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
FedEx Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
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
= 4,913 – 13.11% × 70,379 = -4,316
The analysis reveals a consistent pattern of negative economic profit over the observed period. While net operating profit after taxes (NOPAT) fluctuated, it was consistently insufficient to cover the cost of capital employed, resulting in value destruction for shareholders. Invested capital generally increased throughout the period, contributing to the sustained negative economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a substantial increase from 2020 to 2021, rising from US$2,531 million to US$7,163 million. However, this was followed by a decline in 2022 to US$5,014 million, and remained relatively stable between 2022 and 2025, fluctuating around US$5 billion. This suggests a peak in profitability in 2021 that was not sustained.
- Cost of Capital
- The cost of capital increased from 11.82% in 2020 to a peak of 14.31% in 2024, before decreasing slightly to 13.11% in 2025. This increase in the cost of capital, particularly between 2020 and 2024, likely contributed to the widening negative economic profit during those years. The slight decrease in 2025 offers a marginal improvement, but does not offset the overall trend.
- Invested Capital
- Invested capital demonstrated a consistent upward trend, increasing from US$57,553 million in 2020 to US$70,379 million in 2025. This continuous growth in capital employed, coupled with the inability of NOPAT to consistently exceed the cost of capital, exacerbated the negative economic profit. The rate of increase slowed between 2023 and 2025.
- Economic Profit
- Economic profit remained negative throughout the entire period, ranging from -US$4,045 million to -US$5,098 million. The most substantial negative economic profit occurred in 2024, coinciding with the highest cost of capital. While the negative economic profit lessened slightly in 2025 compared to 2024, it remained significant, indicating continued value destruction. The magnitude of the negative economic profit suggests that the company’s investments are not generating returns sufficient to cover their cost.
In summary, the period under review is characterized by increasing invested capital and a generally increasing cost of capital, both contributing to consistently negative economic profit. While NOPAT saw a temporary surge, it was not enough to overcome the cost of capital and generate positive economic profit.
Net Operating Profit after Taxes (NOPAT)
FedEx Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
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
= 16,837 × 3.98% = 670
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,459 × 21.00% = 306
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 363 × 21.00% = 76
8 Elimination of after taxes investment income.
- Net Income
- The net income exhibits a significant increase from 2020 to 2021, rising from 1,286 million US dollars to 5,231 million US dollars. Following this peak, there is a decline in 2022 to 3,826 million US dollars. The values then show a modest upward movement in 2023 and 2024, reaching 4,331 million US dollars, before dipping slightly to 4,092 million US dollars in 2025. This pattern suggests a period of volatility with an initial strong recovery followed by a stabilization phase with minor fluctuations.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT follows a somewhat parallel trend to net income but with less volatility. It increases notably from 2,531 million US dollars in 2020 to a peak of 7,163 million US dollars in 2021. A decline is observed in 2022 to 5,014 million US dollars, after which it gradually decreases to 4,913 million US dollars by 2025. The downward trend in the last few years indicates some pressure on the core operating profitability despite the initial strong gain.
Cash Operating Taxes
FedEx Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
- Provision for Income Taxes
- The provision for income taxes shows a notable increase from 383 million USD in 2020 to a peak of 1,443 million USD in 2021, representing a substantial rise. This is followed by a decrease to 1,070 million USD in 2022. Subsequently, the provision increases again to 1,391 million USD in 2023, then slightly rises to 1,505 million USD in 2024, before declining to 1,349 million USD in 2025. The trend indicates volatility with overall growth compared to the initial year, suggesting fluctuating taxable income or changes in tax planning strategies over the period.
- Cash Operating Taxes
- Cash operating taxes have generally trended upward over the six-year period. Starting at 259 million USD in 2020, the figures increase sharply to 893 million USD in 2021 and continue to rise to 983 million USD in 2022. The upward trajectory continues through 2023 with 1,177 million USD and reaches the highest value of 1,885 million USD in 2024. In 2025, there is a decline to 1,626 million USD. The overall increase suggests higher actual tax payments, which might correlate with increased operating profits or altered tax compliance and payment profiles.
- Comparison and Insights
- Comparing the two items, cash operating taxes generally rise more consistently than the provision for income taxes, which shows more fluctuations. The significant jump in cash taxes from 2023 to 2024, contrasting with a steady rise in provision in the same period, might indicate timing differences or changes in tax payment schedules. The decline in both provision and cash taxes in 2025 could indicate a reduction in taxable income or enhanced tax efficiency measures.
Invested Capital
FedEx Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
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 equity equivalents to common stockholders’ investment.
5 Removal of accumulated other comprehensive income.
The financial data over the six-year period presents several noteworthy trends in key capital structure metrics.
- Total reported debt & leases
- This metric shows a gradual increase from 36,121 million USD in 2020 to a peak of 38,332 million USD in 2023, followed by a slight decrease to 37,416 million USD in 2025. This pattern suggests a strategy of moderate leveraging with a plateauing effect in recent years, potentially reflecting cautious debt management or repayment activities after 2023.
