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
Motorola Solutions Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,871 – 14.94% × 8,921 = 538
The financial performance from 2019 to 2023 demonstrates a general upward trajectory in value creation, characterized by substantial growth in operational profitability and a consistent expansion of the capital base.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a strong overall growth trend, increasing from 984 million USD in 2019 to 1,871 million USD in 2023. Despite a moderate contraction in 2022, the sharp increase in 2023 represents the most significant growth spike in the period, indicating a substantial enhancement in core operational earning power.
- Invested Capital and Cost of Capital
- Invested capital grew consistently year-over-year, rising from 6,887 million USD in 2019 to 8,921 million USD in 2023. During this same period, the cost of capital remained relatively stable but trended slightly upward, moving from 14.31% in 2019 to 14.94% in 2023, reflecting a marginal increase in the required rate of return for the company's investments.
- Economic Profit
- Economic profit showed notable volatility over the five-year span. Starting from a marginal deficit of -1 million USD in 2019, the metric improved to a peak of 277 million USD by 2021. A decline occurred in 2022, resulting in a negative economic profit of -13 million USD, which coincided with a dip in NOPAT and a continuing increase in invested capital. However, a significant recovery was achieved in 2023, with economic profit reaching a period high of 538 million USD, confirming that operational gains substantially exceeded the cost of capital.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Motorola Solutions Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in reorganization of businesses accruals.
4 Addition of increase (decrease) in equity equivalents to net earnings attributable to Motorola Solutions, Inc..
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 532 × 4.34% = 23
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 272 × 21.00% = 57
7 Addition of after taxes interest expense to net earnings attributable to Motorola Solutions, Inc..
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 33 × 21.00% = 7
9 Elimination of after taxes investment income.
- Net earnings attributable to Motorola Solutions, Inc.
- The net earnings demonstrate a consistent upward trend throughout the five-year period. Starting at 868 million US dollars in 2019, the figure increased each year, reaching 1709 million US dollars by 2023. This growth suggests a steady enhancement of profitability and successful operational execution over the years.
- Net operating profit after taxes (NOPAT)
- The NOPAT values generally follow an increasing pattern from 2019 to 2023. Beginning at 984 million US dollars in 2019, NOPAT peaked at 1409 million US dollars in 2021 before experiencing a decline to 1222 million US dollars in 2022. It then rose sharply to 1871 million US dollars in 2023, indicating a strong recovery and improved operational efficiency in the latest period. The fluctuation observed in 2022 may warrant further analysis to understand the causes behind the temporary dip.
AI Ask an analyst for more
Cash Operating Taxes
Motorola Solutions Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The financial data reflects the annual trends in income tax expense and cash operating taxes over the five-year period ending in 2023.
- Income Tax Expense
- Between 2019 and 2021, there was a consistent upward trend, with the income tax expense increasing from 130 million USD in 2019 to 302 million USD in 2021. However, in 2022, this figure experienced a significant decline to 148 million USD. Subsequently, it surged markedly to 432 million USD in 2023, representing the highest value in the reported period.
- Cash Operating Taxes
- Cash operating taxes also exhibited an upward trajectory from 265 million USD in 2019 to 315 million USD in 2021. In 2022, this amount rose sharply to 534 million USD, followed by a slight decrease to 514 million USD in 2023. Despite this minor reduction in the final year, cash operating taxes remained substantially elevated compared to the earlier years.
Overall, the data indicates that both income tax expense and cash operating taxes generally increased over the period, with notable fluctuations in the last two years. Income tax expense demonstrated volatility with a sharp decrease followed by a substantial increase, whereas cash operating taxes showed a strong upward spike in 2022 and then a moderate decline in 2023. These patterns suggest changing tax liabilities or operational circumstances impacting taxable income and actual cash tax payments.
AI Ask an analyst for more
Invested Capital
Motorola Solutions Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
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 reorganization of businesses accruals.
5 Addition of equity equivalents to total Motorola Solutions, Inc. stockholders’ equity (deficit).
6 Removal of accumulated other comprehensive income.
- Total reported debt & leases
- The total reported debt and leases exhibited a generally increasing trend over the analyzed period. Starting at $5,748 million in 2019, debt slightly decreased to $5,703 million in 2020, then rose to $6,130 million in 2021. This upward momentum continued in 2022 reaching $6,551 million and remained nearly stable at $6,550 million in 2023. Overall, the data suggests a gradual increase in debt levels, particularly from 2020 onward, indicating a potential expansion or capital investment strategy funded through increased leverage.
