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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Oracle Corp., economic profit calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Net operating profit after taxes (NOPAT)¹	10,160)	7,492)	14,348)	10,144)	10,943)	4,255)
Cost of capital²	11.44%	10.51%	10.31%	9.98%	10.92%	10.62%
Invested capital³	98,251)	77,262)	81,745)	87,978)	72,089)	72,343)

Economic profit⁴	(1,082)	(631)	5,918)	1,359)	3,072)	(3,426)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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
= 10,160 – 11.44% × 98,251 = -1,082

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Oracle Corp. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Oracle Corp., NOPAT calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Net income	8,503)	6,717)	13,746)	10,135)	11,083)	3,825)
Deferred income tax expense (benefit)¹	(2,167)	(1,146)	(2,425)	(851)	(1,191)	(611)
Increase (decrease) in allowances for credit losses²	66)	(11)	(36)	38)	1)	51)
Increase (decrease) in deferred revenues³	828)	(344)	855)	(444)	77)	219)
Increase (decrease) in restructuring plans accrued⁴	68)	(94)	74)	(111)	(20)	18)
Increase (decrease) in equity equivalents⁵	(1,205)	(1,595)	(1,532)	(1,368)	(1,133)	(323)
Interest expense	3,505)	2,755)	2,496)	1,995)	2,082)	2,025)
Interest expense, operating lease liability⁶	194)	106)	78)	67)	74)	49)
Adjusted interest expense	3,699)	2,861)	2,574)	2,062)	2,156)	2,074)
Tax benefit of interest expense⁷	(777)	(601)	(541)	(433)	(453)	(606)
Adjusted interest expense, after taxes⁸	2,922)	2,260)	2,033)	1,629)	1,704)	1,469)
Interest income	(285)	(94)	(101)	(527)	(1,092)	(1,201)
Investment income, before taxes	(285)	(94)	(101)	(527)	(1,092)	(1,201)
Tax expense (benefit) of investment income⁹	60)	20)	21)	111)	229)	351)
Investment income, after taxes¹⁰	(225)	(74)	(80)	(416)	(863)	(850)
Net income (loss) attributable to noncontrolling interest	165)	184)	180)	164)	152)	135)
Net operating profit after taxes (NOPAT)	10,160)	7,492)	14,348)	10,144)	10,943)	4,255)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances for credit losses.

³ Addition of increase (decrease) in deferred revenues.

⁴ Addition of increase (decrease) in restructuring plans accrued.

⁵ Addition of increase (decrease) in equity equivalents to net income.

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 4,849 × 4.00% = 194

⁷ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 3,699 × 21.00% = 777

⁸ Addition of after taxes interest expense to net income.

⁹ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 285 × 21.00% = 60

¹⁰ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Oracle Corp. NOPAT decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Oracle Corp., cash operating taxes calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Provision for (benefit from) income taxes	623)	932)	(747)	1,928)	1,185)	9,066)
Less: Deferred income tax expense (benefit)	(2,167)	(1,146)	(2,425)	(851)	(1,191)	(611)
Add: Tax savings from interest expense	777)	601)	541)	433)	453)	606)
Less: Tax imposed on investment income	60)	20)	21)	111)	229)	351)
Cash operating taxes	3,507)	2,659)	2,197)	3,101)	2,600)	9,932)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Oracle Corp. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Oracle Corp., invested capital calculation (financing approach)

US$ in millions

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Notes payable and other borrowings, current	4,061)	3,749)	8,250)	2,371)	4,494)	4,491)
Notes payable and other borrowings, non-current	86,420)	72,110)	75,995)	69,226)	51,673)	56,128)
Operating lease liability¹	4,849)	3,658)	2,782)	2,098)	2,158)	1,462)
Total reported debt & leases	95,330)	79,517)	87,027)	73,695)	58,325)	62,081)
Total Oracle Corporation stockholders’ equity (deficit)	1,073)	(6,220)	5,238)	12,074)	21,785)	45,726)
Net deferred tax (assets) liabilities²	(6,454)	(6,751)	(5,772)	(3,211)	(2,432)	(1,434)
Allowances for credit losses³	428)	362)	373)	409)	371)	370)
Deferred revenues⁴	9,938)	9,110)	9,454)	8,599)	9,043)	9,054)
Restructuring plans accrued⁵	199)	131)	225)	151)	262)	282)
Equity equivalents⁶	4,111)	2,852)	4,280)	5,948)	7,244)	8,272)
Accumulated other comprehensive (income) loss, net of tax⁷	1,522)	1,692)	1,175)	1,716)	1,628)	1,636)
Noncontrolling interests	483)	452)	714)	643)	578)	498)
Adjusted total Oracle Corporation stockholders’ equity (deficit)	7,189)	(1,224)	11,407)	20,381)	31,235)	56,132)
Construction in progress⁸	(3,846)	(512)	(233)	(280)	(158)	(229)
Marketable securities⁹	(422)	(519)	(16,456)	(5,818)	(17,313)	(45,641)
Invested capital	98,251)	77,262)	81,745)	87,978)	72,089)	72,343)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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 deferred revenues.

⁵ Addition of restructuring plans accrued.

⁶ Addition of equity equivalents to total Oracle Corporation stockholders’ equity (deficit).

