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 – 16.63% × 28,591 = 683
The financial performance from 2021 to 2025 is characterized by a significant contraction in economic profit, driven by a divergence between expanding invested capital and declining net operating profit after taxes (NOPAT).
- Net Operating Profit After Taxes (NOPAT)
- An initial increase is observed from 2021 to 2022, reaching a peak of US$ 8,736 million. However, a subsequent downward trend occurs through 2024, where NOPAT falls to US$ 5,023 million. A marginal recovery is noted in 2025, with the figure rising to US$ 5,439 million, though it remains well below 2021 and 2022 levels.
- Invested Capital and Cost of Capital
- Invested capital exhibits a consistent and aggressive growth trajectory, increasing from US$ 16,409 million in 2021 to US$ 28,591 million by 2025. During this same period, the cost of capital remains relatively stable, fluctuating within a narrow range between 16.50% and 16.84%. The continuous expansion of the capital base, while the cost of capital remained constant, resulted in a steadily increasing total annual capital charge.
- Economic Profit Analysis
- Economic profit demonstrates a severe decline, falling from a peak of US$ 5,779 million in 2022 to US$ 683 million by 2025. This erosion of economic value is the direct result of the "double squeeze" created by a rising capital charge and falling operating profits. The most precipitous drop occurs between 2022 and 2024, signaling a substantial decrease in capital efficiency and a reduced ability to generate returns above the cost of capital.
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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$2,424 million from 2024 to 2025. The growth in invested capital is largely driven by the increases in both debt and equity, with debt contributing a larger proportion of the increase in recent years.
The consistent rise in invested capital suggests ongoing investment in operations and/or acquisitions. The increasing reliance on debt financing, particularly between 2022 and 2024, warrants further investigation to assess the associated financial risk and the returns generated from these investments.
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Cost of Capital
Texas Instruments Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 200,968) | 200,968) | ÷ | 214,939) | = | 0.94 | 0.94 | × | 17.57% | = | 16.43% | ||
| Long-term debt, including current portion3 | 13,240) | 13,240) | ÷ | 214,939) | = | 0.06 | 0.06 | × | 4.00% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 731) | 731) | ÷ | 214,939) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 214,939) | 1.00 | 16.63% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 17.57% | = | 16.27% | ||
| 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 | 16.50% | ||||||||||
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 | × | 17.57% | = | 16.30% | ||
| 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 | 16.50% | ||||||||||
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 | × | 17.57% | = | 16.73% | ||
| 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 | 16.84% | ||||||||||
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 | × | 17.57% | = | 16.64% | ||
| 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 | 16.75% | ||||||||||
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 | 683) | 707) | 2,784) | 5,779) | 5,175) | |
| Invested capital2 | 28,591) | 26,167) | 22,590) | 17,563) | 16,409) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 2.39% | 2.70% | 12.32% | 32.90% | 31.54% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | -21.11% | -27.37% | -28.80% | -28.42% | 28.16% | |
| Analog Devices Inc. | -12.03% | -14.15% | -10.06% | -11.43% | -14.67% | |
| Applied Materials Inc. | 17.27% | 10.37% | 13.36% | 23.33% | 18.82% | |
| Broadcom Inc. | -2.94% | -10.36% | 4.87% | 3.61% | -5.62% | |
| Intel Corp. | -18.62% | -29.96% | -19.83% | -13.05% | 3.54% | |
| KLA Corp. | 20.58% | 16.23% | 20.17% | 22.57% | 11.03% | |
| Lam Research Corp. | 12.15% | -2.98% | 2.38% | 17.40% | 12.74% | |
| Marvell Technology Inc. | -26.42% | -26.46% | -22.13% | -24.89% | -26.61% | |
| Micron Technology Inc. | -5.75% | -17.66% | -29.62% | -1.97% | -6.58% | |
| NVIDIA Corp. | 117.48% | 62.03% | -16.05% | 26.14% | 6.62% | |
| Qualcomm Inc. | 12.49% | 7.70% | 0.23% | 26.66% | 24.06% | |
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 × 683 ÷ 28,591 = 2.39%
4 Click competitor name to see calculations.
A pronounced decline in economic efficiency is evident between 2021 and 2025. The company transitioned from a period of high value creation to a state of significantly diminished economic returns, characterized by a diverging trend between aggressive capital expansion and falling economic profits.
