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
Eli Lilly & Co., economic profit 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 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
= 19,711 – 9.28% × 49,610 = 15,108
The period demonstrates significant fluctuations in economic profit, driven by changes in net operating profit after taxes (NOPAT) and invested capital. While the cost of capital remained relatively stable, the interplay between profitability and capital employed resulted in a varied performance profile.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a decline from 2021 to 2023, decreasing from US$5,065 million to US$3,228 million. However, a substantial recovery occurred in 2024, with NOPAT reaching US$8,605 million, followed by a further increase to US$19,711 million in 2025. This indicates a strengthening of operational profitability in the latter years of the period.
- Cost of Capital
- The cost of capital exhibited a modest increasing trend over the five-year period, rising from 8.91% in 2021 to 9.28% in 2025. This increase, while gradual, represents a higher hurdle rate for generating economic profit.
- Invested Capital
- Invested capital followed a non-linear pattern. It decreased from US$26,117 million in 2021 to US$24,287 million in 2022, then increased to US$29,370 million in 2023. Further growth was observed in 2024 (US$35,786 million) and a significant expansion in 2025 (US$49,610 million). This suggests a growing capital base, potentially driven by strategic investments or acquisitions.
- Economic Profit
- Economic profit mirrored the trends in NOPAT, declining from US$2,739 million in 2021 to US$508 million in 2023. The substantial increase in NOPAT in 2024 and 2025 translated into a corresponding rise in economic profit, reaching US$5,296 million and US$15,108 million respectively. This demonstrates a clear correlation between operational performance and value creation. The magnitude of the increase in economic profit in 2025 is particularly noteworthy, indicating a significant improvement in returns above the cost of capital.
Overall, the period began with a moderate level of economic profit, experienced a period of decline, and concluded with substantial growth. The latter years of the period are characterized by a significant improvement in both profitability and the generation of economic value.
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Net Operating Profit after Taxes (NOPAT)
Eli Lilly & Co., NOPAT calculation
US$ 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
= 1,362 × 4.70% = 64
5 2025 Calculation
Tax benefit of interest expense on borrowings = Adjusted interest expense on borrowings × Statutory income tax rate
= 959 × 21.00% = 201
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$20,640 million. The difference between net income and NOPAT suggests that factors beyond core operations, such as financing costs or non-operating income, played an increasingly significant role in determining overall net income, particularly in 2024 and 2025.
The substantial increase in NOPAT from 2023 to 2025 suggests improved operational efficiency, increased sales volume, or a combination of both. Further investigation would be required to determine the specific drivers of this improvement. The divergence between net income and NOPAT trends warrants further scrutiny to understand the impact of non-operating items on overall profitability.
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Cash Operating Taxes
Eli Lilly & Co., cash operating taxes calculation
US$ 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$6,999 million in 2025. This represents a nearly five-fold increase over the 2021 level.
- Relationship between Income Taxes and Cash Operating Taxes
- While both metrics increase, cash operating taxes consistently exceed income taxes throughout the observed period. The difference between the two widens over time, suggesting increasing tax payments beyond the reported income tax expense. This divergence could be attributable to various factors, including timing differences between accounting and cash tax liabilities, changes in tax regulations, or the utilization of tax loss carryforwards. The substantial growth in cash operating taxes, particularly in the later years, warrants further investigation to understand the underlying drivers and potential implications for future cash flows.
The observed trends suggest a growing tax burden for the company. The significant increase in cash operating taxes, exceeding the growth in reported income taxes, indicates a potential shift in the company’s tax profile and requires further scrutiny.
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Invested Capital
Eli Lilly & Co., invested capital calculation (financing approach)
US$ 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$26,535 million respectively. This suggests increasing internal funding sources alongside the growing debt levels.
The combined effect of increasing debt and shareholders’ equity resulted in the overall upward trend in invested capital from 2022 onwards. The rate of increase in invested capital accelerated in the later years, driven primarily by the substantial growth in both debt and equity financing.
