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
Medtronic PLC, economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,540 – 11.81% × 71,088 = -2,857
An analysis of the economic profit over the six-year period reveals a persistent failure to generate value above the cost of capital, although a positive trajectory in the latter years suggests an improving financial position.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited significant volatility between 2021 and 2024, peaking at 4,888 million USD in 2022 before declining to a period low of 3,736 million USD in 2024. However, a strong recovery is observed from 2025 onward, with NOPAT climbing to 4,980 million USD and reaching a projected high of 5,540 million USD by 2026.
- Cost of Capital and Invested Capital
- The cost of capital has remained relatively stable with a gradual downward trend, decreasing from 12.38% in 2021 to 11.81% by 2026. Concurrently, invested capital has fluctuated within a narrow range, starting at 72,405 million USD in 2021, dipping to 68,670 million USD in 2024, and moderately increasing to 71,088 million USD by 2026. The stability of the invested capital base indicates that changes in economic profit are driven primarily by operational profitability rather than significant changes in the capital structure.
- Economic Profit Trends
- Economic profit remained negative throughout the entire analyzed period, indicating that the operating returns were insufficient to cover the capital charge. The deficit peaked in 2021 at -4,912 million USD. While a period of stagnation occurred between 2023 and 2024, a notable improvement is evident in the final two years, with the economic loss narrowing to -3,379 million USD in 2025 and further improving to -2,857 million USD in 2026.
The convergence of increasing NOPAT and a slightly declining cost of capital is reducing the economic deficit. While the organization has not yet achieved a positive economic profit, the trend from 2024 to 2026 demonstrates a consistent narrowing of the gap between operating returns and the required return on invested capital.
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Net Operating Profit after Taxes (NOPAT)
Medtronic PLC, NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances and credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring reserve.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Medtronic.
6 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,187 × 4.00% = 47
7 2026 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 762 × 21.00% = 160
8 Addition of after taxes interest expense to net income attributable to Medtronic.
9 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0
10 Elimination of after taxes investment income.
The analysis of operational profitability and net earnings reveals a cyclical trajectory characterized by a peak in 2022, a subsequent contraction reaching a trough in 2024, and a strong recovery phase through 2026.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT exhibits significant volatility over the observed period. An initial increase is noted from US$ 4,049 million in 2021 to US$ 4,888 million in 2022, followed by a two-year decline that brings the value down to US$ 3,736 million by 2024. A robust recovery is observed thereafter, with NOPAT ascending to US$ 4,980 million in 2025 and reaching a period high of US$ 5,540 million in 2026. This upward movement in the final two years indicates an expansion in core operational efficiency.
- Net Income Performance
- Net income attributable to the entity mirrors the general trajectory of NOPAT but demonstrates different magnitudes of change. A sharp increase occurred in 2022, reaching US$ 5,039 million, which was followed by a contraction to US$ 3,758 million in 2023 and a further slight decrease to US$ 3,676 million in 2024. The recovery phase aligns with NOPAT, with net income climbing to US$ 4,801 million by 2026.
- Relationship Between Operational Profit and Net Earnings
- A comparison between NOPAT and net income reveals that operational profitability generally exceeds the final net income, which is typical given that NOPAT excludes the impact of financing costs. A notable anomaly is observed in 2022, where net income (US$ 5,039 million) surpassed NOPAT (US$ 4,888 million), suggesting the influence of non-operating income or one-time gains. In the subsequent years, the gap widens significantly; by 2026, NOPAT exceeds net income by US$ 739 million, reflecting a strengthening of the core operating engine relative to the final bottom line.
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Cash Operating Taxes
Medtronic PLC, cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
The analysis of tax metrics from April 2021 to April 2026 reveals a period of volatility characterized by a consistent divergence between accounting tax provisions and actual cash tax outflows.
- Cash Operating Taxes Trend
- Cash operating taxes exhibited a strong upward trajectory between 2021 and 2023, rising from 925 million US$ to a peak of 1,979 million US$. Following this peak, expenditures experienced a moderate decline, eventually stabilizing near 1,428 million US$ in the 2025 and 2026 periods.
- Income Tax Provision Volatility
- The income tax provision demonstrated more pronounced fluctuations than the cash tax outflows. After an initial increase from 265 million US$ in 2021 to 455 million US$ in 2022, a sharp spike occurred in 2023, reaching 1,580 million US$. This was followed by a downward trend to 936 million US$ by 2025, before rebounding to 1,299 million US$ in 2026.
- Comparison of Cash Taxes versus Provisions
- A persistent discrepancy is observed where cash operating taxes exceed the income tax provision in every reporting period. This indicates that the actual cash outflows for taxes are consistently higher than the tax expenses recognized for accounting purposes. While the variance was substantial in the early periods—reaching 731 million US$ in 2022—the gap narrowed significantly by 2026, reducing to 129 million US$.
