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
Corning Inc., economic profit calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 817 – 14.90% × 20,411 = -2,224
The financial performance from 2019 to 2023 is characterized by a consistent failure to generate positive economic profit, indicating that operating returns were insufficient to cover the cost of the capital employed. Although a period of improvement was observed through 2021, the subsequent decline in operating profit, coupled with a sustained high cost of capital, resulted in a widening economic loss by the end of the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A non-linear trajectory is observed, with NOPAT increasing from 968 million US$ in 2019 to a peak of 2,088 million US$ in 2021. This growth was followed by a sharp contraction, with figures falling to 1,544 million US$ in 2022 and further declining to 817 million US$ in 2023, marking a significant reduction in operating efficiency.
- Cost of Capital
- The cost of capital exhibited a general upward trend for the majority of the period, rising from 13.22% in 2019 to a peak of 15.47% in 2022. A slight correction to 14.90% occurred in 2023, although the hurdle rate remained elevated compared to the 2019 baseline.
- Invested Capital
- Invested capital remained relatively stable, fluctuating between 18,872 million US$ and 21,233 million US$. After peaking in 2020, the capital base saw a slight decrease before settling at 20,411 million US$ in 2023, suggesting that the economic losses were not driven by aggressive capital expansion but rather by diminishing returns on existing assets.
- Economic Profit
- Economic profit remained negative throughout the five-year duration. The economic loss narrowed from -1,526 million US$ in 2019 to its minimum deficit of -917 million US$ in 2021. However, this trend reversed abruptly, with the loss widening to -1,498 million US$ in 2022 and reaching a period low of -2,224 million US$ in 2023, reflecting a significant erosion of shareholder value.
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Net Operating Profit after Taxes (NOPAT)
Corning Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Corning Incorporated.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 958 × 4.40% = 42
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 371 × 21.00% = 78
7 Addition of after taxes interest expense to net income attributable to Corning Incorporated.
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 38 × 21.00% = 8
9 Elimination of after taxes investment income.
An analysis of the financial results from 2019 to 2023 reveals a period of significant volatility in both net income and net operating profit after taxes (NOPAT), characterized by a sharp peak in 2021 followed by a consistent decline.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT exhibited strong growth in the early part of the period, rising from 968 million US dollars in 2019 to a peak of 2,088 million US dollars in 2021. This represents a substantial increase in core operational profitability. However, this trajectory reversed after 2021, with NOPAT falling to 1,544 million US dollars in 2022 and further declining to 817 million US dollars by 2023, bringing the figure below the 2019 baseline.
- Net Income Performance
- Net income attributable to Corning Incorporated showed more erratic fluctuations than NOPAT. A sharp contraction occurred in 2020, where income dropped to 512 million US dollars. This was followed by a dramatic surge to 1,906 million US dollars in 2021. Similar to the NOPAT trend, net income declined in the subsequent two years, reaching 581 million US dollars by the end of 2023.
- Divergence Between Operating Profit and Net Income
- A notable divergence is observed in 2020, where NOPAT increased significantly to 1,761 million US dollars while net income decreased to 512 million US dollars. This gap indicates that while the core operating performance remained robust and grew during that year, non-operating factors—such as interest expenses, taxes, or one-time non-operational losses—adversely impacted the final net income. As the period progressed toward 2023, both metrics converged toward a downward trend, indicating a broader compression of both operating and bottom-line profitability.
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Cash Operating Taxes
Corning Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
The financial figures for the period between 2019 and 2023 reveal significant volatility in both tax provisions and cash operating tax outflows. A cyclical pattern is evident, characterized by a sharp contraction in 2020, a peak in 2021 and 2022, and a subsequent reduction in 2023.
- Cash Operating Tax Trends
- Cash operating taxes experienced a substantial decrease from 494 million USD in 2019 to 192 million USD in 2020. This was followed by a rapid increase to a five-year peak of 542 million USD in 2021. Outflows remained elevated in 2022 at 523 million USD before declining to 313 million USD in 2023.
- Comparative Analysis of Provisions and Cash Outflows
- A consistent variance is observed between the provision for income taxes and actual cash operating taxes. Cash operating taxes exceeded the accounting provision in every year of the analyzed period. The widest discrepancy occurred in 2019, where cash taxes were 238 million USD higher than the provision, whereas the narrowest gap was recorded in 2021 at 51 million USD.
- Impact on Economic Value Added (EVA)
- The recurring gap between accounting tax provisions and actual cash outflows indicates the presence of significant deferred tax items or permanent differences. Since EVA calculations prioritize actual cash flows over accounting accruals, the fact that cash operating taxes consistently exceed provisions suggests that accounting-based net income figures may overstate the actual cash available to the firm for value creation during this period.
