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.
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AT&T Inc. pages available for free this week:
- Income Statement
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
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Economic Profit
AT&T Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibited significant volatility over the observed periods. It started relatively low at 4,489 million USD in 2020, followed by a sharp increase to 32,698 million USD in 2021. However, this was followed by a steep decline to 1,500 million USD in 2022. Subsequently, there was a recovery to 22,742 million USD in 2023, but a decline occurred again in 2024, with NOPAT decreasing to 18,826 million USD. This pattern indicates considerable fluctuations in operating profitability after taxes, signaling variability in operational efficiency or external market impacts across years.
- Cost of Capital
- The cost of capital showed minor fluctuations, ranging between 6.87% and 8.31%. Specifically, it decreased from 7.52% in 2020 to a low of 6.87% in 2021, then rose to 7.45% in 2022. It slightly lowered to 7.15% in 2023, and increased noticeably to 8.31% in 2024. The rising trend in the latest year could indicate increased perceived risk or changes in financing costs.
- Invested Capital
- Invested capital displayed a general decreasing trend over the period. It started at 412,041 million USD in 2020, increased to 439,195 million USD in 2021, then decreased significantly to 309,447 million USD in 2022. Following this, a slight increase and subsequent reduction were observed, with values of 326,144 million USD in 2023 and 314,065 million USD in 2024 respectively. This decline might reflect divestitures or asset optimization efforts.
- Economic Profit
- Economic profit was negative in most periods, indicating that the company often failed to generate returns above its cost of capital. It was -26,500 million USD in 2020, turned positive at 2,537 million USD in 2021, then sharply declined to -21,568 million USD in 2022. The value remained negative but improved slightly to -567 million USD in 2023 before deteriorating again to -7,271 million USD in 2024. These figures underline persistent challenges in value creation and suggest that despite occasional improvements, the company generally struggled to exceed its capital costs.
Net Operating Profit after Taxes (NOPAT)
AT&T Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
The financial data indicates notable fluctuations in profitability metrics over the five-year period.
- Net Income (Loss) Attributable to the Company
- The net income demonstrates significant volatility, beginning with a substantial loss of approximately 5,176 million US dollars at the end of 2020. This is followed by a sharp turnaround in 2021, with net income reaching an impressive 20,081 million US dollars. However, this positive result was not sustained, as net income reverted to a loss of around 8,524 million in 2022. Subsequently, the company recovered again with net income of 14,400 million in 2023, before experiencing a moderate decline to 10,948 million in 2024. The pattern suggests a cyclical or event-driven influence on profitability, with pronounced peaks and troughs.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a similar pattern of fluctuations, though trends show a stronger positive trajectory post-2020. Starting from 4,489 million in 2020, there was a notable surge to 32,698 million in 2021, reaching the peak value within the dataset. A sharp drop to 1,500 million follows in 2022, indicating substantial operational or performance challenges. Recovery is evident thereafter, with NOPAT climbing back to 22,742 million in 2023 and slightly declining to 18,826 million in 2024. These variations highlight periods of operational strength and weakness, indicating potential impacts from market conditions, restructuring, or other internal and external factors affecting operating efficiency and profitability.
Overall, both net income and NOPAT metrics reflect high volatility but suggest a capacity for rapid recovery following downturns. Despite these fluctuations, the company managed to maintain generally positive operating profitability from 2021 onwards, although net income was less consistent. The downward adjustments in the latest year indicate caution and emphasize the need to monitor ongoing financial performance and underlying factors driving the variability.
Cash Operating Taxes
AT&T Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense shows a marked increase from 965 million US dollars in 2020 to a peak of 5,468 million US dollars in 2021. This sharp rise is followed by a decline to 3,780 million US dollars in 2022. Subsequently, the tax expense exhibits a gradual increase over the next two periods, reaching 4,445 million US dollars by the end of 2024. Overall, the trend highlights significant volatility with an initial surge, a drop, and then stabilization at a relatively high level compared to the starting point.
- Cash Operating Taxes
- Cash operating taxes present a steady upward trajectory throughout the analyzed period. The values begin at 1,602 million US dollars in 2020 and remain relatively stable into 2021 at 1,603 million US dollars. After this point, there is a substantial increase to 2,134 million US dollars in 2022, followed by a pronounced rise to 4,298 million US dollars in 2023 and further growth to 5,277 million US dollars in 2024. This consistent increase indicates growing cash tax payments, potentially reflecting heightened operational profitability or changes in tax regulation or payment timing.
- Comparative Observation
- Comparing both items, cash operating taxes have increased consistently every year following a plateau in the first two years, whereas income tax expense has shown more fluctuation. The disparity between income tax expense and cash operating taxes narrows over time, especially from 2023 onwards, suggesting a possible alignment between reported tax expenses and actual cash tax outflows in the most recent periods.
