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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

NXP Semiconductors N.V., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	2,126)	40)	303)	2,196)	1,630)
Cost of capital²	14.15%	14.69%	14.03%	13.76%	14.62%
Invested capital³	16,745)	16,335)	16,952)	18,006)	20,519)

Economic profit⁴	(243)	(2,360)	(2,076)	(282)	(1,370)

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 – 14.15% × 16,745 = -243

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	NXP Semiconductors N.V. economic profit decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

NXP Semiconductors N.V., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income attributable to stockholders	1,871)	52)	243)	2,208)	2,215)
Deferred income tax expense (benefit)¹	(20)	(349)	(175)	(211)	(797)
Increase (decrease) in allowance for credit loss²	—)	—)	(1)	—)	1)
Increase (decrease) in restructuring liabilities³	(37)	42)	(33)	(24)	(62)
Increase (decrease) in equity equivalents⁴	(57)	(307)	(209)	(235)	(858)
Interest expense	369)	362)	370)	273)	310)
Interest expense, operating lease liability⁵	5)	7)	7)	5)	4)
Adjusted interest expense	374)	369)	377)	278)	314)
Tax benefit of interest expense⁶	(93)	(92)	(94)	(70)	(79)
Adjusted interest expense, after taxes⁷	280)	277)	283)	209)	236)
Interest income	(4)	(13)	(57)	(48)	(27)
Investment income, before taxes	(4)	(13)	(57)	(48)	(27)
Tax expense (benefit) of investment income⁸	1)	3)	14)	12)	7)
Investment income, after taxes⁹	(3)	(10)	(43)	(36)	(20)
Net income (loss) attributable to noncontrolling interest	35)	28)	29)	50)	57)
Net operating profit after taxes (NOPAT)	2,126)	40)	303)	2,196)	1,630)

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.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	NXP Semiconductors N.V. NOPAT decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

NXP Semiconductors N.V., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Income tax expense (benefit)	272)	(83)	20)	176)	(483)
Less: Deferred income tax expense (benefit)	(20)	(349)	(175)	(211)	(797)
Add: Tax savings from interest expense	93)	92)	94)	70)	79)
Less: Tax imposed on investment income	1)	3)	14)	12)	7)
Cash operating taxes	384)	355)	275)	445)	386)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	NXP Semiconductors N.V. cash operating taxes increased from 2019 to 2020 and from 2020 to 2021.

NXP Semiconductors N.V., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Short-term debt	—)	—)	—)	1,107)	751)
Long-term debt	10,572)	7,609)	7,365)	6,247)	5,814)
Operating lease liability¹	237)	237)	238)	138)	118)
Total reported debt & leases	10,809)	7,846)	7,603)	7,492)	6,683)
Stockholders’ equity	6,528)	8,944)	9,441)	10,505)	13,527)
Net deferred tax (assets) liabilities²	(384)	(392)	(11)	157)	377)
Allowance for credit loss³	2)	2)	2)	3)	3)
Restructuring liabilities⁴	37)	74)	32)	65)	89)
Equity equivalents⁵	(345)	(316)	23)	225)	469)
Accumulated other comprehensive (income) loss, net of tax⁶	(48)	(117)	(75)	(123)	(177)
Non-controlling interests	242)	207)	214)	185)	189)
Adjusted stockholders’ equity	6,377)	8,718)	9,603)	10,792)	14,008)
Prepayments and construction in progress⁷	(423)	(210)	(253)	(278)	(172)
Marketable equity securities⁸	(18)	(19)	(1)	—)	—)
Invested capital	16,745)	16,335)	16,952)	18,006)	20,519)

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.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	NXP Semiconductors N.V. invested capital decreased from 2019 to 2020 but then increased from 2020 to 2021 not reaching 2019 level.

NXP Semiconductors N.V., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	50,255)	50,255)	÷	61,792)	=	0.81	0.81	×	16.76%	=	13.63%
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					14.15%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,452)	49,452)	÷	58,289)	=	0.85	0.85	×	16.76%	=	14.22%
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					14.69%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	32,071)	32,071)	÷	40,231)	=	0.80	0.80	×	16.76%	=	13.36%
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					14.03%

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 »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	27,595)	27,595)	÷	35,279)	=	0.78	0.78	×	16.76%	=	13.11%
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					13.76%

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 »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,738)	39,738)	÷	46,937)	=	0.85	0.85	×	16.76%	=	14.19%
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					14.62%

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 »

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	(243)	(2,360)	(2,076)	(282)	(1,370)
Invested capital²	16,745)	16,335)	16,952)	18,006)	20,519)
Performance Ratio
Economic spread ratio³	-1.45%	-14.45%	-12.25%	-1.56%	-6.68%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	37.85%	11.60%	-6.54%	—	—
Analog Devices Inc.	-11.45%	-6.51%	-4.97%	-7.76%	—
Applied Materials Inc.	24.49%	12.66%	12.28%	20.35%	—
Broadcom Inc.	-1.30%	-6.86%	-6.56%	-2.34%	—
Intel Corp.	10.39%	16.06%	14.15%	—	—
KLA Corp.	16.19%	5.02%	6.51%	24.68%	—
Lam Research Corp.	25.64%	8.64%	5.18%	10.34%	—
Micron Technology Inc.	-2.13%	-7.74%	2.44%	25.04%	—
NVIDIA Corp.	13.80%	-0.19%	60.40%	—	—
ON Semiconductor Corp.	-1.97%	-13.28%	-9.85%	—	—
Qualcomm Inc.	27.65%	12.69%	14.07%	-30.60%	—
Texas Instruments Inc.	35.05%	30.21%	29.89%	—	—

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 × -243 ÷ 16,745 = -1.45%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	NXP Semiconductors N.V. economic spread ratio deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

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	(243)	(2,360)	(2,076)	(282)	(1,370)
Revenue	11,063)	8,612)	8,877)	9,407)	9,256)
Performance Ratio
Economic profit margin²	-2.19%	-27.40%	-23.38%	-2.99%	-14.80%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	14.27%	5.18%	-3.31%	—	—
Analog Devices Inc.	-73.56%	-21.15%	-15.23%	-23.31%	—
Applied Materials Inc.	15.63%	9.64%	8.52%	12.02%	—
Broadcom Inc.	-3.06%	-18.93%	-17.42%	-5.00%	—
Intel Corp.	11.64%	16.91%	15.85%	—	—
KLA Corp.	15.95%	5.63%	9.09%	16.00%	—
Lam Research Corp.	18.31%	8.46%	4.52%	9.00%	—
Micron Technology Inc.	-3.57%	-15.27%	4.04%	29.17%	—
NVIDIA Corp.	10.79%	-0.25%	24.66%	—	—
ON Semiconductor Corp.	-2.20%	-17.42%	-12.24%	—	—
Qualcomm Inc.	16.65%	9.57%	12.43%	-25.32%	—
Texas Instruments Inc.	31.36%	27.08%	25.05%	—	—

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 × -243 ÷ 11,063 = -2.19%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	NXP Semiconductors N.V. economic profit margin deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

NXP Semiconductors N.V. (NASDAQ:NXPI)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin