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
NXP Semiconductors N.V., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,126 – 18.54% × 16,745 = -979
An analysis of the economic profit from 2017 to 2021 reveals a consistent failure to generate positive economic value added. Throughout the five-year period, the net operating profit after taxes (NOPAT) remained insufficient to cover the cost of invested capital, resulting in negative economic profit in every fiscal year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited extreme volatility during the observed period. After an initial increase from 1,630 million USD in 2017 to 2,196 million USD in 2018, a severe contraction occurred, with values dropping to 303 million USD in 2019 and reaching a nadir of 40 million USD in 2020. A significant recovery was recorded in 2021, as NOPAT rebounded to 2,126 million USD.
- Cost of Capital and Invested Capital
- The cost of capital remained relatively stable, fluctuating within a narrow range between 17.99% and 19.28%. During the same period, invested capital followed a general downward trajectory, decreasing from 20,519 million USD in 2017 to 16,335 million USD in 2020, followed by a slight increase to 16,745 million USD in 2021. This reduction in the capital base served to lower the absolute capital charge, although not enough to offset the declines in NOPAT between 2019 and 2020.
- Economic Profit Trends
- Economic profit remained in negative territory for the entire duration. The deficit improved from -2,309 million USD in 2017 to -1,043 million USD in 2018, before deteriorating sharply to -2,806 million USD in 2019 and peaking at a loss of -3,109 million USD in 2020. By 2021, economic profit showed substantial improvement, narrowing the deficit to -979 million USD, driven primarily by the resurgence in operating profitability.
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Net Operating Profit after Taxes (NOPAT)
NXP Semiconductors N.V., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit loss.
3 Addition of increase (decrease) in restructuring liabilities.
4 Addition of increase (decrease) in equity equivalents to net income attributable to stockholders.
5 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 237 × 2.00% = 5
6 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 374 × 25.00% = 93
7 Addition of after taxes interest expense to net income attributable to stockholders.
8 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 4 × 25.00% = 1
9 Elimination of after taxes investment income.
The financial data reveals notable fluctuations in both net income attributable to stockholders and net operating profit after taxes (NOPAT) over the five-year period.
- Net Income Attributable to Stockholders
- From 2017 to 2018, net income remained relatively stable, showing a slight decline from 2215 million US dollars to 2208 million US dollars. In 2019, a significant drop occurred, with net income decreasing sharply to 243 million US dollars. This downward trend continued into 2020, reaching a low of 52 million US dollars. However, in 2021, there was a strong recovery, with net income rising substantially to 1871 million US dollars, approaching earlier peak levels.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a somewhat parallel trend to net income. It increased from 1630 million US dollars in 2017 to 2196 million US dollars in 2018. In 2019, NOPAT declined considerably to 303 million US dollars and further dropped to 40 million US dollars in 2020, highlighting a period of operational challenges. A notable rebound occurred in 2021, with NOPAT climbing to 2126 million US dollars, indicating significant operational improvement.
Overall, the data indicates a period of stability in the initial years, followed by a marked deterioration in financial performance in 2019 and 2020. The pronounced recovery in 2021 for both net income and NOPAT suggests a recovery phase, possibly driven by operational enhancements or favorable market conditions. The volatility observed could be indicative of external disruptions or internal restructuring efforts during the observed timeframe.
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Cash Operating Taxes
NXP Semiconductors N.V., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
The financial data for income tax expense (benefit) and cash operating taxes over the five-year period reveals notable fluctuations and trends.
- Income Tax Expense (Benefit)
- The income tax expense (benefit) displays significant variability. Starting with a benefit of $483 million in 2017, the company experienced a positive tax expense of $176 million in 2018, followed by a smaller expense of $20 million in 2019. In 2020, the tax expense reverted to a benefit of $83 million, before increasing sharply to an expense of $272 million in 2021. This volatility indicates fluctuations in taxable income or changes in tax strategies and could reflect variations in profitability or one-time tax adjustments across the years.
- Cash Operating Taxes
- Cash operating taxes show a relatively stable trend from 2017 to 2021, with values ranging from $275 million to $445 million. There was an increase from $386 million in 2017 to a peak of $445 million in 2018, followed by a decline to $275 million in 2019. The tax paid then rose again to $355 million in 2020 and $384 million in 2021. This pattern suggests that while the accounting income tax expense experienced fluctuations, the actual cash taxes paid remained consistently substantial, with some variability potentially influenced by operational results or tax payment timing.