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Invested Capital
Corning Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
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 deferred revenue.
5 Addition of equity equivalents to total Corning Incorporated shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
The analysis of the capital structure from 2019 to 2023 reveals a period of volatility in invested capital, with an overall increase from 18,872 million USD to 20,411 million USD. The most significant expansion occurred between 2019 and 2020, followed by a contraction phase and a renewed upward trajectory in the final fiscal year.
- Invested Capital Dynamics
- Invested capital reached a peak of 21,233 million USD in 2020, representing a substantial increase over the 2019 baseline. A subsequent reduction was observed through 2021 and 2022, with values stabilizing near 19,700 million USD. A reversal of this trend occurred in 2023, as invested capital rose to 20,411 million USD.
- Shareholders' Equity Trends
- A consistent downward trajectory in shareholders' equity is evident following a peak of 13,257 million USD in 2020. Equity decreased annually thereafter, falling to 12,333 million USD in 2021, 12,008 million USD in 2022, and reaching a five-year low of 11,551 million USD by December 31, 2023. This indicates a sustained reduction in the equity base over the final three years of the analyzed period.
- Debt and Lease Obligations
- Total reported debt and leases exhibited a fluctuating pattern. After an initial increase to 8,701 million USD in 2020, obligations were reduced to 7,829 million USD in 2021 and remained relatively stable at 7,817 million USD in 2022. In 2023, debt levels increased to 8,484 million USD, which served as a primary driver for the increase in total invested capital for that year, offsetting the continued decline in shareholders' equity.
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Cost of Capital
Corning Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 27,465) | 27,465) | ÷ | 35,743) | = | 0.77 | 0.77 | × | 18.36% | = | 14.11% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 35,743) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 7,320) | 7,320) | ÷ | 35,743) | = | 0.20 | 0.20 | × | 4.30% × (1 – 21.00%) | = | 0.70% | ||
| Operating lease liability4 | 958) | 958) | ÷ | 35,743) | = | 0.03 | 0.03 | × | 4.40% × (1 – 21.00%) | = | 0.09% | ||
| Total: | 35,743) | 1.00 | 14.90% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,197) | 30,197) | ÷ | 37,427) | = | 0.81 | 0.81 | × | 18.36% | = | 14.82% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 37,427) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 6,324) | 6,324) | ÷ | 37,427) | = | 0.17 | 0.17 | × | 4.26% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 906) | 906) | ÷ | 37,427) | = | 0.02 | 0.02 | × | 4.20% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 37,427) | 1.00 | 15.47% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 34,925) | 34,925) | ÷ | 44,065) | = | 0.79 | 0.79 | × | 18.36% | = | 14.55% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | —) | —) | ÷ | 44,065) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt and short-term borrowings3 | 8,355) | 8,355) | ÷ | 44,065) | = | 0.19 | 0.19 | × | 4.21% × (1 – 21.00%) | = | 0.63% | ||
| Operating lease liability4 | 785) | 785) | ÷ | 44,065) | = | 0.02 | 0.02 | × | 4.00% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 44,065) | 1.00 | 15.24% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 28,337) | 28,337) | ÷ | 40,922) | = | 0.69 | 0.69 | × | 18.36% | = | 12.72% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | 2,300) | 2,300) | ÷ | 40,922) | = | 0.06 | 0.06 | × | 4.25% | = | 0.24% | ||
| Long-term debt and short-term borrowings3 | 9,556) | 9,556) | ÷ | 40,922) | = | 0.23 | 0.23 | × | 4.12% × (1 – 21.00%) | = | 0.76% | ||
| Operating lease liability4 | 729) | 729) | ÷ | 40,922) | = | 0.02 | 0.02 | × | 3.90% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 40,922) | 1.00 | 13.77% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 21,359) | 21,359) | ÷ | 32,682) | = | 0.65 | 0.65 | × | 18.36% | = | 12.00% | ||
| Convertible preferred stock, Series A, par value $100 per share (book value) | 2,300) | 2,300) | ÷ | 32,682) | = | 0.07 | 0.07 | × | 4.25% | = | 0.30% | ||
| Long-term debt and short-term borrowings3 | 8,511) | 8,511) | ÷ | 32,682) | = | 0.26 | 0.26 | × | 4.20% × (1 – 21.00%) | = | 0.86% | ||
| Operating lease liability4 | 512) | 512) | ÷ | 32,682) | = | 0.02 | 0.02 | × | 4.10% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 32,682) | 1.00 | 13.22% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and short-term borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Corning Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,224) | (1,498) | (917) | (1,163) | (1,526) | |
| Invested capital2 | 20,411) | 19,666) | 19,716) | 21,233) | 18,872) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -10.90% | -7.61% | -4.65% | -5.48% | -8.09% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 138.73% | 200.23% | 196.59% | — | — | |
| Arista Networks Inc. | 20.64% | 16.17% | 31.22% | — | — | |
| Cisco Systems Inc. | 3.38% | 3.36% | 2.60% | — | — | |
| Dell Technologies Inc. | -0.70% | 3.17% | -1.36% | — | — | |
| Lumentum Holdings Inc. | -19.00% | -6.33% | 5.99% | — | — | |
| Super Micro Computer Inc. | -1.42% | -9.62% | -18.07% | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,224 ÷ 20,411 = -10.90%
