Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Oracle Corp. (NYSE:ORCL)

Economic Value Added (EVA)

Advanced level

Economic Profit

Oracle Corp., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Net operating profit after taxes (NOPAT)1 10,144  10,943  4,255  10,264  10,298  9,942 
Cost of capital2 8.39% 9.12% 8.87% 9.13% 9.15% 9.43%
Invested capital3 87,978  72,089  72,343  78,705  65,186  67,473 
 
Economic profit4 2,762  4,366  (2,161) 3,081  4,331  3,580 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 10,1448.39% × 87,978 = 2,762

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.’s economic profit increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

Oracle Corp., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Net income 10,135  11,083  3,825  9,335  8,901  9,938 
Deferred income tax expense (benefit)1 (851) (1,191) (611) (486) (105) (548)
Increase (decrease) in allowances for doubtful trade receivables2 38  51  (8) 42  (21)
Increase (decrease) in deferred revenues3 (444) 77  219  644  553  (35)
Increase (decrease) in restructuring plans accrued4 (111) (20) 18  (19) 163  (49)
Increase (decrease) in equity equivalents5 (1,368) (1,133) (323) 131  653  (653)
Interest expense 1,995  2,082  2,025  1,798  1,467  1,143 
Interest expense, operating lease liability6 67  74  49  50  37  42 
Adjusted interest expense 2,062  2,156  2,074  1,848  1,504  1,185 
Tax benefit of interest expense7 (433) (453) (606) (647) (526) (415)
Adjusted interest expense, after taxes8 1,629  1,704  1,469  1,201  978  771 
Interest income (527) (1,092) (1,201) (802) (538) (349)
Investment income, before taxes (527) (1,092) (1,201) (802) (538) (349)
Tax expense (benefit) of investment income9 111  229  351  281  188  122 
Investment income, after taxes10 (416) (863) (850) (521) (350) (227)
Net income (loss) attributable to noncontrolling interest 164  152  135  118  116  113 
Net operating profit after taxes (NOPAT) 10,144  10,943  4,255  10,264  10,298  9,942 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances for doubtful trade receivables.

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 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,098 × 3.20% = 67

7 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,062 × 21.00% = 433

8 Addition of after taxes interest expense to net income.

9 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 527 × 21.00% = 111

10 Elimination of after taxes investment income.

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.’s NOPAT increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Cash Operating Taxes

Oracle Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Provision for income taxes 1,928  1,185  9,066  2,182  2,541  2,896 
Less: Deferred income tax expense (benefit) (851) (1,191) (611) (486) (105) (548)
Add: Tax savings from interest expense 433  453  606  647  526  415 
Less: Tax imposed on investment income 111  229  351  281  188  122 
Cash operating taxes 3,101  2,600  9,932  3,034  2,984  3,737 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

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.’s cash operating taxes decreased from 2018 to 2019 but then slightly increased from 2019 to 2020.

Invested Capital

Oracle Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Notes payable, current 2,371  4,494  4,491  9,797  3,750  1,999 
Notes payable and other borrowings, non-current 69,226  51,673  56,128  48,112  40,105  39,959 
Operating lease liability1 2,098  2,158  1,462  1,541  1,125  1,116 
Total reported debt & leases 73,695  58,325  62,081  59,450  44,980  43,074 
Total Oracle Corporation stockholders’ equity 12,074  21,785  45,726  53,860  47,289  48,663 
Net deferred tax (assets) liabilities2 (3,211) (2,432) (1,434) (683) (1,131) (993)
Allowances for doubtful trade receivables3 409  371  370  319  327  285 
Deferred revenues4 8,599  9,043  9,054  8,835  8,191  7,638 
Restructuring plans accrued5 151  262  282  264  283  120 
Equity equivalents6 5,948  7,244  8,272  8,735  7,670  7,050 
Accumulated other comprehensive (income) loss, net of tax7 1,716  1,628  1,636  803  816  996 
Noncontrolling interests 643  578  498  386  501  435 
Adjusted total Oracle Corporation stockholders’ equity 20,381  31,235  56,132  63,784  56,276  57,144 
Construction in progress8 (280) (158) (229) (235) (97) (93)
Marketable securities9 (5,818) (17,313) (45,641) (44,294) (35,973) (32,652)
Invested capital 87,978  72,089  72,343  78,705  65,186  67,473 

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

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.

7 Removal of accumulated other comprehensive income.

8 Subtraction of construction in progress.

9 Subtraction of marketable securities.

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.’s invested capital decreased from 2018 to 2019 but then increased from 2019 to 2020 exceeding 2018 level.