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Invested Capital
NXP Semiconductors N.V., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
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 restructuring liabilities.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of prepayments and construction in progress.
8 Subtraction of marketable equity securities.
- Total reported debt & leases
- There is a noticeable upward trend in total reported debt and leases from 2017 to 2021. The figure increased steadily from $6,683 million in 2017 to $7,846 million in 2020, followed by a significant jump to $10,809 million in 2021. This represents a substantial rise in the company's leverage, particularly in the last reported year.
- Stockholders’ equity
- Stockholders’ equity shows a consistent decline over the five-year period. Starting at $13,527 million in 2017, equity decreased each year, reaching $6,528 million in 2021. This reduction suggests a diminishing net asset base, possibly impacted by accumulated losses, dividends, or repurchases, which may be cause for deeper examination into retained earnings and other equity changes.
- Invested capital
- Invested capital decreased from $20,519 million in 2017 to $16,335 million in 2020, indicating a reduction in the company’s total funds invested in operations. However, 2021 saw a slight increase to $16,745 million, which could reflect either asset acquisition or other forms of reinvestment. Despite the modest recovery, the overall trend indicates contraction in invested capital over the period analyzed.
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Cost of Capital
NXP Semiconductors N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 50,255) | 50,255) | ÷ | 61,792) | = | 0.81 | 0.81 | × | 22.17% | = | 18.03% | ||
| Current and non-current debt3 | 11,300) | 11,300) | ÷ | 61,792) | = | 0.18 | 0.18 | × | 3.72% × (1 – 25.00%) | = | 0.51% | ||
| Operating lease liability4 | 237) | 237) | ÷ | 61,792) | = | 0.00 | 0.00 | × | 2.00% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 61,792) | 1.00 | 18.54% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Current and non-current debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 49,452) | 49,452) | ÷ | 58,289) | = | 0.85 | 0.85 | × | 22.17% | = | 18.81% | ||
| Current and non-current debt3 | 8,600) | 8,600) | ÷ | 58,289) | = | 0.15 | 0.15 | × | 4.17% × (1 – 25.00%) | = | 0.46% | ||
| Operating lease liability4 | 237) | 237) | ÷ | 58,289) | = | 0.00 | 0.00 | × | 3.00% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 58,289) | 1.00 | 19.28% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Current and non-current debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 32,071) | 32,071) | ÷ | 40,231) | = | 0.80 | 0.80 | × | 22.17% | = | 17.67% | ||
| Current and non-current debt3 | 7,922) | 7,922) | ÷ | 40,231) | = | 0.20 | 0.20 | × | 4.46% × (1 – 25.00%) | = | 0.66% | ||
| Operating lease liability4 | 238) | 238) | ÷ | 40,231) | = | 0.01 | 0.01 | × | 3.10% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 40,231) | 1.00 | 18.34% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Current and non-current debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 27,595) | 27,595) | ÷ | 35,279) | = | 0.78 | 0.78 | × | 22.17% | = | 17.34% | ||
| Current and non-current debt3 | 7,545) | 7,545) | ÷ | 35,279) | = | 0.21 | 0.21 | × | 3.97% × (1 – 25.00%) | = | 0.64% | ||
| Operating lease liability4 | 138) | 138) | ÷ | 35,279) | = | 0.00 | 0.00 | × | 3.97% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 35,279) | 1.00 | 17.99% | ||||||||||
Based on: 20-F (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Current and non-current debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 39,738) | 39,738) | ÷ | 46,937) | = | 0.85 | 0.85 | × | 22.17% | = | 18.77% | ||
| Current and non-current debt3 | 7,081) | 7,081) | ÷ | 46,937) | = | 0.15 | 0.15 | × | 3.72% × (1 – 25.00%) | = | 0.42% | ||
| Operating lease liability4 | 118) | 118) | ÷ | 46,937) | = | 0.00 | 0.00 | × | 3.72% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 46,937) | 1.00 | 19.20% | ||||||||||
Based on: 20-F (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Current and non-current debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
NXP Semiconductors N.V., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (979) | (3,109) | (2,806) | (1,043) | (2,309) | |
| Invested capital2 | 16,745) | 16,335) | 16,952) | 18,006) | 20,519) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.85% | -19.03% | -16.55% | -5.79% | -11.25% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 27.67% | — | — | — | — | |
| Analog Devices Inc. | -14.75% | -9.69% | — | — | — | |
| Applied Materials Inc. | 18.51% | 6.87% | — | — | — | |
| Broadcom Inc. | -5.73% | -10.95% | — | — | — | |
| Intel Corp. | 3.35% | — | — | — | — | |
| KLA Corp. | 11.99% | 1.04% | — | — | — | |
| Lam Research Corp. | 14.80% | -0.90% | — | — | — | |
| Micron Technology Inc. | -6.77% | -12.20% | — | — | — | |
| NVIDIA Corp. | 6.18% | — | — | — | — | |
| Qualcomm Inc. | 23.91% | 8.98% | — | — | — | |
| Texas Instruments Inc. | 31.47% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -979 ÷ 16,745 = -5.85%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by a persistent inability to generate positive economic value, as economic profit remained negative throughout the period. Despite this, a significant trend toward recovery in value creation efficiency is observable by the end of the sequence.