- Common stockholders’ investment
- There is a consistent and significant upward trajectory in common stockholders’ equity, rising from 18,295 million USD in 2020 to 28,074 million USD in 2025. This increase indicates steady growth in the equity base, possibly driven by retained earnings accumulation or issuance of new stock, thereby strengthening the company’s capital foundation over time.
- Invested capital
- Invested capital demonstrates a steady upward trend from 57,553 million USD in 2020 to 70,379 million USD in 2025. The growth in invested capital parallels the increase in equity and debt levels, showing expansion in total capital employed by the business. The slower growth rate after 2023 suggests a stabilization in capital investment or asset base expansion.
Overall, the data indicates a balanced growth approach with incremental increases in both debt and equity financing contributing to a higher invested capital base. The stability in debt levels post-2023, combined with continuous growth in shareholders’ equity, may reflect strategic financial management aimed at optimizing capital structure and funding sustainable growth.
Cost of Capital
FedEx Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 53,250) | 53,250) | ÷ | 87,967) | = | 0.61 | 0.61 | × | 19.74% | = | 11.95% | ||
| Long-term debt, including current maturities3 | 17,880) | 17,880) | ÷ | 87,967) | = | 0.20 | 0.20 | × | 3.50% × (1 – 21.00%) | = | 0.56% | ||
| Operating lease liability4 | 16,837) | 16,837) | ÷ | 87,967) | = | 0.19 | 0.19 | × | 3.98% × (1 – 21.00%) | = | 0.60% | ||
| Total: | 87,967) | 1.00 | 13.11% | ||||||||||
Based on: 10-K (reporting date: 2025-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 74,517) | 74,517) | ÷ | 109,964) | = | 0.68 | 0.68 | × | 19.74% | = | 13.38% | ||
| Long-term debt, including current maturities3 | 17,931) | 17,931) | ÷ | 109,964) | = | 0.16 | 0.16 | × | 3.50% × (1 – 21.00%) | = | 0.45% | ||
| Operating lease liability4 | 17,516) | 17,516) | ÷ | 109,964) | = | 0.16 | 0.16 | × | 3.79% × (1 – 21.00%) | = | 0.48% | ||
| Total: | 109,964) | 1.00 | 14.31% | ||||||||||
Based on: 10-K (reporting date: 2024-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 63,985) | 63,985) | ÷ | 100,038) | = | 0.64 | 0.64 | × | 19.74% | = | 12.63% | ||
| Long-term debt, including current maturities3 | 18,300) | 18,300) | ÷ | 100,038) | = | 0.18 | 0.18 | × | 3.50% × (1 – 21.00%) | = | 0.51% | ||
| Operating lease liability4 | 17,753) | 17,753) | ÷ | 100,038) | = | 0.18 | 0.18 | × | 3.42% × (1 – 21.00%) | = | 0.48% | ||
| Total: | 100,038) | 1.00 | 13.61% | ||||||||||
Based on: 10-K (reporting date: 2023-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 56,641) | 56,641) | ÷ | 92,839) | = | 0.61 | 0.61 | × | 19.74% | = | 12.04% | ||
| Long-term debt, including current maturities3 | 19,268) | 19,268) | ÷ | 92,839) | = | 0.21 | 0.21 | × | 3.50% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 16,930) | 16,930) | ÷ | 92,839) | = | 0.18 | 0.18 | × | 2.85% × (1 – 21.00%) | = | 0.41% | ||
| Total: | 92,839) | 1.00 | 13.03% | ||||||||||
Based on: 10-K (reporting date: 2022-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 78,820) | 78,820) | ÷ | 118,028) | = | 0.67 | 0.67 | × | 19.74% | = | 13.18% | ||
| Long-term debt, including current maturities3 | 23,625) | 23,625) | ÷ | 118,028) | = | 0.20 | 0.20 | × | 3.40% × (1 – 21.00%) | = | 0.54% | ||
| Operating lease liability4 | 15,583) | 15,583) | ÷ | 118,028) | = | 0.13 | 0.13 | × | 2.94% × (1 – 21.00%) | = | 0.31% | ||
| Total: | 118,028) | 1.00 | 14.03% | ||||||||||
Based on: 10-K (reporting date: 2021-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,995) | 42,995) | ÷ | 80,398) | = | 0.53 | 0.53 | × | 19.74% | = | 10.56% | ||
| Long-term debt, including current maturities3 | 23,285) | 23,285) | ÷ | 80,398) | = | 0.29 | 0.29 | × | 3.60% × (1 – 21.00%) | = | 0.82% | ||
| Operating lease liability4 | 14,118) | 14,118) | ÷ | 80,398) | = | 0.18 | 0.18 | × | 3.19% × (1 – 21.00%) | = | 0.44% | ||
| Total: | 80,398) | 1.00 | 11.82% | ||||||||||
Based on: 10-K (reporting date: 2020-05-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
FedEx Corp., economic spread ratio calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,316) | (5,098) | (4,045) | (3,645) | (1,846) | (4,273) | |
| Invested capital2 | 70,379) | 70,265) | 69,545) | 66,462) | 64,229) | 57,553) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -6.13% | -7.25% | -5.82% | -5.48% | -2.87% | -7.42% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Uber Technologies Inc. | 13.96% | 6.10% | -3.72% | -73.72% | -22.88% | — | |
| Union Pacific Corp. | -2.53% | -3.20% | -3.29% | -1.38% | -2.25% | — | |
| United Airlines Holdings Inc. | -2.68% | -1.85% | 0.85% | -3.37% | -10.29% | — | |
