increase in operating profit as seen in the early part of the period.
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.
The analysis of economic value creation from 2020 to 2024 reveals a period of significant expansion in the capital base accompanied by fluctuating levels of economic efficiency. While the absolute volume of economic profit has increased over the five-year period, the rate of return relative to invested capital has experienced a notable decline following a peak in 2021.
- Economic Profit Trends
- Economic profit exhibited strong growth in the early part of the period, rising from 48,419 thousand USD in 2020 to a peak of 199,775 thousand USD in 2022. A contraction occurred in 2023, with profit falling to 149,639 thousand USD, followed by a partial recovery to 159,196 thousand USD in 2024. Despite the volatility between 2022 and 2024, the 2024 figure remains substantially higher than the 2020 baseline.
- Invested Capital Expansion
- A consistent upward trajectory is observed in invested capital, which grew from 635,280 thousand USD in 2020 to 1,689,877 thousand USD by the end of 2024. The most significant acceleration in capital deployment occurred between 2021 and 2022, where the invested base nearly doubled. This suggests an aggressive strategy of asset accumulation or infrastructure investment during this timeframe.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the efficiency of value generation over the cost of capital, peaked at 18.74% in 2021. Subsequently, a steady downward trend is observed, with the ratio declining to 16.22% in 2022, 10.14% in 2023, and finishing at 9.42% in 2024. This contraction indicates that while the company continues to generate positive economic profit, the marginal return on newly invested capital is diminishing.
- Capital Efficiency Insight
- The divergence between the growth of invested capital and the economic spread ratio suggests a dilution of capital efficiency. Although the absolute economic profit in 2024 is higher than in 2020, the spread ratio has failed to return to its 2021 levels. This pattern implies that the expansion of the invested capital base is outpacing the growth of the economic profit generated from those investments.
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.
Between 2020 and 2024, a period of significant expansion in revenue was observed, accompanied by a non-linear trajectory in economic profit and a subsequent contraction in the economic profit margin after a peak in 2022.
- Revenue Growth Trajectory
- Revenue demonstrated consistent upward momentum throughout the analyzed period, increasing from 844,452 thousand US dollars in 2020 to 2,207,100 thousand US dollars by 2024. The most pronounced growth occurred between 2020 and 2022, followed by a period of relative stability in 2023 and a further increase in 2024.
- Economic Profit Performance
- Economic profit grew substantially from 48,419 thousand US dollars in 2020 to a peak of 199,775 thousand US dollars in 2022. A contraction occurred in 2023, with the value falling to 149,639 thousand US dollars, before a moderate recovery to 159,196 thousand US dollars in 2024. Despite the volatility in the latter years, the 2024 economic profit remained significantly higher than the 2020 baseline.
- Economic Profit Margin Analysis
- The economic profit margin exhibited a bell-shaped trend, rising from 5.73% in 2020 to a peak of 11.13% in 2022. However, a downward trend emerged in the subsequent two years, with the margin declining to 8.22% in 2023 and further to 7.21% in 2024. This indicates that while total revenue and absolute economic profit have increased over the long term, the efficiency of generating economic value relative to total revenue has diminished since 2022.
The divergence between continuous revenue growth and the declining economic profit margin since 2022 suggests that the costs of capital or operational expenses associated with scaling have begun to offset the gains in revenue, leading to a reduction in the overall rate of economic value creation per dollar of sales.