- Total Motorola Solutions, Inc. stockholders’ equity (deficit)
- Stockholders’ equity showed significant improvement throughout the period. Initially in a deficit of $700 million in 2019, the negative equity reduced consistently each year, moving to a deficit of $558 million in 2020 and further narrowing to a near break-even position with a $40 million deficit in 2021. By 2022, the company achieved positive equity of $116 million, which substantially increased to $724 million by 2023. This positive trend indicates strengthening financial stability and improved capital structure, reflecting enhanced retained earnings, reduced losses, or equity injections.
- Invested capital
- Invested capital demonstrated steady growth over the five-year period. Starting at $6,887 million in 2019, the total capital invested increased incrementally each year, reaching $6,976 million in 2020, $7,857 million in 2021, $8,350 million in 2022, and culminating at $8,921 million in 2023. The continuous rise in invested capital aligns with the increased debt levels and improving equity, suggesting ongoing investment in operational assets or expansion initiatives funded through a combination of debt and equity resources.
AI Ask an analyst for more
Cost of Capital
Motorola Solutions Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 53,810) | 53,810) | ÷ | 60,742) | = | 0.89 | 0.89 | × | 16.46% | = | 14.58% | ||
| Long-term debt3 | 6,400) | 6,400) | ÷ | 60,742) | = | 0.11 | 0.11 | × | 3.94% × (1 – 21.00%) | = | 0.33% | ||
| Operating lease liability4 | 532) | 532) | ÷ | 60,742) | = | 0.01 | 0.01 | × | 4.34% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 60,742) | 1.00 | 14.94% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,716) | 44,716) | ÷ | 51,153) | = | 0.87 | 0.87 | × | 16.46% | = | 14.39% | ||
| Long-term debt3 | 5,900) | 5,900) | ÷ | 51,153) | = | 0.12 | 0.12 | × | 3.94% × (1 – 21.00%) | = | 0.36% | ||
| Operating lease liability4 | 537) | 537) | ÷ | 51,153) | = | 0.01 | 0.01 | × | 4.07% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 51,153) | 1.00 | 14.78% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,174) | 37,174) | ÷ | 43,811) | = | 0.85 | 0.85 | × | 16.46% | = | 13.97% | ||
| Long-term debt3 | 6,200) | 6,200) | ÷ | 43,811) | = | 0.14 | 0.14 | × | 3.77% × (1 – 21.00%) | = | 0.42% | ||
| Operating lease liability4 | 437) | 437) | ÷ | 43,811) | = | 0.01 | 0.01 | × | 3.11% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 43,811) | 1.00 | 14.41% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,606) | 30,606) | ÷ | 36,934) | = | 0.83 | 0.83 | × | 16.46% | = | 13.64% | ||
| Long-term debt3 | 5,800) | 5,800) | ÷ | 36,934) | = | 0.16 | 0.16 | × | 3.92% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 528) | 528) | ÷ | 36,934) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 36,934) | 1.00 | 14.16% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 31,456) | 31,456) | ÷ | 37,575) | = | 0.84 | 0.84 | × | 16.46% | = | 13.78% | ||
| Long-term debt3 | 5,500) | 5,500) | ÷ | 37,575) | = | 0.15 | 0.15 | × | 4.17% × (1 – 21.00%) | = | 0.48% | ||
| Operating lease liability4 | 619) | 619) | ÷ | 37,575) | = | 0.02 | 0.02 | × | 3.61% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 37,575) | 1.00 | 14.31% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Motorola Solutions Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 538) | (13) | 277) | 140) | (1) | |
| Invested capital2 | 8,921) | 8,350) | 7,857) | 6,976) | 6,887) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 6.03% | -0.15% | 3.52% | 2.01% | -0.02% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 137.56% | 199.07% | 195.44% | 143.41% | — | |
| Arista Networks Inc. | 20.60% | 16.12% | 31.17% | — | — | |
| Cisco Systems Inc. | 3.37% | 3.35% | 2.59% | — | — | |
| Dell Technologies Inc. | -0.70% | 3.17% | -1.35% | — | — | |
| Lumentum Holdings Inc. | -19.02% | -6.35% | 5.97% | — | — | |
| Super Micro Computer Inc. | -1.51% | -9.69% | -18.15% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 538 ÷ 8,921 = 6.03%
