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 regarding the company’s profitability, capital efficiency, and economic value creation over a six-year period ending in June 2025.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT has demonstrated a consistent upward trajectory, increasing from $12,785 million in 2020 to $16,618 million in 2025. This reflects steady improvement in operating profitability after taxes, indicating better operational performance or revenue growth coupled with effective cost management over time.
- Cost of Capital
- The cost of capital has gradually increased from 8.22% in 2020 to a peak of 8.54% in 2024, before slightly decreasing to 8.44% in 2025. This moderate increase suggests a rising hurdle rate for investments, possibly influenced by changes in market conditions, risk profile, or capital structure. The slight decline in the final year may indicate improved investor confidence or adjustments in financing costs.
- Invested Capital
- Invested capital exhibited a decline from $101,100 million in 2020 to a low of $93,924 million in 2022, followed by a gradual recovery to $100,282 million by 2025. This pattern indicates an initial period of capital reduction, which could be due to asset disposals, efficiency improvements, or reduced investment, and a subsequent phase of reinvestment or capital growth aligning with expanding operational needs.
- Economic Profit
- Economic profit, representing value creation beyond the cost of capital, increased significantly from $4,474 million in 2020 to $8,157 million in 2025. After a notable rise between 2020 and 2022, economic profit experienced a slight dip in 2023 before resuming growth. This suggests that the company has been increasingly successful in generating returns above its capital costs, enhancing shareholder value throughout the period.
Overall, the data indicates improved profitability and value generation despite modest fluctuations in invested capital and cost of capital. The upward trend in economic profit highlights the company's strengthened ability to produce returns exceeding its cost of capital, reflecting sound financial and operational management.
Net Operating Profit after Taxes (NOPAT)
Procter & Gamble Co., NOPAT calculation
US$ 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 annual financial data reveals a generally positive trend in key performance indicators over the observed periods.
- Economic profit
- Economic profit has demonstrated consistent growth from 2020 through 2025, starting at 4,474 million US dollars in 2020 and rising to 8,157 million US dollars by 2025. This growth, although with some fluctuations, reflects an overall increasing ability to generate value beyond the cost of capital. Notably, a peak is observed in 2022 at 6,715 million US dollars, followed by a slight dip in 2023 and then a renewed increase in subsequent years.
- Invested capital
- The invested capital shows a mild declining trend initially, reducing from 101,100 million US dollars in 2020 to a low point of 93,924 million US dollars in 2022. However, after 2022, it begins to recover and gradually increases again, reaching 100,282 million US dollars by 2025. This pattern suggests a period of reduced capital deployment or asset optimization followed by renewed investment efforts or asset growth in later years.
- Economic spread ratio
- The economic spread ratio, a key indicator of profitability relative to invested capital, has exhibited an upward trajectory overall. It moved from 4.43% in 2020 to 8.13% in 2025, with a peak in 2022 at 7.15% and a minor decline in 2023 before rising again. This trend indicates improving efficiency in generating returns on invested capital and potentially better cost management or enhanced operational performance.
In summary, the economic profit has nearly doubled over the six-year period, driven by an increasing spread ratio despite initial reductions in invested capital. The recovery and growth in invested capital from 2023 onward, combined with the improvement in the economic spread, suggest strengthened financial health and improved value creation capacity.
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 from the analyzed periods reveal certain notable trends in the company's economic profit, net sales, and economic profit margin.
- Economic Profit
- The economic profit has shown a generally upward trajectory over the periods, starting at 4474 million US dollars in mid-2020 and increasing to 8157 million US dollars by mid-2025. Despite a slight dip in 2023, the overall growth indicates an improvement in value generated beyond the cost of capital.
- Net Sales
- Net sales have exhibited consistent growth over the reviewed timeframe, rising from 70950 million US dollars in 2020 to a peak of 84284 million US dollars projected for 2025. The steady increase suggests strengthening revenue performance year-over-year.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, demonstrates fluctuation but overall enhancement. It increased from 6.31% in 2020 to 9.68% in 2025, with minor variations such as a small decline in 2023. The margin growth implies improved profitability relative to sales.
In summary, the data indicate a positive financial performance trend, characterized by rising net sales and economic profit, accompanied by an improving economic profit margin. This suggests effective management of costs and capital, resulting in enhanced value creation over the analyzed periods.