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
Salesforce Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
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
= 12,319 – 19.71% × 96,559 = -6,714
The financial trajectory of the company is characterized by consistent value destruction over the analyzed period, as economic profit remained negative from 2021 through 2026. However, a distinct recovery trend is observable in the latter half of the period, with the deficit in economic profit narrowing significantly as operational profitability improved.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited significant volatility, beginning with a period of stability followed by a sharp contraction in 2023, where it fell to 1,931 million. From 2024 onward, a strong upward trend is evident, with profits accelerating to 12,319 million by January 2026, indicating a substantial increase in the company's ability to generate operational earnings.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the six-year period, fluctuating minimally between a high of 20.60% in 2021 and a low of 19.71% in 2026. This stability implies that the required rate of return on invested capital did not fluctuate significantly despite changes in the broader economic environment.
- Invested Capital
- A substantial expansion in the capital base occurred between 2021 and 2022, with invested capital increasing from 53,200 million to 81,940 million. This growth continued at a more moderate pace in subsequent years, reaching 96,559 million by January 2026, reflecting ongoing investment in the business infrastructure.
- Economic Profit
- Economic profit remained in negative territory for the entire duration, peaking in its deficit in 2023 at -14,754 million. This peak deficit was a direct result of the simultaneous decline in NOPAT and the high existing level of invested capital. A consistent recovery trend followed, with the economic profit improving to -6,714 million by 2026, suggesting that the growth in NOPAT is beginning to outpace the capital charges associated with the invested capital base.
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)
Salesforce Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in unearned revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,737 × 3.40% = 93
5 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 417 × 21.00% = 88
6 Addition of after taxes interest expense to net income.
Net operating profit after taxes (NOPAT) exhibited considerable fluctuation over the observed period. While net income experienced volatility, NOPAT demonstrates a distinct pattern of initial stability, a significant decline, and subsequent strong recovery and growth.
- Initial Stability (2021-2022)
- NOPAT remained relatively consistent between 2021 and 2022, registering values of US$4,388 million and US$4,442 million respectively. This suggests a period of stable operational profitability before considering the impact of financing costs and taxes.
- Significant Decline (2023)
- A substantial decrease in NOPAT occurred in 2023, falling to US$1,931 million. This represents a significant contraction in operating profitability after taxes, considerably lower than the preceding two years. This decline is more pronounced than the decrease observed in net income during the same period.
- Recovery and Growth (2024-2026)
- Following the decline, NOPAT experienced a robust recovery, increasing to US$5,317 million in 2024. This upward trend continued, with NOPAT reaching US$7,014 million in 2025 and culminating in a substantial value of US$12,319 million in 2026. This indicates a strong resurgence in core operational profitability.
- Relationship to Net Income
- While NOPAT and net income generally move in the same direction, the magnitude of change differs. The decline in 2023 was more severe for NOPAT than for net income, and the subsequent recovery in NOPAT appears to be accelerating relative to net income growth. This divergence suggests changes in the company’s capital structure or non-operating items are influencing net income to a greater extent than operating performance.
The observed trend in NOPAT suggests a period of operational challenges in 2023 followed by a successful turnaround and a period of strong operational performance through 2026. Further investigation into the factors driving the 2023 decline and the subsequent recovery would be beneficial.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cash Operating Taxes
Salesforce Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
The provision for (benefit from) income taxes demonstrates significant fluctuation over the observed period. Initially, a substantial benefit was recorded in 2021, followed by a return to a provision in subsequent years, with a consistent upward trend from 2022 through 2025. Cash operating taxes also exhibit an increasing trend, though with more pronounced year-over-year growth.
- Provision for (benefit from) income taxes
- In 2021, a benefit of US$1,511 million was recorded, indicating a reduction in tax liabilities, potentially due to tax loss carryforwards or other tax credits. This was followed by a provision of US$88 million in 2022, suggesting a shift towards taxable income. The provision increased steadily to US$452 million in 2023, US$814 million in 2024, and reached US$1,241 million in 2025. This consistent increase suggests growing profitability and a reduced reliance on tax benefits. The provision is projected to further increase to US$2,063 million in 2026.
