Economic Value Added (EVA)
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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.
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Procter & Gamble Co. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Procter & Gamble Co., economic profit calculation
US$ in millions
| 12 months ended: | Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
Over the observed period, the financial performance, as measured by economic profit, demonstrates a generally positive trajectory. Net operating profit after taxes (NOPAT) exhibits consistent growth, while the cost of capital shows a moderate increase, and invested capital fluctuates. These factors combine to influence the overall economic profit generated.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased steadily from US$12,785 million in 2020 to US$16,618 million in 2025. This represents a cumulative increase of approximately 29.9% over the six-year period, indicating improving operational profitability. The growth rate appears to accelerate in the later years, with a more substantial increase between 2024 and 2025.
- Cost of Capital
- The cost of capital experienced a gradual rise from 9.21% in 2020 to 9.56% in 2024, before decreasing slightly to 9.44% in 2025. This increase suggests a potentially higher risk profile or changing market conditions impacting funding costs. The slight decrease in 2025 may indicate improved capital market perceptions or internal efficiency gains.
- Invested Capital
- Invested capital decreased from US$101,100 million in 2020 to US$93,924 million in 2022, before beginning a recovery, reaching US$100,282 million in 2025. The initial decline could be attributed to asset sales, improved capital efficiency, or share repurchases. The subsequent increase suggests reinvestment in the business or acquisitions.
- Economic Profit
- Economic profit increased from US$3,475 million in 2020 to US$7,149 million in 2025. This represents a cumulative increase of over 105%. While economic profit peaked at US$5,766 million in 2022, it experienced a slight dip in 2023 before resuming growth. The substantial increase in economic profit in 2025 is likely driven by the combined effect of higher NOPAT and a slight reduction in the cost of capital, despite the increase in invested capital.
In summary, the period demonstrates a positive trend in value creation, as evidenced by the increasing economic profit. The company appears to be effectively deploying capital and generating returns exceeding its cost of capital, particularly in the later years of the observed timeframe. Fluctuations in invested capital warrant further investigation to understand the underlying drivers of these changes.
Net Operating Profit after Taxes (NOPAT)
Procter & Gamble Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in restructuring reserves.
3 Addition of increase (decrease) in equity equivalents to net earnings attributable to Procter & Gamble (P&G).
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net earnings attributable to Procter & Gamble (P&G).
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net earnings attributable to Procter & Gamble (P&G)
- The net earnings of the company demonstrated a consistent upward trend over the analyzed periods. Starting at 13,027 million US dollars in mid-2020, earnings increased steadily each year, reaching 15,974 million US dollars by mid-2025. The growth, although steady, showed minor fluctuations in the rate of increase, with a slightly slower increment between mid-2022 and mid-2023, followed by renewed acceleration towards the end of the period.
- Net operating profit after taxes (NOPAT)
- NOPAT exhibited a parallel pattern to net earnings, indicating effective operational management and stable profitability. It rose from 12,785 million US dollars in mid-2020 to 16,618 million US dollars in mid-2025. The increment was generally consistent, with a slight deceleration in growth between mid-2021 and mid-2022, before regaining momentum through to the final period. This trend suggests sustained operational efficiency and the capacity to enhance profitability over time.
Cash Operating Taxes
Procter & Gamble Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
- Tax Expense
- Over the period from June 30, 2020, to June 30, 2025, the tax expense exhibits an overall upward trend. Starting at 2,731 million USD in 2020, it increases to 3,263 million USD in 2021. A slight decline occurs in 2022 with 3,202 million USD, followed by a renewed increase to 3,615 million USD in 2023. The upward trajectory continues through 2024 and 2025, reaching 3,787 million USD and 4,102 million USD, respectively. This reflects an aggregate growth of approximately 50% over the six-year span.
- Cash Operating Taxes
- Cash operating taxes also show an upward movement initially but with some fluctuation. Beginning at 3,400 million USD in 2020, the figure rises steadily through to 2023, peaking at 4,168 million USD. However, subsequent years see a slight decline, with values of 4,135 million USD in 2024 and further reduction to 4,054 million USD in 2025. Despite this late decrease, cash operating taxes overall have increased by roughly 19% compared to the initial 2020 figure.
- Comparative Insights
- Both tax expense and cash operating taxes show general increases across the analyzed timeframe, indicating a growing tax burden in absolute terms. The tax expense growth is more consistent and robust, whereas cash operating taxes peak earlier and then slightly decline. The divergence in the last two years could suggest changes in tax payment timing, cash management strategies, or variations in tax structures impacting cash taxes differently than accrued tax expenses.
Invested Capital
Procter & Gamble Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of restructuring reserves.
