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
AT&T 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
= 32,194 – 8.51% × 337,331 = 3,504
The financial performance from 2021 through 2025 is characterized by significant volatility in operating profitability and a fluctuating capacity to generate economic value above the cost of capital. While the period concludes with a return to positive economic profit, a substantial portion of the intervening years was marked by value destruction.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability experienced extreme fluctuations, with a precipitous decline in 2022 where NOPAT fell to 1,500 million US dollars from 32,698 million US dollars in 2021. A recovery trend followed in 2023 and 2025, with the 2025 figure reaching 32,194 million US dollars, nearly returning to the baseline observed at the start of the period.
- Cost of Capital
- The cost of capital exhibited a general upward trajectory, rising from 7.12% in 2021 to a peak of 8.64% in 2024, before settling at 8.51% in 2025. This increase indicates a higher threshold for the return required to cover the cost of financing and investment, thereby placing additional pressure on the ability to generate positive economic profit.
- Invested Capital
- Invested capital underwent a sharp contraction in 2022, decreasing from 439,195 million US dollars to 309,447 million US dollars. Following this reduction, the capital base remained relatively stable, oscillating between 314,065 million and 337,331 million US dollars through 2025.
- Economic Profit
- Economic profit transitioned from a positive 1,438 million US dollars in 2021 to a severe deficit of -22,440 million US dollars in 2022. Despite a partial recovery in 2023, value destruction persisted through 2024. Value creation resumed in 2025, with economic profit reaching 3,504 million US dollars, marking the highest positive value in the analyzed five-year period.
The correlation between the sharp decline in NOPAT and the subsequent negative economic profit suggests that operational volatility was the primary driver of value destruction between 2022 and 2024. The eventual return to positive economic profit in 2025 was achieved through a recovery in operating earnings that sufficiently offset both the increased cost of capital and the stabilized level of invested capital.
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Net Operating Profit after Taxes (NOPAT)
AT&T 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 allowance for credit loss.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AT&T.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 22,524 × 4.60% = 1,036
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 7,840 × 21.00% = 1,646
6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 399 × 21.00% = 84
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
Net operating profit after taxes (NOPAT) exhibited significant fluctuation over the five-year period. While net income attributable to AT&T also showed volatility, the NOPAT figures present a distinct pattern of initial decline, subsequent recovery, and further growth. A substantial decrease in NOPAT is observed between 2021 and 2022, followed by a period of recovery and expansion through 2025.
- NOPAT Trend
- In 2021, NOPAT stood at US$32,698 million. This value decreased dramatically to US$1,500 million in 2022, representing a significant contraction in operating profitability. A strong recovery occurred in 2023, with NOPAT reaching US$22,742 million. This upward trend continued into 2024, with NOPAT reported at US$18,826 million, although at a slower rate of increase than the prior year. Finally, NOPAT experienced substantial growth in 2025, reaching US$32,194 million, nearly returning to the level observed in 2021.
- Relationship to Net Income
- The divergence between NOPAT and net income is notable. While net income experienced a substantial loss in 2022, NOPAT, though significantly reduced, remained positive. This suggests that non-operating items contributed substantially to the net loss in 2022. In 2023 and 2025, NOPAT growth outpaced net income growth, indicating improved core operational performance relative to other financial influences. The difference between NOPAT and net income suggests the presence of significant interest expense, non-recurring items, or tax adjustments impacting the bottom line.
The fluctuations in NOPAT warrant further investigation to understand the underlying drivers. The sharp decline in 2022 requires detailed analysis of operational performance, cost structures, and any significant one-time events. The subsequent recovery and growth demonstrate an ability to improve operational profitability, but the slower growth rate in 2024 suggests potential headwinds or challenges to sustaining the momentum. The strong performance in 2025 indicates a return to robust operational profitability.
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Cash Operating Taxes
AT&T Inc., cash operating taxes calculation
US$ 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 reported income tax expense demonstrates fluctuation over the five-year period. A decrease is observed from 2021 to 2022, followed by increases in 2022 and 2023, a further increase in 2024, and then a decrease in 2025. However, cash operating taxes exhibit a different pattern, showing a more substantial increase between 2021 and 2024 before declining in the most recent year.
- Income Tax Expense Trend
- Income tax expense began at US$5,468 million in 2021, decreased to US$3,780 million in 2022, and then increased to US$4,225 million in 2023. This upward trend continued into 2024, reaching US$4,445 million, before decreasing to US$3,621 million in 2025. The largest single-year decrease occurred between 2021 and 2022, while the largest single-year increase occurred between 2022 and 2023.
- Cash Operating Taxes Trend
- Cash operating taxes increased from US$1,603 million in 2021 to US$2,134 million in 2022. A significant increase is then observed, rising to US$4,298 million in 2023 and further to US$5,277 million in 2024. In 2025, cash operating taxes decreased substantially to US$2,308 million. The period between 2021 and 2024 shows a consistent upward trajectory, while 2025 represents a considerable decline.
