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
Procter & Gamble Co., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-06-30), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 16,734 – 9.50% × 101,868 = 7,061
An analysis of the economic value added metrics reveals a consistent pattern of value creation over the six-year period. The company has maintained a positive economic profit throughout the timeframe, indicating that the returns on invested capital consistently exceeded the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A steady upward trajectory is observed in NOPAT, rising from 14,283 million US$ in 2021 to 16,734 million US$ by 2026. The most significant growth occurred between 2024 and 2025, where NOPAT increased by approximately 9.9%, suggesting a substantial improvement in operational efficiency or revenue expansion during that period.
- Invested Capital and Cost of Capital
- Invested capital exhibited a general increase, growing from 95,095 million US$ in 2021 to 101,868 million US$ in 2026, despite a marginal contraction in 2022. Simultaneously, the cost of capital showed a slight upward trend from 9.35% in 2021 to a peak of 9.61% in 2024, before stabilizing at 9.50% for the 2025 and 2026 periods. The expansion of the capital base suggests continued investment in growth or infrastructure.
- Economic Profit Trends
- Economic profit remained positive across all years, fluctuating between a low of 5,395 million US$ in 2021 and a peak of 7,096 million US$ in 2025. While there was a slight dip in 2023, the overall trend is positive. The sharp increase in economic profit observed in 2025 is primarily driven by the acceleration in NOPAT growth, which more than offset the increase in the capital charge resulting from higher invested capital.
The convergence of stabilizing capital costs and increasing operational profits has led to an enhanced capacity for value creation. By 2026, economic profit is projected to plateau at 7,061 million US$, reflecting a balance between the continuing growth in invested capital and the growth rate of NOPAT.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
Procter & Gamble Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-06-30), 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).
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 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 887 × 5.60% = 50
5 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 927 × 21.00% = 195
6 Addition of after taxes interest expense to net earnings attributable to Procter & Gamble (P&G).
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 430 × 21.00% = 90
8 Elimination of after taxes investment income.
The financial results from 2021 to 2026 indicate a sustained increase in both overall profitability and operating efficiency. Both net earnings and Net Operating Profit After Taxes (NOPAT) demonstrate an upward trajectory, suggesting strong operational performance and a consistent ability to generate value over the six-year period.
- Net Earnings Performance
- Net earnings attributable to the company increased from 14,306 million US$ in 2021 to 16,046 million US$ by 2026. While the general trend is positive, a marginal contraction occurred in 2023, with earnings decreasing to 14,653 million US$ from 14,742 million US$ in the prior year. This was followed by a significant acceleration in 2025, where earnings reached 15,974 million US$, before stabilizing in 2026.
- NOPAT Trends
- Net operating profit after taxes exhibited a more consistent growth pattern than net earnings, increasing annually throughout the analyzed period. NOPAT rose from 14,283 million US$ in 2021 to 16,734 million US$ in 2026. The most pronounced expansion occurred between 2024 and 2025, during which NOPAT increased from 15,111 million US$ to 16,618 million US$, indicating a period of enhanced operating productivity.
- Comparative Analysis of NOPAT and Net Earnings
- A close alignment is observed between NOPAT and net earnings, although the relationship shifted over time. In 2021, NOPAT was slightly lower than net earnings. From 2024 through 2026, NOPAT consistently exceeded net earnings. This divergence indicates that core operational profitability grew more robustly than the final bottom-line earnings, suggesting that operating efficiency became a more dominant driver of financial performance relative to non-operating factors.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cash Operating Taxes
Procter & Gamble Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-06-30), 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).
An upward trajectory is observed in both tax expense and cash operating taxes over the analyzed six-year period. While the accounting tax expense demonstrates a steady and consistent increase from 2022 onward, the cash operating taxes exhibit a more volatile growth pattern, though they conclude the period at a significantly higher level than the baseline.
- Tax Expense Trends
- Tax expenses grew from 3,263 million in 2021 to 4,233 million by 2026. Aside from a marginal decrease between 2021 and 2022, the expense grew annually, reflecting a cumulative increase of approximately 29.7% over the period.
