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.
Paying user area
Try for free
Arista Networks Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2014
- Operating Profit Margin since 2014
- Current Ratio since 2014
- Price to Earnings (P/E) since 2014
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Arista Networks Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Arista Networks Inc., economic profit calculation
US$ in thousands
| 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 has demonstrated a consistent and substantial upward trend over the five-year period. Starting from approximately 676 million USD in 2020, it increased significantly each year, reaching nearly 3.4 billion USD by the end of 2024. The most pronounced growth occurred between 2022 and 2024, indicating accelerating profitability.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating marginally between 15.77% and 15.81%. This stability suggests that the company's cost of financing did not experience significant variations, providing a consistent benchmark for assessing returns.
- Invested Capital
- Invested capital experienced a notable increase, rising from approximately 1.87 billion USD in 2020 to nearly 5.87 billion USD in 2024. The growth rate accelerated markedly from 2021 onwards, particularly between 2021 and 2023, reflecting significant capital deployment and expansion.
- Economic Profit
- Economic profit, derived from the residual income after accounting for the cost of capital, showed a strong positive trend. Starting at around 382 million USD in 2020, it climbed substantially to over 2.47 billion USD by 2024. Despite a slight dip in growth rate between 2021 and 2022, economic profit surged notably in the last two years, indicating the company's enhanced ability to generate value beyond its capital costs.
- Overall Analysis
- The data reveals a pattern of robust growth in profitability and capital investment, accompanied by stable financing costs. The increasing gap between NOPAT and the cost of capital, as evidenced by rising economic profit, suggests effective operational leverage and value creation. The company appears to be successfully utilizing its invested capital to generate returns well above its capital charge, signifying strong financial performance and efficient capital management over the analyzed timeframe.
Net Operating Profit after Taxes (NOPAT)
Arista Networks Inc., NOPAT calculation
US$ in thousands
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 deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
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.
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.
- Net Income Trend
- The net income of the company has demonstrated a consistent upward trajectory over the five-year period. Starting at $634.6 million in 2020, it increased by approximately 32.5% to $840.9 million in 2021. The growth accelerated further in 2022 with net income reaching $1.35 billion, representing a notable increase of around 60.7% year over year. This positive momentum sustained into 2023 and 2024, with net income rising to $2.09 billion and $2.85 billion respectively, indicating continued strong profitability expansion.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT exhibited a similarly positive trend, reflecting improving operational efficiency and profitability. The initial value of approximately $676.2 million in 2020 increased to $1.02 billion in 2021, a growth rate of about 50.6%. Although the growth rate slightly moderated in 2022 with NOPAT at $1.20 billion, the figure surged significantly to $2.07 billion in 2023 and further to $3.40 billion in 2024. These figures indicate a robust enhancement in the company's operational profit generation after tax consideration.
- Comparative Analysis Between Net Income and NOPAT
- Both net income and NOPAT demonstrate strong and consistent growth patterns, with NOPAT generally exceeding net income in absolute terms throughout the period, which may suggest an increasingly efficient core business operation after taxes. The gap between NOPAT and net income widened notably towards the end of the period, highlighting enhanced operational earnings relative to net income, potentially due to improvements in non-operating factors or tax effects over time.
- Overall Financial Performance Insights
- The data reflects significant and accelerating growth in profitability metrics, indicating a successful expansion and improved operational performance. The company’s ability to nearly triple its net income within four years, alongside a more than fivefold increase in NOPAT, points to strong financial health and effective management strategies. This upward trend suggests solid prospects for continued business success if the current growth drivers are sustained.
Cash Operating Taxes
Arista Networks Inc., cash operating taxes calculation
US$ in thousands
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).
- Provision for Income Taxes
- Over the five-year period, the provision for income taxes demonstrates a substantial upward trend. Starting at $104,306 thousand in 2020, it slightly decreased to $90,025 thousand in 2021, marking a minor decline in the second year. However, from 2021 onward, there is a notable acceleration in growth, with the provision increasing significantly to $229,350 thousand in 2022, then further rising to $334,705 thousand in 2023, and reaching $412,980 thousand by 2024. This pattern suggests a rising tax expense potentially linked to increased profitability or changes in tax legislation or accounting practices.
- Cash Operating Taxes
- Cash operating taxes exhibit a strong and consistent upward trajectory throughout the observed period. Starting at $106,136 thousand in 2020, cash operating taxes almost doubled by 2021, reaching $188,364 thousand. This growth momentum continued sharply in subsequent years, with values increasing to $468,759 thousand in 2022, $675,037 thousand in 2023, and ultimately $840,462 thousand in 2024. The sharp escalation in cash operating taxes compared to the provision for income taxes may reflect timing differences in tax payments or increased effective tax rates, or a combination of operational scale expansion and higher taxable income.