- Relationship Between Income Tax Expense and Cash Operating Taxes
- While both metrics relate to taxation, their movements diverge. Cash operating taxes generally increased at a faster rate than income tax expense between 2021 and 2024. The substantial decrease in cash operating taxes in 2025, while income tax expense also decreased, suggests a potential shift in the timing of tax payments or changes in tax planning strategies. The difference between the two metrics indicates the presence of deferred tax items or other non-cash tax effects.
The fluctuations in both income tax expense and cash operating taxes warrant further investigation to understand the underlying drivers. The significant divergence in trends between the two metrics, particularly in 2025, suggests a need to examine the components of each figure in greater detail.
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Invested Capital
AT&T Inc., invested capital calculation (financing approach)
US$ 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 equity equivalents to stockholders’ equity attributable to AT&T.
5 Removal of accumulated other comprehensive income.
6 Subtraction of under construction.
7 Subtraction of investment securities.
The reported invested capital exhibited considerable fluctuation over the five-year period. Total reported debt & leases and stockholders’ equity attributable to AT&T both experienced significant changes, contributing to the observed trends in invested capital.
- Invested Capital Trend
- Invested capital decreased substantially from US$439,195 million in 2021 to US$309,447 million in 2022, representing a decline of approximately 29.7%. A moderate increase followed, with invested capital reaching US$326,144 million in 2023. This was followed by a slight decrease to US$314,065 million in 2024. The most recent year, 2025, shows a further increase to US$337,331 million.
- Debt & Leases
- Total reported debt & leases decreased significantly from US$202,321 million in 2021 to US$158,096 million in 2022, a reduction of roughly 21.8%. The level remained relatively stable through 2023 at US$158,423 million, before decreasing again to US$144,456 million in 2024. In 2025, debt & leases increased to US$158,624 million, approaching the 2022 level.
- Stockholders’ Equity
- Stockholders’ equity attributable to AT&T experienced a substantial decrease from US$166,332 million in 2021 to US$97,500 million in 2022, a decline of approximately 41.2%. Subsequent years showed a recovery, with equity increasing to US$103,297 million in 2023, US$104,372 million in 2024, and further to US$110,533 million in 2025. While recovering, equity levels remained below those observed in 2021.
The fluctuations in invested capital appear to be driven primarily by the significant changes in both debt & leases and stockholders’ equity. The substantial decrease in both components in 2022 resulted in the largest drop in invested capital during the period. The subsequent recovery in equity, coupled with relatively stable debt levels in 2023-2025, contributed to the stabilization and modest increase in invested capital observed in those years.
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Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 189,786) | 189,786) | ÷ | 343,842) | = | 0.55 | 0.55 | × | 12.66% | = | 6.99% | ||
| 5.000% Perpetual Preferred Stock, Series A | 967) | 967) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 5.00% | = | 0.01% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,331) | 1,331) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 129,234) | 129,234) | ÷ | 343,842) | = | 0.38 | 0.38 | × | 4.20% × (1 – 21.00%) | = | 1.25% | ||
| Operating lease liability4 | 22,524) | 22,524) | ÷ | 343,842) | = | 0.07 | 0.07 | × | 4.60% × (1 – 21.00%) | = | 0.24% | ||
| Total: | 343,842) | 1.00 | 8.51% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 182,039) | 182,039) | ÷ | 320,946) | = | 0.57 | 0.57 | × | 12.66% | = | 7.18% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,010) | 1,010) | ÷ | 320,946) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,390) | 1,390) | ÷ | 320,946) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 115,583) | 115,583) | ÷ | 320,946) | = | 0.36 | 0.36 | × | 4.20% × (1 – 21.00%) | = | 1.19% | ||
| Operating lease liability4 | 20,924) | 20,924) | ÷ | 320,946) | = | 0.07 | 0.07 | × | 4.50% × (1 – 21.00%) | = | 0.23% | ||
| Total: | 320,946) | 1.00 | 8.64% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 120,167) | 120,167) | ÷ | 276,051) | = | 0.44 | 0.44 | × | 12.66% | = | 5.51% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,008) | 1,008) | ÷ | 276,051) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,381) | 1,381) | ÷ | 276,051) | = | 0.01 | 0.01 | × | 4.75% | = | 0.02% | ||
| Debt3 | 132,403) | 132,403) | ÷ | 276,051) | = | 0.48 | 0.48 | × | 4.23% × (1 – 21.00%) | = | 1.60% | ||
| Operating lease liability4 | 21,092) | 21,092) | ÷ | 276,051) | = | 0.08 | 0.08 | × | 4.10% × (1 – 21.00%) | = | 0.25% | ||
| Total: | 276,051) | 1.00 | 7.40% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 137,321) | 137,321) | ÷ | 286,836) | = | 0.48 | 0.48 | × | 12.66% | = | 6.06% | ||
| 5.000% Perpetual Preferred Stock, Series A | 881) | 881) | ÷ | 286,836) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,221) | 1,221) | ÷ | 286,836) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 125,207) | 125,207) | ÷ | 286,836) | = | 0.44 | 0.44 | × | 4.10% × (1 – 21.00%) | = | 1.41% | ||
| Operating lease liability4 | 22,206) | 22,206) | ÷ | 286,836) | = | 0.08 | 0.08 | × | 3.70% × (1 – 21.00%) | = | 0.23% | ||
