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:
- Cash Flow Statement
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2013
- Return on Assets (ROA) since 2013
- Total Asset Turnover since 2013
- Price to Operating Profit (P/OP) since 2013
- Price to Book Value (P/BV) since 2013
- Analysis of Revenues
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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 reveals several notable trends for the company from 2020 through 2024. These trends reflect significant developments in profitability, capital efficiency, and overall economic value creation.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a fluctuating but ultimately increasing trajectory over the five-year period. It started at $7,224 million in 2020, declined to $6,394 million in 2021, and then gradually rose to $7,149 million in 2022. The years 2023 and 2024 saw substantial increases, with NOPAT reaching $14,313 million and $18,486 million respectively. This suggests strong operational performance improvements and enhanced profitability in the latter years.
- Cost of Capital
- The cost of capital displayed a modest upward trend, beginning at 7.4% in 2020 and gradually increasing to 8.39% by 2024. This increase may reflect changes in market conditions, risk profiles, or capital structure, indicating that the company faces increasing costs to finance its operations as time progresses.
- Invested Capital
- The invested capital base showed relative stability with slight growth. It increased from $177,902 million in 2020 to $187,599 million in 2024. The consistency in invested capital suggests a steady level of asset investment, which, combined with rising NOPAT in the later years, may contribute to improved returns on capital invested.
- Economic Profit
- Economic profit figures exhibit a marked improvement over the period. The company recorded negative economic profit from 2020 through 2022, with values of -$5,948 million, -$7,146 million, and -$7,336 million, indicating that the returns were insufficient to cover the cost of capital during these years. However, economic profit nearly broke even in 2023 at -$315 million and turned positive in 2024 with $2,755 million. This turning point suggests that the company began generating returns exceeding its cost of capital, signifying increasing shareholder value creation.
Overall, the company exhibits a positive shift in financial performance with growing operational profits and an improving economic profit profile despite a slightly rising cost of capital. Stability in invested capital alongside these profitability trends points to efficient capital management and an enhancing return on invested funds moving into 2023 and 2024.
Net Operating Profit after Taxes (NOPAT)
T-Mobile US Inc., NOPAT calculation
US$ 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 showed a significant negative trend from 2020 through 2022, with losses deepening each year, reaching a low of -7,336 million US dollars in 2022. However, there was a marked improvement in 2023, with losses substantially reduced to -315 million US dollars. By 2024, economic profit turned positive, registering a gain of 2,755 million US dollars, indicating a strong recovery and enhanced value creation for shareholders.
- Invested Capital
- Invested capital increased gradually over the five-year period, rising from 177,902 million US dollars in 2020 to 187,599 million US dollars in 2024. The growth in invested capital was steady but modest, suggesting incremental capital deployment or asset base expansion during these years without abrupt fluctuations.
- Economic Spread Ratio
- The economic spread ratio, representing the difference between return on invested capital and cost of capital, was consistently negative from 2020 to 2022, moving from -3.34% to a more unfavorable -3.94%. This indicates the company was not generating adequate returns over its capital costs during this period. A sharp improvement is observed in 2023, where the spread narrowed to -0.17%, signaling near breakeven performance. By 2024, the spread turned positive at 1.47%, reflecting enhanced profitability and efficient capital utilization.
- Overall Assessment
- The data reveals a company experiencing challenges in generating economic profits and returns above cost of capital through 2022. The subsequent years exhibit a substantial turnaround, with economic profit moving from significant losses to positive values and the economic spread shifting from negative to positive. Meanwhile, the steady increase in invested capital underscores ongoing investment activities concurrent with the improving financial performance. This trend suggests an effective strategic or operational adjustment leading to improved economic profitability.
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.
- Economic Profit
- The economic profit demonstrates a marked improvement over the five-year period. Starting from a substantial negative value of -5948 million USD in 2020, the loss widened in the subsequent two years, reaching -7146 million USD in 2021 and -7336 million USD in 2022. However, a significant turnaround is observed thereafter, with the economic profit sharply improving to -315 million USD in 2023 and turning positive at 2755 million USD by the end of 2024. This indicates enhanced value generation and a shift from loss to profitability.
- Adjusted Revenues
- Adjusted revenues exhibit a generally upward trend, growing from 68,796 million USD in 2020 to 79,944 million USD in 2021. A slight dip to 79,495 million USD occurs in 2022, followed by another minor decrease to 78,603 million USD in 2023. Revenues increase again in 2024 to 81,797 million USD, the highest in the period analyzed. Overall, revenues show stability with moderate growth potential.
- Economic Profit Margin
- The economic profit margin parallels the economic profit trend, initially negative and declining from -8.65% in 2020 to -9.23% in 2022. A remarkable recovery is then noted, with the margin improving dramatically to -0.4% in 2023 and turning positive at 3.37% in 2024. This shift reflects improved operational efficiency and profitability relative to revenue.
- Summary of Trends
- The period under review reveals a progression from significant economic losses toward economic profitability despite relatively stable revenues. The turning points occur post-2022, correlating with a substantial contraction in economic losses and eventual profit generation by the end of 2024. This improvement is also reflected in the economic profit margin, which shifts from negative double digits to positive territory. The data suggests successful cost management, improved operational efficiency, or strategic initiatives that enhanced economic value. Revenues remain stable with a slight upward trajectory, supporting sustainable profitable growth.