- Comparative Insights
- Both provision for income taxes and cash operating taxes have risen notably over the five years, with cash operating taxes growing at an even faster rate than the provision. The disparity between these two tax-related figures suggests potential differences in deferred tax accounting or changes in the company’s tax payment schedule. The steady increase across both metrics implies growing taxable income levels or evolving tax obligations. This consistent increase in tax-related expenses may impact the company’s net earnings and cash flows, indicating the necessity for careful tax planning going forward.
Invested Capital
Arista Networks Inc., invested capital calculation (financing approach)
US$ in thousands
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 deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction-in-process.
7 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases demonstrate a declining trend over the five-year period. Starting at $90,170 thousand in 2020, the figure decreases each year, reaching $59,642 thousand by 2024. This consistent reduction indicates a deliberate effort to lower debt levels and manage lease obligations effectively, improving the company’s leverage position.
- Stockholders’ Equity
- Stockholders’ equity shows a strong upward trend, more than tripling from $3,320,291 thousand in 2020 to $9,994,807 thousand in 2024. This significant increase suggests robust retained earnings, possibly combined with equity financing activities, contributing to a solid expansion of the company’s net asset base over the period.
- Invested Capital
- Invested capital rises steadily from $1,866,365 thousand in 2020 to $5,869,309 thousand in 2024. The growth accelerates particularly after 2021, indicating increased investment in operating assets or growth initiatives. The expansion of invested capital alongside rising equity suggests an aggressive strategy focused on scaling operations or asset acquisition.
- Overall Financial Trends
- The combined trends reflect a company that is strengthening its financial foundation by reducing debt, significantly increasing equity, and expanding invested capital. The reduction in total debt coupled with substantial equity growth suggests an improved capital structure and financial stability. The growth in invested capital points to reinvestment and expansion efforts, which may support future growth and operational capacity.
Cost of Capital
Arista Networks Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
Economic Spread Ratio
Arista Networks 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 thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer 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.
The financial data reveals significant variations in key metrics over the five-year period under consideration.
- Economic Profit
- There is a clear upward trajectory in economic profit from 2020 to 2024. Starting with a value of approximately $382 million in 2020, economic profit nearly doubled to about $719 million in 2021. While it slightly declined to roughly $712 million in 2022, it then surged to over $1.3 billion in 2023 and nearly doubled again to over $2.4 billion in 2024. This pattern indicates strong growth momentum in the later years, suggesting enhanced operational efficiency or improved profitability.
- Invested Capital
- Invested capital exhibited consistent growth throughout the period. Beginning at approximately $1.87 billion in 2020, the figure remained relatively stable through 2021, followed by a marked increase to nearly $3.1 billion in 2022. This was followed by substantial gains, reaching approximately $4.77 billion in 2023 and about $5.87 billion in 2024. The trend indicates significant capital investment or asset accumulation strategies employed over time.
- Economic Spread Ratio
- The economic spread ratio displays considerable fluctuation across the years. Starting at 20.46% in 2020, it saw a notable rise to 38.05% in 2021, declined to 23.01% in 2022, then increased to 27.48% in 2023, and finally reached a peak of 42.1% in 2024. This measure's volatility reflects changes in returns relative to the cost of capital, culminating in the highest profitability efficiency ratio in 2024.
Economic Profit Margin
Arista Networks Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer 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 ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals substantial growth across multiple key metrics over the five-year period ending December 31, 2024.
- Economic Profit
- Economic profit shows a strong upward trajectory, increasing from $381,922 thousand in 2020 to $2,471,074 thousand in 2024. Despite a slight dip in 2022 compared to 2021, the overall trend is markedly positive, with the economic profit more than sextupling over the observed period. This suggests enhanced value creation and efficient use of capital over the years.
- Adjusted Revenue
- Adjusted revenue has grown steadily and significantly, rising from $2,393,051 thousand in 2020 to $8,288,357 thousand in 2024. The growth rate accelerates in the later years, especially between 2022 and 2024, indicating expansion of business operations or increased sales performance. The consistent upward trend demonstrates solid top-line growth.
- Economic Profit Margin
- The economic profit margin exhibits variability but maintains an overall upward trend, beginning at 15.96% in 2020 and peaking at 29.81% in 2024. The margin initially rises sharply to 22.29% in 2021, dips to 15.85% in 2022, then increases again, reaching the highest level in 2024. This fluctuation may reflect operational efficiency changes or cost structure adjustments, with the final margin indicating improved profitability relative to revenue.
In summary, the data reflects robust growth in both profitability and revenue, with economic profit expanding significantly and margins improving despite some intermediate variability. The company appears to enhance its value creation and operational efficiency over the period analyzed.