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Oracle Corp. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Oracle Corp., cost of capital calculations

May 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	331,248)	331,248)	÷	416,560)	=	0.80	0.80	×	13.57%	=	10.79%
Borrowings³	80,463)	80,463)	÷	416,560)	=	0.19	0.19	×	4.01% × (1 – 21.00%)	=	0.61%
Operating lease liability⁴	4,849)	4,849)	÷	416,560)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.04%
Total:	416,560)					1.00					11.44%

Based on: 10-K (reporting date: 2023-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

May 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	180,362)	180,362)	÷	251,133)	=	0.72	0.72	×	13.57%	=	9.75%
Borrowings³	67,113)	67,113)	÷	251,133)	=	0.27	0.27	×	3.47% × (1 – 21.00%)	=	0.73%
Operating lease liability⁴	3,658)	3,658)	÷	251,133)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.03%
Total:	251,133)					1.00					10.51%

Based on: 10-K (reporting date: 2022-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

May 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	217,748)	217,748)	÷	310,243)	=	0.70	0.70	×	13.57%	=	9.53%
Borrowings³	89,713)	89,713)	÷	310,243)	=	0.29	0.29	×	3.35% × (1 – 21.00%)	=	0.77%
Operating lease liability⁴	2,782)	2,782)	÷	310,243)	=	0.01	0.01	×	2.80% × (1 – 21.00%)	=	0.02%
Total:	310,243)					1.00					10.31%

Based on: 10-K (reporting date: 2021-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

May 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	169,146)	169,146)	÷	252,257)	=	0.67	0.67	×	13.57%	=	9.10%
Borrowings³	81,013)	81,013)	÷	252,257)	=	0.32	0.32	×	3.40% × (1 – 21.00%)	=	0.86%
Operating lease liability⁴	2,098)	2,098)	÷	252,257)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	252,257)					1.00					9.98%

Based on: 10-K (reporting date: 2020-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

May 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	187,206)	187,206)	÷	247,877)	=	0.76	0.76	×	13.57%	=	10.25%
Borrowings³	58,513)	58,513)	÷	247,877)	=	0.24	0.24	×	3.45% × (1 – 21.00%)	=	0.64%
Operating lease liability⁴	2,158)	2,158)	÷	247,877)	=	0.01	0.01	×	3.45% × (1 – 21.00%)	=	0.02%
Total:	247,877)					1.00					10.92%

Based on: 10-K (reporting date: 2019-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

May 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	175,569)	175,569)	÷	238,644)	=	0.74	0.74	×	13.57%	=	9.99%
Borrowings³	61,613)	61,613)	÷	238,644)	=	0.26	0.26	×	3.38% × (1 – 29.20%)	=	0.62%
Operating lease liability⁴	1,462)	1,462)	÷	238,644)	=	0.01	0.01	×	3.38% × (1 – 29.20%)	=	0.01%
Total:	238,644)					1.00					10.62%

Based on: 10-K (reporting date: 2018-05-31).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Oracle Corp., economic spread ratio calculation, comparison to benchmarks

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(1,082)	(631)	5,918)	1,359)	3,072)	(3,426)
Invested capital²	98,251)	77,262)	81,745)	87,978)	72,089)	72,343)
Performance Ratio
Economic spread ratio³	-1.10%	-0.82%	7.24%	1.54%	4.26%	-4.74%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	6.07%	8.92%	10.76%	11.33%	10.05%	10.29%
Adobe Inc.	5.66%	11.09%	13.50%	5.77%	3.87%	1.52%
International Business Machines Corp.	-1.43%	-9.30%	-4.31%	-4.05%	-0.32%	—
Intuit Inc.	-5.99%	-4.93%	2.82%	6.15%	19.82%	17.52%
Microsoft Corp.	16.09%	24.04%	33.05%	31.07%	26.19%	7.85%
Palo Alto Networks Inc.	14.98%	6.83%	-1.86%	-2.90%	0.35%	-2.47%
Salesforce Inc.	-11.91%	-9.48%	-7.16%	-10.20%	-6.20%	—
ServiceNow Inc.	9.04%	4.50%	5.71%	7.33%	6.74%	—
Synopsys Inc.	-3.51%	3.07%	-2.95%	-2.78%	-5.77%	-7.15%

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,082 ÷ 98,251 = -1.10%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Oracle Corp. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Oracle Corp., economic profit margin calculation, comparison to benchmarks

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(1,082)	(631)	5,918)	1,359)	3,072)	(3,426)

Revenues	49,954)	42,440)	40,479)	39,068)	39,506)	39,831)
Add: Increase (decrease) in deferred revenues	828)	(344)	855)	(444)	77)	219)
Adjusted revenues	50,782)	42,096)	41,334)	38,624)	39,583)	40,050)
Performance Ratio
Economic profit margin²	-2.13%	-1.50%	14.32%	3.52%	7.76%	-8.55%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	3.12%	4.30%	5.52%	5.76%	4.65%	4.32%
Adobe Inc.	7.08%	12.91%	16.82%	8.28%	5.82%	2.49%
International Business Machines Corp.	-2.55%	-16.14%	-8.22%	-7.04%	-0.54%	—
Intuit Inc.	-9.81%	-9.49%	3.58%	6.93%	13.21%	11.64%
Microsoft Corp.	18.33%	23.04%	27.44%	23.07%	19.37%	5.57%
Palo Alto Networks Inc.	14.88%	7.95%	-2.50%	-4.70%	0.38%	-3.66%
Salesforce Inc.	-30.33%	-26.33%	-16.43%	-25.12%	-12.20%	—
ServiceNow Inc.	7.27%	3.62%	4.94%	5.98%	4.94%	—
Synopsys Inc.	-4.95%	4.33%	-4.69%	-4.77%	-9.97%	-12.20%

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -1,082 ÷ 50,782 = -2.13%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Oracle Corp. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Oracle Corp. (NYSE:ORCL)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin