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

Synopsys Inc., economic profit calculation

US$ in thousands

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Net operating profit after taxes (NOPAT)¹	891,268)	1,357,350)	800,432)	774,053)	489,829)	352,472)
Cost of capital²	14.58%	14.51%	14.52%	14.45%	14.17%	13.56%
Invested capital³	8,083,758)	7,739,574)	6,945,230)	6,656,460)	5,864,612)	5,535,296)

Economic profit⁴	(287,055)	234,178)	(207,974)	(187,706)	(340,947)	(397,887)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 891,268 – 14.58% × 8,083,758 = -287,055

Download chart

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.	Synopsys Inc. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Synopsys Inc., NOPAT calculation

US$ in thousands

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Net income attributed to Synopsys	1,229,888)	984,594)	757,516)	664,347)	532,367)	432,518)
Deferred income tax expense (benefit)¹	(211,045)	(36,913)	(128,583)	(111,526)	(82,620)	(210,310)
Increase (decrease) in allowance for credit losses²	13,169)	(1,127)	2,116)	19,518)	3,433)	448)
Increase (decrease) in deferred revenue³	(114,166)	411,368)	160,813)	190,535)	32,857)	121,941)
Increase (decrease) in equity equivalents⁴	(312,042)	373,328)	34,346)	98,527)	(46,330)	(87,921)
Interest expense	1,178)	1,698)	3,365)	5,140)	11,659)	15,607)
Interest expense, operating lease liability⁵	16,743)	13,918)	11,390)	13,711)	—)	—)
Adjusted interest expense	17,921)	15,616)	14,755)	18,851)	11,659)	15,607)
Tax benefit of interest expense⁶	(3,763)	(3,279)	(3,099)	(3,959)	(2,448)	(3,655)
Adjusted interest expense, after taxes⁷	14,158)	12,337)	11,657)	14,892)	9,211)	11,952)
Interest income	(36,674)	(8,545)	(2,442)	(3,561)	(6,859)	(5,323)
Investment income, before taxes	(36,674)	(8,545)	(2,442)	(3,561)	(6,859)	(5,323)
Tax expense (benefit) of investment income⁸	7,702)	1,794)	513)	748)	1,440)	1,247)
Investment income, after taxes⁹	(28,972)	(6,751)	(1,929)	(2,813)	(5,419)	(4,076)
Net income (loss) attributable to noncontrolling interest	(11,763)	(6,158)	(1,157)	(900)	—)	—)
Net operating profit after taxes (NOPAT)	891,268)	1,357,350)	800,432)	774,053)	489,829)	352,472)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income attributed to Synopsys.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 669,725 × 2.50% = 16,743

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 17,921 × 21.00% = 3,763

⁷ Addition of after taxes interest expense to net income attributed to Synopsys.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 36,674 × 21.00% = 7,702

⁹ Elimination of after taxes investment income.

Download chart

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.	Synopsys Inc. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Synopsys Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Provision (benefit) for income taxes	83,657)	137,078)	49,155)	(25,288)	13,139)	(68,975)
Less: Deferred income tax expense (benefit)	(211,045)	(36,913)	(128,583)	(111,526)	(82,620)	(210,310)
Add: Tax savings from interest expense	3,763)	3,279)	3,099)	3,959)	2,448)	3,655)
Less: Tax imposed on investment income	7,702)	1,794)	513)	748)	1,440)	1,247)
Cash operating taxes	290,764)	175,476)	180,324)	89,449)	96,767)	143,744)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

Download chart

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.	Synopsys Inc. cash operating taxes decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Synopsys Inc., invested capital calculation (financing approach)

