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
Texas Instruments 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
= 5,439 – 16.70% × 28,591 = 665
A significant erosion of economic value is observed over the analyzed five-year period. While the organization remained economically profitable throughout the duration, the magnitude of the economic profit declined precipitously, transitioning from a peak of 5,767 million US$ in 2022 to 665 million US$ by 2025.
- Net Operating Profit After Taxes (NOPAT)
- A non-linear trend is evident in operating profitability. NOPAT increased from 7,923 million US$ in 2021 to a peak of 8,736 million US$ in 2022, before entering a period of decline. By 2024, NOPAT fell to 5,023 million US$, representing a substantial contraction from the 2022 peak, followed by a marginal recovery to 5,439 million US$ in 2025.
- Invested Capital
- A consistent and aggressive upward trajectory in invested capital is observed. The capital base expanded from 16,409 million US$ in 2021 to 28,591 million US$ in 2025. This steady increase indicates a period of significant investment in assets or infrastructure, with the total invested capital growing by approximately 74% over the period.
- Cost of Capital
- The cost of capital remained relatively stable, fluctuating within a narrow range between 16.56% and 16.90%. This stability suggests that the external financing environment and the organization's risk profile remained constant, meaning the decline in economic profit was not driven by rising borrowing costs or increased equity risk premiums.
- Economic Profit Trends
- The convergence of declining NOPAT and rapidly increasing invested capital resulted in a sharp contraction of economic profit. Because the cost of capital remained high (approximately 16.6%), the expanded capital base required significantly higher operating returns to maintain previous levels of value creation. Consequently, the economic profit plummeted from 5,767 million US$ in 2022 to 665 million US$ in 2025, signaling that the returns on new investments have not kept pace with the cost of the capital employed.
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Net Operating Profit after Taxes (NOPAT)
Texas Instruments 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 accounts receivable allowances.
3 Addition of increase (decrease) in accrued restructuring.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 731 × 4.60% = 34
6 2025 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 577 × 21.00% = 121
7 Addition of after taxes interest expense to net income.
Net income and net operating profit after taxes (NOPAT) exhibited similar patterns over the five-year period. Both metrics increased from 2021 to 2022, followed by a decline through 2024, and a partial recovery in 2025. However, the magnitude of change differed between the two measures.
- Overall Trend
- From 2021 to 2022, both net income and NOPAT demonstrated growth, increasing from US$7,769 million and US$7,923 million, respectively, to US$8,749 million and US$8,736 million. This represents a period of positive financial performance. A subsequent downturn occurred between 2022 and 2024, with both metrics decreasing. Net income fell to US$4,799 million and NOPAT to US$5,023 million. A modest recovery was then observed in 2025, with net income reaching US$5,001 million and NOPAT reaching US$5,439 million.
- NOPAT Analysis
- NOPAT began at US$7,923 million in 2021 and peaked at US$8,736 million in 2022, representing a year-over-year increase of approximately 10.3%. The subsequent decline saw NOPAT decrease by approximately 42.6% between 2022 and 2024. The 2025 value indicates a partial recovery, with an increase of approximately 8.2% from 2024. The fluctuations in NOPAT suggest sensitivity to underlying operational factors or broader economic conditions.
- Relationship to Net Income
- NOPAT closely tracked net income throughout the period. The difference between the two values remained relatively small each year, indicating that non-operating items had a limited impact on overall profitability. In 2021, NOPAT exceeded net income by US$154 million. This difference narrowed in 2022 to just US$13 million. The gap widened again in 2023, 2024, and 2025, reaching US$22 million, US$224 million, and US$438 million respectively, suggesting a growing divergence due to non-operating factors in later years.
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Cash Operating Taxes
Texas Instruments Inc., cash operating taxes calculation
US$ 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 provision for income taxes and cash operating taxes exhibited distinct patterns over the five-year period. Both metrics experienced fluctuations, though cash operating taxes demonstrated a more pronounced variance than the provision for income taxes.
- Provision for Income Taxes
- The provision for income taxes initially increased from US$1,150 million in 2021 to US$1,283 million in 2022, representing a growth of approximately 11.57%. A subsequent decrease was observed in 2023, falling to US$908 million. This downward trend continued into 2024 with a further reduction to US$654 million, before modestly increasing to US$709 million in 2025. Overall, the provision for income taxes decreased from 2022 to 2025.
- Cash Operating Taxes
- Cash operating taxes showed a significant increase from US$1,176 million in 2021 to US$1,521 million in 2022, a rise of approximately 29.12%. This was followed by a decrease to US$1,286 million in 2023. The decline continued into 2024, reaching US$978 million, and further decreased to US$849 million in 2025. The trend indicates a substantial reduction in cash operating taxes from the peak in 2022 to the end of the period.
The difference between the provision for income taxes and cash operating taxes narrowed from US$26 million in 2021 to US$238 million in 2022. However, this difference reversed in subsequent years, becoming a negative value of US$378 million in 2023, US$324 million in 2024, and US$140 million in 2025. This suggests a growing divergence between reported tax expense and actual cash outflows for taxes, potentially due to timing differences or tax planning strategies.