4 Addition of equity equivalents to shareholders’ equity attributable to Procter & Gamble.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
- Total Reported Debt & Leases
- The total reported debt and leases showed a general decline from 35,611 million USD in mid-2020 to 32,293 million USD by mid-2022. However, this downward trend reversed slightly, with debt levels rising again to 35,424 million USD by mid-2023, followed by a moderate decrease in mid-2024 to 33,369 million USD, before increasing once more to 35,464 million USD by mid-2025. This pattern indicates fluctuations in debt levels, with no clear long-term reduction or increase over the six-year period.
- Shareholders’ Equity Attributable to Procter & Gamble
- Shareholders’ equity remained relatively stable between mid-2020 and mid-2023, fluctuating marginally between approximately 46,378 million USD and 46,777 million USD. From mid-2023 onward, equity showed a notable upward trend, rising to 50,287 million USD by mid-2024 and further to 52,012 million USD by mid-2025. This growth suggests an improvement in the company's net asset base and potential enhancement in shareholder value in recent years.
- Invested Capital
- Invested capital declined from 101,100 million USD in mid-2020 to 93,924 million USD by mid-2022, reflecting a reduction in the total funds employed in operations. After this trough, invested capital began to increase again, reaching 96,550 million USD in mid-2023 and continuing to rise steadily to 100,282 million USD by mid-2025. This trend implies a recovery in capital investment levels, trending toward the original 2020 amounts.
- Overall Insights
- The data reveals a cyclical pattern in key financial metrics over the six-year timeframe. Debt levels experienced a decrease followed by a rebound, while shareholders’ equity showed stability initially and then increased significantly in the later years. Invested capital decreased initially but reversed to a recovery path toward previous levels. Together, these trends indicate a period of financial adjustment followed by stabilization and growth in equity and capital investment, with debt management remaining somewhat variable.
Cost of Capital
Procter & Gamble Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-06-30).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Procter & Gamble Co., economic spread ratio calculation
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
The economic spread ratio demonstrates a generally positive trend over the observed period. Economic profit also exhibits an upward trajectory, though with some fluctuation. Invested capital shows a moderate decrease initially, followed by a period of stabilization and then growth.
- Economic Spread Ratio
- The economic spread ratio increased from 3.44% in 2020 to 5.73% in 2021, representing a substantial improvement. Further growth was observed in 2022, reaching 6.14%. A slight decrease to 5.74% occurred in 2023, but the ratio continued to climb to 5.92% in 2024. The most significant increase occurred between 2024 and 2025, with the ratio reaching 7.13%. This indicates an increasing ability to generate returns above the cost of capital.
- Economic Profit
- Economic profit increased significantly from US$3,475 million in 2020 to US$5,445 million in 2021. Growth continued, albeit at a slower pace, reaching US$5,766 million in 2022. A minor decline to US$5,541 million was noted in 2023, followed by a recovery to US$5,781 million in 2024. The largest absolute increase in economic profit occurred between 2024 and 2025, with a final value of US$7,149 million. This suggests improving profitability relative to the capital employed.
- Invested Capital
- Invested capital decreased from US$101,100 million in 2020 to US$95,095 million in 2021. A further decrease was observed in 2022, reaching US$93,924 million. However, from 2022 to 2023, invested capital increased to US$96,550 million. This upward trend continued, with values of US$97,641 million in 2024 and US$100,282 million in 2025. The increase in invested capital in the later years, coupled with rising economic profit, supports the improved economic spread ratio.
Overall, the observed trends suggest a strengthening financial performance. The increasing economic spread ratio, driven by growth in economic profit and a stabilization/increase in invested capital, indicates improved value creation.
Economic Profit Margin
Procter & Gamble Co., economic profit margin calculation
| Jun 30, 2025 | Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
Based on: 10-K (reporting date: 2025-06-30), 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
The economic profit margin demonstrates a generally positive trajectory over the observed period, though with some fluctuation. Initial values show growth followed by a slight contraction, ultimately culminating in a strong increase in the most recent year.
- Economic Profit
- Economic profit exhibits an increasing trend overall, rising from US$3,475 million in 2020 to US$7,149 million in 2025. The most significant increase occurred between 2024 and 2025. A moderate slowdown in growth is apparent between 2021 and 2023, before resuming a more robust expansion.
- Net Sales
- Net sales consistently increased throughout the period, moving from US$70,950 million in 2020 to US$84,284 million in 2025. The rate of increase appears relatively stable, with a slight deceleration between 2022 and 2023, followed by a return to previous growth rates.
- Economic Profit Margin
- The economic profit margin began at 4.90% in 2020 and increased substantially to 7.15% in 2021, and 7.19% in 2022. A slight decrease to 6.76% was observed in 2023, followed by a modest recovery to 6.88% in 2024. The most recent year, 2025, shows a significant jump to 8.48%, indicating improved profitability relative to sales. The margin’s performance suggests a strengthening ability to generate profit from revenue over time, despite the temporary dip in 2023.
The correlation between increasing economic profit and net sales suggests a positive relationship between revenue generation and value creation. The substantial increase in the economic profit margin in 2025 warrants further investigation to determine the underlying drivers of this improvement.