- Cash operating taxes
- Cash operating taxes began at US$322 million in 2021 and increased to US$403 million in 2022, representing a moderate growth rate. The increase accelerated in 2023 to US$868 million, and continued to US$1,635 million in 2024. A further substantial increase to US$2,531 million is observed in 2025. However, a decrease to US$1,192 million is projected for 2026. This final decrease could be attributable to various factors, including changes in tax laws, tax planning strategies, or a shift in the geographic distribution of income.
- Relationship between Provision and Cash Taxes
- The difference between the provision for income taxes and cash operating taxes indicates the impact of non-cash tax items, such as deferred tax assets and liabilities. In 2021, the significant difference reflects the large tax benefit, while the cash taxes paid were relatively low. As the provision increased from 2022 onwards, the gap between the provision and cash taxes narrowed, suggesting a greater alignment between reported tax expense and actual cash outflows. The projected decrease in cash taxes in 2026, despite a continued increase in the provision, warrants further investigation to understand the underlying drivers.
Overall, the trend suggests a transition from utilizing tax benefits to paying increasingly substantial cash taxes, reflecting improved financial performance. The projected decline in cash operating taxes in 2026 is a notable deviation from the preceding trend and merits further scrutiny.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Invested Capital
Salesforce Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of unearned revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The reported invested capital demonstrates a consistent upward trajectory over the observed period. While fluctuations exist in the components contributing to invested capital, the overall trend indicates increasing financial resources deployed within the business. A detailed examination of the underlying elements reveals specific patterns.
- Total Reported Debt & Leases
- Total reported debt and leases experienced a substantial increase between 2021 and 2022, nearly doubling from US$6,413 million to US$14,370 million. Subsequent years show some moderation, with a decrease in 2024 to US$12,070 million, before rising again to US$17,711 million in 2026. This suggests periods of aggressive debt financing followed by potential deleveraging or reinvestment of debt proceeds.
- Stockholders’ Equity
- Stockholders’ equity exhibited a steady increase from US$41,493 million in 2021 to US$61,173 million in 2025. A slight decrease is observed in 2026, settling at US$59,142 million. This growth indicates increasing retained earnings and/or capital contributions from shareholders, contributing to a stronger equity base.
- Invested Capital
- Invested capital, calculated as the sum of total reported debt & leases and stockholders’ equity, increased from US$53,200 million in 2021 to US$96,559 million in 2026. The rate of increase was most pronounced between 2021 and 2022, mirroring the significant rise in debt. While growth continued in subsequent years, the pace moderated. The consistent expansion of invested capital suggests ongoing investment in operations and strategic initiatives.
The interplay between debt and equity in funding invested capital is noteworthy. The initial surge in invested capital appears heavily reliant on debt financing, while later periods demonstrate a more balanced contribution from both debt and equity. The observed fluctuations in debt levels warrant further investigation to understand the underlying drivers and associated financial implications.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cost of Capital
Salesforce Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 178,093) | 178,093) | ÷ | 194,065) | = | 0.92 | 0.92 | × | 21.23% | = | 19.49% | ||
| Debt and finance lease liabilities3 | 13,235) | 13,235) | ÷ | 194,065) | = | 0.07 | 0.07 | × | 3.46% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 2,737) | 2,737) | ÷ | 194,065) | = | 0.01 | 0.01 | × | 3.40% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 194,065) | 1.00 | 19.71% | ||||||||||
Based on: 10-K (reporting date: 2026-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 280,583) | 280,583) | ÷ | 290,820) | = | 0.96 | 0.96 | × | 21.23% | = | 20.49% | ||