The most substantial changes occurred between 2022 and 2023 for both metrics, with both experiencing notable declines. The period from 2023 to 2025 shows a more moderate, but continued, decrease in cash operating taxes, while the provision for income taxes stabilized somewhat.
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Invested Capital
Texas Instruments Inc., invested capital calculation (financing approach)
US$ 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 accrued restructuring.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of investments measured at fair value.
Invested capital has demonstrated a consistent upward trend over the five-year period. Simultaneously, both total reported debt & leases and stockholders’ equity have increased, contributing to the growth in invested capital. The rate of increase in invested capital appears to be accelerating in later years.
- Total Reported Debt & Leases
- Total reported debt & leases increased from US$8,206 million in 2021 to US$14,779 million in 2025. The largest single-year increase occurred between 2022 and 2023, rising by US$2,635 million. Growth slowed between 2023 and 2024, but remained substantial at US$2,588 million. The increase from 2024 to 2025 was minimal, at US$392 million.
- Stockholders’ Equity
- Stockholders’ equity exhibited growth from US$13,333 million in 2021 to US$16,273 million in 2025. The rate of growth was most pronounced between 2021 and 2023, increasing by US$3,564 million. Growth slowed considerably between 2023 and 2024, with a marginal increase, and then decreased slightly in 2025.
- Invested Capital
- Invested capital increased steadily from US$16,409 million in 2021 to US$28,591 million in 2025. The increase from 2021 to 2022 was US$1,154 million. The increase from 2022 to 2023 was US$5,027 million, representing a significant acceleration. This trend continued from 2023 to 2024 with an increase of US$3,577 million, and then US$2,424 million from 2024 to 2025. The growth in invested capital is largely driven by the increases in both debt and equity, with debt contributing a larger proportion of the increase in recent years.
The consistent rise in invested capital suggests ongoing investment in operations and/or acquisitions. The increasing reliance on debt financing, particularly between 2022 and 2024, warrants further investigation to assess the associated financial risk and the returns generated from these investments.
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Cost of Capital
Texas Instruments Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 200,968) | 200,968) | ÷ | 214,939) | = | 0.94 | 0.94 | × | 17.63% | = | 16.49% | ||
| Long-term debt, including current portion3 | 13,240) | 13,240) | ÷ | 214,939) | = | 0.06 | 0.06 | × | 4.00% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 731) | 731) | ÷ | 214,939) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 214,939) | 1.00 | 16.70% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 166,618) | 166,618) | ÷ | 179,879) | = | 0.93 | 0.93 | × | 17.63% | = | 16.33% | ||
| Long-term debt, including current portion3 | 12,480) | 12,480) | ÷ | 179,879) | = | 0.07 | 0.07 | × | 3.79% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 781) | 781) | ÷ | 179,879) | = | 0.00 | 0.00 | × | 4.53% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 179,879) | 1.00 | 16.56% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 144,759) | 144,759) | ÷ | 156,005) | = | 0.93 | 0.93 | × | 17.63% | = | 16.36% | ||
| Long-term debt, including current portion3 | 10,680) | 10,680) | ÷ | 156,005) | = | 0.07 | 0.07 | × | 3.50% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 566) | 566) | ÷ | 156,005) | = | 0.00 | 0.00 | × | 4.22% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 156,005) | 1.00 | 16.56% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 165,192) | 165,192) | ÷ | 173,471) | = | 0.95 | 0.95 | × | 17.63% | = | 16.79% | ||
| Long-term debt, including current portion3 | 7,860) | 7,860) | ÷ | 173,471) | = | 0.05 | 0.05 | × | 2.93% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 419) | 419) | ÷ | 173,471) | = | 0.00 | 0.00 | × | 2.71% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 173,471) | 1.00 | 16.90% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 158,314) | 158,314) | ÷ | 167,159) | = | 0.95 | 0.95 | × | 17.63% | = | 16.70% | ||
| Long-term debt, including current portion3 | 8,380) | 8,380) | ÷ | 167,159) | = | 0.05 | 0.05 | × | 2.60% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 465) | 465) | ÷ | 167,159) | = | 0.00 | 0.00 | × | 2.51% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 167,159) | 1.00 | 16.81% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Texas Instruments 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 | 665) | 691) | 2,770) | 5,767) | 5,164) | |
| Invested capital2 | 28,591) | 26,167) | 22,590) | 17,563) | 16,409) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 2.33% | 2.64% | 12.26% | 32.84% | 31.47% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -21.59% | -27.86% | -29.29% | -28.90% | 27.67% | |