| Total: | 286,836) | 1.00 | 7.74% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 171,001) | 171,001) | ÷ | 402,190) | = | 0.43 | 0.43 | × | 12.66% | = | 5.38% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,286) | 1,286) | ÷ | 402,190) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,838) | 1,838) | ÷ | 402,190) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 203,098) | 203,098) | ÷ | 402,190) | = | 0.50 | 0.50 | × | 3.80% × (1 – 21.00%) | = | 1.52% | ||
| Operating lease liability4 | 24,967) | 24,967) | ÷ | 402,190) | = | 0.06 | 0.06 | × | 3.70% × (1 – 21.00%) | = | 0.18% | ||
| Total: | 402,190) | 1.00 | 7.12% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
AT&T 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 | 3,504) | (8,321) | (1,403) | (22,440) | 1,438) | |
| Invested capital2 | 337,331) | 314,065) | 326,144) | 309,447) | 439,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.04% | -2.65% | -0.43% | -7.25% | 0.33% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | 1.26% | 1.31% | -0.31% | -4.08% | -4.01% | |
| Verizon Communications Inc. | 0.29% | 0.63% | -0.94% | 2.09% | 2.84% | |
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 × 3,504 ÷ 337,331 = 1.04%
4 Click competitor name to see calculations.
The analysis of economic value addition reveals a period of significant volatility between 2021 and 2025, characterized by a sharp transition from value creation to value destruction and a subsequent recovery. The financial trajectory indicates substantial fluctuations in both the capital base and the ability to generate returns exceeding the cost of capital.
- Economic Profit
- A volatile trend is observed in economic profit, which began at 1,438 million US dollars in 2021 before plummeting to a significant deficit of 22,440 million US dollars in 2022. Although a partial recovery occurred in 2023, a secondary decline to 8,321 million US dollars was recorded in 2024. By 2025, the figure returned to positive territory, reaching 3,504 million US dollars, marking the highest level of economic profit within the analyzed period.
- Invested Capital
- Invested capital experienced a substantial reduction between 2021 and 2022, falling from 439,195 million US dollars to 309,447 million US dollars. Following this contraction, the capital base remained relatively stable, fluctuating between approximately 314,000 million and 337,000 million US dollars through 2025. This suggests a significant restructuring of the asset base or a major divestiture occurring after 2021.
- Economic Spread Ratio
- The economic spread ratio closely mirrors the movements of economic profit, indicating the margin by which returns exceed the cost of capital. The ratio dropped from a positive 0.33% in 2021 to a severe low of -7.25% in 2022. While the spread improved to -0.43% in 2023, it dipped again to -2.65% in 2024. The period concludes with a positive spread of 1.04% in 2025, signaling a return to efficient capital utilization and value creation.
The correlation between the decrease in invested capital and the volatility of the economic spread ratio suggests a period of operational realignment. The return to a positive economic spread ratio in 2025 indicates that the organization has successfully adjusted its capital structure or operational efficiency to generate returns that once again exceed its cost of capital.
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Economic Profit Margin
AT&T 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 | 3,504) | (8,321) | (1,403) | (22,440) | 1,438) | |
| Operating revenues | 125,648) | 122,336) | 122,428) | 120,741) | 168,864) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.79% | -6.80% | -1.15% | -18.59% | 0.85% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | 2.81% | 3.01% | -0.74% | -9.56% | -9.23% | |
| Verizon Communications Inc. | 0.70% | 1.44% | -2.13% | 4.61% | 6.17% | |
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 ÷ Operating revenues
= 100 × 3,504 ÷ 125,648 = 2.79%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by significant volatility in economic value creation, coupled with a structural shift in operating revenues.
- Operating Revenue Trends
- A substantial decrease in operating revenues occurred between 2021 and 2022, falling from 168,864 million to 120,741 million. Following this contraction, revenues remained relatively stagnant through 2024, ending with a marginal increase to 125,648 million by 2025.
- Economic Profit Volatility
- Economic profit exhibited extreme fluctuations throughout the period. After a positive result in 2021, a severe deficit of 22,440 million was recorded in 2022. Although 2023 showed a recovery toward the break-even point, a secondary decline occurred in 2024, with losses widening to 8,321 million. A return to positive value creation is evident in 2025, with economic profit rising to 3,504 million.
- Economic Profit Margin Analysis
- The economic profit margin reflects the volatility of value creation relative to the scale of operations. The margin collapsed from 0.85% in 2021 to -18.59% in 2022. Despite a brief improvement to -1.15% in 2023, the margin deteriorated again to -6.80% in 2024 before achieving its highest level of the period at 2.79% in 2025.
The observed patterns indicate a period of financial instability where the cost of capital frequently exceeded operating returns between 2022 and 2024, followed by a recovery in 2025 that restored the capacity to generate economic value.
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