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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Texas Instruments Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	6,512)	8,736)	7,923)	5,637)	5,202)
Cost of capital²	13.12%	13.37%	13.29%	13.34%	13.33%
Invested capital³	22,590)	17,563)	16,409)	12,963)	12,056)

Economic profit⁴	3,549)	6,389)	5,742)	3,907)	3,595)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 6,512 – 13.12% × 22,590 = 3,549

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Texas Instruments Inc. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Texas Instruments Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	6,510)	8,749)	7,769)	5,595)	5,017)
Deferred income tax expense (benefit)¹	(299)	(191)	15)	(137)	81)
Increase (decrease) in accounts receivable allowances²	3)	5)	(3)	3)	(11)
Increase (decrease) in accrued restructuring³	—)	(5)	(13)	18)	(28)
Increase (decrease) in equity equivalents⁴	(296)	(191)	(1)	(116)	42)
Interest and debt expense	353)	214)	184)	190)	170)
Interest expense, operating lease liability⁵	24)	11)	12)	10)	11)
Adjusted interest and debt expense	377)	225)	196)	200)	181)
Tax benefit of interest and debt expense⁶	(79)	(47)	(41)	(42)	(38)
Adjusted interest and debt expense, after taxes⁷	298)	178)	155)	158)	143)
Net operating profit after taxes (NOPAT)	6,512)	8,736)	7,923)	5,637)	5,202)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 566 × 4.22% = 24

⁶ 2023 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 377 × 21.00% = 79

⁷ Addition of after taxes interest expense to net income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Texas Instruments Inc. NOPAT increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Texas Instruments Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision for income taxes	908)	1,283)	1,150)	422)	711)
Less: Deferred income tax expense (benefit)	(299)	(191)	15)	(137)	81)
Add: Tax savings from interest and debt expense	79)	47)	41)	42)	38)
Cash operating taxes	1,286)	1,521)	1,176)	601)	668)

Based on: 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), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Texas Instruments Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Texas Instruments Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of long-term debt	599)	500)	500)	550)	500)
Long-term debt, excluding current portion	10,624)	8,235)	7,241)	6,248)	5,303)
Operating lease liability¹	566)	419)	465)	321)	332)
Total reported debt & leases	11,789)	9,154)	8,206)	7,119)	6,135)
Stockholders’ equity	16,897)	14,577)	13,333)	9,187)	8,907)
Net deferred tax (assets) liabilities²	(694)	(407)	(176)	(253)	(119)
Accounts receivable allowances³	16)	13)	8)	11)	8)
Accrued restructuring⁴	—)	—)	5)	18)	—)
Equity equivalents⁵	(678)	(394)	(163)	(224)	(111)
Accumulated other comprehensive (income) loss, net of tax⁶	205)	254)	157)	360)	347)
Adjusted stockholders’ equity	16,424)	14,437)	13,327)	9,323)	9,143)
Investments measured at fair value⁷	(5,623)	(6,028)	(5,124)	(3,479)	(3,222)
Invested capital	22,590)	17,563)	16,409)	12,963)	12,056)

Based on: 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), 10-K (reporting date: 2019-12-31).

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.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Texas Instruments Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Texas Instruments Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	144,759)	144,759)	÷	156,005)	=	0.93	0.93	×	13.92%	=	12.92%
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					13.12%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	165,192)	165,192)	÷	173,471)	=	0.95	0.95	×	13.92%	=	13.25%
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					13.37%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	158,314)	158,314)	÷	167,159)	=	0.95	0.95	×	13.92%	=	13.18%
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					13.29%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	156,376)	156,376)	÷	164,477)	=	0.95	0.95	×	13.92%	=	13.23%
Long-term debt, including current portion³	7,780)	7,780)	÷	164,477)	=	0.05	0.05	×	2.77% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	321)	321)	÷	164,477)	=	0.00	0.00	×	3.02% × (1 – 21.00%)	=	0.00%
Total:	164,477)					1.00					13.34%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	122,790)	122,790)	÷	129,412)	=	0.95	0.95	×	13.92%	=	13.21%
Long-term debt, including current portion³	6,290)	6,290)	÷	129,412)	=	0.05	0.05	×	2.99% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	332)	332)	÷	129,412)	=	0.00	0.00	×	3.37% × (1 – 21.00%)	=	0.01%
Total:	129,412)					1.00					13.33%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Texas Instruments Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	3,549)	6,389)	5,742)	3,907)	3,595)
Invested capital²	22,590)	17,563)	16,409)	12,963)	12,056)
Performance Ratio
Economic spread ratio³	15.71%	36.38%	34.99%	30.14%	29.82%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	-19.23%	-18.95%	37.79%	11.53%	-6.60%
Analog Devices Inc.	-6.88%	-8.24%	-11.51%	-6.57%	-5.03%
Applied Materials Inc.	19.04%	28.91%	24.43%	12.60%	12.22%
Broadcom Inc.	9.60%	8.02%	-1.36%	-6.91%	-6.61%
Intel Corp.	-13.29%	-6.86%	10.33%	16.00%	14.09%
KLA Corp.	25.21%	27.46%	16.12%	4.96%	6.46%
Lam Research Corp.	11.51%	26.12%	25.58%	8.58%	5.12%
Micron Technology Inc.	-25.51%	2.33%	-2.19%	-7.80%	2.38%
NVIDIA Corp.	-8.89%	33.31%	13.74%	-0.26%	60.33%
ON Semiconductor Corp.	0.43%	2.33%	-2.02%	-13.34%	-9.89%
Qualcomm Inc.	3.74%	30.18%	27.59%	12.63%	14.02%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 3,549 ÷ 22,590 = 15.71%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Texas Instruments Inc. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Texas Instruments Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	3,549)	6,389)	5,742)	3,907)	3,595)
Revenue	17,519)	20,028)	18,344)	14,461)	14,383)
Performance Ratio
Economic profit margin²	20.26%	31.90%	31.30%	27.02%	25.00%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	-49.07%	-46.98%	14.24%	5.15%	-3.34%
Analog Devices Inc.	-24.70%	-30.88%	-73.96%	-21.34%	-15.42%
Applied Materials Inc.	12.77%	16.69%	15.59%	9.59%	8.48%
Broadcom Inc.	16.80%	15.01%	-3.20%	-19.07%	-17.56%
Intel Corp.	-22.57%	-9.65%	11.57%	16.85%	15.78%
KLA Corp.	20.03%	23.21%	15.89%	5.56%	9.01%
Lam Research Corp.	10.02%	18.95%	18.26%	8.40%	4.47%
Micron Technology Inc.	-87.76%	4.00%	-3.67%	-15.39%	3.95%
NVIDIA Corp.	-7.04%	22.33%	10.74%	-0.33%	24.63%
ON Semiconductor Corp.	0.57%	2.62%	-2.27%	-17.49%	-12.29%
Qualcomm Inc.	3.29%	20.10%	16.62%	9.53%	12.38%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 3,549 ÷ 17,519 = 20.26%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Texas Instruments Inc. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Texas Instruments Inc. (NASDAQ:TXN)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin