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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Economic Profit
T-Mobile US Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data exhibits several notable trends over the analyzed periods. Net operating profit after taxes (NOPAT) initially declined from 7,224 million US dollars in 2020 to 6,394 million in 2021 but recovered to 7,149 million in 2022. Subsequently, NOPAT experienced a significant increase, more than doubling to 14,313 million in 2023 and further rising to 18,486 million in 2024.
The cost of capital remained relatively stable with a slight upward trend. It was 7.39% in 2020, decreased marginally to 7.34% in 2021, and then steadily increased to 7.76% in 2022, 7.84% in 2023, and 8.37% in 2024. This gradual increase suggests a rising hurdle rate for investments over time.
Invested capital showed a consistent but modest growth pattern, rising from 177,902 million US dollars in 2020 to 187,599 million in 2024. This indicates a relatively stable base of capital investment, with slight incremental increases across the years.
The economic profit, calculated as the return above the cost of capital, revealed a distinct turnaround. From negative values in the initial years (-5,927 million in 2020, -7,124 million in 2021, and -7,312 million in 2022), economic profit improved substantially to nearly break even at -290 million in 2023, followed by a positive economic profit of 2,782 million in 2024. This transformation indicates enhanced value creation and operational efficiency in the most recent years after several years of value destruction.
- Summary of Key Trends
- 1. NOPAT declined in the early years but showed robust growth in the last two years analyzed.
- 2. The cost of capital has been gradually increasing, reflecting potentially higher risk or capital costs.
- 3. Invested capital increased slightly and steadily, suggesting stable capital deployment without significant expansion or contraction.
- 4. Economic profit shifted from notable negative values to a positive value, indicating a meaningful improvement in profitability relative to the cost of capital and a turnaround in the company’s value generation.
Net Operating Profit after Taxes (NOPAT)
T-Mobile US Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 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.
9 Elimination of discontinued operations.
The financial data reveals significant fluctuations and overall growth in the profitability metrics over the five-year period.
- Net Income
-
Net income shows a moderate decline from 3,064 million USD in 2020 to 2,590 million USD in 2022. Subsequently, there is a marked increase to 8,317 million USD in 2023, followed by a further rise to 11,339 million USD in 2024. This indicates a strong recovery and substantial growth in the last two years after a period of decline.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT exhibits a decrease from 7,224 million USD in 2020 to 6,394 million USD in 2021, before increasing to 7,149 million USD in 2022. A significant surge is observed thereafter, with NOPAT reaching 14,313 million USD in 2023 and further climbing to 18,486 million USD in 2024. This trend reflects an improvement in operating efficiency and profitability after the initial decline.
Overall, while both net income and NOPAT experienced declines in the early years of the data, the subsequent periods demonstrate substantial growth. The acceleration in profitability metrics from 2023 onwards suggests successful operational improvements or favorable market conditions contributing to strengthened financial performance.
Cash Operating Taxes
T-Mobile US Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
The analysis of the company's tax-related financial data over the five-year period reveals fluctuating trends with a notable increase in the most recent years.
- Income tax expense
- The income tax expense displays variability across the years. Initially, there was a decrease from $786 million in 2020 to $327 million in 2021, followed by a moderate increase to $556 million in 2022. However, a significant surge occurred in 2023, with the expense rising sharply to $2,682 million, and this upward trend continued into 2024, reaching $3,373 million. This pattern suggests a considerable change in taxable income or tax rates impacting the corporation during the latest two years.
- Cash operating taxes
- Cash operating taxes showed a gradual upward trend over the period. Starting at $895 million in 2020, this figure increased steadily to $1,053 million in 2021 and $1,058 million in 2022. The growth continued more modestly to $1,069 million in 2023 and then more notably to $1,244 million in 2024. The consistent increase indicates higher cash outflows related to operating taxes, potentially reflecting growth in operating activities or changes in tax payment structures.
Invested Capital
T-Mobile US Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 financial data over the five-year period displays several notable trends in key capital structure metrics. The total reported debt and leases have shown a consistent and gradual increase each year. This trend indicates a growing reliance on debt financing, as the total amount rose from approximately $104.2 billion at the end of 2020 to about $110.3 billion by the end of 2024.