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Cost of Capital
Eli Lilly & Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 979,460) | 979,460) | ÷ | 1,020,621) | = | 0.96 | 0.96 | × | 9.48% | = | 9.10% | ||
| Debt3 | 39,799) | 39,799) | ÷ | 1,020,621) | = | 0.04 | 0.04 | × | 5.58% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 1,362) | 1,362) | ÷ | 1,020,621) | = | 0.00 | 0.00 | × | 4.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 1,020,621) | 1.00 | 9.28% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 822,111) | 822,111) | ÷ | 853,826) | = | 0.96 | 0.96 | × | 9.48% | = | 9.13% | ||
| Debt3 | 30,568) | 30,568) | ÷ | 853,826) | = | 0.04 | 0.04 | × | 3.87% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 1,147) | 1,147) | ÷ | 853,826) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 853,826) | 1.00 | 9.25% | ||||||||||
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 | 708,737) | 708,737) | ÷ | 733,230) | = | 0.97 | 0.97 | × | 9.48% | = | 9.17% | ||
| Debt3 | 23,388) | 23,388) | ÷ | 733,230) | = | 0.03 | 0.03 | × | 3.58% × (1 – 21.00%) | = | 0.09% | ||
| Operating lease liability4 | 1,105) | 1,105) | ÷ | 733,230) | = | 0.00 | 0.00 | × | 4.40% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 733,230) | 1.00 | 9.26% | ||||||||||
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 | 312,714) | 312,714) | ÷ | 327,263) | = | 0.96 | 0.96 | × | 9.48% | = | 9.06% | ||
| Debt3 | 13,821) | 13,821) | ÷ | 327,263) | = | 0.04 | 0.04 | × | 2.69% × (1 – 21.00%) | = | 0.09% | ||
| Operating lease liability4 | 728) | 728) | ÷ | 327,263) | = | 0.00 | 0.00 | × | 3.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 327,263) | 1.00 | 9.16% | ||||||||||
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 | 226,954) | 226,954) | ÷ | 245,797) | = | 0.92 | 0.92 | × | 9.48% | = | 8.76% | ||
| Debt3 | 18,158) | 18,158) | ÷ | 245,797) | = | 0.07 | 0.07 | × | 2.44% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 686) | 686) | ÷ | 245,797) | = | 0.00 | 0.00 | × | 3.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 245,797) | 1.00 | 8.91% | ||||||||||
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 | 15,108) | 5,296) | 508) | 2,143) | 2,739) | |
| Invested capital2 | 49,610) | 35,786) | 29,370) | 24,287) | 26,117) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 30.45% | 14.80% | 1.73% | 8.83% | 10.49% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.99% | -1.95% | -3.66% | 5.75% | 5.11% | |
| Amgen Inc. | 6.47% | -0.33% | 2.48% | 7.02% | 7.01% | |
| Bristol-Myers Squibb Co. | 5.92% | -21.76% | 1.80% | -0.92% | 1.35% | |
| Danaher Corp. | -10.62% | -10.78% | -11.55% | -6.54% | -5.71% | |
| Gilead Sciences Inc. | 12.90% | -10.19% | 3.11% | -0.01% | 6.99% | |
| Johnson & Johnson | 11.86% | 2.18% | 0.33% | 5.59% | 10.66% | |
| Merck & Co. Inc. | 10.80% | 13.68% | -8.61% | 11.57% | 11.71% | |
| Pfizer Inc. | -3.49% | -3.17% | -9.29% | 18.21% | 11.38% | |
| Regeneron Pharmaceuticals Inc. | 14.11% | 16.93% | 13.74% | 19.10% | 62.85% | |
| Thermo Fisher Scientific Inc. | -7.36% | -8.16% | -8.63% | -6.88% | -4.86% | |
| Vertex Pharmaceuticals Inc. | 21.14% | -22.51% | 11.44% | 14.18% | 15.39% | |
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 × 15,108 ÷ 49,610 = 30.45%
4 Click competitor name to see calculations.
The economic spread ratio demonstrates a fluctuating pattern over the five-year period. Initial values indicate a relatively strong economic spread, which subsequently declined before experiencing substantial growth.
- Economic Spread Ratio Trend
- In 2021, the economic spread ratio stood at 10.49%. A decrease was observed in 2022, with the ratio falling to 8.83%. This downward trend continued into 2023, with a significant decline to 1.73%, representing the lowest value within the observed timeframe. A substantial recovery began in 2024, as the ratio increased to 14.80%. This positive momentum accelerated in 2025, reaching 30.45%, the highest value recorded.
