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
Linde plc, 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
= 7,182 – 14.10% × 80,195 = -4,124
The financial performance from 2021 to 2025 is characterized by a persistent state of negative economic profit, although there was a notable reduction in the magnitude of these losses during the mid-period due to strengthened operational earnings.
- Net Operating Profit After Taxes (NOPAT) Trends
- A strong upward trajectory is observed in NOPAT, which grew from US$ 3,800 million in 2021 to US$ 7,182 million in 2025. The most significant expansion occurred between 2022 and 2023, where NOPAT increased by approximately 66.6%, suggesting a substantial improvement in operational efficiency or revenue scaling during that interval.
- Capital Cost and Investment Base
- The cost of capital remained relatively stable, oscillating between a low of 14.10% and a peak of 14.40%. Concurrently, invested capital showed a general increase, rising from US$ 72,560 million in 2021 to US$ 80,195 million in 2025. A significant increase in capital deployment was recorded in 2025, with invested capital growing by approximately 7.1% compared to the previous year.
- Economic Profit Analysis
- Economic profit remained negative throughout the five-year period, indicating that the company's operating returns were insufficient to cover the total cost of the capital employed. A period of recovery was observed between 2022 and 2024, during which the economic loss narrowed from -US$ 6,464 million to -US$ 3,876 million, primarily driven by the rapid growth in NOPAT. However, this trend reversed in 2025, with the economic loss widening to -US$ 4,124 million. This decline is attributable to the surge in invested capital, which increased the capital charge beyond the gains achieved through higher NOPAT.
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Net Operating Profit after Taxes (NOPAT)
Linde plc, 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 allowance for expected credit losses.
3 Addition of increase (decrease) in cost reduction programs.
4 Addition of increase (decrease) in equity equivalents to net income, Linde plc.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 866 × 4.46% = 39
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 503 × 21.00% = 106
7 Addition of after taxes interest expense to net income, Linde plc.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 209 × 21.00% = 44
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
Net income and net operating profit after taxes (NOPAT) exhibited positive trends over the five-year period. Both metrics demonstrate consistent growth, with a notable acceleration in later years. The difference between net income and NOPAT remains relatively small throughout the period, suggesting limited impact from financing or non-operating activities.
- NOPAT Trend
- NOPAT increased from US$3,800 million in 2021 to US$7,182 million in 2025. The growth was moderate between 2021 and 2022, with an increase of approximately 0.87%. A significant jump occurred between 2022 and 2023, with NOPAT rising to US$6,386 million, representing a growth of approximately 66.7%. This upward trajectory continued from 2023 to 2025, with increases of approximately 6.8% and 12.5% respectively.
- Relationship between Net Income and NOPAT
- The values for net income and NOPAT are closely aligned across all reported years. In 2021, NOPAT was US$3,800 million, compared to net income of US$3,826 million. This difference of US$26 million remained relatively consistent in 2022 (US$3,833 million NOPAT vs. US$4,147 million net income, a difference of US$314 million). The gap widened slightly in 2023 (US$6,386 million NOPAT vs. US$6,199 million net income) and continued to widen in 2024 (US$6,814 million NOPAT vs. US$6,565 million net income) and 2025 (US$7,182 million NOPAT vs. US$6,898 million net income). These differences suggest increasing non-operating items or financing costs as a percentage of overall profitability.
The consistent growth in NOPAT indicates improving core operational profitability. The increasing divergence between NOPAT and net income warrants further investigation to understand the drivers of these differences, potentially related to interest expense, taxes, or other non-operating items. Overall, the trend in NOPAT is positive and suggests strong underlying business performance.
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Cash Operating Taxes
Linde plc, cash operating taxes calculation
US$ 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).
The provision for income taxes and cash operating taxes both demonstrate an increasing trend over the five-year period. However, the magnitude of increase differs between the two items, and both exhibit some fluctuation in growth rate.
- Provision for Income Taxes
- The provision for income taxes increased from US$1,262 million in 2021 to US$1,814 million in 2023, representing a substantial rise. Growth slowed in 2024 to US$2,002 million, and then decreased slightly to US$1,989 million in 2025. This suggests a potential stabilization or minor reduction in tax obligations after a period of significant growth.
