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.
Economic Profit
Monolithic Power Systems Inc., economic profit 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 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
= 456,676 – 17.68% × 1,689,877 = 157,840
The financial trajectory from 2020 to 2024 reflects a period of significant operational expansion and fluctuating economic value creation. While operational profitability has increased substantially over the five-year period, the acceleration of invested capital has created a divergent trend in economic profit, which peaked in 2022 before experiencing a correction and subsequent modest recovery.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is observed in NOPAT, which grew from 160,282 thousand US$ in 2020 to 456,676 thousand US$ by 2024. This represents a significant increase in core operational profitability. A slight contraction occurred in 2023, where NOPAT dipped to 409,452 thousand US$, before rebounding in the final year of the period.
- Invested Capital Growth
- Invested capital exhibited rapid growth, particularly starting in 2022. The capital base expanded from 635,280 thousand US$ in 2020 to 1,689,877 thousand US$ in 2024. The most aggressive increase occurred between 2021 and 2022, where invested capital nearly doubled, indicating a period of heavy reinvestment or asset acquisition.
- Economic Profit Trends
- Economic profit increased sharply from 47,909 thousand US$ in 2020 to a peak of 198,787 thousand US$ in 2022. However, a decline was noted in 2023, with economic profit dropping to 148,455 thousand US$. This decrease suggests that the cost of the additional capital deployed outweighed the incremental NOPAT generated during that period. A slight recovery to 157,840 thousand US$ was recorded in 2024.
- Cost of Capital Stability
- The cost of capital remained remarkably stable throughout the analyzed period, holding at 17.69% from 2020 through 2023, with a negligible decrease to 17.68% in 2024. This consistency indicates that the fluctuations in economic profit were driven by operational performance and capital deployment rather than changes in the required rate of return.
The relationship between the rapid increase in invested capital and the growth of NOPAT reveals a period of diminishing marginal returns to invested capital between 2022 and 2024. Although the company continues to generate positive economic profit, the rate of capital expansion has outpaced the rate of profit growth, leading to a lower economic profit in the final two years compared to the 2022 peak.
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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
= 15,793 × 5.50% = 869
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 869 × 21.00% = 182
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
= 27,011 × 21.00% = 5,672
8 Elimination of after taxes investment income.
The financial performance from 2020 through 2024 indicates a general trajectory of growth in both net income and net operating profit after taxes (NOPAT), although a significant divergence between these two metrics occurred in the final reporting period.
- Net Income Trends
- Net income exhibited consistent growth from 2020 to 2022, increasing from 164,375 thousand to 437,672 thousand. After a marginal decline in 2023 to 427,374 thousand, a substantial surge is observed in 2024, where net income reached 1,786,700 thousand, representing an increase of approximately 318% over the previous year.
- NOPAT Progression
- The net operating profit after taxes followed a similar growth pattern to net income between 2020 and 2022, rising from 160,282 thousand to 416,610 thousand. In 2023, NOPAT experienced a slight contraction to 409,452 thousand, followed by a moderate increase to 456,676 thousand in 2024.
- Operating vs. Non-Operating Divergence
- A notable correlation existed between net income and NOPAT from 2020 to 2023, suggesting that earnings were primarily driven by core operations. However, in 2024, a sharp decoupling is evident. While net income grew exponentially, NOPAT increased by only 11.5% relative to 2023. This disparity indicates that the vast majority of the 2024 net income increase was derived from non-operating sources rather than core operational profitability.
- Implications for Economic Value Added
- Because EVA is calculated based on NOPAT, the core operational contribution to economic value grew at a much slower rate in 2024 than the net income figure suggests. The stability of NOPAT relative to the volatility of net income in the final period suggests that the underlying operational efficiency remained steady, while the bottom line was influenced by extraordinary non-operating items.
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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 trajectory of tax obligations reveals a period of significant growth in cash outflows followed by a stark divergence between accounting tax expenses and actual cash tax payments in the final year of the analyzed period.
- Cash Operating Tax Trends
- Cash operating taxes exhibited a steep upward trajectory from 2020 through 2022, increasing from 4,486 thousand US$ to a peak of 97,226 thousand US$. A subsequent contraction occurred in 2023, with payments decreasing to 66,188 thousand US$, before recovering to 78,589 thousand US$ in 2024.
- Accounting vs. Cash Tax Divergence
- A significant anomaly is observed in 2024. While the income tax expense (benefit), net, recorded a massive benefit of -1,213,788 thousand US$, the cash operating taxes remained a positive outflow of 78,589 thousand US$. This indicates that the reported tax benefit was entirely non-cash, likely resulting from deferred tax asset adjustments or accounting-based tax credits that did not translate into immediate cash inflows or a reduction in current tax payments.
