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:
- Statement of Comprehensive Income
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
- Aggregate Accruals
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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
= – × =
The financial data reveals several key trends related to profitability and capital efficiency over the six-year period analyzed.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a consistent upward trend from 12,785 million USD in 2020 to 16,618 million USD in 2025. This steady increase indicates improving operational efficiency or higher profitability from core operations across the years.
- Cost of Capital
- The cost of capital has shown a gradual increase from 8.18% in 2020 to a peak of 8.49% in 2024, before slightly declining to 8.40% in 2025. This pattern suggests marginally rising capital expenses or risk considerations until 2024, followed by a modest reduction in the last year.
- Invested Capital
- Invested capital decreased from 101,100 million USD in 2020 to 93,924 million USD in 2022, implying a reduction in the capital base during the initial years. Thereafter, it rises moderately to 100,282 million USD by 2025, indicating a recovery or reinvestment phase in the latter part of the period.
- Economic Profit
- Economic profit has increased consistently from 4,514 million USD in 2020 to 8,197 million USD in 2025. The growth in economic profit surpasses the increase in NOPAT, highlighting an enhanced value creation for shareholders as the company generates returns exceeding its cost of capital by an expanding margin.
In summary, the financial indicators reveal a positive trajectory in profitability and economic value creation. Despite fluctuations in invested capital and cost of capital, the company has succeeded in increasing its operational profit and generating progressively higher economic profit, pointing to improved capital efficiency and successful management of financial resources over time.
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 analysis of the financial data over the observed periods reveals several important trends and insights related to economic profit, invested capital, and the economic spread ratio.
- Economic Profit
-
The economic profit demonstrates an overall upward trend from 2020 to 2025. Starting at 4,514 million US dollars in 2020, it increases significantly to 6,435 million in 2021 and continues to grow, reaching 8,197 million by 2025. Despite a minor dip between 2022 and 2023 (from 6,753 million to 6,554 million), the overarching trajectory indicates strong profitability growth, suggesting effective utilization of capital and possibly improved operational efficiency or pricing power.
- Invested Capital
-
The invested capital shows some fluctuations but remains generally stable within a narrow range over the six-year period. It starts at 101,100 million US dollars in 2020, decreases gradually to 93,924 million by 2022, before experiencing a slight rebound to 100,282 million by 2025. The overall movement implies relatively consistent capital investment without significant expansion or contraction, which may reflect a steady state of asset base or controlled capital expenditure.
- Economic Spread Ratio
-
The economic spread ratio, indicating the return on invested capital above its cost, exhibits a meaningful improvement. It rises from 4.46% in 2020 to a peak of 8.17% in 2025. This positive trend, with a slight dip between 2022 and 2023, aligns with the increase in economic profit and stable capital investment. The improvement in economic spread ratio suggests enhanced value creation and efficient capital deployment over the period under review.
In summary, the financial data reflect a robust improvement in economic profit and profitability ratios, accompanied by stable invested capital. The trends suggest that the company has successfully enhanced its economic value generation capabilities between 2020 and 2025, possibly through optimizing its asset base and maintaining effective operational performance.
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 financial data reveals several notable trends in the company's performance over the examined periods.
- Net Sales
- Net sales have exhibited a consistent upward trajectory, increasing from 70,950 million US dollars in 2020 to 84,284 million US dollars in 2025. This steady growth indicates sustained demand and expansion in revenue generation over the six-year span.
- Economic Profit
- Economic profit has generally risen during the period, moving from 4,514 million US dollars in 2020 to 8,197 million in 2025. Notably, there was a considerable increase between 2020 and 2021, followed by more moderate increments through 2024, and a more pronounced rise again in 2025. This growth suggests improving operational efficiency and value creation.
- Economic Profit Margin
- The economic profit margin, reflecting profitability relative to revenue, also shows an overall improvement. Starting at 6.36% in 2020, the margin climbed to 8.45% in 2021, maintained a similar level through 2022 and 2023 with slight fluctuations, and experienced a significant increase to 9.73% by 2025. This trend indicates enhanced profitability management alongside sales growth.
In summary, the data points to a positive progression in both top-line sales and economic profitability. The improvement in economic profit margin further underscores the company's capability to convert increased sales into higher profitability effectively. Such trends suggest a robust operational and strategic performance over the analyzed periods.