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 – 13.91% × 80,195 = -3,976
The financial trajectory from 2021 to 2025 is characterized by a sustained negative economic profit, indicating that the return on invested capital has remained below the weighted average cost of capital throughout the period. Despite this, a clear trend of improvement is observable, as the magnitude of the economic loss decreased significantly over the five-year window, primarily driven by substantial growth in operational profitability.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is observed in NOPAT, which grew from US$ 3,800 million in 2021 to US$ 7,182 million in 2025. A particularly sharp increase occurred between 2022 and 2023, where NOPAT rose from US$ 3,833 million to US$ 6,386 million, reflecting a significant expansion in operational earnings power.
- Invested Capital and Cost of Capital
- The cost of capital remained relatively stable, fluctuating marginally between a low of 13.91% in 2025 and a peak of 14.21% in 2023. Simultaneously, invested capital exhibited a general increase, rising from US$ 72,560 million in 2021 to US$ 80,195 million by 2025. The acceleration in capital investment in 2025 represents the most significant increase in the asset base over the analyzed period.
- Economic Profit Analysis
- Economic profit remained in negative territory for all reported years, signifying value destruction from a capital charge perspective. The economic loss narrowed from US$ -6,323 million in 2021 to a peak improvement of US$ -3,737 million in 2024. However, a slight reversal in this improvement is noted in 2025, with the economic profit dipping to US$ -3,976 million. This decline suggests that the growth in the capital charge—driven by the increase in invested capital to over US$ 80 billion—offset the gains achieved through the increase in 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$80,195 million. This growth in invested capital correlates with the increasing debt levels, indicating that debt financing is contributing to capital expansion. The slight dip in invested capital between 2021 and 2022 is likely due to the decrease in shareholders’ equity offsetting the increase in debt.
The combined effect of rising debt and fluctuating equity results in a generally increasing trend in invested capital. The company appears to be actively employing debt to fund its operations and growth initiatives, particularly in the later years of the observed period. Further investigation into the specific uses of the increased debt would be beneficial to assess the efficiency and effectiveness of these capital allocation decisions.
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Cost of Capital
Linde plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 235,529) | 235,529) | ÷ | 262,183) | = | 0.90 | 0.90 | × | 15.27% | = | 13.71% | ||
| Debt and finance lease liabilities3 | 25,788) | 25,788) | ÷ | 262,183) | = | 0.10 | 0.10 | × | 2.42% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 866) | 866) | ÷ | 262,183) | = | 0.00 | 0.00 | × | 4.46% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 262,183) | 1.00 | 13.91% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 15.27% | = | 13.90% | ||
| 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 | 14.09% | ||||||||||
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 | × | 15.27% | = | 14.04% | ||
| 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 | 14.21% | ||||||||||
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 | × | 15.27% | = | 13.89% | ||
| 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 | 14.05% | ||||||||||
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 | × | 15.27% | = | 13.84% | ||
| 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 | 13.95% | ||||||||||
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 | (3,976) | (3,737) | (4,047) | (6,329) | (6,323) | |
| Invested capital2 | 80,195) | 74,884) | 73,409) | 72,341) | 72,560) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -4.96% | -4.99% | -5.51% | -8.75% | -8.71% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Sherwin-Williams Co. | -1.71% | -0.69% | -2.95% | -3.20% | -2.75% | |
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 × -3,976 ÷ 80,195 = -4.96%
4 Click competitor name to see calculations.
The financial performance regarding economic value added indicates a period of persistent negative economic profit, although a trajectory of gradual recovery is evident. While the company failed to generate returns exceeding its cost of capital throughout the observed period, the magnitude of the economic loss diminished significantly between 2022 and 2025.
- Economic Profit Trends
- Economic profit remained negative for all five years, peaking in losses during 2022 at -6,329 million USD. A notable recovery occurred in 2023 and 2024, with losses narrowing to -4,047 million USD and -3,737 million USD, respectively. A slight reversal in this improvement was observed in 2025, as economic profit declined to -3,976 million USD.
- Invested Capital Growth
- Invested capital exhibited a general upward trend over the period. After remaining relatively stagnant between 2021 and 2022, capital grew steadily from 72,341 million USD in 2022 to 80,195 million USD by the end of 2025. The most significant increase occurred between 2024 and 2025, representing a substantial expansion of the capital base.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained negative, confirming that the company did not create economic value. However, the ratio improved from -8.71% in 2021 to -4.96% in 2025. This narrowing spread suggests an increase in operational efficiency or a reduction in the cost of capital relative to the returns generated, despite the continued negative economic profit.
In summary, the data reflects a trend of narrowing economic losses and an improving spread ratio, occurring simultaneously with an expansion of invested capital. The convergence of the spread ratio toward zero indicates a gradual approach toward the threshold of economic value creation.
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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 | (3,976) | (3,737) | (4,047) | (6,329) | (6,323) | |
| Sales | 33,986) | 33,005) | 32,854) | 33,364) | 30,793) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -11.70% | -11.32% | -12.32% | -18.97% | -20.53% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Sherwin-Williams Co. | -1.40% | -0.50% | -2.10% | -2.51% | -2.18% | |
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 × -3,976 ÷ 33,986 = -11.70%
3 Click competitor name to see calculations.
The financial performance from 2021 through 2025 is characterized by a persistent negative economic profit, although there is a discernible trend toward recovery in both absolute value and margin efficiency. While the entity continues to generate economic value below its cost of capital, the gap has narrowed considerably over the analyzed five-year period.
- Economic Profit Trends
- Economic profit remained negative throughout the period, starting at -6,323 million USD in 2021 and reaching its lowest point in 2022 at -6,329 million USD. A significant improvement occurred in 2023 and 2024, with the deficit reducing to -4,047 million USD and -3,737 million USD, respectively. A slight reversal is observed in 2025, where the economic profit declined to -3,976 million USD.
- Revenue Performance
- Sales exhibited a general upward trajectory, increasing from 30,793 million USD in 2021 to 33,986 million USD by 2025. Despite a minor contraction in 2023, where sales dipped to 32,854 million USD, the overall trend indicates steady top-line growth.
- Economic Profit Margin Analysis
- The economic profit margin demonstrated a consistent narrowing of the deficit, moving from -20.53% in 2021 to -11.32% in 2024. This suggests a gradual improvement in the ability to generate returns relative to the capital employed. A marginal deterioration to -11.70% is noted in 2025, correlating with the slight increase in absolute economic loss for that year.
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