In contrast, stockholders’ equity presented a different pattern. It increased from 2020 to 2022, peaking at nearly $69.7 billion, but then declined in the subsequent years, reaching approximately $61.7 billion by the end of 2024. This decline in equity after 2022 may suggest dividend distributions, share repurchases, or reduced retained earnings impacting the equity base.
Invested capital exhibited a steady rise over the period, though the rate of increase slowed towards the latter years. The invested capital grew from about $177.9 billion in 2020 to nearly $187.6 billion in 2024. This rise primarily reflects the combined effect of incremental increases in both debt and equity, despite the decrease in equity in later years.
- Total Reported Debt & Leases
- Consistently increased each year, signaling a rising debt burden and possibly a strategic shift towards leveraging external financing.
- Stockholders’ Equity
- Increased initially but then showed a declining trend after 2022, which may indicate capital return actions or earnings impacts on retained earnings.
- Invested Capital
- Grew steadily throughout the period, reflecting an overall expansion in capital resources, supported mainly by debt increases given the equity decline in the later years.
Overall, the period reflects a growing balance sheet with a greater proportion of financing coming through debt, coupled with a decreasing equity base after a certain point. This could suggest increased financial risk or a deliberate strategy to optimize the capital structure and shareholder returns. Further analysis on profitability and cash flows would be necessary to assess the sustainability of these trends.
Cost of Capital
T-Mobile US Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 »
| 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: 2020-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a negative trend from 2020 through 2022, with values decreasing from -5927 million USD in 2020 to -7312 million USD in 2022. However, a significant improvement took place in 2023, with economic profit rising sharply to -290 million USD. By 2024, the economic profit turned positive, reaching 2782 million USD, indicating a marked recovery and enhanced profitability.
- Invested Capital
- Invested capital showed a steady, gradual increase over the five-year period. It increased from 177,902 million USD in 2020 to 187,599 million USD in 2024. The growth was relatively modest and stable, suggesting consistent investment levels with no abrupt changes in capital allocation.
- Economic Spread Ratio
- The economic spread ratio demonstrated a negative position throughout the first three years, declining from -3.33% in 2020 to -3.93% in 2022, signaling that the returns on invested capital were below the cost of capital during this period. In 2023, the ratio improved significantly to -0.16%, close to breaking even, and turned positive to 1.48% in 2024. This transition to a positive spread aligns with the significant improvement in economic profit, indicating better capital efficiency and value generation.
Economic Profit Margin
T-Mobile US Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals significant fluctuations in the economic profit and its margin for the analyzed periods, along with relatively stable adjusted revenues over the same timeframe.
- Adjusted Revenues
- Adjusted revenues experienced an overall upward trend from approximately 68.8 billion US dollars in 2020 to about 81.8 billion in 2024. The revenues peaked in 2021 at nearly 79.9 billion, slightly decreased in 2022 and 2023 but showed a recovery in 2024. This indicates a relatively stable revenue base with minor variability year over year.
- Economic Profit
- Economic profit displayed a dramatic improvement over the years. Starting with a substantial negative value of approximately -5.9 billion US dollars in 2020, the loss deepened in 2021 and 2022 reaching about -7.1 billion and -7.3 billion respectively. However, a sharp turnaround is observed in 2023 with economic profit nearing breakeven at -290 million, followed by a positive economic profit of about 2.8 billion US dollars in 2024. This shift from significant losses to notable profitability signifies strong operational improvements or cost management effects.
- Economic Profit Margin
- The economic profit margin followed a pattern consistent with economic profit. Initially negative and worsening from -8.62% in 2020 to -9.2% in 2022, it then showed a marked improvement in 2023, dropping to a marginal negative margin of -0.37%, and finally turning positive to 3.4% in 2024. This reflects the company's progress in converting its revenues into sustainable economic value over the assessed period.
Overall, despite relatively steady revenues, the company showed significant transformation in profitability, emerging from substantial economic losses in the early years to positive economic profit and margin in the most recent year. This signals effective strategic or operational changes that enhanced economic efficiency and value creation.