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Invested Capital
Medtronic PLC, invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
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 deferred revenue.
5 Addition of restructuring reserve.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
9 Subtraction of available-for-sale debt securities.
The analysis of invested capital from 2021 to 2026 reveals a period of relative stability, with total invested capital fluctuating within a narrow range between approximately $68.6 billion and $72.4 billion. While the total capital base remained consistent, there were notable shifts in the underlying composition of debt and equity.
- Invested Capital Volatility
- Invested capital experienced a slight downward trajectory from $72,405 million in 2021 to a trough of $68,670 million in 2024. This was followed by a recovery phase, with values increasing to $70,365 million in 2025 and $71,088 million in 2026. This pattern suggests a disciplined management of the capital base, avoiding aggressive expansion or significant contraction.
- Debt and Lease Obligations
- Total reported debt and leases exhibited a non-linear trend. Following a decrease from $27,404 million in 2021 to $24,984 million in 2022, debt levels climbed steadily, peaking at $29,626 million in 2025. A marginal reduction to $29,148 million was observed in 2026, indicating a period of increased leverage toward the end of the analyzed timeframe.
- Shareholders' Equity Trends
- Shareholders' equity showed an inverse relationship with debt levels during several periods. After reaching a peak of $52,551 million in 2022, equity underwent a consistent decline over the next three years, reaching a low of $48,024 million in 2025. A reversal of this trend occurred in 2026, with equity rising back to $49,463 million.
The interaction between the financing components indicates that the increase in debt and leases, particularly between 2023 and 2025, served as a primary offset to the decline in shareholders' equity. This strategic balancing acted to stabilize the total invested capital, ensuring that the operational resource base remained steady despite the shift in the capital structure toward higher leverage.
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Cost of Capital
Medtronic PLC, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 101,559) | 101,559) | ÷ | 128,128) | = | 0.79 | 0.79 | × | 14.29% | = | 11.33% | ||
| Debt3 | 25,382) | 25,382) | ÷ | 128,128) | = | 0.20 | 0.20 | × | 2.92% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 1,187) | 1,187) | ÷ | 128,128) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 128,128) | 1.00 | 11.81% | ||||||||||
Based on: 10-K (reporting date: 2026-04-24).
1 US$ 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 | 110,624) | 110,624) | ÷ | 138,005) | = | 0.80 | 0.80 | × | 14.29% | = | 11.45% | ||
| Debt3 | 26,271) | 26,271) | ÷ | 138,005) | = | 0.19 | 0.19 | × | 2.66% × (1 – 21.00%) | = | 0.40% | ||
| Operating lease liability4 | 1,110) | 1,110) | ÷ | 138,005) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 138,005) | 1.00 | 11.88% | ||||||||||
Based on: 10-K (reporting date: 2025-04-25).
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 | 102,800) | 102,800) | ÷ | 126,170) | = | 0.81 | 0.81 | × | 14.29% | = | 11.64% | ||
| Debt3 | 22,347) | 22,347) | ÷ | 126,170) | = | 0.18 | 0.18 | × | 2.67% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 1,023) | 1,023) | ÷ | 126,170) | = | 0.01 | 0.01 | × | 3.40% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 126,170) | 1.00 | 12.04% | ||||||||||
Based on: 10-K (reporting date: 2024-04-26).
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 | 116,291) | 116,291) | ÷ | 139,117) | = | 0.84 | 0.84 | × | 14.29% | = | 11.95% | ||
| Debt3 | 21,777) | 21,777) | ÷ | 139,117) | = | 0.16 | 0.16 | × | 2.53% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 1,049) | 1,049) | ÷ | 139,117) | = | 0.01 | 0.01 | × | 2.40% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 139,117) | 1.00 | 12.27% | ||||||||||
Based on: 10-K (reporting date: 2023-04-28).
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 | 117,817) | 117,817) | ÷ | 141,661) | = | 0.83 | 0.83 | × | 14.29% | = | 11.88% | ||
| Debt3 | 22,974) | 22,974) | ÷ | 141,661) | = | 0.16 | 0.16 | × | 2.05% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 870) | 870) | ÷ | 141,661) | = | 0.01 | 0.01 | × | 2.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 141,661) | 1.00 | 12.16% | ||||||||||
Based on: 10-K (reporting date: 2022-04-29).
