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 – 14.09% × 80,195 = -4,114
Analysis of economic value added reveals a period of significant operational growth juxtaposed with a persistent inability to generate positive economic profit over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trajectory is observed in NOPAT, which increased from 3,800 million USD in 2021 to 7,182 million USD by 2025. A significant acceleration occurred between 2022 and 2023, during which NOPAT rose by approximately 66.6%, indicating a substantial expansion in operational earnings capacity.
- Cost of Capital and Invested Capital
- The cost of capital remained relatively stable, fluctuating narrowly between a minimum of 14.09% and a maximum of 14.39%. Concurrently, invested capital exhibited a steady increase, growing from 72,560 million USD in 2021 to 80,195 million USD in 2025. This growth in the capital base, particularly the acceleration observed in 2025, effectively increased the total capital charge required to achieve economic break-even.
- Economic Profit Trends
- Economic profit remained negative throughout the entire period, signifying that the NOPAT was insufficient to cover the cost of the invested capital. A narrowing of the deficit was observed between 2022 and 2024, with economic profit improving from -6,455 million USD to -3,867 million USD. However, this recovery trend reversed in 2025, with the economic profit declining to -4,114 million USD, suggesting that the growth in invested capital outpaced the growth in operating profits during the final year.
In summary, while the operational performance has scaled considerably, the magnitude of the invested capital base combined with a consistent cost of capital above 14% continues to result in the destruction of economic value.
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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$80,195 million. This growth in invested capital correlates with the increasing debt levels, indicating that debt financing is contributing to capital expansion. The slight dip in invested capital between 2021 and 2022 is likely due to the decrease in shareholders’ equity offsetting the increase in debt.
The combined effect of rising debt and fluctuating equity results in a generally increasing trend in invested capital. The company appears to be actively employing debt to fund its operations and growth initiatives, particularly in the later years of the observed period. Further investigation into the specific uses of the increased debt would be beneficial to assess the efficiency and effectiveness of these capital allocation decisions.
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Cost of Capital
Linde plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 235,529) | 235,529) | ÷ | 262,183) | = | 0.90 | 0.90 | × | 15.46% | = | 13.89% | ||
| Debt and finance lease liabilities3 | 25,788) | 25,788) | ÷ | 262,183) | = | 0.10 | 0.10 | × | 2.42% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 866) | 866) | ÷ | 262,183) | = | 0.00 | 0.00 | × | 4.46% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 262,183) | 1.00 | 14.09% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 15.46% | = | 14.07% | ||
| 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 | 14.26% | ||||||||||
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 | × | 15.46% | = | 14.21% | ||
| 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 | 14.39% | ||||||||||
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 | × | 15.46% | = | 14.06% | ||
| 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 | 14.22% | ||||||||||
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 | × | 15.46% | = | 14.01% | ||
| 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 | 14.12% | ||||||||||
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 | (4,114) | (3,867) | (4,177) | (6,455) | (6,449) | |
| Invested capital2 | 80,195) | 74,884) | 73,409) | 72,341) | 72,560) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -5.13% | -5.16% | -5.69% | -8.92% | -8.89% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Sherwin-Williams Co. | -1.80% | -0.78% | -3.04% | -3.29% | -2.84% | |
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 × -4,114 ÷ 80,195 = -5.13%
4 Click competitor name to see calculations.
The financial performance across the period from 2021 to 2025 is characterized by a persistent negative economic value added, although a general trend of improvement in the spread between returns and the cost of capital is observable.
- Economic Profit
- Economic profit remained negative throughout the reporting period, signaling that the return on invested capital did not exceed the company's cost of capital. After reaching a trough of -6,455 million USD in 2022, the deficit narrowed significantly through 2023 and 2024, reaching a peak improvement of -3,867 million USD. A slight deterioration occurred in 2025, with the figure widening to -4,114 million USD.
- Invested Capital
- Invested capital exhibited a steady growth pattern following a marginal dip in 2022. The capital base expanded from 72,560 million USD in 2021 to 80,195 million USD by 2025. This growth accelerated notably in the final year, indicating a significant increase in the total resources deployed to generate returns.
- Economic Spread Ratio
- The economic spread ratio demonstrates a consistent recovery trajectory. Starting at -8.89% in 2021, the ratio improved to -5.13% by 2025. The most substantial correction took place between 2022 and 2023, where the ratio shifted from -8.92% to -5.69%. Notably, in 2025, the spread ratio continued to improve slightly despite the decline in absolute economic profit, suggesting that the expanded capital base mitigated the impact of the profit dip on the overall spread.
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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 | (4,114) | (3,867) | (4,177) | (6,455) | (6,449) | |
| Sales | 33,986) | 33,005) | 32,854) | 33,364) | 30,793) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -12.11% | -11.72% | -12.71% | -19.35% | -20.94% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Sherwin-Williams Co. | -1.48% | -0.57% | -2.16% | -2.57% | -2.25% | |
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 × -4,114 ÷ 33,986 = -12.11%
3 Click competitor name to see calculations.
The analysis of economic value added reveals a consistent period of negative economic profit, although a general trend of recovery and margin improvement is evident from 2021 through 2024, followed by a slight regression in 2025.
- Economic Profit Trends
- Economic profit remained relatively stagnant between 2021 and 2022, with losses holding at approximately 6.4 billion US$. A significant recovery phase occurred in 2023 and 2024, where the economic loss was reduced to 4.18 billion US$ and 3.87 billion US$, respectively. However, this trend reversed slightly in 2025, as the economic profit declined to negative 4.11 billion US$.
- Revenue Trajectory
- Sales exhibited overall growth over the five-year period, increasing from 30.79 billion US$ in 2021 to 33.99 billion US$ in 2025. While there was a minor contraction in 2023, the general upward movement in sales provided a broader base for the improvement in economic efficiency observed during the mid-period.
- Economic Profit Margin Performance
- The economic profit margin showed a marked improvement, narrowing from -20.94% in 2021 to a peak of -11.72% in 2024. This indicates that the company reduced the gap between its net operating profit after taxes and its cost of capital relative to its total sales. This positive trend plateaued in 2025, with the margin widening slightly to -12.11%, suggesting a minor decline in the efficiency of capital utilization relative to revenue generation.
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