| Debt and finance lease liabilities3 | 7,278) | 7,278) | ÷ | 290,820) | = | 0.03 | 0.03 | × | 2.78% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 2,959) | 2,959) | ÷ | 290,820) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 290,820) | 1.00 | 20.57% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 294,657) | 294,657) | ÷ | 306,593) | = | 0.96 | 0.96 | × | 21.23% | = | 20.41% | ||
| Debt and finance lease liabilities3 | 8,774) | 8,774) | ÷ | 306,593) | = | 0.03 | 0.03 | × | 2.56% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 3,162) | 3,162) | ÷ | 306,593) | = | 0.01 | 0.01 | × | 2.90% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 306,593) | 1.00 | 20.49% | ||||||||||
Based on: 10-K (reporting date: 2024-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 182,950) | 182,950) | ÷ | 196,210) | = | 0.93 | 0.93 | × | 21.23% | = | 19.80% | ||
| Debt and finance lease liabilities3 | 9,773) | 9,773) | ÷ | 196,210) | = | 0.05 | 0.05 | × | 2.54% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 3,487) | 3,487) | ÷ | 196,210) | = | 0.02 | 0.02 | × | 2.60% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 196,210) | 1.00 | 19.94% | ||||||||||
Based on: 10-K (reporting date: 2023-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 195,921) | 195,921) | ÷ | 210,181) | = | 0.93 | 0.93 | × | 21.23% | = | 19.79% | ||
| Debt and finance lease liabilities3 | 10,871) | 10,871) | ÷ | 210,181) | = | 0.05 | 0.05 | × | 2.55% × (1 – 21.00%) | = | 0.10% | ||
| Operating lease liability4 | 3,389) | 3,389) | ÷ | 210,181) | = | 0.02 | 0.02 | × | 2.10% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 210,181) | 1.00 | 19.93% | ||||||||||
Based on: 10-K (reporting date: 2022-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 196,284) | 196,284) | ÷ | 203,010) | = | 0.97 | 0.97 | × | 21.23% | = | 20.53% | ||
| Debt and finance lease liabilities3 | 3,118) | 3,118) | ÷ | 203,010) | = | 0.02 | 0.02 | × | 3.47% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 3,608) | 3,608) | ÷ | 203,010) | = | 0.02 | 0.02 | × | 2.20% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 203,010) | 1.00 | 20.60% | ||||||||||
Based on: 10-K (reporting date: 2021-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Salesforce Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (6,714) | (10,588) | (11,958) | (14,754) | (11,885) | (6,573) | |
| Invested capital2 | 96,559) | 85,579) | 84,311) | 83,692) | 81,940) | 53,200) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -6.95% | -12.37% | -14.18% | -17.63% | -14.50% | -12.36% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | — | 0.70% | 0.34% | 1.12% | 3.99% | 5.81% | |
| Adobe Inc. | — | 13.20% | 0.92% | 1.09% | 6.58% | 8.97% | |
| AppLovin Corp. | — | 28.93% | 1.21% | -20.00% | -26.37% | -29.58% | |
| Cadence Design Systems Inc. | — | -1.28% | -2.87% | 7.18% | 6.59% | 6.80% | |
| Datadog Inc. | — | -8.74% | -9.43% | -5.95% | -11.70% | -3.88% | |
| International Business Machines Corp. | — | -0.82% | -7.67% | -3.61% | -11.36% | -6.21% | |
| Intuit Inc. | 7.83% | -2.91% | -6.58% | -8.63% | -7.52% | 0.11% | |
| Microsoft Corp. | 8.88% | 5.63% | 7.51% | 10.56% | 18.54% | 27.58% | |
| Oracle Corp. | -3.77% | -7.90% | -7.76% | -8.56% | -7.56% | 0.65% | |
| Palantir Technologies Inc. | — | 41.88% | -12.04% | -8.76% | -32.50% | -39.96% | |
| Palo Alto Networks Inc. | -12.79% | -3.82% | 5.37% | 11.50% | 3.53% | -5.17% | |
| ServiceNow Inc. | — | 2.66% | 5.94% | 5.23% | 0.73% | 1.94% | |
| Synopsys Inc. | — | -12.39% | -8.14% | -7.44% | -0.84% | -6.86% | |
| Workday Inc. | -9.43% | -11.52% | -12.93% | -19.15% | -13.98% | -19.23% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -6,714 ÷ 96,559 = -6.95%
4 Click competitor name to see calculations.
The financial performance over the analyzed period is characterized by a consistent negative economic profit, indicating that returns on invested capital remained below the cost of capital. However, the trajectory shows a distinct U-shaped pattern, with a period of deterioration followed by a sustained recovery in value creation metrics.
- Economic Profit Trends
- Economic profit experienced a significant decline from -6,573 million USD in 2021 to a peak deficit of -14,754 million USD in 2023. Following this trough, a consistent recovery trend is observed, with the deficit narrowing to -11,958 million USD in 2024, -10,588 million USD in 2025, and reaching -6,714 million USD by 2026. This indicates a gradual restoration of economic efficiency.
