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:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) 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 trajectory from 2020 to 2024 reflects a period of aggressive capital expansion accompanied by a general increase in operating profitability, although the efficiency of value creation experienced fluctuations.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a strong upward trend, increasing from 160,282 thousand USD in 2020 to 456,676 thousand USD by 2024. While the growth was substantial over the five-year period, a slight deceleration occurred in 2023, with a marginal decrease to 409,452 thousand USD before resuming growth in 2024.
- Invested Capital and Cost of Capital
- Invested capital grew significantly, rising from 635,280 thousand USD in 2020 to 1,689,877 thousand USD in 2024. The most rapid expansion occurred between 2021 and 2022, where invested capital nearly doubled. Throughout this entire period, the cost of capital remained static at 17.76%.
- Economic Profit Analysis
- Economic profit grew consistently in the first three years, peaking at 197,904 thousand USD in 2022. However, a downward trend emerged in 2023, with economic profit falling to 147,397 thousand USD, followed by a slight recovery to 156,629 thousand USD in 2024. The decline in 2023 indicates that the growth in the capital charge—driven by the increasing invested capital base—outpaced the growth in NOPAT during that period.
- Overall Value Creation Trend
- Although the company continues to generate positive economic profit, the gap between NOPAT growth and the expansion of invested capital has led to a reduction in absolute economic profit since 2022. The data suggests that while the scale of operations has increased, the incremental return on newly invested capital has not consistently exceeded the 17.76% cost of capital in the most recent years.
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 financial trajectory from 2020 to 2024 is characterized by a substantial expansion of the capital base and a volatile but generally positive economic profit. While the absolute value of economic profit has increased significantly compared to the 2020 baseline, the efficiency of value creation relative to invested capital has diminished over the latter half of the period.
- Economic Profit Trends
- Economic profit experienced rapid growth between 2020 and 2022, rising from 47,454 thousand US$ to a peak of 197,904 thousand US$. Following this peak, a contraction occurred in 2023 to 147,397 thousand US$, followed by a marginal recovery to 156,629 thousand US$ by the end of 2024.
- Invested Capital Expansion
- A consistent and accelerating upward trend is observed in invested capital, which grew from 635,280 thousand US$ in 2020 to 1,689,877 thousand US$ in 2024. This indicates a significant increase in the resource base, with the most pronounced expansion occurring between 2021 and 2022.
- Economic Spread Ratio Analysis
- The economic spread ratio reached a peak of 18.59% in 2021, indicating a period of optimal efficiency in generating returns exceeding the cost of capital. However, a persistent downward trend has been observed since that peak, with the ratio declining to 16.07% in 2022, 9.99% in 2023, and finishing at 9.27% in 2024. This compression suggests that the growth in invested capital has outpaced the growth in economic profit, resulting in lower relative value creation per unit of capital invested.
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.
An analysis of the financial performance from 2020 to 2024 reveals a period of significant expansion in scale followed by a compression in economic efficiency. While total revenue and absolute economic profit have increased over the five-year horizon, the rate of economic profit growth has not kept pace with revenue expansion in the most recent periods.
- Revenue Trajectory
- A consistent upward trend in revenue is observed, growing from 844,452 thousand US dollars in 2020 to 2,207,100 thousand US dollars by 2024. The most aggressive growth occurred between 2020 and 2022, followed by a period of relative stability in 2023 and a subsequent increase in 2024.
- Economic Profit Performance
- Economic profit experienced rapid growth in the initial phase, rising from 47,454 thousand US dollars in 2020 to a peak of 197,904 thousand US dollars in 2022. A contraction occurred in 2023, where profit fell to 147,397 thousand US dollars, before a moderate recovery to 156,629 thousand US dollars in 2024.
- Economic Profit Margin Analysis
- The economic profit margin exhibited a bell-shaped trajectory, peaking in 2022 at 11.03% after an initial rise from 5.62% in 2020. Since the 2022 peak, a downward trend is evident, with the margin declining to 8.09% in 2023 and further to 7.10% in 2024. This suggests that while the company continues to scale its operations, the incremental economic value generated per dollar of revenue has diminished over the last three fiscal years.