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 – 11.77% × 71,088 = -2,824
The analysis of financial performance from 2021 to 2026 reveals a persistent state of negative economic profit, although a gradual trend toward recovery and deficit reduction is evident. While the organization has consistently failed to generate returns exceeding its cost of capital, the magnitude of the economic loss has diminished over the observed period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits significant volatility, starting at 4,049 million US$ in 2021 and peaking at 4,888 million US$ in 2022. A subsequent decline is observed through 2024, where profit reached a period low of 3,736 million US$. However, a strong recovery follows, with a projected increase to 4,980 million US$ in 2025 and 5,540 million US$ by 2026, indicating an improving operational efficiency in the latter years.
- Cost of Capital
- The cost of capital shows a gradual downward trajectory, moving from 12.33% in 2021 to 11.77% in 2026. This slight but steady decline suggests a marginal reduction in the required rate of return for investors or a decrease in the weighted average cost of financing.
- Invested Capital
- Invested capital remains relatively stable throughout the period, fluctuating within a narrow range between 68,670 million US$ and 72,405 million US$. The lack of significant expansion or contraction in the capital base indicates a strategy of capital maintenance rather than aggressive growth or divestment.
- Economic Profit Trend
- Economic profit remains negative across all periods, confirming that the return on invested capital has stayed below the cost of capital. However, the economic loss has improved from -4,876 million US$ in 2021 to -2,824 million US$ in 2026. This improvement is primarily driven by the growth in NOPAT and the slight reduction in the cost of capital, rather than a significant reduction in the total amount of invested capital.
In summary, the trend indicates a movement toward economic break-even. The narrowing of the economic profit deficit is closely tied to the recovery of operational profits starting in 2025, suggesting that if the current growth in NOPAT continues while the capital base remains stable, the organization may eventually move toward positive economic value added.
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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 $49,463 million.
The interaction between the financing components indicates that the increase in debt and leases, particularly between 2023 and 2025, served as a primary offset to the decline in shareholders' equity. This strategic balancing acted to stabilize the total invested capital, ensuring that the operational resource base remained steady despite the shift in the capital structure toward higher leverage.
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Cost of Capital
Medtronic PLC, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 101,559) | 101,559) | ÷ | 128,128) | = | 0.79 | 0.79 | × | 14.23% | = | 11.28% | ||
| Debt3 | 25,382) | 25,382) | ÷ | 128,128) | = | 0.20 | 0.20 | × | 2.92% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 1,187) | 1,187) | ÷ | 128,128) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 128,128) | 1.00 | 11.77% | ||||||||||
Based on: 10-K (reporting date: 2026-04-24).
1 US$ 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 | × | 14.23% | = | 11.41% | ||
| 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 | 11.83% | ||||||||||
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 | × | 14.23% | = | 11.60% | ||
| 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 | 11.99% | ||||||||||
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 | × | 14.23% | = | 11.90% | ||
| 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 | 12.22% | ||||||||||
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 | × | 14.23% | = | 11.84% | ||
| 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 | 12.11% | ||||||||||
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 | × | 14.23% | = | 12.09% | ||
| 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 | 12.33% | ||||||||||
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 | (2,824) | (3,346) | (4,498) | (4,467) | (3,543) | (4,876) | |
| Invested capital2 | 71,088) | 70,365) | 68,670) | 70,505) | 69,629) | 72,405) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -3.97% | -4.76% | -6.55% | -6.34% | -5.09% | -6.73% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | — | -2.28% | -4.53% | -4.70% | -2.46% | -1.98% | |
| Elevance Health Inc. | — | -0.97% | -0.56% | -0.90% | 0.14% | 1.46% | |
| Intuitive Surgical Inc. | — | 0.81% | 3.39% | -3.06% | -3.34% | 12.27% | |
| UnitedHealth Group Inc. | — | -0.99% | 0.13% | 5.02% | 4.06% | 3.91% | |
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 × -2,824 ÷ 71,088 = -3.97%
4 Click competitor name to see calculations.
The financial performance over the observed six-year period is characterized by a consistent failure to generate positive economic value, as evidenced by negative economic profit and a negative economic spread ratio throughout the duration. However, a discernible trend toward recovery emerged following the 2024 fiscal year.