- Economic Spread Ratio Trends
- The economic spread ratio peaked at 32.90% in 2022 before experiencing a precipitous contraction to 12.32% in 2023. This downward trajectory continued sharply, falling to 2.70% in 2024 and further declining to 2.39% by 2025. This trend indicates a substantial erosion in the company's ability to generate returns above its cost of capital.
- Invested Capital Expansion
- Invested capital demonstrated consistent growth throughout the analyzed period. Starting at 16,409 million USD in 2021, the capital base increased steadily each year, reaching 28,591 million USD by 2025. This represents a significant increase in the total resources deployed within the business.
- Economic Profit Trajectory
- Economic profit reached a high of 5,779 million USD in 2022 but entered a steep decline thereafter. By 2024, economic profit had fallen to 707 million USD, ending the period at 683 million USD in 2025. The combination of rising invested capital and falling economic profit explains the collapse of the economic spread ratio.
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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 | 683) | 707) | 2,784) | 5,779) | 5,175) | |
| Revenue | 17,682) | 15,641) | 17,519) | 20,028) | 18,344) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 3.86% | 4.52% | 15.89% | 28.85% | 28.21% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | -37.61% | -61.81% | -73.50% | -70.47% | 10.61% | |
| Analog Devices Inc. | -45.93% | -65.34% | -36.13% | -42.83% | -94.24% | |
| Applied Materials Inc. | 12.25% | 7.22% | 8.96% | 13.47% | 12.01% | |
| Broadcom Inc. | -6.91% | -28.32% | 8.52% | 6.76% | -13.24% | |
| Intel Corp. | -41.07% | -52.08% | -33.68% | -18.36% | 3.97% | |
| KLA Corp. | 15.74% | 13.93% | 16.02% | 19.08% | 10.87% | |
| Lam Research Corp. | 10.15% | -3.02% | 2.09% | 12.85% | 10.28% | |
| Marvell Technology Inc. | -81.64% | -91.49% | -74.77% | -111.07% | -81.68% | |
| Micron Technology Inc. | -9.41% | -37.51% | -101.90% | -3.38% | -11.01% | |
| NVIDIA Corp. | 42.55% | 31.32% | -12.70% | 17.52% | 5.17% | |
| Qualcomm Inc. | 8.83% | 6.10% | 0.20% | 17.76% | 14.49% | |
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 × 683 ÷ 17,682 = 3.86%
3 Click competitor name to see calculations.
The analysis of economic value creation over the five-year period from 2021 to 2025 reveals a significant deterioration in the ability to generate economic profit relative to the cost of capital. While the initial period showed stability and growth, a sharp downward trajectory began after 2022, leading to a substantial compression of the economic profit margin by 2025.
- Economic Profit Trends
- Economic profit experienced an initial increase, peaking at 5,779 million US dollars in 2022. This was followed by a steep decline, with profit falling to 2,784 million US dollars in 2023 and further plummeting to 707 million US dollars in 2024. By 2025, the value stabilized slightly but remained at a low level of 683 million US dollars, representing a significant reduction from the 2021 and 2022 benchmarks.
- Revenue Performance and Divergence
- Revenue showed volatility throughout the period, rising to 20,028 million US dollars in 2022 before contracting over the next two years to a low of 15,641 million US dollars in 2024. Although a recovery in revenue is observed in 2025, reaching 17,682 million US dollars, this growth did not correlate with an increase in economic profit, suggesting that the recovery in top-line sales was offset by higher operating costs or an increased cost of capital.
- Economic Profit Margin Compression
- The economic profit margin demonstrates a severe contraction. After reaching a high of 28.85% in 2022, the margin dropped to 15.89% in 2023 and collapsed to 4.52% in 2024. The trend continued downward into 2025, ending at 3.86%. This consistent decline indicates that the efficiency of generating value above the required return on investment has diminished substantially over the analyzed timeframe.
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