The economic spread ratio’s movement appears to correlate with changes in economic profit. The decline in the ratio from 2021 to 2023 coincides with a decrease in economic profit. Conversely, the substantial increase in the ratio from 2024 to 2025 aligns with the significant growth in economic profit during the same period.
- Invested Capital and Economic Spread
- Invested capital increased consistently throughout the period, moving from US$26,117 million in 2021 to US$49,610 million in 2025. Despite this consistent increase in invested capital, the economic spread ratio did not exhibit a linear relationship. The ratio’s ability to increase significantly in 2024 and 2025, despite the continued growth in invested capital, suggests an improved efficiency in generating returns on the larger capital base.
The substantial increase in the economic spread ratio in the latter years of the period suggests a strengthening of the company’s ability to generate value exceeding its cost of capital. The trend warrants further investigation to understand the drivers behind the improved performance, particularly in relation to the increasing invested capital.
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Economic Profit Margin
Eli Lilly & Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 15,108) | 5,296) | 508) | 2,143) | 2,739) | |
| Revenue | 65,179) | 45,043) | 34,124) | 28,541) | 28,318) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 23.18% | 11.76% | 1.49% | 7.51% | 9.67% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 1.00% | -2.39% | -4.60% | 8.14% | 8.72% | |
| Amgen Inc. | 10.79% | -0.66% | 6.45% | 11.25% | 11.62% | |
| Bristol-Myers Squibb Co. | 7.28% | -28.23% | 2.71% | -1.43% | 2.34% | |
| Danaher Corp. | -32.53% | -33.27% | -37.91% | -16.25% | -14.28% | |
| Gilead Sciences Inc. | 19.10% | -15.79% | 5.30% | -0.01% | 12.37% | |
| Johnson & Johnson | 17.39% | 2.62% | 0.39% | 6.70% | 11.14% | |
| Merck & Co. Inc. | 16.28% | 16.93% | -10.02% | 14.43% | 17.01% | |
| Pfizer Inc. | -7.80% | -6.75% | -24.17% | 19.94% | 12.15% | |
| Regeneron Pharmaceuticals Inc. | 13.04% | 14.85% | 12.53% | 19.23% | 42.50% | |
| Thermo Fisher Scientific Inc. | -15.56% | -15.61% | -17.23% | -12.68% | -9.89% | |
| Vertex Pharmaceuticals Inc. | 18.64% | -18.48% | 15.35% | 20.93% | 19.08% | |
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 × 15,108 ÷ 65,179 = 23.18%
3 Click competitor name to see calculations.
The economic profit exhibited considerable fluctuation over the five-year period. Initially, a decrease is observed, followed by a substantial increase culminating in a peak in the final year. Revenue demonstrated a consistent upward trajectory throughout the period, accelerating in later years. Consequently, the economic profit margin mirrored the pattern of economic profit, displaying initial decline, followed by significant growth.
- Economic Profit
- Economic profit began at US$2,739 million in 2021, decreased to US$2,143 million in 2022, and experienced a significant drop to US$508 million in 2023. A substantial recovery occurred in 2024, with economic profit reaching US$5,296 million, and continued to rise dramatically to US$15,108 million in 2025. This indicates improving profitability relative to the cost of capital in the latter part of the period.
- Revenue
- Revenue increased from US$28,318 million in 2021 to US$28,541 million in 2022, representing modest growth. The rate of increase accelerated in 2023, reaching US$34,124 million, and continued to climb to US$45,043 million in 2024. The most substantial increase occurred between 2024 and 2025, with revenue reaching US$65,179 million. This consistent revenue growth suggests expanding market presence or increased sales volume.
- Economic Profit Margin
- The economic profit margin began at 9.67% in 2021, declining to 7.51% in 2022 and further to 1.49% in 2023. A significant turnaround began in 2024, with the margin increasing to 11.76%, and reaching a high of 23.18% in 2025. This suggests that the company’s ability to generate economic profit relative to its revenue improved considerably in the later years of the period, likely driven by the combination of increased economic profit and accelerating revenue growth.
The substantial increase in both economic profit and economic profit margin in 2024 and 2025 warrants further investigation to understand the underlying drivers of this performance. The decline in 2022 and 2023 also merits review to identify any contributing factors and assess whether these were temporary setbacks or indicative of broader challenges.
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