- Impact on Economic Value Added (EVA)
- The utilization of cash operating taxes rather than net income tax expense in the context of EVA prevents the artificial inflation of economic profit for the 2024 period. By focusing on the actual cash outflow of 78,589 thousand US$ instead of the reported accounting benefit, the analysis maintains a realistic view of the company's after-tax cash operating profit and its ability to cover the cost of capital.
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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.
The analysis of the capital structure from 2020 through 2024 reveals a consistent expansion of the resource base used to generate economic value. A strong upward trajectory is observed across all primary capital metrics, characterized by substantial growth in stockholders' equity and a steady increase in invested capital.
- Invested Capital Growth
- Invested capital has demonstrated a continuous increase over the five-year period, rising from 635,280 thousand US dollars in 2020 to 1,689,877 thousand US dollars by 2024. This represents a total increase of approximately 166%. A significant acceleration occurred between 2021 and 2022, where invested capital grew by approximately 80%, suggesting a period of intensified capital deployment or asset acquisition.
- Stockholders' Equity Expansion
- Stockholders' equity has grown steadily and substantially each year, increasing from 966,587 thousand US dollars in 2020 to 3,145,767 thousand US dollars in 2024. The consistent growth in equity indicates strong retained earnings or capital injections, providing a robust cushion for operations and future investments.
- Debt and Leverage Profile
- Total reported debt and leases remain negligible relative to the total equity and invested capital. While debt increased from 3,099 thousand US dollars in 2020 to 15,793 thousand US dollars in 2024, the leverage ratio remains extremely low. The jump in debt observed in 2024 does not materially alter the company's low-leverage financial profile.
- Capital Composition Insights
- A notable divergence is observed between stockholders' equity and invested capital. By 2024, stockholders' equity exceeded invested capital by over 1.4 billion US dollars. This indicates a high concentration of non-operating assets, such as cash and short-term investments, which are excluded from the invested capital calculation in an Economic Value Added (EVA) framework.
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Cost of Capital
Monolithic Power Systems Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 27,710,585) | 27,710,585) | ÷ | 27,726,378) | = | 1.00 | 1.00 | × | 17.69% | = | 17.68% | ||
| Operating lease liability3 | 15,793) | 15,793) | ÷ | 27,726,378) | = | 0.00 | 0.00 | × | 5.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 27,726,378) | 1.00 | 17.68% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,037,866) | 35,037,866) | ÷ | 35,045,734) | = | 1.00 | 1.00 | × | 17.69% | = | 17.69% | ||
| Operating lease liability3 | 7,868) | 7,868) | ÷ | 35,045,734) | = | 0.00 | 0.00 | × | 4.30% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 35,045,734) | 1.00 | 17.69% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 22,851,153) | 22,851,153) | ÷ | 22,854,950) | = | 1.00 | 1.00 | × | 17.69% | = | 17.69% | ||
| Operating lease liability3 | 3,797) | 3,797) | ÷ | 22,854,950) | = | 0.00 | 0.00 | × | 2.10% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 22,854,950) | 1.00 | 17.69% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 21,461,113) | 21,461,113) | ÷ | 21,466,920) | = | 1.00 | 1.00 | × | 17.69% | = | 17.69% | ||
| Operating lease liability3 | 5,807) | 5,807) | ÷ | 21,466,920) | = | 0.00 | 0.00 | × | 2.00% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 21,466,920) | 1.00 | 17.69% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 17,748,850) | 17,748,850) | ÷ | 17,751,949) | = | 1.00 | 1.00 | × | 17.69% | = | 17.69% | ||
| Operating lease liability3 | 3,099) | 3,099) | ÷ | 17,751,949) | = | 0.00 | 0.00 | × | 2.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 17,751,949) | 1.00 | 17.69% | ||||||||||
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 | 157,840) | 148,455) | 198,787) | 127,515) | 47,909) | |
| Invested capital2 | 1,689,877) | 1,475,541) | 1,231,421) | 683,433) | 635,280) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 9.34% | 10.06% | 16.14% | 18.66% | 7.54% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -27.37% | -28.80% | -28.42% | 28.16% | — | |
| Analog Devices Inc. | -14.15% | -10.06% | -11.43% | -14.67% | -9.61% | |
| Applied Materials Inc. | 10.37% | 13.36% | 23.33% | 18.82% | 7.16% | |
| Broadcom Inc. | -10.36% | 4.87% | 3.61% | -5.62% | -10.85% | |
| Intel Corp. | -29.96% | -19.83% | -13.05% | 3.54% | — | |
| KLA Corp. | 16.23% | 20.17% | 22.57% | 11.03% | — | |
| Lam Research Corp. | -2.98% | 2.38% | 17.40% | 12.74% | — | |
| Marvell Technology Inc. | -26.46% | -22.13% | -24.89% | -26.61% | — | |
| Micron Technology Inc. | -17.66% | -29.62% | -1.97% | -6.58% | -12.02% | |
| NVIDIA Corp. | 62.03% | -16.05% | 26.14% | 6.62% | — | |
| Qualcomm Inc. | 7.70% | 0.23% | 26.66% | 24.06% | 9.13% | |
| Texas Instruments Inc. | 2.70% | 12.32% | 32.90% | 31.54% | — | |
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 × 157,840 ÷ 1,689,877 = 9.34%
4 Click competitor name to see calculations.
An analysis of the financial performance from 2020 to 2024 reveals a period of significant expansion in capital deployment accompanied by fluctuating levels of economic profit. While the absolute economic profit has increased substantially over the five-year period, the efficiency of this capital utilization, as measured by the economic spread ratio, has experienced a notable contraction after an initial surge.
