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:
- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Total Asset Turnover 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 financial performance, as measured by economic value added (EVA) metrics, demonstrates a generally positive trend over the five-year period. Net operating profit after taxes (NOPAT) increased significantly from 2020 to 2022, experienced a slight decrease in 2023, and then increased again in 2024. Invested capital also exhibited consistent growth throughout the period. The cost of capital remained constant, allowing for a focused assessment of operational performance and capital efficiency.
- NOPAT Trend
- NOPAT increased from US$160.282 million in 2020 to US$248.394 million in 2021, representing a substantial growth rate. This growth continued into 2022, reaching US$416.610 million. A minor decline to US$409.452 million was observed in 2023, followed by a recovery to US$456.676 million in 2024. This suggests strong underlying profitability with a temporary fluctuation in 2023.
- Invested Capital Trend
- Invested capital showed a consistent upward trajectory, increasing from US$635.280 million in 2020 to US$683.433 million in 2021. The most significant increase occurred between 2021 and 2022, reaching US$1,231.421 million. Growth continued, albeit at a slower pace, to US$1,475.541 million in 2023 and US$1,689.877 million in 2024. This indicates ongoing investment in the business.
- Economic Profit Trend
- Economic profit mirrored the NOPAT trend, rising from US$48.323 million in 2020 to US$127.961 million in 2021. The largest increase in economic profit occurred between 2021 and 2022, reaching US$199.590 million. A decrease was noted in 2023, with economic profit falling to US$149.417 million, before recovering to US$158.942 million in 2024. The consistent positive values indicate that the company is generating returns above its cost of capital.
The consistent positive economic profit values across all observed years suggest effective capital allocation and strong operational performance. While a slight dip occurred in 2023, the subsequent recovery in 2024 indicates resilience and continued value creation. The increasing invested capital, coupled with growing NOPAT, suggests a scalable business model.
Net Operating Profit after Taxes (NOPAT)
Monolithic Power Systems Inc., NOPAT calculation
US$ 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 economic spread ratio demonstrates a fluctuating pattern over the five-year period. Initially, a substantial increase is observed, followed by a period of decline. Economic profit consistently increased from 2020 to 2022, while invested capital also rose, though at varying rates. The subsequent years show a stabilization, and then a slight increase in economic profit, coupled with continued growth in invested capital.
- Economic Spread Ratio Trend
- The economic spread ratio began at 7.61% in 2020 and experienced a significant surge to 18.72% in 2021. This indicates a substantial improvement in the company’s ability to generate returns exceeding its cost of capital. However, the ratio decreased to 16.21% in 2022, suggesting a moderation in this performance. A more pronounced decline followed, with the ratio falling to 10.13% in 2023 and further to 9.41% in 2024. This downward trend, despite increasing economic profit in the later years, suggests that invested capital is growing at a faster rate than economic profit.
- Economic Profit and Invested Capital Relationship
- Economic profit increased significantly from US$48,323 thousand in 2020 to US$199,590 thousand in 2022, demonstrating strong profitability growth. While economic profit decreased to US$149,417 thousand in 2023, it recovered slightly to US$158,942 thousand in 2024. Invested capital exhibited consistent growth throughout the period, increasing from US$635,280 thousand in 2020 to US$1,689,877 thousand in 2024. The increasing invested capital base, coupled with the declining economic spread ratio in the later years, indicates diminishing returns on invested capital.
The observed trends suggest that while the company continues to generate positive economic profit, its efficiency in utilizing invested capital to generate those profits has decreased in recent years. Further investigation into the drivers of invested capital growth and their impact on economic profit would be beneficial.
Economic Profit Margin
Monolithic Power Systems Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
The economic profit margin exhibited a generally increasing trend from 2020 to 2022, followed by a decline in the subsequent two years. Economic profit itself demonstrated consistent growth through 2022, with a subsequent decrease in 2023, and a partial recovery in 2024. Revenue increased steadily throughout the period, with the most substantial growth occurring between 2021 and 2022.
- Economic Profit Margin
- The economic profit margin increased from 5.72% in 2020 to 10.59% in 2021, representing a significant improvement in profitability relative to revenue. This upward trajectory continued, reaching a peak of 11.12% in 2022. However, the margin then decreased to 8.20% in 2023 and further to 7.20% in 2024. This suggests that while revenue continued to grow, the rate of economic profit generation did not keep pace in the latter two years.
- Economic Profit
- Economic profit increased substantially from US$48.323 million in 2020 to US$127.961 million in 2021, and continued its growth to US$199.590 million in 2022. A decrease was observed in 2023, with economic profit falling to US$149.417 million. The value partially recovered in 2024, reaching US$158.942 million. The 2023 decline, despite revenue growth, contributed to the observed decrease in the economic profit margin.
- Revenue
- Revenue demonstrated consistent year-over-year growth throughout the five-year period. From US$844.452 million in 2020, revenue increased to US$1.207.798 million in 2021, US$1.794.148 million in 2022, and US$1.821.072 million in 2023. The largest increase occurred between 2021 and 2022. Revenue continued to grow in 2024, reaching US$2.207.100 million, indicating sustained demand for the company’s products or services.
The divergence between revenue growth and economic profit margin in 2023 and 2024 warrants further investigation. Potential factors contributing to this trend could include increased operating costs, changes in the cost of capital, or shifts in the product mix.