Invested Capital
AT&T Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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.
- Total reported debt & leases
-
The total reported debt and leases showed an initial increase from 182,984 million USD in 2020 to 202,321 million USD in 2021, reflecting a rising leverage or financing need in that period. Subsequently, there was a marked decline to 158,096 million USD in 2022, which remained relatively stable in 2023 at 158,423 million USD before continuing to decrease to 144,456 million USD by the end of 2024. The overall trend from 2021 to 2024 indicates a strategic reduction in debt obligations, potentially aimed at deleveraging and improving financial stability.
- Stockholders’ equity attributable to AT&T
-
Stockholders' equity attributable to the company gradually increased from 161,673 million USD in 2020 to 166,332 million USD in 2021. However, a significant drop occurred in 2022, bringing equity down to 97,500 million USD. Following this decline, there was a modest recovery to 103,297 million USD in 2023 and a slight increase to 104,372 million USD in 2024. This decline in 2022 could signify a major event such as restructuring, asset revaluation, or other factors impacting retained earnings or equity components, with partial recovery in the subsequent years.
- Invested capital
-
Invested capital exhibited an upward trajectory from 412,041 million USD in 2020 to 439,195 million USD in 2021, suggesting an increase in capital investment or assets employed in operations. However, this was followed by a notable decrease to 309,447 million USD in 2022, partly recovering to 326,144 million USD in 2023 before decreasing again to 314,065 million USD in 2024. The fluctuations in invested capital closely mirror the changes in equity, indicating possible asset disposals, changes in working capital, or other operational adjustments that influenced the capital base over the period.
Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit Trend
- The economic profit exhibits a highly volatile pattern over the observed periods. Initially, there is a significant negative value at the end of 2020, indicating substantial losses. In 2021, the company records a positive economic profit, reflecting an improved financial performance. However, this is followed by a sharp decline back to negative territory in 2022. The subsequent years, 2023 and 2024, also demonstrate negative economic profit values, though less severe than in 2020 and 2022, indicating ongoing challenges in generating value above the cost of capital.
- Invested Capital Dynamics
- Invested capital increased from 2020 to 2021, suggesting expansion or increased investment during that period. However, there is a marked decrease from 2021 through 2024. The decline could suggest divestitures, asset sales, or a strategic contraction of invested resources. Despite this reduction, the invested capital maintains a relatively high level, implying a substantial asset base remains in place.
- Economic Spread Ratio Analysis
- The economic spread ratio closely mirrors the fluctuations in economic profit. It turns positive in 2021, indicating the company's return on invested capital exceeded its cost of capital during that year. Nevertheless, in all other years, the ratio remains negative, signaling that the company typically underperforms relative to its capital costs. The magnitude of negative spreads is most pronounced in 2020 and 2022, while the values for 2023 and 2024 show some moderation but still highlight challenges in value creation.
- Overall Insights
- The data reveals a pattern of inconsistent economic profitability, with a brief period of favorable returns in 2021 amid predominately negative outcomes. The reduction in invested capital after 2021 may reflect strategic shifts or operational responses to financial pressures. Persistent negative economic spreads underscore the difficulty in consistently generating returns above the cost of capital, suggesting a need for ongoing financial or operational improvements.
Economic Profit Margin
AT&T Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | ||||||
| Verizon Communications Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit figures demonstrate significant volatility over the observed period. In 2020, the company experienced a large economic loss of 26,500 million USD. This was followed by a substantial positive turnaround in 2021, with economic profit rising to 2,537 million USD. However, the trend reversed sharply in 2022 with another considerable loss of 21,568 million USD. Losses continued in 2023 and 2024, albeit at lower levels compared to 2020 and 2022, with values of -567 and -7,271 million USD respectively. This pattern indicates an unstable profitability performance, with large fluctuations and no sustained positive economic profit over the period.
- Operating Revenues
- Operating revenues show a declining trend from 2020 through 2022. Revenues decreased from 171,760 million USD in 2020 to 120,741 million USD in 2022, representing a significant drop. The revenue remained relatively stable thereafter, with only slight increases to 122,428 million USD in 2023 and a marginal decrease to 122,336 million USD in 2024. Overall, the revenue trajectory suggests a notable contraction in the earlier years followed by relative stabilization.
- Economic Profit Margin
- The economic profit margin aligns closely with the economic profit trends, showing negative margins for most years. In 2020, the margin was strongly negative at -15.43%, recovering to a small positive margin of 1.5% in 2021. The margin then declined again to -17.86% in 2022, reflecting the sharp economic loss in that year. The margin improved markedly in 2023 to -0.46%, hinting at near breakeven economic profitability, before worsening again in 2024 to -5.94%. This pattern confirms an inconsistent ability to generate economic profit relative to operating revenues, with margins fluctuating between losses and limited gains.