- Economic Profit Trends
- Economic profit demonstrated rapid growth in the early part of the period, rising from 47,909 thousand US$ in 2020 to a peak of 198,787 thousand US$ in 2022. Following this peak, a decline occurred in 2023 to 148,455 thousand US$, followed by a partial recovery to 157,840 thousand US$ in 2024. Despite the volatility observed between 2022 and 2024, the ending economic profit remains significantly higher than the 2020 baseline.
- Invested Capital Growth
- A consistent and accelerating upward trend in invested capital is observed throughout the period. Capital increased from 635,280 thousand US$ in 2020 to 1,689,877 thousand US$ by 2024. A particularly sharp increase occurred between 2021 and 2022, where invested capital nearly doubled, signaling a period of aggressive investment or asset acquisition.
- Economic Spread Ratio Dynamics
- The economic spread ratio peaked in 2021 at 18.66%, indicating a high level of value creation relative to the cost of capital. However, a persistent downward trend followed, with the ratio declining to 16.14% in 2022, 10.06% in 2023, and finally 9.34% in 2024. This compression suggests that the growth in invested capital has outpaced the growth in economic profit, leading to a reduction in the marginal efficiency of deployed capital over the last three years.
In summary, the data indicates that while the entity has succeeded in scaling its operations and increasing its absolute economic surplus, the rate of return above the cost of capital has diminished. The transition from a peak spread of 18.66% to 9.34% reflects a trend of diminishing returns on the expanded capital base.
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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 | 157,840) | 148,455) | 198,787) | 127,515) | 47,909) | |
| Revenue | 2,207,100) | 1,821,072) | 1,794,148) | 1,207,798) | 844,452) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 7.15% | 8.15% | 11.08% | 10.56% | 5.67% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -61.81% | -73.50% | -70.47% | 10.61% | — | |
| Analog Devices Inc. | -65.34% | -36.13% | -42.83% | -94.24% | -31.23% | |
| Applied Materials Inc. | 7.22% | 8.96% | 13.47% | 12.01% | 5.45% | |
| Broadcom Inc. | -28.32% | 8.52% | 6.76% | -13.24% | -29.94% | |
| Intel Corp. | -52.08% | -33.68% | -18.36% | 3.97% | — | |
| KLA Corp. | 13.93% | 16.02% | 19.08% | 10.87% | — | |
| Lam Research Corp. | -3.02% | 2.09% | 12.85% | 10.28% | — | |
| Marvell Technology Inc. | -91.49% | -74.77% | -111.07% | -81.68% | — | |
| Micron Technology Inc. | -37.51% | -101.90% | -3.38% | -11.01% | -23.72% | |
| NVIDIA Corp. | 31.32% | -12.70% | 17.52% | 5.17% | — | |
| Qualcomm Inc. | 6.10% | 0.20% | 17.76% | 14.49% | 6.89% | |
| Texas Instruments Inc. | 4.52% | 15.89% | 28.85% | 28.21% | — | |
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 × 157,840 ÷ 2,207,100 = 7.15%
3 Click competitor name to see calculations.
The financial performance from 2020 to 2024 is characterized by consistent revenue expansion alongside a fluctuating trend in economic profit and a deteriorating economic profit margin after a peak in 2022.
- Revenue Growth Trajectory
- A sustained upward trend in revenue is observed throughout the five-year period. Revenue increased from 844,452 thousand US$ in 2020 to 2,207,100 thousand US$ in 2024, representing a substantial growth in the scale of operations.
- Economic Profit Performance
- Economic profit experienced rapid acceleration between 2020 and 2022, rising from 47,909 thousand US$ to a peak of 198,787 thousand US$. A contraction occurred in 2023, with value falling to 148,455 thousand US$, followed by a partial recovery to 157,840 thousand US$ in 2024.
- Economic Profit Margin Analysis
- The economic profit margin demonstrated a strong initial increase, climbing from 5.67% in 2020 to a maximum of 11.08% in 2022. However, a downward trend emerged in the subsequent two years, with the margin declining to 8.15% in 2023 and further to 7.15% in 2024. This indicates that while absolute economic profit recovered slightly in the final year, it did not keep pace with the growth in revenue, leading to a reduction in overall efficiency of value creation relative to sales.
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