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 – 18.46% × 16,745 = -965
The analysis of economic profit from 2017 to 2021 reveals a consistent trend of negative economic value added, indicating that the returns generated by the operating assets were insufficient to cover the associated cost of capital throughout the entire period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated significant volatility over the five-year period. After an initial increase from US$ 1,630 million in 2017 to US$ 2,196 million in 2018, a sharp contraction occurred, with values plummeting to US$ 303 million in 2019 and reaching a nadir of US$ 40 million in 2020. However, a strong recovery was observed in 2021, as NOPAT surged back to US$ 2,126 million.
- Invested Capital and Cost of Capital
- Invested capital followed a general downward trajectory for the majority of the period, decreasing from US$ 20,519 million in 2017 to a low of US$ 16,335 million in 2020, before a slight increase to US$ 16,745 million in 2021. During this time, the cost of capital remained relatively stable and high, fluctuating within a narrow range between 17.91% and 19.19%.
- Economic Profit Trends
- Economic profit remained negative across all reporting years, reflecting a persistent destruction of economic value. The deficit narrowed in 2018 to -US$ 1,029 million but widened significantly during the NOPAT collapse of 2019 and 2020, peaking at a loss of -US$ 3,095 million in 2020. By 2021, the recovery in operating profit led to a reduction in the economic loss, which improved to -US$ 965 million, although it remained below the break-even threshold.
The data suggests that while operational profitability recovered strongly by 2021, the high cost of capital continues to act as a significant barrier to achieving positive economic profit. The magnitude of the economic loss is heavily influenced by the fluctuations in NOPAT rather than changes in the invested capital base or the cost of capital.
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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 $16,745 million, which could reflect either asset acquisition or other forms of reinvestment. Despite the modest recovery, the overall trend indicates contraction in invested capital over the period analyzed.
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Cost of Capital
NXP Semiconductors N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 50,255) | 50,255) | ÷ | 61,792) | = | 0.81 | 0.81 | × | 22.07% | = | 17.95% | ||
| Current and non-current debt3 | 11,300) | 11,300) | ÷ | 61,792) | = | 0.18 | 0.18 | × | 3.72% × (1 – 25.00%) | = | 0.51% | ||
| Operating lease liability4 | 237) | 237) | ÷ | 61,792) | = | 0.00 | 0.00 | × | 2.00% × (1 – 25.00%) | = | 0.01% | ||
| Total: | 61,792) | 1.00 | 18.46% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ 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 | × | 22.07% | = | 18.72% | ||
| 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 | 19.19% | ||||||||||
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 | × | 22.07% | = | 17.59% | ||
| 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 | 18.26% | ||||||||||
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 | × | 22.07% | = | 17.26% | ||
| 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 | 17.91% | ||||||||||
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 | × | 22.07% | = | 18.68% | ||
| 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 | 19.11% | ||||||||||
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 | (965) | (3,095) | (2,793) | (1,029) | (2,292) | |
| Invested capital2 | 16,745) | 16,335) | 16,952) | 18,006) | 20,519) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.77% | -18.95% | -16.47% | -5.71% | -11.17% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 27.68% | — | — | — | — | |
| Analog Devices Inc. | -14.62% | -9.56% | — | — | — | |
| Applied Materials Inc. | 18.58% | 6.93% | — | — | — | |
| Broadcom Inc. | -5.62% | -10.84% | — | — | — | |
| Intel Corp. | 3.43% | — | — | — | — | |
| KLA Corp. | 12.10% | 1.14% | — | — | — | |
| Lam Research Corp. | 14.87% | -0.82% | — | — | — | |
| Micron Technology Inc. | -6.67% | -12.11% | — | — | — | |
| NVIDIA Corp. | 6.22% | — | — | — | — | |
| Qualcomm Inc. | 24.01% | 9.08% | — | — | — | |
| Texas Instruments Inc. | 31.62% | — | — | — | — | |
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 × -965 ÷ 16,745 = -5.77%
4 Click competitor name to see calculations.
Between 2017 and 2021, the organization consistently operated with a negative economic profit, indicating that the returns generated on invested capital were insufficient to cover the cost of that capital. While the magnitude of these losses fluctuated, the economic spread ratio remained negative throughout the entire five-year period, signaling a persistent failure to create economic value.
