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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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NVIDIA Corp. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Economic Profit
12 months ended: | Jan 26, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Jan 26, 2020 | |
---|---|---|---|---|---|---|---|
Net operating profit after taxes (NOPAT)1 | |||||||
Cost of capital2 | |||||||
Invested capital3 | |||||||
Economic profit4 |
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals significant fluctuations and growth across the analyzed periods, reflecting varying operational and capital efficiency conditions.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced an overall upward trend with notable volatility. Starting at 2,792 million USD in early 2020, it more than tripled to 9,602 million USD by early 2022, followed by a sharp decline to 2,334 million USD in early 2023. Subsequently, it surged dramatically to 27,819 million USD in early 2024 and further increased to 68,707 million USD by early 2025. This pattern indicates strong growth potential, albeit with periods of operational challenge or fluctuation.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating only slightly within a narrow range around 21.3% to 21.7%. This stability suggests consistent market or company-specific risk assessments and capital structure during the timeframe.
- Invested Capital
- The invested capital shows a steady growth trend, beginning at 14,224 million USD in 2020 and increasing consistently each year to reach 47,433 million USD by 2025. The growth in invested capital suggests expansion in assets or resources deployed to generate returns.
- Economic Profit
- Economic profit demonstrated significant volatility but an overall strong upward trajectory toward later periods. Initially, there was a slight economic loss of 260 million USD in 2020, followed by meaningful positive economic profits reaching 5,737 million USD in 2022. A decline into negative territory occurred again in 2023, with a loss of 2,238 million USD. However, economic profit rebounded strongly, surging to 21,085 million USD in 2024 and further to 58,422 million USD in 2025. This reflects periods where returns exceeded or fell short of the cost of capital, with recent years indicating substantial value creation.
Overall, the data highlights a company experiencing rapid expansion and increasing value generation capabilities, punctuated by intervals of operational and economic challenges. The stable cost of capital alongside rising invested capital and pronounced increases in both NOPAT and economic profit in the latest periods suggest enhanced efficiency and profitability moving forward.
Net Operating Profit after Taxes (NOPAT)
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in accrual for product warranty liabilities.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income.
9 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
The financial data reveals significant fluctuations and overall growth in key profitability metrics over the observed periods.
- Net Income
- The net income shows a general upward trend from January 26, 2020, to January 26, 2025, starting at $2,796 million and increasing markedly to $72,880 million. A notable surge occurs between January 29, 2023 ($4,368 million) and January 28, 2024 ($29,760 million), followed by a further sharp increase to $72,880 million in the subsequent period. Despite a dip after January 30, 2022 ($9,752 million) down to $4,368 million by January 29, 2023, the overall trajectory is strongly positive.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT values follow a similar pattern to net income, starting at $2,792 million in January 26, 2020 and increasing substantially by January 26, 2025 to $68,707 million. This metric also exhibits a decline from $9,602 million in January 30, 2022 to $2,334 million in January 29, 2023, before recovering dramatically to $27,819 million in January 28, 2024 and continuing to grow significantly in the final period.
Overall, the data indicates periods of volatility around early 2023, with decreases in profitability metrics, followed by a strong recovery and exceptional growth leading into 2024 and 2025. This suggests that while the company experienced some operational and financial challenges in the mid-period, it managed to capitalize on conditions or strategic initiatives leading to a substantial increase in profitability towards the end of the analysis window.
Cash Operating Taxes
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
- Income tax expense (benefit)
- Over the analyzed periods, the income tax expense exhibits a volatile trend. Initially, it decreased from 174 million US dollars in early 2020 to 77 million in early 2021, followed by an increase to 189 million in early 2022. The figure then shifted to a negative value (-187 million) in early 2023, indicating a tax benefit during that year. Subsequently, there was a sharp and substantial increase to 4,058 million in early 2024, which further escalated to 11,146 million in early 2025, reflecting significantly rising tax expenses in the most recent years.
- Cash operating taxes
- Cash operating taxes demonstrate a consistent and pronounced upward trend throughout the period. Starting at 134 million US dollars in early 2020, the cash taxes increased steadily each year, reaching 390 million in 2021, 643 million in 2022, and 1,983 million in 2023. The upward trajectory accelerates substantially in the final years analyzed, with cash operating taxes rising to 6,430 million in early 2024 and then more than doubling to 15,316 million by early 2025. This indicates a growing cash tax outflow from operations over the years under review.
Invested Capital
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of accrual for product warranty liabilities.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in process.
9 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases demonstrated a marked increase from 2,643 million USD in early 2020 to a peak of 12,031 million USD by early 2023, reflecting a significant rise in financial obligations over this period. Subsequently, a downward trend is observed, with the amount decreasing to 11,056 million USD in early 2024 and further to 10,270 million USD by early 2025. Despite this recent reduction, the debt level remains substantially elevated compared to the 2020 baseline.
- Shareholders’ Equity
- Shareholders’ equity exhibited strong and consistent growth throughout the timeframe. Starting at 12,204 million USD in early 2020, it increased to 16,893 million USD by early 2021, followed by a substantial surge to 26,612 million USD in early 2022. While a slight decline occurred in early 2023, falling to 22,101 million USD, equity then rose sharply to 42,978 million USD in 2024 and reached an impressive 79,327 million USD by early 2025. This upward trajectory indicates a significant accumulation of net assets and possibly improved retained earnings or capital inflows.
