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
Dell Technologies Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 7,836 – 14.15% × 56,257 = -125
The analysis of economic profit over the observed six-year period reveals significant volatility in value creation, characterized by a period of substantial value destruction followed by a recovery phase. Economic profit remained negative for five of the six years, indicating that the net operating profit after taxes was generally insufficient to cover the required return on invested capital.
- Net Operating Profit After Taxes (NOPAT)
- A pronounced downward trajectory is observed from January 2021 through January 2025, with NOPAT falling from 7,942 million US$ to a low of 2,070 million US$. This represents a significant contraction in operating profitability. However, a sharp reversal occurred by January 2026, as NOPAT rebounded to 7,836 million US$, nearly returning to the levels seen at the start of the period.
- Cost of Capital
- The cost of capital exhibited a general upward trend, particularly accelerating after February 2023. While the rate fluctuated between 10.42% and 11.42% in the first three years, it rose sharply to 13.65% in February 2024 and continued to climb, reaching 14.15% by January 2026. This increase in the hurdle rate heightened the pressure on the company to generate higher operating returns to achieve a positive economic profit.
- Invested Capital
- A substantial reduction in invested capital occurred between January 2021 and January 2022, dropping from 83,528 million US$ to 53,988 million US$. Following this initial contraction, the capital base remained relatively stable, fluctuating between approximately 50 billion and 58 billion US$, ending at 56,257 million US$ in January 2026.
- Economic Profit and Value Creation
- Economic profit was positive only in January 2022, reaching 1,711 million US$, which coincided with the sharp reduction in invested capital. Subsequently, the combination of declining NOPAT and a rising cost of capital led to severe value destruction, peaking in January 2025 with an economic profit of -4,854 million US$. By January 2026, the significant recovery in NOPAT effectively mitigated the impact of the high cost of capital, bringing the economic profit back toward a break-even point at -125 million US$.
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Net Operating Profit after Taxes (NOPAT)
Dell Technologies Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for expected credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in warranty liability.
5 Addition of increase (decrease) in severance liability.
6 Addition of increase (decrease) in equity equivalents to net income attributable to Dell Technologies Inc..
7 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 727 × 4.74% = 34
8 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,594 × 21.00% = 335
9 Addition of after taxes interest expense to net income attributable to Dell Technologies Inc..
10 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 256 × 21.00% = 54
11 Elimination of after taxes investment income.
12 Elimination of discontinued operations.
The Net Operating Profit After Taxes (NOPAT) exhibits considerable fluctuation over the observed period. While Net Income attributable to Dell Technologies Inc. generally trends upward, NOPAT demonstrates a more complex pattern, initially decreasing significantly before a substantial recovery.
- Overall Trend
- NOPAT begins at US$7,942 million in January 2021, experiences a slight decrease to US$7,874 million in January 2022, then declines markedly to US$5,638 million in February 2023. A further substantial decrease is observed in February 2024, reaching US$2,835 million. However, NOPAT then begins to recover, increasing to US$2,070 million in January 2025 and culminating in a significant rise to US$7,836 million in January 2026, nearly matching the initial value.
- Comparison with Net Income
- While Net Income shows a general upward trajectory from 2021 to 2026, the NOPAT trend diverges. The largest discrepancy occurs in 2024, where Net Income remains at US$3,211 million, while NOPAT falls to its lowest point of US$2,835 million. This suggests that factors beyond core operational profitability are significantly influencing reported net income, such as non-operating items or tax adjustments. The recovery in NOPAT in 2026 is not mirrored by a similar proportional increase in Net Income, indicating a potential shift in the composition of earnings.
- Period-to-Period Changes
- The period between January 2023 and February 2024 shows the most dramatic decline in NOPAT, decreasing by US$2,803 million. Conversely, the period between February 2024 and January 2026 demonstrates the most substantial increase, with NOPAT rising by US$5,001 million. These large swings suggest significant volatility in the company’s operational performance or accounting for operational performance during these periods.
The observed fluctuations in NOPAT warrant further investigation to determine the underlying drivers. A detailed analysis of the components of NOPAT, including revenue, operating expenses, and tax rates, is recommended to understand the reasons for these shifts and their implications for the company’s long-term financial health.
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Cash Operating Taxes
Dell Technologies Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
The reported income tax expense and cash operating taxes exhibit distinct patterns over the observed period. Income tax expense demonstrates considerable fluctuation, while cash operating taxes generally trend upward, albeit with some variability.