US$ in thousands

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Short-term debt	—)	—)	74,992)	27,084)	17,614)	343,769)
Long-term debt	18,078)	20,824)	25,094)	100,823)	120,093)	125,535)
Operating lease liability¹	669,725)	635,547)	566,681)	535,584)	622,599)	589,900)
Total reported debt & leases	687,803)	656,371)	666,767)	663,491)	760,306)	1,059,204)
Total Synopsys stockholders’ equity	6,147,308)	5,515,725)	5,295,137)	4,907,404)	4,083,013)	3,479,152)
Net deferred tax (assets) liabilities²	(826,971)	(657,198)	(606,741)	(495,149)	(388,641)	(397,434)
Allowance for credit losses³	42,722)	29,553)	30,680)	28,564)	9,046)	5,613)
Deferred revenue⁴	1,951,128)	2,065,294)	1,653,926)	1,493,113)	1,302,578)	1,269,721)
Equity equivalents⁵	1,166,879)	1,437,649)	1,077,865)	1,026,528)	922,983)	877,900)
Accumulated other comprehensive (income) loss, net of tax⁶	196,414)	234,277)	49,604)	54,074)	92,447)	113,177)
Redeemable non-controlling interest	31,043)	38,664)	—)	—)	—)	—)
Non-controlling interest	5,950)	4,801)	3,806)	4,963)	5,863)	5,863)
Adjusted total Synopsys stockholders’ equity	7,547,594)	7,231,116)	6,426,412)	5,992,969)	5,104,306)	4,476,092)
Short-term investments⁷	(151,639)	(147,913)	(147,949)	—)	—)	—)
Invested capital	8,083,758)	7,739,574)	6,945,230)	6,656,460)	5,864,612)	5,535,296)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

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 deferred revenue.

⁵ Addition of equity equivalents to total Synopsys stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of short-term investments.

Download chart

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Synopsys Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Synopsys Inc., cost of capital calculations

Oct 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	86,185,679)	86,185,679)	÷	86,873,482)	=	0.99	0.99	×	14.68%	=	14.56%
Debt³	18,078)	18,078)	÷	86,873,482)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	669,725)	669,725)	÷	86,873,482)	=	0.01	0.01	×	2.50% × (1 – 21.00%)	=	0.02%
Total:	86,873,482)					1.00					14.58%

Based on: 10-K (reporting date: 2023-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	50,959,165)	50,959,165)	÷	51,615,536)	=	0.99	0.99	×	14.68%	=	14.49%
Debt³	20,824)	20,824)	÷	51,615,536)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	635,547)	635,547)	÷	51,615,536)	=	0.01	0.01	×	2.19% × (1 – 21.00%)	=	0.02%
Total:	51,615,536)					1.00					14.51%

Based on: 10-K (reporting date: 2022-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,579,968)	55,579,968)	÷	56,246,735)	=	0.99	0.99	×	14.68%	=	14.50%
Debt³	100,086)	100,086)	÷	56,246,735)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	566,681)	566,681)	÷	56,246,735)	=	0.01	0.01	×	2.01% × (1 – 21.00%)	=	0.02%
Total:	56,246,735)					1.00					14.52%

Based on: 10-K (reporting date: 2021-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	37,147,108)	37,147,108)	÷	37,810,599)	=	0.98	0.98	×	14.68%	=	14.42%
Debt³	127,907)	127,907)	÷	37,810,599)	=	0.00	0.00	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	535,584)	535,584)	÷	37,810,599)	=	0.01	0.01	×	2.56% × (1 – 21.00%)	=	0.03%
Total:	37,810,599)					1.00					14.45%

Based on: 10-K (reporting date: 2020-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	21,056,819)	21,056,819)	÷	21,817,125)	=	0.97	0.97	×	14.68%	=	14.17%
Debt³	137,707)	137,707)	÷	21,817,125)	=	0.01	0.01	×	0.00% × (1 – 21.00%)	=	0.00%
Operating lease liability⁴	622,599)	622,599)	÷	21,817,125)	=	0.03	0.03	×	0.00% × (1 – 21.00%)	=	0.00%
Total:	21,817,125)					1.00					14.17%