- Economic Profit
- Economic profit remained negative across all periods, indicating that the returns generated were insufficient to cover the cost of capital. A period of volatility is noted between 2021 and 2024, with a peak deficit of negative 4,876 million US dollars in 2021 and a subsequent low of negative 4,498 million US dollars in 2024. From 2025 onward, a positive trajectory is observed, with the deficit narrowing to negative 3,346 million US dollars in 2025 and further improving to negative 2,824 million US dollars by 2026.
- Invested Capital
- The capital base remained relatively stable, fluctuating within a narrow range between 68,670 million US dollars and 72,405 million US dollars. A slight contraction in invested capital occurred through 2024, followed by a gradual increase in 2025 and 2026, ending the period at 71,088 million US dollars. This stability suggests that the changes in economic profit were driven by operational performance or cost of capital shifts rather than significant changes in the scale of investment.
- Economic Spread Ratio
- The economic spread ratio consistently remained below zero, confirming that the return on invested capital was lower than the weighted average cost of capital. The ratio exhibited a downward trend reaching its lowest point of negative 6.55% in 2024. Since that trough, a steady recovery is evident, with the ratio improving to negative 4.76% in 2025 and reaching negative 3.97% in 2026. This narrowing of the negative spread indicates an improvement in the efficiency of capital utilization relative to the cost of funding.
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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 | (2,824) | (3,346) | (4,498) | (4,467) | (3,543) | (4,876) | |
| 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 | -7.76% | -9.98% | -13.88% | -14.30% | -11.17% | -16.16% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Abbott Laboratories | — | -3.21% | -6.48% | -6.99% | -3.45% | -2.85% | |
| Elevance Health Inc. | — | -0.40% | -0.25% | -0.37% | 0.06% | 0.68% | |
| Intuitive Surgical Inc. | — | 0.91% | 3.15% | -3.05% | -2.89% | 9.66% | |
| UnitedHealth Group Inc. | — | -0.44% | 0.06% | 2.50% | 2.08% | 1.92% | |
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 × -2,824 ÷ 36,418 = -7.76%
3 Click competitor name to see calculations.
The financial analysis of economic value added reveals a consistent period of negative economic profit from 2021 through 2026, indicating that the return on capital has remained below the cost of capital during this timeframe. However, a general trajectory of recovery is observable, as both the absolute economic loss and the economic profit margin demonstrate a narrowing gap toward a break-even point.
- Economic Profit Trends
- Economic profit remained negative throughout the analyzed period, beginning at -4,876 million US$ in 2021. After an initial improvement in 2022, the figure experienced a period of volatility, dipping back to -4,498 million US$ by 2024. A sustained recovery is noted in the final two years, with economic profit improving to -3,346 million US$ in 2025 and further reaching -2,824 million US$ by 2026.
- Adjusted Net Sales Performance
- A steady growth pattern in adjusted net sales is evident, rising from 30,182 million US$ in 2021 to 36,418 million US$ in 2026. Despite a marginal contraction in 2023, the overall trend reflects a consistent expansion of the revenue base, which serves as the denominator for the economic profit margin calculations.
- Economic Profit Margin Analysis
- The economic profit margin shows a corresponding trend of improvement, moving from a low of -16.16% in 2021 to -7.76% in 2026. While the margin fluctuated between 2022 and 2024, the significant reduction in the negative margin during 2025 and 2026 suggests an increase in operational efficiency or a reduction in the cost of capital relative to the earnings generated from the asset base.
In summary, while the organization has not yet achieved positive economic value added, the convergence of growing adjusted net sales and reducing economic losses indicates a positive shift in value creation capacity over the six-year period.
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