- Invested Capital
- Invested capital showed fluctuation early in the period, declining from 14,224 million USD in early 2020 to 13,232 million USD in early 2021 before ascending steadily to 18,075 million USD in early 2022. This growth continued, reaching 21,396 million USD in early 2023, followed by a notable increase to 31,144 million USD in 2024. The trend culminated with a substantial rise to 47,433 million USD by early 2025. This progression implies increased investment in operational assets or expansion activities over time.
- Summary
- Overall, the data reveal a strategy characterized by elevated leveraging during the initial years, followed by gradual deleveraging beginning in 2023. Concurrently, both shareholders’ equity and invested capital have grown robustly, with equity growth outpacing that of debt, indicating strengthening financial stability and capital base. The significant rise in invested capital aligns with the reported equity increase, suggesting sustained investment in growth and asset development. These patterns collectively point to an expansion phase supported by increased capital investments alongside active management of debt levels.
Cost of Capital
NVIDIA Corp., cost of capital calculations
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2025-01-26).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2024-01-28).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2023-01-29).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2022-01-30).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2021-01-31).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | ÷ | = | × | = | |||||||||
Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
Total: |
Based on: 10-K (reporting date: 2020-01-26).
1 US$ in millions
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Jan 26, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Jan 26, 2020 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
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. | |||||||
Qualcomm Inc. | |||||||
Texas Instruments Inc. |
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trend
- The economic profit experienced significant fluctuations over the reported periods. Starting with a loss of 260 million US dollars in early 2020, it improved markedly to 1611 million by early 2021 and further increased to 5737 million in early 2022. However, there was a substantial reversal in early 2023 with a loss of 2238 million, followed by strong recoveries in 2024 and 2025, reaching 21085 million and 58422 million respectively. This pattern indicates considerable volatility with significant growth in certain years despite notable setbacks.
- Invested Capital Trend
- Invested capital showed a steady upward movement over the periods. Beginning at 14224 million US dollars in early 2020, it slightly decreased to 13232 million in early 2021, but from 2022 onwards it increased consistently each year, reaching 47433 million by early 2025. The growth in invested capital suggests increased resource allocation or asset base expansion over time.
- Economic Spread Ratio Trend
- The economic spread ratio followed a pattern similar to the economic profit, illustrating volatility alongside overall growth. It was negative at -1.83% in early 2020, rose significantly to 12.18% in early 2021 and further to 31.74% in early 2022. In early 2023, it again became negative at -10.46%, followed by a sharp increase to 67.7% in 2024 and further to 123.17% in 2025. This indicates fluctuating profitability relative to invested capital, with recent years showing notably enhanced value generation relative to capital invested.
- Summary of Financial Performance
- The data reveal periods of strong economic profitability interspersed with declines, suggesting exposure to fluctuating market or operational conditions. Despite this, the substantial increase in invested capital and an improving economic spread ratio in recent years indicate a positive strategic investment stance and improved efficiency in capital use. The recent upward trends in both economic profit and economic spread ratio demonstrate strengthened financial performance and value creation capability.
Economic Profit Margin
Jan 26, 2025 | Jan 28, 2024 | Jan 29, 2023 | Jan 30, 2022 | Jan 31, 2021 | Jan 26, 2020 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Economic profit1 | |||||||
Revenue | |||||||
Add: Increase (decrease) in deferred revenue | |||||||
Adjusted 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. | |||||||
Qualcomm Inc. | |||||||
Texas Instruments Inc. |
Based on: 10-K (reporting date: 2025-01-26), 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-01-26).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenue
- Adjusted revenue has shown a consistent and substantial upward trend over the analyzed periods. Starting from approximately $10.98 billion in January 2020, it nearly doubled by January 2021 to around $16.93 billion, followed by a significant increase to about $26.97 billion in January 2022. Revenue remained relatively stable between January 2022 and January 2023, with a slight increase from $26.97 billion to $27.04 billion. Thereafter, revenue surged dramatically, reaching approximately $61.69 billion in January 2024 and more than doubling again to $130.97 billion by January 2025. This demonstrates strong growth momentum, especially notable in the last two years.
- Economic Profit
- The economic profit exhibits considerable volatility across the periods. It begins with a negative value of approximately -$260 million in January 2020, shifting dramatically to a positive $1.61 billion in January 2021. The profit continued to grow substantially to $5.74 billion by January 2022 but reverted to a negative figure of around -$2.24 billion in January 2023. Following this downturn, the economic profit experienced a sharp and significant rebound to $21.09 billion in January 2024 and reached an impressive $58.42 billion in January 2025. The fluctuations suggest varying operational efficiency or external factors impacting profitability, but the latest two years reflect robust economic value creation.
- Economic Profit Margin
- The economic profit margin closely mirrors the trends observed in economic profit. It progressed from a negative margin of -2.37% in January 2020 to a positive 9.52% in January 2021, further increasing to 21.28% in January 2022. A decline occurs with the margin dropping to -8.28% in January 2023, indicating a period of reduced profitability or increased costs relative to revenue. Subsequently, the margin surged to 34.18% in January 2024 and reached 44.61% by January 2025, reflecting improved profitability and efficient utilization of revenue to generate economic profit.
- Overall Insights
- The data reflects a trajectory of robust revenue growth accompanied by significant fluctuations in economic profitability. The initial years indicate growing revenue with mixed profitability outcomes, including periods of negative economic profit and margin. However, the most recent years show a remarkable turnaround with substantial increases in both absolute economic profit and profit margins, suggesting enhanced operational performance or strategic improvements. The sharp increases in adjusted revenue coupled with strong economic profit margins point towards improved financial health and effective value creation in the latter periods.