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 | 167,894) | 167,894) | ÷ | 197,582) | = | 0.85 | 0.85 | × | 14.29% | = | 12.14% | ||
| Debt3 | 28,673) | 28,673) | ÷ | 197,582) | = | 0.15 | 0.15 | × | 1.96% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 1,015) | 1,015) | ÷ | 197,582) | = | 0.01 | 0.01 | × | 2.30% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 197,582) | 1.00 | 12.38% | ||||||||||
Based on: 10-K (reporting date: 2021-04-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Medtronic PLC, economic spread ratio calculation, comparison to benchmarks
| Apr 24, 2026 | Apr 25, 2025 | Apr 26, 2024 | Apr 28, 2023 | Apr 29, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (2,857) | (3,379) | (4,531) | (4,501) | (3,577) | (4,912) | |
| Invested capital2 | 71,088) | 70,365) | 68,670) | 70,505) | 69,629) | 72,405) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -4.02% | -4.80% | -6.60% | -6.38% | -5.14% | -6.78% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | — | -2.33% | -4.57% | -4.75% | -2.51% | -2.02% | |
| Elevance Health Inc. | — | -1.08% | -0.68% | -1.03% | 0.01% | 1.33% | |
| Intuitive Surgical Inc. | — | 1.16% | 3.74% | -2.71% | -2.99% | 12.62% | |
| UnitedHealth Group Inc. | — | -1.14% | -0.04% | 4.85% | 3.88% | 3.74% | |
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,857 ÷ 71,088 = -4.02%
4 Click competitor name to see calculations.
The financial performance over the analyzed period indicates a persistent failure to generate positive economic value, as economic profit remained negative from 2021 through 2026. Despite this consistent deficit, there is a discernible trend toward recovery in the latter portion of the period, characterized by a reduction in the magnitude of economic losses.
- Economic Profit Trends
- Economic profit exhibited volatility between 2021 and 2024, with losses fluctuating between -3,577 million and -4,912 million. However, a sustained improvement is observed starting in 2025, with the deficit narrowing to -3,379 million and further improving to -2,857 million by 2026. This suggests a gradual narrowing of the gap between the net operating profit after tax and the required return on capital.
- Invested Capital Stability
- Invested capital remained relatively stable throughout the six-year period, fluctuating within a narrow range between 68,670 million and 72,405 million. The lack of significant expansion or contraction in the capital base indicates that the changes in economic profit and the spread ratio are driven by operational performance or cost of capital adjustments rather than substantial changes in the scale of investment.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all periods, confirming that the return on invested capital was consistently below the cost of capital. The ratio reached its lowest point of -6.78% in 2021 and experienced a secondary decline to -6.60% in 2024. A positive reversal is noted in the final two years, with the ratio improving to -4.80% in 2025 and reaching -4.02% by 2026. This upward trajectory indicates an increase in the efficiency of capital utilization, although the company had not yet achieved a positive spread by the end of the period.
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Economic Profit Margin
Medtronic PLC, economic profit margin calculation, comparison to benchmarks
| Apr 24, 2026 | Apr 25, 2025 | Apr 26, 2024 | Apr 28, 2023 | Apr 29, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (2,857) | (3,379) | (4,531) | (4,501) | (3,577) | (4,912) | |
| Net sales | 36,364) | 33,537) | 32,364) | 31,227) | 31,686) | 30,117) | |
| Add: Increase (decrease) in deferred revenue | 54) | (7) | 48) | 6) | 31) | 65) | |
| Adjusted net sales | 36,418) | 33,530) | 32,412) | 31,233) | 31,717) | 30,182) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -7.85% | -10.08% | -13.98% | -14.41% | -11.28% | -16.28% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Abbott Laboratories | — | -3.28% | -6.55% | -7.06% | -3.52% | -2.92% | |
| Elevance Health Inc. | — | -0.44% | -0.30% | -0.42% | 0.00% | 0.62% | |
| Intuitive Surgical Inc. | — | 1.31% | 3.48% | -2.70% | -2.58% | 9.93% | |
| UnitedHealth Group Inc. | — | -0.51% | -0.02% | 2.41% | 1.99% | 1.83% | |
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -2,857 ÷ 36,418 = -7.85%
3 Click competitor name to see calculations.
An analysis of the economic value generated between 2021 and 2026 indicates a persistent failure to achieve positive economic profit, although a sustained recovery trend is observable in the final two years of the period.
- Economic Profit Trajectory
- Economic profit remained negative throughout the entire analyzed period, fluctuating from a peak deficit of -4,912 million USD in 2021 to a minimum deficit of -2,857 million USD in 2026. After a period of volatility between 2022 and 2024, where losses widened again to -4,531 million USD, a consistent reduction in economic loss was achieved in 2025 and 2026.
- Adjusted Net Sales Growth
- A general upward trajectory in adjusted net sales is observed, rising from 30,182 million USD in 2021 to 36,418 million USD by 2026. Despite a slight contraction in 2023, the overall growth in sales suggests an expansion of the operational scale, which has coincided with the narrowing of economic losses in the latter part of the period.
- Economic Profit Margin Evolution
- The economic profit margin demonstrates a narrowing deficit, improving from -16.28% in 2021 to -7.85% in 2026. The margin experienced a regression between 2022 and 2024, dropping to -13.98%, before recovering to -10.08% in 2025 and -7.85% in 2026. This trend suggests an improving alignment between the cost of capital and generated returns, although the threshold for positive economic value addition has not yet been crossed.
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