Economic Value Added (EVA)
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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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Eli Lilly & Co. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Economic Profit
Eli Lilly & Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of economic profit from 2021 to 2025 reveals a distinctive U-shaped trajectory, characterized by a period of contraction followed by an aggressive phase of value creation.
- Net Operating Profit After Taxes (NOPAT)
- A downward trend is observed between 2021 and 2023, during which NOPAT declined from 5,065 million USD to 3,228 million USD. This contraction was followed by a sharp reversal in 2024, with NOPAT increasing to 8,605 million USD, and further accelerating to 19,711 million USD by 2025, representing a substantial expansion in operational profitability.
- Invested Capital and Cost of Capital
- Invested capital exhibited a slight decrease in 2022 before entering a period of steady growth, rising from 24,287 million USD to 49,610 million USD by 2025. Throughout this period, the cost of capital remained relatively stable, fluctuating within a narrow range between 9.14% and 9.53%, indicating a consistent weighted average cost of capital despite the expanding capital base.
- Economic Profit Trends
- Economic profit mirrored the volatility of NOPAT, decreasing from 2,676 million USD in 2021 to a trough of 434 million USD in 2023. This period of diminished value creation was succeeded by an exponential increase, with economic profit reaching 5,207 million USD in 2024 and peaking at 14,985 million USD in 2025. The magnitude of this increase indicates that the returns generated on invested capital grew at a rate significantly higher than the cost of that capital.
The overall financial pattern suggests that after a three-year period of declining economic value added, the entity achieved a pivot toward rapid scalability. The surge in economic profit by 2025 demonstrates that the operational gains have far outpaced the costs associated with the expanded invested capital base.
Net Operating Profit after Taxes (NOPAT)
Eli Lilly & Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense on borrowings = Adjusted interest expense on borrowings × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income.
Net income and net operating profit after taxes (NOPAT) exhibited distinct trends over the five-year period. While net income generally increased, NOPAT demonstrated a more complex pattern of fluctuation.
- NOPAT Trend
- NOPAT decreased from US$5,065 million in 2021 to US$3,228 million in 2023, representing a substantial decline over two years. This downward trend reversed in 2024, with NOPAT increasing significantly to US$8,605 million. The most substantial growth occurred between 2024 and 2025, with NOPAT reaching US$19,711 million. This indicates a considerable improvement in core operational profitability in the latter part of the period.
- Relationship between Net Income and NOPAT
- Although both metrics generally moved in the same direction, the magnitude of change differed. Net income increased from US$5,582 million in 2021 to US$6,245 million in 2022, then decreased to US$5,240 million in 2023, before experiencing substantial growth in 2024 and 2025, reaching US$20,640 million. The difference between net income and NOPAT suggests that factors beyond core operations, such as financing costs or non-operating income, played an increasingly significant role in determining overall net income, particularly in 2024 and 2025.
The substantial increase in NOPAT from 2023 to 2025 suggests improved operational efficiency, increased sales volume, or a combination of both. Further investigation would be required to determine the specific drivers of this improvement. The divergence between net income and NOPAT trends warrants further scrutiny to understand the impact of non-operating items on overall profitability.
Cash Operating Taxes
Eli Lilly & Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
A significant increase in both income taxes and cash operating taxes is observed over the five-year period. While income taxes demonstrate substantial growth, cash operating taxes exhibit a more pronounced and consistent upward trajectory.
- Income Taxes
- Income taxes remained relatively stable between 2021 and 2022, fluctuating between US$562 million and US$574 million. A substantial increase is then noted in 2023, reaching US$1,314 million, followed by further increases to US$2,090 million in 2024 and US$5,091 million in 2025. This represents a nearly nine-fold increase over the 2021 level.
- Cash Operating Taxes
- Cash operating taxes demonstrate a consistent upward trend throughout the period. Beginning at US$1,452 million in 2021, they more than doubled to US$2,822 million in 2022. Continued growth is evident in subsequent years, reaching US$3,767 million in 2023, US$4,949 million in 2024, and US$6,999 million in 2025. This represents a nearly five-fold increase over the 2021 level.
- Relationship between Income Taxes and Cash Operating Taxes
- While both metrics increase, cash operating taxes consistently exceed income taxes throughout the observed period. The difference between the two widens over time, suggesting increasing tax payments beyond the reported income tax expense. This divergence could be attributable to various factors, including timing differences between accounting and cash tax liabilities, changes in tax regulations, or the utilization of tax loss carryforwards. The substantial growth in cash operating taxes, particularly in the later years, warrants further investigation to understand the underlying drivers and potential implications for future cash flows.
The observed trends suggest a growing tax burden for the company. The significant increase in cash operating taxes, exceeding the growth in reported income taxes, indicates a potential shift in the company’s tax profile and requires further scrutiny.
