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
T-Mobile US Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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
= 18,761 – 8.33% × 198,267 = 2,238
An analysis of the financial trajectory between 2021 and 2025 reveals a significant turnaround in value creation, characterized by a transition from consistent economic losses to positive economic profit. This shift is primarily driven by a substantial increase in net operating profit after taxes (NOPAT), which outpaced the growth in invested capital and the marginal increases in the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trajectory is observed in NOPAT, which grew from US$ 6,394 million in 2021 to US$ 18,761 million by 2025. The most pronounced acceleration occurred between 2022 and 2023, where NOPAT approximately doubled from US$ 7,149 million to US$ 14,313 million, indicating a significant improvement in operational efficiency and profitability.
- Cost of Capital
- The cost of capital exhibited a general upward trend for the majority of the period, rising from 7.60% in 2021 to a peak of 8.68% in 2024, before slightly moderating to 8.33% in 2025. Despite these fluctuations, the increase in the cost of capital was insufficient to offset the gains achieved in operating profit.
- Invested Capital
- Invested capital remained relatively stagnant from 2021 through 2024, fluctuating within a narrow range between US$ 184,079 million and US$ 187,599 million. A more notable increase occurred in 2025, with invested capital rising to US$ 198,267 million, suggesting a renewed phase of capital deployment or asset acquisition.
- Economic Profit
- The economic profit transitioned from a state of value destruction to value creation. Substantial negative values were recorded in 2021 and 2022, reaching a low of negative US$ 7,827 million. A rapid recovery followed, with losses narrowing to negative US$ 810 million in 2023 before crossing into positive territory in 2024 at US$ 2,202 million. This positive trend continued into 2025, reaching US$ 2,238 million, confirming that the returns on invested capital have exceeded the required cost of capital.
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Net Operating Profit after Taxes (NOPAT)
T-Mobile US Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 restructuring initiatives.
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
= 30,185 × 4.60% = 1,389
7 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 5,163 × 21.00% = 1,084
8 Addition of after taxes interest expense to net income.
Net operating profit after taxes (NOPAT) demonstrated a consistent upward trajectory over the five-year period examined. Simultaneously, net income exhibited more volatility, with a decline in 2022 followed by substantial growth in subsequent years. The relationship between NOPAT and net income warrants further investigation, as the growth rates differ significantly.
- NOPAT Trend
- NOPAT increased from US$6,394 million in 2021 to US$7,149 million in 2022, representing a growth of approximately 11.8%. This upward trend continued with a significant increase to US$14,313 million in 2023, and further to US$18,486 million in 2024. The rate of increase slowed slightly in 2025, with NOPAT reaching US$18,761 million. Overall, NOPAT nearly tripled over the period.
- Net Income Trend
- Net income decreased from US$3,024 million in 2021 to US$2,590 million in 2022, a decline of approximately 14.4%. However, net income experienced substantial growth in 2023, reaching US$8,317 million, and continued to increase to US$11,339 million in 2024. In 2025, net income decreased slightly to US$10,992 million, though remaining significantly higher than the 2021 and 2022 levels.
- Relationship between NOPAT and Net Income
- While both metrics ultimately increased over the period, the divergence in their growth patterns is notable. The substantial increase in NOPAT relative to net income in 2023 and 2024 suggests potential changes in the company’s capital structure, tax rate, or non-operating items. Further analysis of these factors is recommended to understand the drivers behind this difference. The slight decrease in net income in 2025, despite continued NOPAT growth, reinforces the need for a deeper investigation into the components of net income.
The consistent growth in NOPAT indicates improving operational efficiency and profitability. However, the fluctuations in net income suggest that factors beyond core operations are influencing overall financial results. A comprehensive review of the company’s financial statements, including the income statement and balance sheet, is necessary to fully understand these trends.
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Cash Operating Taxes
T-Mobile US Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported income tax expense and cash operating taxes demonstrate distinct trends over the five-year period. Income tax expense initially increased significantly, while cash operating taxes exhibited a more moderate and consistent upward trajectory.
- Income Tax Expense
- Income tax expense increased from US$327 million in 2021 to US$556 million in 2022, representing a substantial rise. This was followed by a dramatic increase to US$2,682 million in 2023. The expense continued to climb to US$3,373 million in 2024 before decreasing slightly to US$3,289 million in 2025. The volatility in income tax expense suggests potential impacts from changes in tax regulations, one-time adjustments, or significant shifts in pre-tax income.
- Cash Operating Taxes
- Cash operating taxes showed a consistent, albeit less dramatic, increase throughout the period. Starting at US$1,053 million in 2021, it rose to US$1,058 million in 2022 and US$1,069 million in 2023. The rate of increase accelerated in the later years, reaching US$1,244 million in 2024 and US$1,509 million in 2025. This steady growth indicates a consistent tax burden related to ongoing operations.