- Cash Operating Taxes
- Cash operating taxes exhibited a consistent increase throughout the period, rising from US$1,537 million in 2021 to US$2,516 million in 2025. The increase from 2021 to 2022 was US$298 million, while the increase from 2024 to 2025 was US$311 million, indicating a relatively consistent absolute increase in cash tax payments. The growth rate, however, decelerated slightly over time.
- Relationship between Provision and Cash Taxes
- Cash operating taxes consistently exceeded the provision for income taxes in each year. The difference between the two items varied between approximately US$275 million and US$527 million. This difference suggests the presence of timing differences between accounting income and taxable income, or potentially deferred tax assets/liabilities. The gap narrowed slightly between 2021 and 2023, then widened again in 2024 and 2025, indicating a changing dynamic in these timing differences.
Overall, the company experienced increasing tax obligations, both from an accounting perspective (provision for income taxes) and a cash flow perspective (cash operating taxes). The consistent difference between the two items warrants further investigation to understand the underlying causes and potential implications for future cash flows and financial reporting.
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Invested Capital
Linde plc, invested capital calculation (financing approach)
US$ 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 allowance for doubtful accounts receivable.
4 Addition of cost reduction programs.
5 Addition of equity equivalents to total Linde plc shareholders’ equity.
6 Removal of accumulated other comprehensive income.
Analysis of the presented financial information reveals trends in the company’s capital structure and invested capital over a five-year period. Total reported debt and leases demonstrate a consistent upward trajectory, while total shareholders’ equity exhibits more fluctuation. Invested capital generally increases throughout the period, though its growth appears to be influenced by both debt and equity movements.
- Debt & Leases
- Total reported debt and leases increased steadily from US$15,216 million in 2021 to US$28,069 million in 2025. The rate of increase accelerated in later years, with a substantial rise between 2024 and 2025. This suggests an increasing reliance on debt financing.
- Shareholders’ Equity
- Total Linde plc shareholders’ equity decreased from US$44,035 million in 2021 to US$38,092 million in 2024, before experiencing a slight increase to US$38,245 million in 2025. This initial decline could be attributed to share repurchases, dividend payments, or unrealized losses. The stabilization in 2025 suggests a potential bottoming out of equity reduction.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2023, fluctuating around US$72-73 billion. A noticeable increase occurred in 2024, reaching US$74,884 million, and continued into 2025, reaching US$80,195 million. This growth in invested capital correlates with the increasing debt levels, indicating that debt financing is contributing to capital expansion. The slight dip in invested capital between 2021 and 2022 is likely due to the decrease in shareholders’ equity offsetting the increase in debt.
The combined effect of rising debt and fluctuating equity results in a generally increasing trend in invested capital. The company appears to be actively employing debt to fund its operations and growth initiatives, particularly in the later years of the observed period. Further investigation into the specific uses of the increased debt would be beneficial to assess the efficiency and effectiveness of these capital allocation decisions.
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Cost of Capital
Linde plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 235,529) | 235,529) | ÷ | 262,183) | = | 0.90 | 0.90 | × | 15.47% | = | 13.90% | ||
| Debt and finance lease liabilities3 | 25,788) | 25,788) | ÷ | 262,183) | = | 0.10 | 0.10 | × | 2.42% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 866) | 866) | ÷ | 262,183) | = | 0.00 | 0.00 | × | 4.46% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 262,183) | 1.00 | 14.10% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 218,272) | 218,272) | ÷ | 239,715) | = | 0.91 | 0.91 | × | 15.47% | = | 14.09% | ||
| Debt and finance lease liabilities3 | 20,661) | 20,661) | ÷ | 239,715) | = | 0.09 | 0.09 | × | 2.62% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 782) | 782) | ÷ | 239,715) | = | 0.00 | 0.00 | × | 4.17% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 239,715) | 1.00 | 14.28% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 217,287) | 217,287) | ÷ | 236,279) | = | 0.92 | 0.92 | × | 15.47% | = | 14.23% | ||
| Debt and finance lease liabilities3 | 18,243) | 18,243) | ÷ | 236,279) | = | 0.08 | 0.08 | × | 2.67% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 749) | 749) | ÷ | 236,279) | = | 0.00 | 0.00 | × | 4.19% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 236,279) | 1.00 | 14.40% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 171,454) | 171,454) | ÷ | 188,442) | = | 0.91 | 0.91 | × | 15.47% | = | 14.08% | ||
| Debt and finance lease liabilities3 | 16,267) | 16,267) | ÷ | 188,442) | = | 0.09 | 0.09 | × | 2.18% × (1 – 21.00%) | = | 0.15% | ||
| Operating lease liability4 | 721) | 721) | ÷ | 188,442) | = | 0.00 | 0.00 | × | 3.26% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 188,442) | 1.00 | 14.23% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 148,891) | 148,891) | ÷ | 164,282) | = | 0.91 | 0.91 | × | 15.47% | = | 14.02% | ||
| Debt and finance lease liabilities3 | 14,558) | 14,558) | ÷ | 164,282) | = | 0.09 | 0.09 | × | 1.48% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 833) | 833) | ÷ | 164,282) | = | 0.01 | 0.01 | × | 2.91% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 164,282) | 1.00 | 14.14% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Linde plc, 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 | (4,124) | (3,876) | (4,186) | (6,464) | (6,458) | |
| Invested capital2 | 80,195) | 74,884) | 73,409) | 72,341) | 72,560) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.14% | -5.18% | -5.70% | -8.94% | -8.90% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Sherwin-Williams Co. | -1.65% | -0.63% | -2.89% | -3.14% | -2.69% | |