Invested Capital
Eli Lilly & Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to total Eli Lilly and Company shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable securities.
The reported invested capital exhibited a fluctuating pattern over the five-year period. Total reported debt & leases and total shareholders’ equity both contributed to the overall invested capital figure, with notable changes observed in both components.
- Invested Capital Trend
- Invested capital decreased from US$26,117 million in 2021 to US$24,287 million in 2022, representing a decline of approximately 6.7%. Subsequently, invested capital increased to US$29,370 million in 2023, US$35,786 million in 2024, and further to US$49,610 million in 2025. This indicates a substantial growth trend in invested capital from 2022 through 2025.
- Debt & Leases
- Total reported debt & leases decreased from US$17,570 million in 2021 to US$16,967 million in 2022. However, beginning in 2023, a consistent and significant increase in debt & leases is observed, rising to US$26,330 million, US$34,791 million, and ultimately US$43,865 million in 2025. This represents a considerable reliance on debt financing over the latter part of the analyzed period.
- Shareholders’ Equity
- Total shareholders’ equity demonstrated an initial increase from US$8,979 million in 2021 to US$10,650 million in 2022, and a slight increase to US$10,772 million in 2023. A more pronounced growth in shareholders’ equity is then evident in 2024 and 2025, reaching US$14,192 million and US$26,535 million respectively. This suggests increasing internal funding sources alongside the growing debt levels.
The combined effect of increasing debt and shareholders’ equity resulted in the overall upward trend in invested capital from 2022 onwards. The rate of increase in invested capital accelerated in the later years, driven primarily by the substantial growth in both debt and equity financing.
Cost of Capital
Eli Lilly & Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| 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 | ÷ | = | × | = | |||||||||
| 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 | ÷ | = | × | = | |||||||||
| 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 | ÷ | = | × | = | |||||||||
| 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 »
Economic Spread Ratio
Eli Lilly & Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 exhibits a period of significant contraction followed by an aggressive phase of value creation. A notable volatility is observed in the early years of the period, with a sharp trough occurring in 2023, followed by an exponential increase in both absolute economic profit and the efficiency of capital deployment through 2025.
- Economic Spread Ratio
- The spread ratio experienced a severe decline from 10.25% in 2021 to a minimum of 1.48% in 2023, indicating that the return on invested capital narrowed significantly relative to the cost of capital. However, a rapid reversal occurred in 2024, with the ratio climbing to 14.55%, and culminating in a peak of 30.21% by 2025. This trajectory suggests a dramatic improvement in the company's ability to generate returns above its cost of capital.
- Economic Profit
- Economic profit followed a similar V-shaped pattern. After declining from 2,676 million US dollars in 2021 to 434 million US dollars in 2023, the figure surged to 5,207 million US dollars in 2024 and reached 14,985 million US dollars in 2025. The magnitude of this increase indicates that the value created for shareholders accelerated substantially in the final two years of the period.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2022 before entering a phase of consistent expansion. Capital increased from 24,287 million US dollars in 2022 to 49,610 million US dollars by 2025. The simultaneous rise in both invested capital and the economic spread ratio demonstrates that the increased capital expenditures were highly productive, as the rate of profit growth significantly outpaced the rate of capital investment.
Overall, the data indicates a transition from a period of diminishing economic value to a high-growth phase. The substantial expansion of the economic spread ratio alongside growing invested capital confirms a highly efficient scaling of operations, resulting in a significant increase in the total economic value added by the end of 2025.
Economic Profit Margin
Eli Lilly & Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
A volatile yet ultimately expansive trend in economic value creation is observed between 2021 and 2025. The period is characterized by a significant contraction in economic profitability reaching a nadir in 2023, followed by a period of rapid acceleration in both absolute economic profit and margin efficiency.
- Revenue Growth Trends
- Revenue exhibits a consistent upward trajectory, increasing from US$ 28,318 million in 2021 to US$ 65,179 million by 2025. The growth rate accelerated notably after 2022, with the most substantial absolute increase occurring between 2024 and 2025.
- Economic Profit Volatility
- Economic profit experienced a sharp decline from US$ 2,676 million in 2021 to a low of US$ 434 million in 2023. This downturn was followed by a dramatic recovery, with values surging to US$ 5,207 million in 2024 and reaching US$ 14,985 million by 2025, indicating a significant increase in value creation above the cost of capital.
- Economic Profit Margin Dynamics
- The economic profit margin reflects a proportional U-shaped pattern. After declining from 9.45% in 2021 to 1.27% in 2023, the margin expanded aggressively to 11.56% in 2024 and 22.99% in 2025. This suggests that the revenue growth observed since 2023 has been accompanied by high operational efficiency and returns that far outweigh the imputed cost of capital, resulting in a substantial increase in the profitability of the capital employed.