- Economic Profit Trends
- Economic profit exhibited significant volatility, starting at negative 2,292 million USD in 2017. A temporary improvement occurred in 2018, with losses narrowing to 1,029 million USD, before a downward trend led to a peak deficit of 3,095 million USD in 2020. A substantial recovery was observed in 2021, as economic profit improved to its highest level in the period at negative 965 million USD.
- Invested Capital Dynamics
- A steady reduction in invested capital was observed from 2017 through 2020, decreasing from 20,519 million USD to 16,335 million USD. This trend suggests a contraction of the capital base or a strategic effort to optimize assets. However, this downward trajectory reversed slightly in 2021, with invested capital increasing to 16,745 million USD.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of the economic profit, reflecting the spread between the return on invested capital and the cost of capital. The ratio improved from -11.17% in 2017 to -5.71% in 2018, followed by a sharp decline to its lowest point of -18.95% in 2020. By 2021, the ratio recovered significantly to -5.77%, nearly returning to the levels seen in 2018, although it remained in negative territory.
The correlation between the decreasing invested capital and the fluctuating economic spread ratio suggests that the reduction in the capital base was not sufficient to offset the operational factors driving the negative economic profit. The sharp recovery in both economic profit and the spread ratio in 2021 indicates a significant improvement in capital efficiency or operational performance relative to the cost of capital toward the end of the analyzed period.
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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 | (965) | (3,095) | (2,793) | (1,029) | (2,292) | |
| Revenue | 11,063) | 8,612) | 8,877) | 9,407) | 9,256) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -8.73% | -35.94% | -31.46% | -10.94% | -24.76% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | 10.44% | — | — | — | — | |
| Analog Devices Inc. | -93.91% | -31.07% | — | — | — | |
| Applied Materials Inc. | 11.86% | 5.28% | — | — | — | |
| Broadcom Inc. | -13.23% | -29.93% | — | — | — | |
| Intel Corp. | 3.84% | — | — | — | — | |
| KLA Corp. | 11.92% | 1.28% | — | — | — | |
| Lam Research Corp. | 12.00% | -0.96% | — | — | — | |
| Micron Technology Inc. | -11.15% | -23.89% | — | — | — | |
| NVIDIA Corp. | 4.86% | — | — | — | — | |
| Qualcomm Inc. | 14.46% | 6.85% | — | — | — | |
| Texas Instruments Inc. | 28.28% | — | — | — | — | |
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 × -965 ÷ 11,063 = -8.73%
3 Click competitor name to see calculations.
The financial performance regarding economic value added from 2017 to 2021 is characterized by consistently negative economic profit, indicating that the returns generated did not exceed the company's cost of capital during this five-year period.
- Economic Profit Volatility
- Economic profit exhibited significant fluctuations, beginning at -2,292 million USD in 2017. While there was a brief improvement in 2018 to -1,029 million USD, the deficit widened again in 2019 and 2020, reaching a period low of -3,095 million USD. A substantial recovery was observed in 2021, with the economic profit improving to -965 million USD.
- Revenue Correlation
- Revenue levels remained relatively stable between 2017 and 2020, ranging from 8,612 million USD to 9,407 million USD. A significant increase in revenue occurred in 2021, reaching 11,063 million USD. This growth in top-line performance coincides with the most significant improvement in absolute economic profit seen in the analyzed period.
- Economic Profit Margin Trends
- The economic profit margin remained negative throughout the duration of the analysis. The margin showed an initial improvement from -24.76% in 2017 to -10.94% in 2018, followed by a sharp decline to -31.46% in 2019 and a further drop to -35.94% in 2020. In 2021, a strong corrective trend is evident, with the margin rising to -8.73%, marking the narrowest deficit in the recorded timeframe.
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