- Invested Capital Trends
- A consistent downward trajectory in invested capital was observed from 2017, where it stood at 20,519 million USD, through 2020, when it reached a minimum of 16,335 million USD. This period of contraction suggests a reduction or optimization of the capital base. A slight reversal occurred in 2021, with invested capital increasing to 16,745 million USD.
- Economic Profit Volatility
- Economic profit exhibited significant fluctuation, beginning at -2,309 million USD in 2017 and improving to -1,043 million USD in 2018. A subsequent deterioration occurred between 2019 and 2020, with the deficit widening to its maximum of -3,109 million USD. A sharp recovery was recorded in 2021, with the deficit narrowing to -979 million USD, representing the highest level of economic profit within the analyzed timeframe.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all five years, confirming that the return on invested capital failed to exceed the cost of capital. The ratio shifted from -11.25% in 2017 to a peak negative value of -19.03% in 2020. The movement to -5.85% in 2021 indicates a substantial narrowing of the gap between actual returns and the required return, although a positive spread has not yet been achieved.
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Economic Profit Margin
NXP Semiconductors N.V., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (979) | (3,109) | (2,806) | (1,043) | (2,309) | |
| Revenue | 11,063) | 8,612) | 8,877) | 9,407) | 9,256) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -8.85% | -36.10% | -31.61% | -11.09% | -24.95% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | 10.43% | — | — | — | — | |
| Analog Devices Inc. | -94.78% | -31.50% | — | — | — | |
| Applied Materials Inc. | 11.81% | 5.22% | — | — | — | |
| Broadcom Inc. | -13.49% | -30.22% | — | — | — | |
| Intel Corp. | 3.75% | — | — | — | — | |
| KLA Corp. | 11.82% | 1.16% | — | — | — | |
| Lam Research Corp. | 11.93% | -1.04% | — | — | — | |
| Micron Technology Inc. | -11.32% | -24.08% | — | — | — | |
| NVIDIA Corp. | 4.83% | — | — | — | — | |
| Qualcomm Inc. | 14.40% | 6.77% | — | — | — | |
| Texas Instruments Inc. | 28.15% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 20-F (reporting date: 2018-12-31), 20-F (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -979 ÷ 11,063 = -8.85%
3 Click competitor name to see calculations.
An analysis of the economic performance from 2017 to 2021 reveals that the organization consistently operated with a negative economic profit margin, indicating that the net operating profit after taxes was insufficient to cover the cost of capital employed during this period. The margin exhibited significant volatility, characterized by a period of deterioration followed by a substantial recovery in the final year.
- Economic Profit Trends
- The economic profit remained negative throughout the five-year window. After an initial improvement in 2018, where the deficit narrowed to -1,043 million USD, a downward trajectory was observed through 2020, reaching a peak deficit of -3,109 million USD. A significant reversal occurred in 2021, with the economic profit improving to -979 million USD, marking the lowest deficit within the analyzed timeframe.
- Revenue Correlation
- Revenue levels showed a general decline between 2018 and 2020, falling from 9,407 million USD to 8,612 million USD. This contraction in top-line growth coincided with the widening of the economic profit deficit. Conversely, a sharp increase in revenue to 11,063 million USD in 2021 acted as a primary driver for the recovery of the economic profit margin.
- Economic Profit Margin Analysis
- The economic profit margin fluctuated considerably, starting at -24.95% in 2017 and improving to -11.09% in 2018. The margin then deteriorated sharply over the next two years, reaching a low of -36.10% in 2020. This decline suggests a period where the cost of capital significantly outweighed the generated returns relative to revenue. The period concluded with a notable recovery in 2021, as the margin improved to -8.85%, demonstrating a stronger alignment between revenue growth and capital efficiency.
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