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 net operating profit after taxes exhibited considerable volatility across the periods. It increased sharply from 4,489 million US dollars in 2020 to a peak of 32,698 million in 2021, followed by a substantial drop to 1,500 million in 2022. Thereafter, NOPAT recovered to 22,742 million in 2023 but declined again to 18,826 million in 2024. This pattern indicates a highly fluctuating profitability performance over the five-year span.
- Cost of Capital
- The cost of capital demonstrated minor variations over the years, beginning at 7.53% in 2020 and slightly declining to 6.87% in 2021. It then increased marginally to 7.46% in 2022 and decreased again to 7.15% in 2023 before rising notably to 8.32% in 2024. The increasing trend towards the end of the period may suggest rising financing expenses or higher perceived risk.
- Invested Capital
- Invested capital showed a decline over the analyzed periods. It started at 412,041 million US dollars in 2020, increasing to a maximum of 439,195 million in 2021. Thereafter, a consistent decrease was observed down to 309,447 million in 2022, with slight recoveries in 2023 and 2024 to 326,144 million and 314,065 million respectively. This general downward trend from 2021's peak may reflect divestitures, depreciation, or capital restructuring.
- Economic Profit
- Economic profit, reflecting the residual income after accounting for the cost of capital, fluctuated significantly, remaining mostly negative for the periods analyzed. It was markedly negative at -26,530 million in 2020, turned positive to 2,509 million in 2021, but reverted dramatically to -21,590 million in 2022. Smaller negative values were recorded in 2023 (-589 million) and 2024 (-7,299 million). The oscillations suggest challenges in consistently generating returns above the cost of capital, with only 2021 showing a positive value.
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
- The economic profit exhibits significant volatility between 2020 and 2024. Initially, there is a substantial negative value in 2020 at -26,530 million US dollars, followed by a marked improvement to a positive economic profit of 2,509 million US dollars in 2021. However, this positive trend reverses sharply in 2022 with a large negative economic profit of -21,590 million US dollars. In subsequent years, the values remain negative but at reduced magnitudes: -589 million in 2023 and -7,299 million in 2024. This irregular pattern suggests fluctuations in the company's profitability relative to its cost of capital.
- Invested Capital
- Invested capital shows an overall decreasing trend after peaking in 2021. Starting at 412,041 million US dollars in 2020, it increases to 439,195 million in 2021, indicating expanded investment. However, there is a substantial decline to 309,447 million in 2022. Following this drop, the invested capital slightly increases to 326,144 million in 2023 but declines again to 314,065 million in 2024. These movements could reflect shifts in asset base, divestitures, or changes in operational scale.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, closely mirrors the volatility seen in economic profit. It is negative in 2020 at -6.44%, turns to a positive 0.57% in 2021, and sharply declines to -6.98% in 2022. Subsequently, it slightly improves but remains negative at -0.18% in 2023 and worsens again to -2.32% in 2024. This indicates that the company’s return on invested capital frequently falls below its cost of capital, except for the year 2021.
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 exhibits notable volatility over the five-year period. Starting with a significant negative value of -26,530 million US dollars in 2020, it shifts to a positive 2,509 million in 2021, indicating a brief period of profitability. However, this improvement is not sustained, as the profit plunges back into negative territory in the following years, with -21,590 million in 2022, -589 million in 2023, and -7,299 million in 2024. The fluctuations suggest challenges in maintaining consistent economic gains and possibly reflect varying operational efficiency or cost management issues.
- Operating Revenues
- The operating revenues show a declining trend from 171,760 million US dollars in 2020 to 168,864 million in 2021, followed by a marked decrease to 120,741 million in 2022. Revenues stabilize thereafter, with slight increases and marginal declines, reaching 122,336 million by 2024. This pattern indicates a significant disruption or strategic shift around 2021 to 2022, after which revenue growth stabilizes but does not recover to previous highs.
- Economic Profit Margin
- The economic profit margin mirrors the trend in economic profit, beginning with a strong negative margin of -15.45% in 2020. It turns positive to 1.49% in 2021, further suggesting improved profitability during that year. Yet, the subsequent years exhibit negative margins again, with -17.88% in 2022, -0.48% in 2023, and -5.97% in 2024. The margin data reinforces the indication of inconsistent profitability, with only brief periods of positive returns and generally negative profitability rates throughout the term.