| United Parcel Service Inc. | -2.41% | -1.96% | 0.75% | 11.73% | 17.56% | — | |
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -4,316 ÷ 70,379 = -6.13%
4 Click competitor name to see calculations.
The financial performance, as indicated by economic value added metrics, demonstrates a consistent pattern of negative economic profit over the observed period. While invested capital has generally increased, the economic spread ratio reveals a deteriorating trend in value creation relative to that capital.
- Economic Profit
- Economic profit consistently registers as negative across all reported years, ranging from a low of -5,098 US$ millions in 2023 to a high of -1,846 US$ millions in 2021. The magnitude of the loss increased from 2020 to 2023, before showing a slight improvement in 2024 and 2025, though remaining negative. This indicates that the company’s returns are consistently below its cost of capital.
- Invested Capital
- Invested capital exhibits a generally increasing trend throughout the period, rising from 57,553 US$ millions in 2020 to 70,379 US$ millions in 2025. The rate of increase slows in the later years, suggesting a potential stabilization in capital deployment. Despite the growth in invested capital, the persistent negative economic profit suggests that these investments are not generating sufficient returns.
- Economic Spread Ratio
- The economic spread ratio, representing the difference between return on invested capital and the cost of capital, shows a clear downward trend. Starting at -7.42% in 2020, it improves to -2.87% in 2021, but then deteriorates steadily to -7.25% in 2023. A slight recovery to -6.13% is observed in 2025, but the ratio remains significantly negative. This indicates a widening gap between the company’s returns and its cost of capital, suggesting increasing pressure on value creation. The negative values confirm that the company is destroying, rather than creating, economic value.
In summary, the analysis reveals a consistent inability to generate positive economic profit, coupled with a declining economic spread ratio despite increasing invested capital. While the most recent period shows a slight improvement, the overall trend suggests a need for strategic adjustments to enhance profitability and improve returns on investment.
Economic Profit Margin
FedEx Corp., economic profit margin calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,316) | (5,098) | (4,045) | (3,645) | (1,846) | (4,273) | |
| Revenue | 87,926) | 87,693) | 90,155) | 93,512) | 83,959) | 69,217) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -4.91% | -5.81% | -4.49% | -3.90% | -2.20% | -6.17% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Uber Technologies Inc. | 4.23% | 2.07% | -1.56% | -37.79% | -21.07% | — | |
| Union Pacific Corp. | -6.56% | -8.17% | -8.40% | -3.32% | -6.01% | — | |
| United Airlines Holdings Inc. | -2.27% | -1.59% | 0.71% | -3.08% | -21.68% | — | |
| United Parcel Service Inc. | -1.38% | -1.04% | 0.37% | 5.23% | 8.01% | — | |
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -4,316 ÷ 87,926 = -4.91%
3 Click competitor name to see calculations.
The financial performance, as indicated by economic profit and its margin, demonstrates a consistent pattern of negative economic profit over the analyzed period spanning from 2020 to 2025. While revenue generally increased through 2022, the economic profit margin remained negative and exhibited a worsening trend, particularly in the later years of the period.
- Economic Profit
- Economic profit consistently registered as a negative value throughout the six-year period. The magnitude of the loss fluctuated, with a peak negative value of US$5,098 million in 2024. A slight improvement is observed in the final year, 2025, with economic profit decreasing to US$4,316 million, though remaining negative.
- Revenue
- Revenue experienced growth from 2020 to 2022, increasing from US$69,217 million to US$93,512 million. However, revenue then declined in subsequent years, reaching US$87,693 million in 2024 before a marginal increase to US$87,926 million in 2025. This suggests a potential plateauing or contraction in top-line growth.
- Economic Profit Margin
- The economic profit margin consistently remained negative, indicating that the company’s returns are not exceeding its cost of capital. The margin worsened from -6.17% in 2020 to -5.81% in 2024, representing a sustained decline in profitability relative to capital employed. A modest improvement is seen in 2025, with the margin increasing to -4.91%, but it remains substantially negative. The divergence between increasing revenue and a declining economic profit margin suggests increasing costs or a less efficient utilization of capital.
Overall, the trend suggests a growing disconnect between revenue generation and the ability to generate economic profit. Despite revenue increases in the earlier part of the period, the company consistently failed to achieve positive economic profit, and the economic profit margin deteriorated, indicating increasing pressure on profitability.