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 – 17.69% × 1,689,877 = 157,690
The financial performance from 2020 to 2024 demonstrates a consistent ability to generate economic profit, indicating that the entity has successfully created value exceeding its cost of capital throughout the period. While there is a general upward trajectory in operating profitability and capital investment, the efficiency of value creation peaked in 2022 before experiencing a moderate correction and subsequent stabilization.
- Net Operating Profit After Taxes (NOPAT)
- A strong growth trend is observed in NOPAT, which increased from 160,282 thousand US dollars in 2020 to 456,676 thousand US dollars in 2024. The most significant acceleration occurred between 2021 and 2022, with a brief period of stagnation in 2023 before returning to growth in the final year of the analysis.
- Invested Capital
- There has been a substantial expansion of the capital base, rising from 635,280 thousand US dollars in 2020 to 1,689,877 thousand US dollars in 2024. A notable surge in investment occurred in 2022, where invested capital nearly doubled compared to the previous year, suggesting an aggressive expansion of the operational asset base.
- Cost of Capital
- The cost of capital remained remarkably stable over the five-year horizon, holding steady at 17.70% from 2020 through 2023, with a negligible decrease to 17.69% in 2024. This stability provides a consistent benchmark for evaluating the return on invested capital.
- Economic Profit
- Economic profit remained positive across all reported years, confirming that the company consistently earned more than the minimum required return on its invested capital. The value creation peaked in 2022 at 198,677 thousand US dollars. However, a decline was noted in 2023 to 148,323 thousand US dollars, primarily driven by the continued increase in invested capital occurring faster than the growth of NOPAT. A slight recovery to 157,690 thousand US dollars was observed in 2024.
In summary, the analysis reveals a company in a high-growth phase. The sharp increase in invested capital has placed higher demands on operating performance to maintain the level of economic profit. While the absolute value created remains high, the decline from the 2022 peak suggests that the marginal return on new investments has moderated, although the overall trajectory remains value-positive.
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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.
- 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.
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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 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.
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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.
- 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.
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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 | × | 17.70% | = | 17.69% | ||
| 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 | 17.69% | ||||||||||
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 | × | 17.70% | = | 17.70% | ||
| 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 | 17.70% | ||||||||||
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 | × | 17.70% | = | 17.70% | ||
| 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 | 17.70% | ||||||||||
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 | × | 17.70% | = | 17.70% | ||
| 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 | 17.70% | ||||||||||
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 | × | 17.70% | = | 17.70% | ||
| 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 | 17.70% | ||||||||||
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 | 157,690) | 148,323) | 198,677) | 127,454) | 47,852) | |
| Invested capital2 | 1,689,877) | 1,475,541) | 1,231,421) | 683,433) | 635,280) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 9.33% | 10.05% | 16.13% | 18.65% | 7.53% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -27.79% | -29.22% | -28.83% | 27.74% | — | |
| Analog Devices Inc. | -14.18% | -10.09% | -11.45% | -14.69% | -9.63% | |
| Applied Materials Inc. | 10.13% | 13.12% | 23.09% | 18.58% | 6.93% | |
| Broadcom Inc. | -10.42% | 4.81% | 3.56% | -5.68% | -10.90% | |
| Intel Corp. | -30.08% | -19.97% | -13.18% | 3.40% | — | |
| KLA Corp. | 16.08% | 20.01% | 22.42% | 10.88% | — | |
| Lam Research Corp. | -3.28% | 2.09% | 17.11% | 12.45% | — | |
| Marvell Technology Inc. | -26.71% | -22.37% | -25.14% | -26.87% | — | |
| Micron Technology Inc. | -17.78% | -29.73% | -2.10% | -6.71% | -12.14% | |
| NVIDIA Corp. | 61.66% | -16.42% | 25.78% | 6.26% | — | |
| Qualcomm Inc. | 7.60% | 0.13% | 26.57% | 23.96% | 9.03% | |
| Texas Instruments Inc. | 2.70% | 12.32% | 32.90% | 31.53% | — | |
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 × 157,690 ÷ 1,689,877 = 9.33%
4 Click competitor name to see calculations.
The analysis of economic value creation between 2020 and 2024 reveals a period of significant capital expansion coupled with fluctuating efficiency in generating economic profit. While absolute economic profit has increased substantially from 2020 levels, the rate of return relative to the invested capital base 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 47,852 thousand USD in 2020 to a peak of 198,677 thousand USD in 2022. A contraction occurred in 2023, where profit fell to 148,323 thousand USD, followed by a moderate recovery to 157,690 thousand USD by the end of 2024. Despite the volatility since 2022, the 2024 economic profit remains more than three times higher than the 2020 baseline.
