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.
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T-Mobile US Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2013
- Price to Book Value (P/BV) since 2013
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Economic Profit
T-Mobile US Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial performance, as measured by economic profit, demonstrates a significant shift over the five-year period. Initially, the organization experienced economic losses, which diminished and ultimately transitioned into positive economic profit. This evolution is driven by changes in net operating profit after taxes, cost of capital, and invested capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a consistent upward trend. From US$6,394 million in 2021, it increased to US$7,149 million in 2022. A substantial increase was observed in 2023, reaching US$14,313 million, followed by further growth to US$18,486 million in 2024 and stabilizing at US$18,761 million in 2025. This indicates improving operational efficiency and profitability.
- Cost of Capital
- The cost of capital generally increased over the period. It rose from 7.31% in 2021 to 7.72% in 2022 and 7.80% in 2023. A more pronounced increase occurred in 2024, reaching 8.33%, before decreasing slightly to 8.01% in 2025. This suggests a changing risk profile or shifts in the capital market.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2023, fluctuating around US$186 million. A moderate increase was observed in 2024, reaching US$187,599 million, and a more substantial increase occurred in 2025, reaching US$198,267 million. This suggests a growing need for capital to support operations or expansion.
- Economic Profit
- Economic profit initially reflected substantial losses, with US$-7,058 million in 2021 and US$-7,238 million in 2022. The loss narrowed significantly in 2023 to US$-216 million. A turning point was reached in 2024, with a positive economic profit of US$2,865 million, which continued to grow to US$2,890 million in 2025. This indicates that the organization is now generating returns exceeding its cost of capital.
The progression from negative to positive economic profit is noteworthy. The substantial increase in NOPAT, coupled with a relatively contained increase in invested capital, appears to be the primary driver of this improvement, despite a rising cost of capital. The organization’s ability to generate returns above its cost of capital in the later years suggests enhanced value creation.
Net Operating Profit after Taxes (NOPAT)
T-Mobile US Inc., NOPAT calculation
US$ 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
= × =
7 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
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$10,992 million, though remaining significantly higher than the 2021 and 2022 levels.
- Relationship between NOPAT and Net Income
- While both metrics ultimately increased over the period, the divergence in their growth patterns is notable. The substantial increase in NOPAT relative to net income in 2023 and 2024 suggests potential changes in the company’s capital structure, tax rate, or non-operating items. Further analysis of these factors is recommended to understand the drivers behind this difference. The slight decrease in net income in 2025, despite continued NOPAT growth, reinforces the need for a deeper investigation into the components of net income.
The consistent growth in NOPAT indicates improving operational efficiency and profitability. However, the fluctuations in net income suggest that factors beyond core operations are influencing overall financial results. A comprehensive review of the company’s financial statements, including the income statement and balance sheet, is necessary to fully understand these trends.
Cash Operating Taxes
T-Mobile US Inc., cash operating taxes calculation
US$ 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$1,509 million in 2025. This steady growth indicates a consistent tax burden related to ongoing operations.
- Relationship between Income Tax Expense and Cash Operating Taxes
- A divergence is apparent between the two measures. While income tax expense experienced significant fluctuations, cash operating taxes demonstrated a more stable upward trend. In 2021 and 2022, cash operating taxes were considerably higher than the reported income tax expense. This difference narrowed in 2023 and 2024 as income tax expense increased, but remained substantial. The difference suggests potential timing differences between when income is recognized for accounting purposes and when taxes are actually paid, or the presence of deferred tax items.
The increasing trend in cash operating taxes warrants further investigation to assess its impact on future cash flows and overall financial performance. The volatility in income tax expense requires a detailed understanding of the underlying drivers to accurately forecast future tax liabilities.
Invested Capital
T-Mobile US Inc., invested capital calculation (financing approach)
US$ 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$198,267 million.
The observed trends suggest a shift in the company’s capital structure towards greater reliance on debt. The decreasing stockholders’ equity warrants further investigation to understand the underlying causes and potential implications for long-term financial health. The increase in invested capital in 2025, driven primarily by debt, should be analyzed in conjunction with the company’s operational performance and future investment plans.
Cost of Capital
T-Mobile US Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AT&T Inc. | ||||||
| Verizon Communications Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio demonstrates a significant improvement over the observed period. Initially negative, the ratio transitions to positive values, indicating a growing ability to generate returns exceeding the cost of capital. This shift is directly correlated with changes in economic profit.
- Economic Spread Ratio Trend
- In 2021 and 2022, the economic spread ratio was negative, registering at -3.83% and -3.89% respectively. This suggests that returns generated were less than the cost of invested capital during those years. A substantial improvement is evident in 2023, with the ratio moving to -0.12%, approaching breakeven. The ratio becomes positive in 2024 and 2025, reaching 1.53% and 1.46% respectively, signifying that returns exceeded the cost of capital in those periods.
The economic spread ratio’s movement mirrors the trend in economic profit. The negative economic profit values in 2021 and 2022 align with the negative spread ratios. The substantial reduction in economic loss in 2023 is reflected in the near-zero spread ratio. The positive economic profit reported in 2024 and 2025 corresponds with the positive economic spread ratios observed in those years.
- Invested Capital
- Invested capital experienced a moderate increase throughout the period, rising from US$184,079 million in 2021 to US$198,267 million in 2025. While invested capital grew, the improvement in the economic spread ratio indicates that the company became more efficient in utilizing this capital to generate returns.
The consistent increase in the economic spread ratio, coupled with the transition from negative to positive economic profit, suggests improved financial performance and value creation. The slight decrease in the economic spread ratio from 2024 to 2025, despite continued positive economic profit, warrants further investigation to determine if this represents a temporary fluctuation or the beginning of a new trend.
Economic Profit Margin
T-Mobile US Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AT&T Inc. | ||||||
| Verizon Communications Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited a significant improvement over the observed period. Initially negative, the metric transitioned to positive values, indicating increasing value creation for stakeholders. This shift is primarily driven by changes in economic profit and, to a lesser extent, fluctuations in adjusted revenues.
- Economic Profit Margin
- The economic profit margin began at -8.83% in 2021 and decreased to -9.11% in 2022, suggesting a worsening of economic profitability relative to revenue. However, a substantial positive change occurred in subsequent years. The margin improved dramatically to -0.28% in 2023, approaching breakeven. This positive trend continued, reaching 3.50% in 2024 and stabilizing at 3.26% in 2025. This indicates a growing ability to generate returns exceeding the cost of capital.
- Economic Profit
- Economic profit demonstrated a similar pattern of improvement. Starting with losses of US$7,058 million in 2021 and US$7,238 million in 2022, it significantly decreased its loss to US$216 million in 2023. This was followed by positive economic profits of US$2,865 million in 2024 and US$2,890 million in 2025. The magnitude of the shift from negative to positive economic profit is a key driver of the economic profit margin improvement.
- Adjusted Revenues
- Adjusted revenues experienced a slight decrease from US$79,944 million in 2021 to US$79,495 million in 2022. A further decrease to US$78,603 million was observed in 2023. However, revenues then increased to US$81,797 million in 2024 and continued to grow to US$88,620 million in 2025. While revenue growth contributed to the overall positive trend, the primary driver of the economic profit margin improvement appears to be the substantial change in economic profit itself, rather than revenue fluctuations.
In summary, the observed period reflects a substantial turnaround in economic profitability. The company moved from generating economic losses to generating economic profits, resulting in a significant improvement in the economic profit margin. Revenue growth in the later years further supported this positive trend.