- Income Tax Expense
- Income tax expense decreased significantly from $165 million in 2021 to $981 million in 2022, representing a substantial increase. It then decreased to $803 million in 2023 and further to $692 million in 2024. A subsequent decline to $472 million is noted in 2025, followed by a marked increase to $1,327 million in 2026. This volatility suggests potential impacts from changes in tax regulations, accounting adjustments, or significant shifts in pre-tax income.
- Cash Operating Taxes
- Cash operating taxes increased from $1,071 million in 2021 to $1,523 million in 2022, and continued to rise to $1,762 million in 2023, indicating a consistent upward trend in actual cash outflows for taxes. A decrease to $1,042 million is observed in 2024, followed by a further reduction to $947 million in 2025. However, cash operating taxes increase substantially to $1,668 million in 2026, returning to levels comparable to those seen in 2023.
The divergence between income tax expense and cash operating taxes suggests potential timing differences between when income is recognized for accounting purposes and when taxes are actually paid. The higher cash operating taxes compared to income tax expense in several years indicate the presence of deferred tax liabilities or other non-cash tax effects. The significant increase in both metrics in 2026 warrants further investigation to determine the underlying drivers.
- Relationship between Metrics
- The ratio of cash operating taxes to income tax expense varies considerably. In 2021, cash operating taxes were approximately 6.47 times income tax expense. This ratio decreased to approximately 1.55 in 2022, 2.19 in 2023, 1.50 in 2024, 2.01 in 2025, and 2.84 in 2026. These fluctuations highlight the impact of non-cash tax items and the timing of tax payments on the overall cash flow profile.
Overall, the observed trends suggest a complex tax position with significant fluctuations in both reported income tax expense and actual cash tax payments. Continued monitoring of these metrics is recommended to assess potential risks and opportunities related to tax planning and cash flow management.
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Invested Capital
Dell Technologies Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
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 warranty liability.
6 Addition of severance liability.
7 Addition of equity equivalents to total Dell Technologies Inc. stockholders’ equity (deficit).
8 Removal of accumulated other comprehensive income.
9 Subtraction of marketable securities.
The reported invested capital demonstrates considerable fluctuation over the observed period. Initially, a substantial decrease is noted, followed by a period of relative stabilization and then a renewed increase towards the end of the timeframe. A closer examination of the components contributing to invested capital – total reported debt & leases and total stockholders’ equity – reveals the drivers behind these trends.
- Invested Capital Trend
- Invested capital began at US$83,528 million in January 2021. A significant decline to US$53,988 million occurred by January 2022. It then experienced a moderate increase to US$57,982 million in February 2023, followed by a slight decrease to US$53,565 million in February 2024. Further declines were observed in January 2025 (US$49,926 million), before a final increase to US$56,257 million in January 2026.
- Debt & Leases
- Total reported debt & leases decreased substantially from US$50,207 million in January 2021 to US$27,961 million in January 2022. It then increased to US$30,478 million in February 2023, decreased again to US$26,823 million in February 2024, continued to decline to US$25,325 million in January 2025, and finally increased to US$32,230 million in January 2026. This suggests active debt management, with periods of reduction followed by re-accumulation.
- Stockholders’ Equity
- Total stockholders’ equity exhibited a consistent negative trend throughout the period. Starting at US$2,479 million in January 2021, it decreased to a deficit of US$-1,685 million in January 2022. This deficit widened to US$-3,122 million in February 2023, US$-2,404 million in February 2024, US$-1,482 million in January 2025, and US$-2,470 million in January 2026. The persistent negative equity position warrants further investigation.
The decrease in invested capital from 2021 to 2022 is primarily attributable to the significant reduction in reported debt. However, the concurrent and accelerating decline in stockholders’ equity also contributed substantially. The subsequent fluctuations in invested capital appear to be driven by a combination of debt management strategies and the continued erosion of equity. The final increase in invested capital in 2026 is largely due to an increase in debt, while equity continues to represent a deficit.