- Invested Capital Expansion
- There is a consistent and accelerating upward trend in invested capital. The capital base grew from 635,280 thousand USD in 2020 to 1,689,877 thousand USD in 2024. A significant acceleration in investment is observed between 2021 and 2022, where invested capital nearly doubled, signaling a period of aggressive resource deployment.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the efficiency of value creation over the cost of capital, peaked at 18.65% in 2021. Subsequently, a downward trend is observed, with the ratio declining to 16.13% in 2022, 10.05% in 2023, and reaching 9.33% in 2024. This decline indicates that the growth in invested capital has outpaced the growth in economic profit, leading to diminishing marginal returns on the capital deployed during the latter half of the analyzed period.
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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 | 157,690) | 148,323) | 198,677) | 127,454) | 47,852) | |
| Revenue | 2,207,100) | 1,821,072) | 1,794,148) | 1,207,798) | 844,452) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 7.14% | 8.14% | 11.07% | 10.55% | 5.67% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -62.75% | -74.56% | -71.49% | 10.46% | — | |
| Analog Devices Inc. | -65.46% | -36.23% | -42.92% | -94.41% | -31.31% | |
| Applied Materials Inc. | 7.05% | 8.79% | 13.33% | 11.85% | 5.27% | |
| Broadcom Inc. | -28.49% | 8.42% | 6.66% | -13.37% | -30.08% | |
| Intel Corp. | -52.27% | -33.91% | -18.54% | 3.81% | — | |
| KLA Corp. | 13.80% | 15.90% | 18.95% | 10.72% | — | |
| Lam Research Corp. | -3.33% | 1.83% | 12.63% | 10.04% | — | |
| Marvell Technology Inc. | -92.37% | -75.59% | -112.19% | -82.48% | — | |
| Micron Technology Inc. | -37.77% | -102.30% | -3.59% | -11.22% | -23.96% | |
| NVIDIA Corp. | 31.13% | -12.99% | 17.28% | 4.89% | — | |
| Qualcomm Inc. | 6.02% | 0.12% | 17.70% | 14.43% | 6.82% | |
| Texas Instruments Inc. | 4.51% | 15.88% | 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 × 157,690 ÷ 2,207,100 = 7.14%
3 Click competitor name to see calculations.
The financial performance from 2020 through 2024 is characterized by strong top-line expansion contrasted with a fluctuating trend in economic value creation. While revenue grew consistently throughout the period, economic profit reached a peak in 2022 before experiencing a contraction and subsequent modest recovery, resulting in a compression of the economic profit margin in the final two years of the period.
- Revenue Growth Trends
- A sustained upward trajectory in revenue is observed, increasing from US$ 844.4 million in 2020 to US$ 2.21 billion by 2024. The most significant growth phase occurred between 2020 and 2022, followed by a period of stabilization in 2023 and renewed growth in 2024.
- Economic Profit Trajectory
- Economic profit experienced rapid growth in the early years, rising from US$ 47.8 million in 2020 to a peak of US$ 198.7 million in 2022. A notable decline occurred in 2023, where economic profit fell to US$ 148.3 million, before recovering slightly to US$ 157.7 million in 2024. This volatility indicates that the value generated in excess of the cost of capital did not maintain a linear relationship with revenue growth after 2022.
- Economic Profit Margin Compression
- The economic profit margin demonstrated a peak-and-decline pattern, rising from 5.67% in 2020 to a maximum of 11.07% in 2022. Subsequently, a downward trend emerged, with the margin retreating to 8.14% in 2023 and further to 7.14% in 2024. The divergence between increasing revenue and a declining margin suggests a reduction in the efficiency of economic value generation relative to sales volume.
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