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: Assets
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Economic Profit
Eli Lilly & Co., 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 NOPAT shows a declining trend from 2020 through 2023, decreasing from approximately 6.36 billion to about 3.09 billion US dollars. However, in 2024, there is a significant recovery, with NOPAT increasing sharply to approximately 8.47 billion US dollars, surpassing the initial value in 2020.
- Cost of capital
- The cost of capital exhibits a gradual increase over the observed periods, starting at 8.17% in 2020 and rising consistently to 8.56% by 2024. This reflects a slight upward pressure on the company’s financing costs or required returns over time.
- Invested capital
- Invested capital fluctuates with an initial increase from roughly 24.56 billion US dollars in 2020 to 26.14 billion in 2021, followed by a decrease in 2022 to approximately 24.30 billion. Subsequently, it grows notably to about 29.38 billion in 2023 and surges further to around 35.80 billion US dollars in 2024, indicating substantial capital investment in the later years.
- Economic profit
- Economic profit declines markedly from 4.35 billion US dollars in 2020 to just over 0.57 billion in 2023, highlighting diminishing returns above the cost of capital during that period. However, in 2024, economic profit experiences a robust rebound to approximately 5.40 billion US dollars, indicating improved value creation in that year.
Net Operating Profit after Taxes (NOPAT)
Eli Lilly & Co., 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 allowances.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in equity equivalents to net income.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
The financial data reveals notable fluctuations in both net income and net operating profit after taxes (NOPAT) over the five-year period ending in 2024.
- Net Income
-
Net income displayed a downward trend from 2020 to 2023, decreasing from 6,193,700 thousand US dollars in 2020 to 5,240,400 thousand US dollars in 2023. However, in 2024, net income surged significantly to 10,590,000 thousand US dollars, almost doubling the previous year’s figure. This sharp increase suggests an exceptional improvement in profitability during the final reported year.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT exhibited a consistent decline throughout the period from 2020 through 2023, beginning at 6,357,340 thousand US dollars in 2020 and dropping steadily to 3,090,452 thousand US dollars in 2023. This represents a reduction of more than 50% over these years. However, in 2024, NOPAT rebounded strongly, rising to 8,466,038 thousand US dollars, indicating a considerable recovery in operating profitability after taxes.
- Overall Insights
-
The downward trend in both net income and NOPAT from 2020 to 2023 may reflect operational challenges or increased costs impacting profitability. The significant rebound in 2024 for both metrics suggests a positive turnaround, possibly as a result of improved operational efficiency, cost management, or increased revenues. The divergence in magnitude between net income and NOPAT in 2024, with net income showing a larger increase, may imply changes in non-operating factors, tax strategies, or extraordinary items affecting the net income figure.
Cash Operating Taxes
Eli Lilly & Co., 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).
- Income Taxes
- The amount of income taxes showed a declining trend from 2020 to 2022, decreasing from approximately 1,036,200 thousand USD in 2020 to 561,600 thousand USD in 2022. This represents almost a halving over this period. However, starting in 2023, there was a significant increase in income taxes, rising sharply to about 1,314,200 thousand USD and continuing upward to 2,090,400 thousand USD in 2024. This reversal suggests a change in taxable income or tax strategy leading to a more than threefold increase from the 2022 low.
- Cash Operating Taxes
- Cash operating taxes exhibited a consistent year-over-year increase across the entire period. Beginning at roughly 1,244,662 thousand USD in 2020, the amount rose to 1,446,213 thousand USD in 2021. This upward trend accelerated considerably starting in 2022, with cash operating taxes reaching 2,811,147 thousand USD, then 3,731,159 thousand USD in 2023, and finally 4,911,605 thousand USD in 2024. The steady and strong growth in this metric indicates increasing operational tax expenses, potentially reflecting higher operating profits or changes in tax regulations impacting cash tax outflows.
- Summary of Trends
- Overall, while income taxes initially declined before a sharp increase in later years, cash operating taxes steadily increased every year with accelerating growth. This divergence suggests that while reporting or accrual-based tax expenses (income taxes) fluctuated, the actual cash tax payments consistently rose, implying increasing operational profitability or other factors driving higher taxation cash flows. The pronounced rise from 2022 onwards in both categories signals a significant change in the tax or operational landscape during this more recent period.
Invested Capital
Eli Lilly & Co., 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 allowance for doubtful accounts receivable.
4 Addition of LIFO reserve. See details »
5 Addition of equity equivalents to total Eli Lilly and Company shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of investments.
The financial data over the five-year period reveals notable trends regarding the company’s debt levels, equity, and invested capital.
- Total reported debt & leases
- This figure remained relatively stable from 2020 through 2022, fluctuating slightly around 17 billion US dollars. However, there was a significant increase starting in 2023, rising sharply to approximately 26.3 billion and further increasing to around 34.8 billion by the end of 2024. This upward trajectory indicates a substantial rise in debt and lease obligations in the most recent years.