Cost of Capital

Oracle Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 169,146  169,146  ÷ 252,257  = 0.67 0.67 × 11.20% = 7.51%
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 8.39%

Based on: 10-K (filing date: 2020-06-22).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 187,206  187,206  ÷ 247,877  = 0.76 0.76 × 11.20% = 8.46%
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 9.12%

Based on: 10-K (filing date: 2019-06-21).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 175,569  175,569  ÷ 238,644  = 0.74 0.74 × 11.20% = 8.24%
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 8.87%

Based on: 10-K (filing date: 2018-06-22).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 209,937  209,937  ÷ 271,891  = 0.77 0.77 × 11.20% = 8.64%
Borrowings3 60,413  60,413  ÷ 271,891  = 0.22 0.22 × 3.25% × (1 – 35.00%) = 0.47%
Operating lease liability4 1,541  1,541  ÷ 271,891  = 0.01 0.01 × 3.25% × (1 – 35.00%) = 0.01%
Total: 271,891  1.00 9.13%

Based on: 10-K (filing date: 2017-06-27).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 164,950  164,950  ÷ 213,026  = 0.77 0.77 × 11.20% = 8.67%
Borrowings3 46,950  46,950  ÷ 213,026  = 0.22 0.22 × 3.30% × (1 – 35.00%) = 0.47%
Operating lease liability4 1,125  1,125  ÷ 213,026  = 0.01 0.01 × 3.30% × (1 – 35.00%) = 0.01%
Total: 213,026  1.00 9.15%

Based on: 10-K (filing date: 2016-06-22).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 178,039  178,039  ÷ 223,256  = 0.80 0.80 × 11.20% = 8.93%
Borrowings3 44,100  44,100  ÷ 223,256  = 0.20 0.20 × 3.80% × (1 – 35.00%) = 0.49%
Operating lease liability4 1,116  1,116  ÷ 223,256  = 0.01 0.01 × 3.80% × (1 – 35.00%) = 0.01%
Total: 223,256  1.00 9.43%

Based on: 10-K (filing date: 2015-06-25).

1 US$ in millions

2 Equity. See details »

3 Borrowings. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

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

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 2,762  4,366  (2,161) 3,081  4,331  3,580 
Invested capital2 87,978  72,089  72,343  78,705  65,186  67,473 
Performance Ratio
Economic spread ratio3 3.14% 6.06% -2.99% 3.91% 6.64% 5.31%
Benchmarks
Economic Spread Ratio, Competitors4
Adobe Inc. 10.05% 8.13% 5.73% 10.44% 9.55% 0.31%
Alphabet Inc. 20.45% 22.01% 7.40% 14.65% 10.04%
Autodesk Inc. 1.95% -19.13% -31.10% -28.88% -10.35% -9.64%
Facebook Inc. 15.02% 24.13% 24.47% 12.48% -3.38%
International Business Machines Corp. -2.87% -3.18% -5.95% -1.88% 1.89%
Intuit Inc. 8.30% 22.11% 19.79% 24.40% 22.63% 15.95%
Microsoft Corp. 37.21% 30.61% 10.00% 25.09% 42.24% 18.53%
salesforce.com inc. -9.27% -5.17% -4.59% -6.02% -4.60% -7.17%
ServiceNow Inc. 4.05% 0.05% 0.58% -26.32% -14.31%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,762 ÷ 87,978 = 3.14%

4 Click competitor name to see calculations.

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.’s economic spread ratio improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Economic Profit Margin

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

Microsoft Excel LibreOffice Calc
May 31, 2020 May 31, 2019 May 31, 2018 May 31, 2017 May 31, 2016 May 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 2,762  4,366  (2,161) 3,081  4,331  3,580 
 
Revenues 39,068  39,506  39,831  37,728  37,047  38,226 
Add: Increase (decrease) in deferred revenues (444) 77  219  644  553  (35)
Adjusted revenues 38,624  39,583  40,050  38,372  37,600  38,191 
Performance Ratio
Economic profit margin2 7.15% 11.03% -5.40% 8.03% 11.52% 9.37%
Benchmarks
Economic Profit Margin, Competitors3
Adobe Inc. 14.42% 12.22% 9.39% 13.61% 12.39% 0.47%
Alphabet Inc. 12.68% 13.95% 4.37% 11.68% 9.56%
Autodesk Inc. 2.57% -31.19% -45.27% -43.08% -13.05% -11.55%
Facebook Inc. 13.95% 26.06% 25.04% 17.46% -5.97%
International Business Machines Corp. -4.91% -4.47% -8.10% -2.51% 2.35%
Intuit Inc. 9.33% 14.72% 13.15% 13.56% 12.79% 10.10%
Microsoft Corp. 24.53% 20.61% 6.59% 19.17% 21.77% 8.15%
salesforce.com inc. -22.64% -10.11% -7.23% -10.56% -6.60% -11.05%
ServiceNow Inc. 2.97% 0.05% 0.47% -19.77% -12.60%

Based on: 10-K (filing date: 2020-06-22), 10-K (filing date: 2019-06-21), 10-K (filing date: 2018-06-22), 10-K (filing date: 2017-06-27), 10-K (filing date: 2016-06-22), 10-K (filing date: 2015-06-25).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 2,762 ÷ 38,624 = 7.15%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s 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.’s economic profit margin improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.