- Relationship between Income Tax Expense and Cash Operating Taxes
- A divergence is apparent between the two measures. While income tax expense experienced significant fluctuations, cash operating taxes demonstrated a more stable upward trend. In 2021 and 2022, cash operating taxes were considerably higher than the reported income tax expense. This difference narrowed in 2023 and 2024 as income tax expense increased, but remained substantial. The difference suggests potential timing differences between when income is recognized for accounting purposes and when taxes are actually paid, or the presence of deferred tax items.
The increasing trend in cash operating taxes warrants further investigation to assess its impact on future cash flows and overall financial performance. The volatility in income tax expense requires a detailed understanding of the underlying drivers to accurately forecast future tax liabilities.
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Invested Capital
T-Mobile US Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 deferred revenue.
5 Addition of restructuring initiatives.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
The reported invested capital exhibited a generally increasing trend over the five-year period. While fluctuations occurred, the overall trajectory suggests a growing capital base. A closer examination of the components contributing to invested capital – total reported debt & leases and stockholders’ equity – reveals differing patterns.
- Total Reported Debt & Leases
- Total reported debt & leases consistently increased from 2021 to 2024, rising from US$106,011 million to US$110,280 million. A more substantial increase is observed in 2025, reaching US$118,737 million. This indicates a growing reliance on debt financing or potentially increased capital expenditure funded through debt.
- Stockholders’ Equity
- Stockholders’ equity demonstrated a decline throughout the period. Beginning at US$69,102 million in 2021, it decreased to US$59,203 million by 2025. This reduction could be attributed to factors such as share repurchases, dividend payments, or accumulated losses exceeding retained earnings.
- Invested Capital Composition
- Despite the decrease in stockholders’ equity, invested capital remained relatively stable between 2021 and 2024, fluctuating around US$186 million. The increase in debt partially offset the decline in equity, maintaining the overall invested capital level. However, the significant rise in debt in 2025, coupled with the continued decrease in equity, resulted in a noticeable increase in invested capital to US$198,267 million.
The observed trends suggest a shift in the company’s capital structure towards greater reliance on debt. The decreasing stockholders’ equity warrants further investigation to understand the underlying causes and potential implications for long-term financial health. The increase in invested capital in 2025, driven primarily by debt, should be analyzed in conjunction with the company’s operational performance and future investment plans.
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Cost of Capital
T-Mobile US Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 230,884) | 230,884) | ÷ | 345,544) | = | 0.67 | 0.67 | × | 10.78% | = | 7.20% | ||
| Short-term and long-term debt, including financing lease liabilities3 | 84,475) | 84,475) | ÷ | 345,544) | = | 0.24 | 0.24 | × | 4.22% × (1 – 21.00%) | = | 0.82% | ||
| Operating lease liability4 | 30,185) | 30,185) | ÷ | 345,544) | = | 0.09 | 0.09 | × | 4.60% × (1 – 21.00%) | = | 0.32% | ||
| Total: | 345,544) | 1.00 | 8.33% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 265,992) | 265,992) | ÷ | 370,154) | = | 0.72 | 0.72 | × | 10.78% | = | 7.75% | ||
| Short-term and long-term debt, including financing lease liabilities3 | 74,473) | 74,473) | ÷ | 370,154) | = | 0.20 | 0.20 | × | 4.13% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 29,689) | 29,689) | ÷ | 370,154) | = | 0.08 | 0.08 | × | 4.40% × (1 – 21.00%) | = | 0.28% | ||
| Total: | 370,154) | 1.00 | 8.68% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 192,011) | 192,011) | ÷ | 296,718) | = | 0.65 | 0.65 | × | 10.78% | = | 6.97% | ||
| Short-term and long-term debt, including financing lease liabilities3 | 72,912) | 72,912) | ÷ | 296,718) | = | 0.25 | 0.25 | × | 4.02% × (1 – 21.00%) | = | 0.78% | ||
| Operating lease liability4 | 31,795) | 31,795) | ÷ | 296,718) | = | 0.11 | 0.11 | × | 4.30% × (1 – 21.00%) | = | 0.36% | ||
| Total: | 296,718) | 1.00 | 8.12% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 179,847) | 179,847) | ÷ | 279,964) | = | 0.64 | 0.64 | × | 10.78% | = | 6.92% | ||
| Short-term and long-term debt, including financing lease liabilities3 | 66,750) | 66,750) | ÷ | 279,964) | = | 0.24 | 0.24 | × | 3.88% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 33,367) | 33,367) | ÷ | 279,964) | = | 0.12 | 0.12 | × | 4.10% × (1 – 21.00%) | = | 0.39% | ||
| Total: | 279,964) | 1.00 | 8.04% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 155,512) | 155,512) | ÷ | 265,707) | = | 0.59 | 0.59 | × | 10.78% | = | 6.31% | ||
| Short-term and long-term debt, including financing lease liabilities3 | 80,952) | 80,952) | ÷ | 265,707) | = | 0.30 | 0.30 | × | 4.05% × (1 – 21.00%) | = | 0.97% | ||
| Operating lease liability4 | 29,243) | 29,243) | ÷ | 265,707) | = | 0.11 | 0.11 | × | 3.60% × (1 – 21.00%) | = | 0.31% | ||
| Total: | 265,707) | 1.00 | 7.60% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
T-Mobile US Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 2,238) | 2,202) | (810) | (7,827) | (7,589) | |
| Invested capital2 | 198,267) | 187,599) | 186,258) | 186,262) | 184,079) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.13% | 1.17% | -0.43% | -4.20% | -4.12% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AT&T Inc. | 0.96% | -2.73% | -0.49% | -7.32% | 0.27% | |
| Verizon Communications Inc. | 0.17% | 0.51% | -1.05% | 1.97% | 2.72% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,238 ÷ 198,267 = 1.13%
4 Click competitor name to see calculations.
The financial data indicates a significant transition from value destruction to value creation over the analyzed five-year period, characterized by a sharp reversal in economic profit and a corresponding shift in the economic spread ratio.
- Economic Profit Trajectory
- Economic profit demonstrates a strong recovery trend, moving from a deficit of US$ 7,589 million in 2021 to a positive US$ 2,238 million by 2025. The most substantial improvement occurred between 2022 and 2023, where the economic loss was reduced from US$ 7,827 million to US$ 810 million, before crossing into positive territory in 2024.
- Invested Capital Dynamics
- Invested capital remained relatively stable from 2021 through 2024, fluctuating within a narrow range between US$ 184,079 million and US$ 187,599 million. A more pronounced increase is observed in 2025, with invested capital rising to US$ 198,267 million, suggesting an expansion of the asset base during the final year of the period.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the trend of economic profit, transitioning from negative values to positive values. The ratio declined slightly from -4.12% in 2021 to -4.20% in 2022, indicating that returns were below the cost of capital. However, a rapid recovery followed, with the ratio reaching -0.43% in 2023 and turning positive in 2024 at 1.17%. The ratio remained positive in 2025 at 1.13%, confirming that the company is generating returns in excess of its cost of capital.
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Economic Profit Margin
T-Mobile US Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 2,238) | 2,202) | (810) | (7,827) | (7,589) | |
| Revenues | 88,309) | 81,400) | 78,558) | 79,571) | 80,118) | |
| Add: Increase (decrease) in deferred revenue | 311) | 397) | 45) | (76) | (174) | |
| Adjusted revenues | 88,620) | 81,797) | 78,603) | 79,495) | 79,944) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.53% | 2.69% | -1.03% | -9.85% | -9.49% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AT&T Inc. | 2.59% | -7.00% | -1.30% | -18.75% | 0.70% | |
| Verizon Communications Inc. | 0.40% | 1.17% | -2.39% | 4.35% | 5.90% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 2,238 ÷ 88,620 = 2.53%
3 Click competitor name to see calculations.
A significant transition from value destruction to value creation is evident between 2021 and 2025. The financial trajectory is marked by a shift from deep negative economic profit to a sustained positive position, supported by a recovery in revenue growth in the latter half of the period.
- Economic Profit Trends
- A period of value destruction was observed from 2021 to 2023, with the most significant deficit occurring in 2022 at -7,827 million USD. A sharp recovery began in 2023, which saw the economic loss narrow substantially to -810 million USD. This upward momentum culminated in a pivot to positive economic profit in 2024, reaching 2,202 million USD, and further increasing to 2,238 million USD by 2025.
- Adjusted Revenue Trajectory
- Adjusted revenues exhibited a slight downward trend during the initial three years, declining from 79,944 million USD in 2021 to a low of 78,603 million USD in 2023. This stagnation was followed by a growth phase starting in 2024, where revenues rose to 81,797 million USD and accelerated to 88,620 million USD by 2025, indicating an expansion in the top-line scale.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the recovery in absolute profit, moving from a trough of -9.85% in 2022 to a near-breakeven point of -1.03% in 2023. The margin turned positive in 2024, peaking at 2.69%. Although the absolute economic profit increased in 2025, the margin experienced a slight compression to 2.53%, suggesting that the growth in adjusted revenues slightly outpaced the growth in economic profit during the final year.
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