- Total Eli Lilly and Company shareholders’ equity
- Shareholders’ equity showed a consistent upward trend throughout the period. It increased from about 5.6 billion in 2020 to nearly 9.0 billion in 2021, followed by further growth to approximately 10.6 billion in 2022. Although there was only a modest increase in 2023, equity rose notably again in 2024 to approximately 14.2 billion. This pattern reflects overall strengthening in the company’s equity base over the period.
- Invested capital
- Invested capital exhibited some volatility but generally increased over the five-year span. After a rise from about 24.6 billion in 2020 to 26.1 billion in 2021, it declined to 24.3 billion in 2022, suggesting some contraction or divestment activities. Subsequently, invested capital expanded significantly in the last two years, reaching approximately 29.4 billion in 2023 and 35.8 billion in 2024. This uptrend indicates increased allocation of resources, possibly for growth or expansion purposes.
In summary, the company’s financial structure demonstrates a rising reliance on debt from 2023 onward, accompanied by steady gains in shareholders’ equity. The invested capital reflects initial contraction followed by substantial growth, consistent with strategic investments or asset acquisitions. The combined trends suggest an aggressive capital deployment strategy supported by increased leverage and equity growth.
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: 2024-12-31).
1 US$ in thousands
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 thousands
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 thousands
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 thousands
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: 2020-12-31).
1 US$ in thousands
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, 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 | ||||||
| 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: 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.
- Economic Profit
- The economic profit exhibited a notable fluctuation over the observed five-year period. Starting from a high value of approximately 4.35 billion USD in 2020, it declined significantly to about 288 million USD in 2021, and further decreased to roughly 2.26 million USD in 2022. The lowest point was observed in 2023 with economic profit dropping to approximately 571 thousand USD. However, there was a strong recovery in 2024, surpassing initial levels to reach over 5.4 billion USD. This pattern suggests variability in profitability, with a pronounced dip in the middle years followed by a robust rebound in the most recent year.
- Invested Capital
- Invested capital demonstrated an overall upward trend throughout the period. Beginning at 24.6 billion USD in 2020, it increased moderately to 26.1 billion USD in 2021. A slight decrease was observed in 2022 when invested capital fell to 24.3 billion USD. This was followed by a significant increase in 2023 to nearly 29.4 billion USD and a continued rise up to 35.8 billion USD in 2024. The data indicate a growing capital base, reflecting potential expansion or reinvestment activities in recent years.
- Economic Spread Ratio
- The economic spread ratio, which measures the company's ability to generate returns over the cost of capital, displayed a declining trend from 17.7% in 2020 to 11.0% in 2021 and further to 9.3% in 2022. It reached a low point of 1.94% in 2023, indicating diminished profitability relative to invested capital. However, there was a substantial recovery in 2024 with the ratio rebounding to 15.1%. This trend aligns with the fluctuations seen in economic profit and suggests that the firm’s efficiency in generating value over cost weakened for a few years before improving significantly in the latest period.
Economic Profit Margin
Eli Lilly & Co., 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 | ||||||
| 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: 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 ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals notable fluctuations and trends over the five-year period under review. The economic profit shows a declining pattern from 2020 to 2023, with a drop from approximately 4.35 billion US dollars in 2020 down to around 571 million US dollars in 2023. However, the year 2024 marks a significant rebound, with economic profit surging to over 5.4 billion US dollars, representing the highest figure in the observed timeframe.
Revenue demonstrates consistent growth throughout the entire period. It increased steadily from approximately 24.54 billion US dollars in 2020 to about 45.04 billion US dollars in 2024. This represents an overall growth of roughly 83% in revenue over the five years, indicating strong top-line expansion.
The economic profit margin, reflecting the ratio of economic profit to revenue, illustrates a somewhat volatile trend. It started at a relatively high 17.73% in 2020, then dropped significantly to a low of 1.67% in 2023. In 2024, the margin recovered to 11.99%, though this is still lower than the initial level observed in 2020. The fluctuation suggests variable efficiency in converting revenue into economic profit, with particular challenges in the middle years followed by improved profitability in the latest period.
- Economic Profit
- Decreased sharply from 2020 to 2023, followed by a pronounced increase in 2024 to the highest recorded value.
- Revenue
- Displayed steady and substantial growth across all five years, nearly doubling from the start to the end of the period.
- Economic Profit Margin
- Fell considerably from 2020 through 2023, indicating reduced profitability relative to revenue, before rebounding in 2024 but not reaching the initial high margin.
In summary, while revenue surged consistently, economic profit and its margin encountered volatility, with a downward trend until 2023 and sharp recovery afterwards. The divergence between rising revenue and fluctuating economic profit suggests changes in cost structures, investment, or other operational factors impacting profitability dynamics over the period analyzed.