- Cash Operating Tax Patterns
- Cash operating taxes increased from 3,623 million in 2021 to a peak of 4,168 million in 2023. Following this peak, a two-year period of slight decline occurred, with values dropping to 4,135 million in 2024 and 4,054 million in 2025, before rebounding to a period high of 4,286 million in 2026.
- Variance Analysis between Accrual and Cash Taxes
- For the majority of the period, cash operating taxes exceeded the reported tax expense, indicating a consistent gap between accounting provisions and actual cash outflows. This variance peaked in 2023 with a difference of 553 million. However, a notable shift occurred in 2025, where cash operating taxes fell below the tax expense for the first time in the series, suggesting a temporary alignment or reversal of deferred tax assets and liabilities.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Invested Capital
Procter & Gamble Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-06-30), 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).
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.
The analysis of invested capital reveals a disciplined growth pattern characterized by an increasing reliance on equity rather than debt. Total capital employed in the business demonstrates a gradual expansion, reflecting a steady increase in the resources available to generate economic value over the six-year period.
- Invested Capital Progression
- Invested capital exhibits a general upward trajectory, rising from 95,095 million US$ in 2021 to 101,868 million US$ by 2026. After a marginal contraction in 2022 to 93,924 million US$, the metric entered a phase of consistent year-over-year growth, eventually surpassing the 100,000 million US$ threshold in 2025.
- Equity Component Analysis
- Shareholders' equity serves as the primary catalyst for the expansion of the capital base. Growth was relatively flat between 2021 and 2023, but a significant acceleration occurred starting in 2024. Equity increased from 46,378 million US$ in 2021 to 54,081 million US$ by 2026, indicating a strong accumulation of retained earnings or capital contributions.
- Debt and Lease Dynamics
- Total reported debt and leases remained relatively stable, fluctuating within a narrow range between 32,293 million US$ and 35,464 million US$. The absence of a sustained upward trend in borrowing suggests that the increase in invested capital was not driven by increased financial leverage, but rather by internal equity growth.
- Capital Structure Implications
- The diverging trends between stable debt levels and rising equity indicate a shifting capital structure toward a more equity-heavy composition. This suggests a conservative approach to financing the expansion of the invested capital base, which may lower the weighted average cost of capital (WACC) depending on the relative costs of debt and equity.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cost of Capital
Procter & Gamble Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 344,039) | 344,039) | ÷ | 378,066) | = | 0.91 | 0.91 | × | 10.17% | = | 9.26% | ||
| Short-term and long-term debt3 | 33,140) | 33,140) | ÷ | 378,066) | = | 0.09 | 0.09 | × | 3.30% × (1 – 21.00%) | = | 0.23% | ||
| Operating lease liability4 | 887) | 887) | ÷ | 378,066) | = | 0.00 | 0.00 | × | 5.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 378,066) | 1.00 | 9.50% | ||||||||||
Based on: 10-K (reporting date: 2026-06-30).
1 US$ 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 | 353,136) | 353,136) | ÷ | 387,727) | = | 0.91 | 0.91 | × | 10.17% | = | 9.27% | ||
| Short-term and long-term debt3 | 33,635) | 33,635) | ÷ | 387,727) | = | 0.09 | 0.09 | × | 3.22% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 956) | 956) | ÷ | 387,727) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 387,727) | 1.00 | 9.50% | ||||||||||
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 | 395,622) | 395,622) | ÷ | 427,584) | = | 0.93 | 0.93 | × | 10.17% | = | 9.41% | ||
| Short-term and long-term debt3 | 31,053) | 31,053) | ÷ | 427,584) | = | 0.07 | 0.07 | × | 3.31% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 909) | 909) | ÷ | 427,584) | = | 0.00 | 0.00 | × | 4.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 427,584) | 1.00 | 9.61% | ||||||||||
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 | 366,043) | 366,043) | ÷ | 400,038) | = | 0.92 | 0.92 | × | 10.17% | = | 9.31% | ||
| Short-term and long-term debt3 | 33,178) | 33,178) | ÷ | 400,038) | = | 0.08 | 0.08 | × | 3.28% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 817) | 817) | ÷ | 400,038) | = | 0.00 | 0.00 | × | 3.50% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 400,038) | 1.00 | 9.53% | ||||||||||