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 × -4,124 ÷ 80,195 = -5.14%
4 Click competitor name to see calculations.
The financial performance over the five-year period from 2021 to 2025 is characterized by a persistent negative economic profit, although a trend of gradual improvement is evident. While the entity continues to operate below its cost of capital, the magnitude of value destruction has diminished significantly since 2022.
- Economic Profit Trends
- Economic profit remained deeply negative in 2021 and 2022, reaching a peak deficit of US$ 6,464 million in 2022. A notable recovery began in 2023, with the deficit reducing to US$ 4,186 million, and further improving to US$ 3,876 million in 2024. A slight increase in the deficit to US$ 4,124 million was observed in 2025, though the losses remain substantially lower than those recorded at the start of the period.
- Invested Capital Expansion
- Invested capital remained relatively stable between 2021 and 2022, hovering around US$ 72 billion. Following this period, a consistent upward trend is observed, with capital increasing to US$ 73,409 million in 2023, US$ 74,884 million in 2024, and reaching US$ 80,195 million by 2025. This indicates a steady expansion of the capital base deployed in operations.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a significant contraction in the gap between the return on invested capital and the cost of capital. The ratio was most negative in 2021 (-8.90%) and 2022 (-8.94%). A sharp improvement occurred in 2023, with the ratio rising to -5.70%, and continued to move toward equilibrium in 2024 (-5.18%) and 2025 (-5.14%). This narrowing spread indicates an improvement in capital efficiency, although the ratio has not yet reached a positive threshold.
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Economic Profit Margin
Linde plc, 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 | (4,124) | (3,876) | (4,186) | (6,464) | (6,458) | |
| Sales | 33,986) | 33,005) | 32,854) | 33,364) | 30,793) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -12.13% | -11.75% | -12.74% | -19.37% | -20.97% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Sherwin-Williams Co. | -1.35% | -0.46% | -2.06% | -2.46% | -2.13% | |
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 ÷ Sales
= 100 × -4,124 ÷ 33,986 = -12.13%
3 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by persistent negative economic profit, despite a general trend of margin improvement. While positive economic value added was not achieved during this period, the magnitude of the economic loss decreased significantly from its peak in 2022, indicating a gradual trend toward recovery.
- Economic Profit Trajectory
- Economic profit remained negative throughout the five-year period. A slight intensification of the loss occurred in 2022, reaching -6,464 million US$. This was followed by a notable recovery phase in 2023 and 2024, where losses were reduced to -4,186 million US$ and -3,876 million US$, respectively. However, a minor reversal is noted in 2025, with the economic profit returning to -4,124 million US$.
- Revenue Performance
- Sales exhibited a general upward trajectory with relative stability. Revenue grew from 30,793 million US$ in 2021 to 33,986 million US$ by 2025. The stability of these figures suggests that the fluctuations in economic profit were not primarily driven by top-line volatility, but rather by changes in the cost of capital or operating efficiency.
- Economic Profit Margin Trends
- The economic profit margin showed a consistent improvement between 2021 and 2024, moving from -20.97% to -11.75%. This contraction of the negative margin indicates an increase in the efficiency of capital utilization relative to the cost of capital. A slight decline occurred in 2025, with the margin settling at -12.13%.
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