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Cost of Capital
Dell Technologies Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 101,085) | 101,085) | ÷ | 133,611) | = | 0.76 | 0.76 | × | 16.73% | = | 12.66% | ||
| Debt3 | 31,799) | 31,799) | ÷ | 133,611) | = | 0.24 | 0.24 | × | 7.85% × (1 – 21.00%) | = | 1.48% | ||
| Operating lease liability4 | 727) | 727) | ÷ | 133,611) | = | 0.01 | 0.01 | × | 4.74% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 133,611) | 1.00 | 14.15% | ||||||||||
Based on: 10-K (reporting date: 2026-01-30).
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 | 68,989) | 68,989) | ÷ | 94,299) | = | 0.73 | 0.73 | × | 16.73% | = | 12.24% | ||
| Debt3 | 24,552) | 24,552) | ÷ | 94,299) | = | 0.26 | 0.26 | × | 7.76% × (1 – 21.00%) | = | 1.60% | ||
| Operating lease liability4 | 758) | 758) | ÷ | 94,299) | = | 0.01 | 0.01 | × | 5.14% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 94,299) | 1.00 | 13.87% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
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 | 80,658) | 80,658) | ÷ | 107,558) | = | 0.75 | 0.75 | × | 16.73% | = | 12.54% | ||
| Debt3 | 26,071) | 26,071) | ÷ | 107,558) | = | 0.24 | 0.24 | × | 5.61% × (1 – 21.00%) | = | 1.07% | ||
| Operating lease liability4 | 829) | 829) | ÷ | 107,558) | = | 0.01 | 0.01 | × | 4.79% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 107,558) | 1.00 | 13.65% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
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 | 29,146) | 29,146) | ÷ | 59,461) | = | 0.49 | 0.49 | × | 16.73% | = | 8.20% | ||
| Debt3 | 29,425) | 29,425) | ÷ | 59,461) | = | 0.49 | 0.49 | × | 5.58% × (1 – 21.00%) | = | 2.18% | ||
| Operating lease liability4 | 890) | 890) | ÷ | 59,461) | = | 0.01 | 0.01 | × | 3.48% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 59,461) | 1.00 | 10.42% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
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 | 40,689) | 40,689) | ÷ | 71,279) | = | 0.57 | 0.57 | × | 16.73% | = | 9.55% | ||
| Debt3 | 29,583) | 29,583) | ÷ | 71,279) | = | 0.42 | 0.42 | × | 5.59% × (1 – 21.00%) | = | 1.83% | ||
| Operating lease liability4 | 1,007) | 1,007) | ÷ | 71,279) | = | 0.01 | 0.01 | × | 3.01% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 71,279) | 1.00 | 11.42% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
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 | 67,870) | 67,870) | ÷ | 123,694) | = | 0.55 | 0.55 | × | 16.73% | = | 9.18% | ||
| Debt3 | 53,601) | 53,601) | ÷ | 123,694) | = | 0.43 | 0.43 | × | 4.77% × (1 – 21.00%) | = | 1.63% | ||
| Operating lease liability4 | 2,223) | 2,223) | ÷ | 123,694) | = | 0.02 | 0.02 | × | 3.47% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 123,694) | 1.00 | 10.86% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dell Technologies Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (125) | (4,854) | (4,475) | (405) | 1,711) | (1,130) | |
| Invested capital2 | 56,257) | 49,926) | 53,565) | 57,982) | 53,988) | 83,528) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -0.22% | -9.72% | -8.36% | -0.70% | 3.17% | -1.35% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Apple Inc. | — | 107.08% | 164.37% | 137.56% | 199.07% | 195.44% | |
| Arista Networks Inc. | — | 53.79% | 35.21% | 20.60% | 16.12% | 31.17% | |
| Cisco Systems Inc. | -1.99% | -6.44% | -3.31% | 3.37% | 3.35% | 2.59% | |
| Lumentum Holdings Inc. | -170.64% | -23.28% | -29.00% | -19.02% | -6.35% | 5.97% | |
| Super Micro Computer Inc. | -3.75% | -13.18% | -11.58% | -1.51% | -9.69% | -18.15% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -125 ÷ 56,257 = -0.22%
4 Click competitor name to see calculations.
The financial data indicates a period of significant volatility in the generation of economic value, characterized by a struggle to consistently exceed the cost of capital. While a brief period of value creation occurred in 2022, the subsequent years showed a marked deterioration in economic performance before a sharp recovery trend emerged in 2026.
