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 – 14.20% × 56,257 = -152
The analysis of economic performance reveals a period of significant volatility in value creation, characterized by an inconsistent ability to generate economic profit. The overall trajectory is marked by a severe contraction in operating profitability and a rising cost of capital, which together eroded economic value before a sharp recovery occurred in the final year of the period.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability experienced a substantial decline starting after January 2022, falling from US$ 7,874 million to a period low of US$ 2,070 million by January 2025. This downward trend suggests a period of diminished operational efficiency or market headwinds. However, a robust recovery is observed in January 2026, where NOPAT surged back to US$ 7,836 million, effectively returning to the levels seen at the start of the analysis period.
- Cost of Capital
- The cost of capital demonstrates a general upward trend, particularly from 2023 onward. After maintaining a range between 10.45% and 11.45% during the first three years, the rate spiked to 13.69% in 2024 and continued to climb to 14.20% by January 2026. This increase in the cost of capital raised the threshold for value creation, requiring higher operating returns to avoid economic losses.
- Invested Capital
- A significant contraction in the capital base is observed between January 2021 and January 2022, with invested capital dropping from US$ 83,528 million to US$ 53,988 million. Following this sharp reduction, the invested capital remained relatively stable, fluctuating within a range of US$ 49,926 million to US$ 57,982 million, before ending the period at US$ 56,257 million in 2026.
- Economic Profit
- Economic profit remained negative for the majority of the observed period, indicating that the company failed to generate returns above its cost of capital in most years. A solitary peak of positive economic profit occurred in January 2022 (US$ 1,692 million), which can be attributed to the massive reduction in invested capital. The subsequent years saw a deepening deficit, reaching a peak loss of US$ 4,876 million in 2025, driven by the simultaneous collapse of NOPAT and the increase in the cost of capital. By January 2026, the economic profit improved significantly to -US$ 152 million, nearly reaching the break-even point due to the recovery in operating profit.
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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 | × | 16.79% | = | 12.70% | ||
| 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 | 14.20% | ||||||||||
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 | × | 16.79% | = | 12.28% | ||
| 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 | 13.91% | ||||||||||
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 | × | 16.79% | = | 12.59% | ||
| 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 | 13.69% | ||||||||||
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 | × | 16.79% | = | 8.23% | ||
| 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 | 10.45% | ||||||||||
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 | × | 16.79% | = | 9.58% | ||
| 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 | 11.45% | ||||||||||
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 | × | 16.79% | = | 9.21% | ||
| 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 | 10.89% | ||||||||||
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 | (152) | (4,876) | (4,500) | (423) | 1,692) | (1,159) | |
| Invested capital2 | 56,257) | 49,926) | 53,565) | 57,982) | 53,988) | 83,528) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -0.27% | -9.77% | -8.40% | -0.73% | 3.13% | -1.39% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Apple Inc. | — | 107.01% | 164.31% | 137.50% | 199.01% | 195.38% | |
| Arista Networks Inc. | — | 53.73% | 35.14% | 20.53% | 16.06% | 31.11% | |
| Cisco Systems Inc. | — | -3.72% | -0.71% | 6.28% | 6.20% | 5.45% | |
| Lumentum Holdings Inc. | — | -21.55% | -26.69% | -17.24% | -5.33% | 7.09% | |
| Super Micro Computer Inc. | — | -8.01% | -5.95% | 4.14% | -4.76% | -12.73% | |
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 × -152 ÷ 56,257 = -0.27%
4 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of high volatility, characterized by a brief window of positive value generation followed by a significant decline and a subsequent recovery phase toward the end of the period.
- Economic Spread Ratio
- A volatile trend is observed in the economic spread ratio, which moved from -1.39% in January 2021 to a peak of 3.13% in January 2022. Following this peak, the ratio entered a period of sharp decline, reaching its lowest point of -9.77% in January 2025. A strong recovery is evident by January 2026, with the ratio improving to -0.27%, indicating a return toward the break-even point where the return on invested capital aligns with the cost of capital.
- Economic Profit
- Economic profit trends closely mirror the spread ratio. A positive economic profit of US$ 1,692 million was recorded in January 2022, marking the only instance of value creation in the observed timeframe. This was followed by expanding losses that peaked in January 2025 at a deficit of US$ 4,876 million. The trajectory reversed significantly by January 2026, with losses narrowing to US$ 152 million.
- Invested Capital
- A substantial reduction in invested capital occurred between January 2021 and January 2022, falling from US$ 83,528 million to US$ 53,988 million. For the remainder of the period, the capital base remained relatively stable, fluctuating within a range of US$ 49,926 million to US$ 57,982 million. This stability suggests that the volatility in economic profit and the spread ratio was primarily driven by changes in operational performance rather than significant adjustments to the underlying capital structure.
Overall, the results indicate that after a period of severe economic value erosion between 2023 and 2025, the organization demonstrated a significant recovery in its ability to generate returns relative to its cost of capital by January 2026.
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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 | (152) | (4,876) | (4,500) | (423) | 1,692) | (1,159) | |
| 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 | -0.13% | -5.28% | -5.16% | -0.40% | 1.64% | -1.19% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Apple Inc. | — | 22.81% | 21.00% | 21.63% | 23.52% | 22.70% | |
| Arista Networks Inc. | — | 33.20% | 24.89% | 15.50% | 11.06% | 18.22% | |
| Cisco Systems Inc. | — | -5.99% | -1.15% | 6.25% | 6.96% | 6.08% | |
| Lumentum Holdings Inc. | — | -39.87% | -60.07% | -28.29% | -7.78% | 8.00% | |
| Super Micro Computer Inc. | — | -4.13% | -3.02% | 1.40% | -2.02% | -4.59% | |
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 × -152 ÷ 114,503 = -0.13%
3 Click competitor name to see calculations.
The analysis of economic value added over the six-year period reveals significant volatility in both absolute economic profit and the corresponding profit margins. The trajectory is characterized by a brief period of value creation followed by a severe contraction and a subsequent recovery toward a break-even state.
- Economic Profit Trends
- Economic profit exhibited substantial fluctuations, starting at a deficit of 1,159 million USD in 2021 before reaching a peak positive value of 1,692 million USD in 2022. This positive momentum was short-lived, as the figure reverted to a negative 423 million USD in 2023 and deteriorated sharply to a low of 4,876 million USD by 2025. However, a notable recovery occurred in 2026, with the deficit narrowing significantly to 152 million USD.
- Adjusted Net Revenue Performance
- Revenue patterns showed a steady increase from 2021 through 2023, peaking at 105,014 million USD. A significant contraction occurred in 2024, where revenue dropped to 87,284 million USD. Following this trough, a strong growth trajectory was established, culminating in a period high of 114,503 million USD in 2026, suggesting a robust expansion of the top line toward the end of the observed period.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of the absolute profit figures. The margin transitioned from -1.19% in 2021 to a positive 1.64% in 2022, indicating a temporary phase of economic value generation. This was followed by a steep decline, reaching its lowest point of -5.28% in 2025. The recovery in 2026 is evidenced by the margin improving to -0.13%, indicating that while the company has not yet returned to positive economic profit, the gap between operating returns and the cost of capital has almost closed.
The correlation between the sharp revenue decline in 2024 and the simultaneous collapse in economic profit suggests a high sensitivity of value creation to top-line performance. The 2026 data indicates a strong recovery phase where substantial revenue growth has successfully mitigated previous losses, bringing the economic profit margin close to neutrality.
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