4 Click competitor name to see calculations.
The financial performance from 2019 to 2023 is characterized by a consistent inability to generate positive economic value, as economic profit remained negative throughout the entire period. A period of relative recovery occurred between 2019 and 2021, but this trajectory was reversed by a significant downturn in 2022 and 2023, culminating in the lowest performance levels of the five-year window.
- Economic Profit Trends
- Losses initially narrowed from -1,526 million in 2019 to -917 million in 2021. However, this improvement was short-lived; losses expanded to -1,498 million in 2022 and deteriorated further to -2,224 million by December 31, 2023. This indicates a substantial acceleration in value destruction over the final two years of the period.
- Invested Capital Stability
- Invested capital exhibited moderate fluctuations, peaking at 21,233 million in 2020 before stabilizing around the 19,600 to 20,400 million range between 2021 and 2023. Because the capital base remained relatively steady while economic profit plummeted, the decline in value is attributable to a decrease in operational efficiency or an increase in the cost of capital rather than an over-expansion of the asset base.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a mirrored trend to economic profit, improving from -8.09% in 2019 to a peak of -4.65% in 2021. This recovery was followed by a sharp decline to -7.61% in 2022 and a further drop to -10.90% in 2023. The widening negative spread confirms that the return on invested capital fell significantly below the required cost of capital, marking a critical deterioration in economic productivity.
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Economic Profit Margin
Corning Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (2,224) | (1,498) | (917) | (1,163) | (1,526) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Add: Increase (decrease) in deferred revenue | (9) | (43) | (112) | 1,024) | —) | |
| Adjusted net sales | 12,579) | 14,146) | 13,970) | 12,327) | 11,503) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -17.68% | -10.59% | -6.56% | -9.44% | -13.27% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | 21.82% | 23.66% | 22.84% | — | — | |
| Arista Networks Inc. | 15.58% | 11.14% | 18.28% | — | — | |
| Cisco Systems Inc. | 3.37% | 3.77% | 2.90% | — | — | |
| Dell Technologies Inc. | -0.39% | 1.66% | -1.17% | — | — | |
| Lumentum Holdings Inc. | -31.18% | -9.25% | 6.75% | — | — | |
| Super Micro Computer Inc. | -0.48% | -4.09% | -6.51% | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -2,224 ÷ 12,579 = -17.68%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2019 through 2023 reveals a consistent inability to generate positive economic value, as economic profit remained negative throughout the entire period. While a period of relative recovery occurred between 2019 and 2021, there was a significant deterioration in economic value creation during the final two years of the sequence.
- Economic Profit Trends
- Economic profit demonstrated a fluctuating trajectory, initially improving from a loss of 1,526 million US$ in 2019 to a peak of negative 917 million US$ in 2021. However, this trend reversed sharply in 2022, with losses widening to 1,498 million US$, and culminating in a five-year low of negative 2,224 million US$ by December 31, 2023. This indicates that the cost of capital significantly exceeded the net operating profit after tax over the observed timeframe.
- Adjusted Net Sales Performance
- Revenue exhibited a growth phase from 2019 to 2022, increasing from 11,503 million US$ to a peak of 14,146 million US$. This upward trend suggests an expansion in market reach or pricing power during that period. Nevertheless, a contraction occurred in 2023, with sales declining to 12,579 million US$, coinciding with the most severe decline in economic profit.
- Economic Profit Margin Analysis
- The economic profit margin closely mirrored the trends observed in absolute economic profit. The margin improved from -13.27% in 2019 to its most favorable level of -6.56% in 2021. This improvement was followed by a rapid decline to -10.59% in 2022 and a further drop to -17.68% in 2023. The widening negative margin in 2023 suggests a compounding effect of declining sales and an increase in the gap between the return on invested capital and the required rate of return.
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