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 | 345,816) | 345,816) | ÷ | 377,314) | = | 0.92 | 0.92 | × | 10.17% | = | 9.32% | ||
| Short-term and long-term debt3 | 30,698) | 30,698) | ÷ | 377,314) | = | 0.08 | 0.08 | × | 1.82% × (1 – 21.00%) | = | 0.12% | ||
| Operating lease liability4 | 800) | 800) | ÷ | 377,314) | = | 0.00 | 0.00 | × | 3.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 377,314) | 1.00 | 9.45% | ||||||||||
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 | 343,262) | 343,262) | ÷ | 378,181) | = | 0.91 | 0.91 | × | 10.17% | = | 9.23% | ||
| Short-term and long-term debt3 | 34,069) | 34,069) | ÷ | 378,181) | = | 0.09 | 0.09 | × | 1.50% × (1 – 21.00%) | = | 0.11% | ||
| Operating lease liability4 | 850) | 850) | ÷ | 378,181) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 378,181) | 1.00 | 9.35% | ||||||||||
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 »
Economic Spread Ratio
Procter & Gamble Co., economic spread ratio calculation
Based on: 10-K (reporting date: 2026-06-30), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 7,061 ÷ 101,868 = 6.93%
The analysis of economic value added reveals a generally positive trajectory in value creation between June 30, 2021, and June 30, 2026. Despite periodic fluctuations, there is a clear trend of increasing economic profit and a strengthening of the economic spread ratio, suggesting an improvement in the organization's ability to generate returns above its cost of capital.
- Economic Profit
- Economic profit demonstrated a growth trend, rising from 5,395 million USD in 2021 to 7,061 million USD by 2026. A period of volatility is observed between 2022 and 2024, where figures fluctuated between 5,489 million USD and 5,728 million USD. A significant expansion occurred in 2025, with economic profit peaking at 7,096 million USD before stabilizing in 2026.
- Invested Capital
- The capital base remained relatively stable with a gradual upward trend. After a slight contraction to 93,924 million USD in 2022, invested capital grew steadily each subsequent year, reaching 101,868 million USD by June 30, 2026. This indicates a consistent increase in the total resources deployed to generate economic value.
- Economic Spread Ratio
- The economic spread ratio, reflecting the efficiency of capital deployment, showed a general increase over the analyzed period. The ratio started at 5.67% in 2021 and reached a peak of 7.08% in 2025. The correlation between the surge in economic profit and the rise in the spread ratio in 2025 suggests that the growth in profit significantly outpaced the growth in invested capital during that timeframe, enhancing overall capital efficiency.
In summary, the financial data indicates that the company successfully expanded its economic profit while maintaining a disciplined growth rate of invested capital. The resulting increase in the economic spread ratio confirms a sustained improvement in value creation efficiency over the six-year horizon.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Economic Profit Margin
Procter & Gamble Co., economic profit margin calculation
Based on: 10-K (reporting date: 2026-06-30), 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).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 7,061 ÷ 87,032 = 8.11%
The financial performance from June 30, 2021, to June 30, 2026, is characterized by a consistent expansion in net sales and a general upward trajectory in economic profit, culminating in a significant increase in capital efficiency toward the end of the period.
- Net Sales Growth
- A steady upward trend in net sales is observed, growing from 76,118 million USD in 2021 to 87,032 million USD by 2026. This represents a consistent growth pattern, with the most significant year-over-year increase occurring between 2021 and 2022.
- Economic Profit Trends
- Economic profit exhibited moderate volatility in the early years, rising to 5,715 million USD in 2022 before retreating to 5,489 million USD in 2023. However, a strong recovery followed, with a sharp acceleration in 2025, where economic profit reached a peak of 7,096 million USD, before stabilizing at 7,061 million USD in 2026.
- Economic Profit Margin Analysis
- The economic profit margin remained relatively stable between 7.09% and 6.69% from 2021 to 2023. A notable expansion occurred starting in 2024, peaking at 8.42% in 2025. This expansion indicates that economic profit grew at a faster rate than net sales during this interval, suggesting improved operational efficiency or a higher return on invested capital relative to the cost of capital.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?