- Economic Profit Trends
- Economic profit exhibited extreme fluctuations over the six-year period. After starting at a deficit of US$ 1,130 million in 2021, the figure surged to a positive US$ 1,711 million in 2022. However, this gain was short-lived, as profits entered a steep decline, reaching a trough of negative US$ 4,854 million by January 31, 2025. A significant reversal is observed by January 30, 2026, where economic profit improved to negative US$ 125 million, nearly returning to a break-even state.
- Invested Capital Movements
- Invested capital underwent a substantial reduction early in the period, dropping from US$ 83,528 million in 2021 to US$ 53,988 million in 2022. Capital levels remained relatively stable between 2022 and 2025, oscillating within the US$ 49,926 million to US$ 57,982 million range. An upward shift is noted in 2026, with invested capital increasing to US$ 56,257 million.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit, serving as a primary indicator of capital efficiency. The ratio peaked at 3.17% in 2022, coinciding with the only period of positive economic profit. A severe contraction followed, with the ratio plummeting to -8.36% in 2024 and reaching a low of -9.72% in 2025. This indicates that the return on invested capital fell significantly below the weighted average cost of capital during these years. The period ends with a notable recovery, as the ratio climbed back to -0.22% in 2026, suggesting a near-alignment of returns with the cost of capital.
The relationship between the metrics suggests that the decline in economic spread was driven primarily by a collapse in economic profit rather than an increase in the capital base, as invested capital actually decreased during the worst-performing years (2024-2025). The recovery in 2026 is particularly prominent, as it represents a rapid narrowing of the spread despite a moderate increase in invested capital.
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Economic Profit Margin
Dell Technologies Inc., economic profit margin calculation, comparison to benchmarks
| Jan 30, 2026 | Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (125) | (4,854) | (4,475) | (405) | 1,711) | (1,130) | |
| Net revenue | 113,538) | 95,567) | 88,425) | 102,301) | 101,197) | 94,224) | |
| Add: Increase (decrease) in deferred revenue | 965) | (3,180) | (1,141) | 2,713) | 1,981) | 3,001) | |
| Adjusted net revenue | 114,503) | 92,387) | 87,284) | 105,014) | 103,178) | 97,225) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -0.11% | -5.25% | -5.13% | -0.39% | 1.66% | -1.16% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Apple Inc. | — | 22.83% | 21.01% | 21.64% | 23.53% | 22.71% | |
| Arista Networks Inc. | — | 33.25% | 24.93% | 15.55% | 11.11% | 18.26% | |
| Cisco Systems Inc. | -3.00% | -10.38% | -5.35% | 3.36% | 3.76% | 2.89% | |
| Lumentum Holdings Inc. | -267.86% | -43.07% | -65.28% | -31.20% | -9.27% | 6.73% | |
| Super Micro Computer Inc. | -2.35% | -6.79% | -5.88% | -0.51% | -4.12% | -6.54% | |
Based on: 10-K (reporting date: 2026-01-30), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × -125 ÷ 114,503 = -0.11%
3 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of significant volatility, with the organization struggling to consistently generate returns exceeding its cost of capital. While a peak in economic value was achieved in 2022, the subsequent years were marked by a substantial erosion of economic profit, reaching a nadir in 2025 before showing signs of recovery in 2026.
- Economic Profit Trends
- Economic profit fluctuated from a deficit of 1,130 million USD in 2021 to a positive 1,711 million USD in 2022. However, a sharp reversal occurred thereafter, with losses accelerating to 4,475 million USD in 2024 and peaking at a deficit of 4,854 million USD in 2025. By 2026, the economic profit improved significantly, narrowing the deficit to 125 million USD, indicating a near-return to the break-even point of value creation.
- Adjusted Net Revenue Correlation
- Revenue patterns do not align linearly with economic profit. Revenue grew steadily from 97,225 million USD in 2021 to 105,014 million USD in 2023, followed by a contraction to 87,284 million USD in 2024. The most significant revenue growth occurred in 2026, reaching 114,503 million USD. Despite this record revenue in 2026, the economic profit remained slightly negative, suggesting that increased scale has not yet fully translated into positive economic value.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the instability of the absolute profit figures. The margin shifted from -1.16% in 2021 to a positive 1.66% in 2022, representing the only period of positive value addition. A severe decline followed, with margins dropping to -5.13% in 2024 and -5.25% in 2025. The recovery to -0.11% in 2026 demonstrates a substantial improvement in capital efficiency and operational performance relative to the cost of capital.
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