| Analog Devices Inc. | -12.12% | -14.24% | -10.15% | -11.51% | -14.75% | |
| Applied Materials Inc. | 16.96% | 10.06% | 13.05% | 23.03% | 18.51% | |
| Broadcom Inc. | -3.06% | -10.48% | 4.75% | 3.50% | -5.73% | |
| Intel Corp. | -18.82% | -30.12% | -20.02% | -13.23% | 3.35% | |
| KLA Corp. | 21.57% | 17.20% | 21.12% | 23.49% | 11.99% | |
| Lam Research Corp. | 14.28% | -0.87% | 4.47% | 19.45% | 14.80% | |
| Micron Technology Inc. | -5.94% | -17.84% | -29.79% | -2.16% | -6.77% | |
| NVIDIA Corp. | 117.04% | 61.59% | -16.49% | 25.71% | 6.18% | |
| Qualcomm Inc. | 12.33% | 7.54% | 0.07% | 26.51% | 23.91% | |
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 × 665 ÷ 28,591 = 2.33%
4 Click competitor name to see calculations.
A significant deterioration in economic value generation is observed between 2021 and 2025. While the capital base expanded consistently, the actual economic profit generated from those investments declined sharply after 2022, indicating a reduction in the efficiency of capital deployment.
- Economic Profit
- Economic profit experienced a brief increase from 5,164 million USD in 2021 to a peak of 5,767 million USD in 2022. Subsequently, a steep contraction occurred, with values falling to 2,770 million USD in 2023 and reaching 665 million USD by 2025. This trajectory represents a substantial reduction in the absolute surplus generated above the company's cost of capital.
- Invested Capital
- Invested capital demonstrated a continuous upward trajectory throughout the analyzed period. The capital base grew from 16,409 million USD in 2021 to 28,591 million USD in 2025. This steady increase reflects a sustained commitment to expanding the asset base and increasing investment in the business.
- Economic Spread Ratio
- The economic spread ratio reveals a critical divergence between capital investment and profitability. After reaching a peak of 32.84% in 2022, the ratio declined precipitously to 12.26% in 2023, and further eroded to 2.33% by 2025. This sharp decline indicates that the returns on invested capital have diminished significantly, bringing the spread close to the cost of capital and suggesting that recent capital expenditures have not yielded proportional economic gains.
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Economic Profit Margin
Texas Instruments 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 | 665) | 691) | 2,770) | 5,767) | 5,164) | |
| Revenue | 17,682) | 15,641) | 17,519) | 20,028) | 18,344) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 3.76% | 4.42% | 15.81% | 28.80% | 28.15% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -38.49% | -62.91% | -74.75% | -71.67% | 10.43% | |
| Analog Devices Inc. | -46.26% | -65.74% | -36.44% | -43.15% | -94.78% | |
| Applied Materials Inc. | 12.03% | 7.00% | 8.75% | 13.30% | 11.81% | |
| Broadcom Inc. | -7.20% | -28.65% | 8.31% | 6.55% | -13.49% | |
| Intel Corp. | -41.51% | -52.35% | -34.00% | -18.61% | 3.75% | |
| KLA Corp. | 16.50% | 14.76% | 16.78% | 19.86% | 11.82% | |
| Lam Research Corp. | 11.94% | -0.88% | 3.93% | 14.36% | 11.93% | |
| Micron Technology Inc. | -9.72% | -37.89% | -102.50% | -3.70% | -11.32% | |
| NVIDIA Corp. | 42.39% | 31.10% | -13.05% | 17.23% | 4.83% | |
| Qualcomm Inc. | 8.71% | 5.98% | 0.06% | 17.66% | 14.40% | |
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 ÷ Revenue
= 100 × 665 ÷ 17,682 = 3.76%
3 Click competitor name to see calculations.
An analysis of the economic value creation metrics reveals a significant contraction in financial performance and capital efficiency over the five-year period ending December 31, 2025. While the initial phase showed stability and growth, a precipitous decline in economic profit and margins occurred from 2023 onwards.
- Economic Profit Trends
- Economic profit reached a peak of 5,767 million USD in 2022, representing a slight increase from the 5,164 million USD recorded in 2021. However, a sharp downward trajectory followed, with profit dropping to 2,770 million USD in 2023 and further collapsing to 691 million USD in 2024. By the end of 2025, economic profit remained depressed at 665 million USD, marking a substantial reduction in the absolute value created above the cost of capital.
- Revenue Volatility
- Revenue patterns exhibit fluctuations rather than a linear decline. After peaking at 20,028 million USD in 2022, revenue declined for two consecutive years, reaching a low of 15,641 million USD in 2024. A partial recovery is observed in 2025, with revenue increasing to 17,682 million USD. This suggests that the decline in economic value is not solely driven by a loss of top-line sales.
- Economic Profit Margin Deterioration
- The economic profit margin demonstrates the most severe decline. The margin remained strong and stable between 2021 (28.15%) and 2022 (28.80%). A significant erosion began in 2023, where the margin fell to 15.81%, and accelerated sharply to 4.42% in 2024 and 3.76% in 2025. This compression indicates a diminishing ability to generate returns exceeding the required cost of capital relative to the scale of operations.
The divergence between the revenue recovery in 2025 and the continued decline in both economic profit and economic profit margin suggests that the organization is facing increased capital costs or diminished operational efficiency. The inability of the 2025 revenue growth to translate into higher economic profit underscores a systemic decline in the value-generation capacity of the employed capital.
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