Based on: 10-K (reporting date: 2019-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	12,802,970)	12,802,970)	÷	13,862,174)	=	0.92	0.92	×	14.68%	=	13.56%
Debt³	469,304)	469,304)	÷	13,862,174)	=	0.03	0.03	×	0.00% × (1 – 23.42%)	=	0.00%
Operating lease liability⁴	589,900)	589,900)	÷	13,862,174)	=	0.04	0.04	×	0.00% × (1 – 23.42%)	=	0.00%
Total:	13,862,174)					1.00					13.56%

Based on: 10-K (reporting date: 2018-10-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Synopsys Inc., economic spread ratio calculation, comparison to benchmarks

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	(287,055)	234,178)	(207,974)	(187,706)	(340,947)	(397,887)
Invested capital²	8,083,758)	7,739,574)	6,945,230)	6,656,460)	5,864,612)	5,535,296)
Performance Ratio
Economic spread ratio³	-3.55%	3.03%	-2.99%	-2.82%	-5.81%	-7.19%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	6.03%	8.88%	10.72%	11.28%	10.01%	10.25%
Adobe Inc.	5.61%	11.04%	13.45%	5.72%	3.83%	1.48%
International Business Machines Corp.	-1.46%	-9.32%	-4.33%	-4.07%	-0.34%	—
Intuit Inc.	-6.03%	-4.97%	2.78%	6.11%	19.78%	17.48%
Microsoft Corp.	16.05%	24.00%	33.01%	31.03%	26.15%	7.81%
Oracle Corp.	-1.14%	-0.85%	7.21%	1.52%	4.23%	-4.77%
Palo Alto Networks Inc.	14.94%	6.79%	-1.90%	-2.93%	0.31%	-2.51%
Salesforce Inc.	-11.95%	-9.53%	-7.21%	-10.25%	-6.24%	—
ServiceNow Inc.	8.99%	4.46%	5.67%	7.29%	6.70%	—

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -287,055 ÷ 8,083,758 = -3.55%

⁴ Click competitor name to see calculations.

Download chart

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.	Synopsys Inc. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Synopsys Inc., economic profit margin calculation, comparison to benchmarks

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	(287,055)	234,178)	(207,974)	(187,706)	(340,947)	(397,887)

Revenue	5,842,619)	5,081,542)	4,204,193)	3,685,281)	3,360,694)	3,121,058)
Add: Increase (decrease) in deferred revenue	(114,166)	411,368)	160,813)	190,535)	32,857)	121,941)
Adjusted revenue	5,728,453)	5,492,910)	4,365,006)	3,875,816)	3,393,551)	3,242,999)
Performance Ratio
Economic profit margin²	-5.01%	4.26%	-4.76%	-4.84%	-10.05%	-12.27%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	3.10%	4.28%	5.50%	5.74%	4.63%	4.30%
Adobe Inc.	7.02%	12.86%	16.77%	8.21%	5.75%	2.42%
International Business Machines Corp.	-2.61%	-16.19%	-8.27%	-7.08%	-0.58%	—
Intuit Inc.	-9.88%	-9.57%	3.52%	6.88%	13.18%	11.61%
Microsoft Corp.	18.28%	23.00%	27.40%	23.04%	19.34%	5.54%
Oracle Corp.	-2.20%	-1.56%	14.26%	3.45%	7.70%	-8.61%
Palo Alto Networks Inc.	14.84%	7.91%	-2.55%	-4.76%	0.34%	-3.72%
Salesforce Inc.	-30.44%	-26.45%	-16.53%	-25.23%	-12.28%	—
ServiceNow Inc.	7.24%	3.58%	4.90%	5.95%	4.91%	—

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -287,055 ÷ 5,728,453 = -5.01%

³ Click competitor name to see calculations.

Download chart

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.	Synopsys Inc. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Synopsys Inc. (NASDAQ:SNPS)

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