4 Click competitor name to see calculations.
The financial performance between 2019 and 2023 reflects a volatile but generally positive trajectory in value creation. While the company experienced periods of economic loss, the most recent fiscal year indicates a significant acceleration in the ability to generate returns exceeding the cost of capital.
- Economic Profit
- Economic profit exhibited fluctuations over the five-year period. After a marginal loss of US$ 1 million in 2019, a positive trend emerged in 2020 and 2021, reaching US$ 277 million. A reversal occurred in 2022 with a dip to negative US$ 13 million, followed by a substantial recovery in 2023, where economic profit peaked at US$ 538 million. This indicates a strengthening capacity to create value for shareholders after a period of instability.
- Invested Capital
- A consistent upward trend is observed in invested capital, which grew steadily from US$ 6,887 million in 2019 to US$ 8,921 million by 2023. This continuous increase suggests a sustained commitment to capital investment and expansion of the asset base to support operational growth.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility of economic profit, alternating between negative and positive territory. The ratio moved from -0.02% in 2019 to a high of 3.52% in 2021, before falling to -0.15% in 2022. The period concluded with a sharp increase to 6.03% in 2023. This peak suggests that the company significantly improved its capital efficiency in the final year, achieving a wider spread between its return on invested capital and its cost of capital despite the overall increase in the total capital employed.
The synthesis of these metrics reveals that although capital investment has increased linearly, the returns on that capital have been non-linear. The alignment of record-high invested capital with the highest economic spread ratio in 2023 indicates a phase of optimized value generation.
AI Ask an analyst for more
Economic Profit Margin
Motorola Solutions Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 538) | (13) | 277) | 140) | (1) | |
| Net sales | 9,978) | 9,112) | 8,171) | 7,414) | 7,887) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 5.39% | -0.14% | 3.39% | 1.89% | -0.01% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | 21.64% | 23.53% | 22.71% | 18.79% | — | |
| Arista Networks Inc. | 15.55% | 11.11% | 18.26% | — | — | |
| Cisco Systems Inc. | 3.36% | 3.76% | 2.89% | — | — | |
| Dell Technologies Inc. | -0.39% | 1.66% | -1.16% | — | — | |
| Lumentum Holdings Inc. | -31.20% | -9.27% | 6.73% | — | — | |
| Super Micro Computer Inc. | -0.51% | -4.12% | -6.54% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 538 ÷ 9,978 = 5.39%
3 Click competitor name to see calculations.
The financial performance from 2019 to 2023 exhibits a general trajectory of revenue growth coupled with fluctuating economic value creation. While net sales have demonstrated a steady upward trend, the generation of economic profit has been characterized by volatility, culminating in a significant peak in the final period.
- Net Sales Growth
- A consistent expansion in revenue is observed from 2020 through 2023, with net sales rising from 7,414 million USD to 9,978 million USD. This represents a steady increase in top-line scale over the five-year period, following a slight contraction between 2019 and 2020.
- Economic Profit Fluctuations
- Economic profit displays a non-linear progression. After starting at a negligible deficit of -1 million USD in 2019, the figure grew to 277 million USD by 2021. A reversal occurred in 2022, where economic profit declined to -13 million USD, despite the concurrent increase in net sales. However, a sharp recovery followed in 2023, reaching a period high of 538 million USD.
- Economic Profit Margin Dynamics
- The economic profit margin mirrors the volatility of the absolute economic profit. The margin improved from -0.01% in 2019 to 3.39% in 2021, before dropping to -0.14% in 2022. The most significant expansion occurred in 2023, with the margin reaching 5.39%. The divergence in 2022, where sales grew while the economic profit margin turned negative, indicates that the cost of capital exceeded the net operating profit after tax during that specific fiscal year, suggesting an increase in capital intensity or a rise in the weighted average cost of capital.
AI Ask an analyst for more