- Invested Capital Dynamics
- A substantial expansion in invested capital occurred between 2021 and 2022, increasing from 53,200 million USD to 81,940 million USD. Capital levels remained relatively stable between 2022 and 2025, fluctuating slightly before rising to 96,559 million USD in 2026. The sharp increase in capital deployment in 2022 correlates with the subsequent widening of the economic profit deficit.
- Economic Spread Ratio Analysis
- The economic spread ratio demonstrates a mirrored trend to economic profit, reaching its most negative point of -17.63% in 2023. A steady improvement followed, with the ratio ascending to -14.18% in 2024 and -12.37% in 2025. By 2026, the ratio shows a significant positive shift to -6.95%, representing the narrowest gap between the return on invested capital and the cost of capital throughout the entire period.
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
Salesforce Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (6,714) | (10,588) | (11,958) | (14,754) | (11,885) | (6,573) | |
| Revenues | 41,525) | 37,895) | 34,857) | 31,352) | 26,492) | 21,252) | |
| Add: Increase (decrease) in unearned revenue | 3,574) | 1,740) | 1,627) | 1,748) | 3,021) | 1,945) | |
| Adjusted revenues | 45,099) | 39,635) | 36,484) | 33,100) | 29,513) | 23,197) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -14.89% | -26.71% | -32.78% | -44.58% | -40.27% | -28.34% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | — | 0.45% | 0.19% | 0.58% | 1.92% | 2.98% | |
| Adobe Inc. | — | 11.94% | 1.04% | 1.37% | 7.67% | 11.17% | |
| AppLovin Corp. | — | 29.73% | 1.17% | -27.38% | -49.38% | -59.23% | |
| Cadence Design Systems Inc. | — | -1.92% | -4.40% | 7.15% | 6.57% | 6.91% | |
| Datadog Inc. | — | -5.18% | -8.56% | -3.72% | -8.10% | -3.08% | |
| International Business Machines Corp. | — | -1.46% | -13.55% | -6.43% | -19.67% | -11.82% | |
| Intuit Inc. | 9.56% | -3.75% | -10.11% | -14.13% | -14.48% | 0.14% | |
| Microsoft Corp. | 14.91% | 8.39% | 10.50% | 12.02% | 17.77% | 22.89% | |
| Oracle Corp. | -9.25% | -15.82% | -14.76% | -16.57% | -13.87% | 1.29% | |
| Palantir Technologies Inc. | — | 21.69% | -10.44% | -4.70% | -54.53% | -65.82% | |
| Palo Alto Networks Inc. | -35.54% | -4.52% | 5.70% | 11.42% | 4.11% | -6.95% | |
| ServiceNow Inc. | — | 2.94% | 4.88% | 4.21% | 0.58% | 1.68% | |
| Synopsys Inc. | — | -72.30% | -13.64% | -10.49% | -1.18% | -10.92% | |
| Workday Inc. | -11.34% | -12.24% | -14.39% | -23.49% | -18.95% | -25.09% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -6,714 ÷ 45,099 = -14.89%
3 Click competitor name to see calculations.
An analysis of the financial performance between January 31, 2021, and January 31, 2026, reveals a period of initial economic value deterioration followed by a consistent recovery trend. While economic profit remained negative throughout the observed timeframe, the magnitude of these losses decreased significantly after a peak deficit in 2023.
- Adjusted Revenue Growth
- A consistent upward trajectory in adjusted revenues is observed, increasing from US$ 23,197 million in 2021 to US$ 45,099 million by 2026. This steady expansion indicates a sustained increase in the scale of operations and market reach over the six-year period.
- Economic Profit Trends
- Economic profit experienced a sharp decline from 2021 to 2023, reaching a minimum of negative US$ 14,754 million. Following this trough, a recovery phase commenced, with the deficit narrowing to negative US$ 6,714 million by 2026. This movement suggests a gradual improvement in the company's ability to cover its cost of capital.
- Economic Profit Margin Dynamics
- The economic profit margin mirrored the trend of absolute economic profit, deteriorating from -28.34% in 2021 to a low of -44.58% in 2023. Subsequently, the margin improved steadily, reaching -14.89% in 2026. The narrowing of this margin indicates enhanced capital efficiency and a trend toward achieving positive economic value added.
The convergence of increasing revenues and narrowing economic losses indicates a strategic shift toward improved value creation. The transition from the 2023 trough to the 2026 projection suggests an increase in operating leverage and a systematic reduction in the gap between actual returns and the required return on 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?