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 – 8.48% × 337,331 = 3,577
The financial performance between 2021 and 2025 is characterized by significant volatility in operating profitability and a fluctuating ability to generate economic value above the cost of capital. A period of substantial value destruction occurred between 2022 and 2024, followed by a recovery to a positive economic profit position by the end of 2025.
- Net Operating Profit After Taxes (NOPAT)
- A severe contraction in NOPAT is observed in 2022, falling from 32,698 million USD in 2021 to 1,500 million USD. While a strong recovery followed in 2023 and 2025, reaching 32,194 million USD, the 2024 period saw a moderate decline to 18,826 million USD. This volatility indicates inconsistent operational efficiency or significant non-recurring impacts on operating results during this five-year window.
- Cost of Capital and Invested Capital
- The cost of capital exhibits a general upward trend, rising from 7.10% in 2021 to a peak of 8.62% in 2024, before settling at 8.48% in 2025. Simultaneously, invested capital underwent a sharp reduction in 2022, dropping from 439,195 million USD to 309,447 million USD. Since 2022, the capital base has remained relatively stable, fluctuating between 309 billion and 337 billion USD, suggesting a strategic downsizing or divestment of assets early in the period.
- Economic Profit Trends
- Economic profit remained negative for three consecutive years from 2022 to 2024, with the most acute value destruction occurring in 2022 at -22,382 million USD. The negative results in 2023 and 2024 indicate that the NOPAT generated was insufficient to cover the imputed cost of the invested capital. A reversal of this trend is evident in 2025, where economic profit returned to a positive value of 3,577 million USD, marking the highest level of value creation in the analyzed period.
The overall analysis suggests that while the reduction in invested capital lowered the absolute capital charge, the simultaneous collapse of NOPAT in 2022 and the rising cost of capital hindered the organization's ability to create economic value. The return to a positive economic profit in 2025 reflects a successful alignment of operational profitability with the prevailing cost of 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$110,533 million in 2025. While recovering, equity levels remained below those observed in 2021.
The fluctuations in invested capital appear to be driven primarily by the significant changes in both debt & leases and stockholders’ equity. The substantial decrease in both components in 2022 resulted in the largest drop in invested capital during the period. The subsequent recovery in equity, coupled with relatively stable debt levels in 2023-2025, contributed to the stabilization and modest increase in invested capital observed in those years.
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Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 189,786) | 189,786) | ÷ | 343,842) | = | 0.55 | 0.55 | × | 12.62% | = | 6.97% | ||
| 5.000% Perpetual Preferred Stock, Series A | 967) | 967) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 5.00% | = | 0.01% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,331) | 1,331) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 129,234) | 129,234) | ÷ | 343,842) | = | 0.38 | 0.38 | × | 4.20% × (1 – 21.00%) | = | 1.25% | ||
| Operating lease liability4 | 22,524) | 22,524) | ÷ | 343,842) | = | 0.07 | 0.07 | × | 4.60% × (1 – 21.00%) | = | 0.24% | ||
| Total: | 343,842) | 1.00 | 8.48% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 12.62% | = | 7.16% | ||
| 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 | 8.62% | ||||||||||
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 | × | 12.62% | = | 5.49% | ||
| 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 | 7.39% | ||||||||||
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 | × | 12.62% | = | 6.04% | ||
| 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 | 7.72% | ||||||||||
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 | × | 12.62% | = | 5.37% | ||
| 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 | 7.10% | ||||||||||
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 | 3,577) | (8,250) | (1,347) | (22,382) | 1,511) | |
| Invested capital2 | 337,331) | 314,065) | 326,144) | 309,447) | 439,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.06% | -2.63% | -0.41% | -7.23% | 0.34% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | 1.29% | 1.35% | -0.27% | -4.04% | -3.98% | |
| Verizon Communications Inc. | 0.33% | 0.67% | -0.90% | 2.13% | 2.88% | |
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 × 3,577 ÷ 337,331 = 1.06%
4 Click competitor name to see calculations.
The financial trajectory between 2021 and 2025 is characterized by significant volatility in value creation, marked by a severe contraction in 2022 and a gradual recovery culminating in positive economic performance by the end of the period.
- Economic Profit
- A substantial shift is observed from a positive economic profit of 1,511 million USD in 2021 to a sharp decline of -22,382 million USD in 2022. While a partial recovery occurred in 2023, performance deteriorated again in 2024 to -8,250 million USD. However, the trend reversed in 2025, with economic profit returning to positive territory at 3,577 million USD, marking the highest value in the analyzed timeframe.
- Invested Capital
- Invested capital experienced a significant reduction of approximately 29.5% between 2021 and 2022, dropping from 439,195 million USD to 309,447 million USD. Following this sharp decline, the capital base remained relatively stable, fluctuating between 314,065 million USD and 337,331 million USD through 2025, suggesting a strategic resizing of the balance sheet.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility of economic profit, plummeting from 0.34% in 2021 to -7.23% in 2022, indicating a period of significant value destruction where the return on capital fell well below the cost of capital. Despite intermittent improvements in 2023 and a subsequent dip to -2.63% in 2024, the ratio reached a peak of 1.06% in 2025. This indicates that the organization successfully transitioned back to creating economic value above its cost of capital by the final year of the period.
The correlation between the contraction of invested capital and the subsequent fluctuations in the economic spread ratio suggests a period of structural adjustment. The return to a positive spread of 1.06% in 2025 indicates a recovery in operational efficiency or a reduction in the weighted average cost of capital relative to the returns generated on the invested base.
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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 | 3,577) | (8,250) | (1,347) | (22,382) | 1,511) | |
| Operating revenues | 125,648) | 122,336) | 122,428) | 120,741) | 168,864) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.85% | -6.74% | -1.10% | -18.54% | 0.89% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | 2.90% | 3.10% | -0.65% | -9.47% | -9.16% | |
| Verizon Communications Inc. | 0.79% | 1.52% | -2.05% | 4.68% | 6.25% | |
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 × 3,577 ÷ 125,648 = 2.85%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by significant volatility in economic value generation and a structural shift in operating revenues. A substantial contraction occurred in 2022, leading to a period of unstable economic profit before a recovery was realized in 2025.
- Economic Profit Margin Trends
- The economic profit margin experienced a severe decline from 0.89% in 2021 to -18.54% in 2022. Although a partial recovery was observed in 2023 at -1.10%, the margin declined again to -6.74% in 2024. By 2025, the margin reached its highest point in the analyzed period at 2.85%.
- Economic Profit Performance
- Absolute economic profit transitioned from a positive US$ 1,511 million in 2021 to a significant deficit of US$ 22,382 million in 2022. This downward trajectory was followed by fluctuating negative values in 2023 (US$ -1,347 million) and 2024 (US$ -8,250 million), before returning to a positive position of US$ 3,577 million in 2025.
- Operating Revenue Analysis
- A sharp reduction in operating revenues is noted between 2021 and 2022, decreasing from US$ 168,864 million to US$ 120,741 million. Revenues remained relatively stable between 2022 and 2024, with a slight upward trend emerging in 2025 as revenues rose to US$ 125,648 million.
The data suggests that the substantial drop in revenues in 2022 coincided with a peak in economic loss, indicating a period of significant value erosion. However, the transition to a positive economic profit margin and a positive absolute economic profit by 2025 demonstrates a recovery in the ability to generate returns above the cost of capital.
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