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.
Paying user area
Try for free
Sherwin-Williams Co. pages available for free this week:
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Sherwin-Williams Co. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Sherwin-Williams Co., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 period under review demonstrates fluctuating financial performance as measured by economic profit. Net operating profit after taxes (NOPAT) generally increased over the five-year span, while the cost of capital remained relatively stable with some variation. Invested capital exhibited an initial increase followed by a decrease and then a substantial rise in the final year. However, economic profit remained negative throughout the period, indicating that the company’s returns did not exceed its cost of capital.
- NOPAT Trend
- Net operating profit after taxes increased from US$2,357,407 thousand in 2021 to US$3,193,137 thousand in 2025. Growth was consistent year-over-year, with a notable increase between 2023 and 2024. This suggests improving operational efficiency or increased sales volume.
- Cost of Capital Trend
- The cost of capital experienced minor fluctuations, beginning at 17.74% in 2021, decreasing to 17.56% in 2022, increasing to 18.31% in 2023, peaking at 18.50% in 2024, and then decreasing slightly to 18.34% in 2025. These changes are relatively small and do not appear to be a primary driver of the economic profit trend.
- Invested Capital Trend
- Invested capital rose from US$15,808,100 thousand in 2021 to US$17,346,300 thousand in 2022, then decreased to US$16,412,900 thousand in 2023, before increasing significantly to US$19,297,800 thousand in 2025. The substantial increase in invested capital in the final year, coupled with the continued negative economic profit, suggests that new investments are not yet generating sufficient returns.
- Economic Profit Trend
- Economic profit was negative for all five years, ranging from a low of US$-567,995 thousand in 2022 to a high of US$-129,145 thousand in 2024. While the magnitude of the loss decreased in 2024, it increased again in 2025 to US$-345,875 thousand. This indicates that, despite increasing NOPAT, the company’s returns on invested capital have consistently fallen short of the cost of capital. The widening gap in 2025, despite higher NOPAT, is attributable to the significant increase in invested capital.
In summary, while the company demonstrates growth in net operating profit, its inability to generate a positive economic profit suggests a need to evaluate capital allocation strategies and improve returns on investment. The increasing invested capital without a corresponding improvement in economic profit warrants further investigation.
Net Operating Profit after Taxes (NOPAT)
Sherwin-Williams Co., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for current expected credit losses.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrual for product warranty claims.
5 Addition of increase (decrease) in restructuring initiatives.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
9 Addition of after taxes interest expense to net income.
10 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
11 Elimination of after taxes investment income.
Net income and net operating profit after taxes (NOPAT) both demonstrate positive performance over the analyzed period. While net income experienced a slight decrease in the most recent year, NOPAT consistently increased, suggesting improvements in core operational profitability. The divergence between the two metrics warrants further investigation.
- NOPAT Trend
- NOPAT exhibited a consistent upward trend from 2021 through 2025. Starting at US$2,357,407 thousand in 2021, it increased to US$2,478,341 thousand in 2022, and US$2,509,420 thousand in 2023. The rate of increase accelerated in 2024, reaching US$2,962,399 thousand, and continued to rise to US$3,193,137 thousand in 2025. This indicates strengthening operational efficiency and profitability.
- Net Income Trend
- Net income also generally increased from 2021 to 2024. It rose from US$1,864,400 thousand in 2021 to US$2,020,100 thousand in 2022, and US$2,388,800 thousand in 2023. A further increase was observed in 2024, reaching US$2,681,400 thousand. However, net income decreased in 2025 to US$2,568,500 thousand, representing a potential shift in factors impacting overall profitability beyond core operations.
- Relationship between NOPAT and Net Income
- From 2021 to 2024, NOPAT consistently exceeded net income. This difference could be attributed to factors such as interest expense, non-operating income or expenses, and tax implications. The widening gap between NOPAT and net income in 2024 and 2025, coupled with the decline in net income in 2025, suggests that non-operating factors are increasingly influencing the bottom line. Further analysis is needed to determine the specific drivers of this divergence.
The sustained growth in NOPAT is a positive indicator of the company’s core business performance. However, the recent decrease in net income, despite continued NOPAT growth, suggests a need to investigate factors impacting overall profitability beyond operational efficiency.
Cash Operating Taxes
Sherwin-Williams Co., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The provisions for income taxes and cash operating taxes both demonstrate an increasing trend from 2021 to 2023, followed by stabilization and a decrease in the most recent year presented. A more detailed examination reveals differing patterns between the two measures.
- Provisions for Income Taxes
- Provisions for income taxes increased from US$384.2 million in 2021 to US$721.1 million in 2023, representing a substantial rise over the two-year period. Growth slowed in 2024, with provisions reaching US$770.4 million, and then decreased slightly to US$769.7 million in 2025. This suggests a potential stabilization of tax obligations after a period of significant increase.
- Cash Operating Taxes
- Cash operating taxes exhibited a similar upward trajectory from 2021 to 2023, increasing from US$545.6 million to US$908.0 million. The rate of increase was notably higher than that of provisions for income taxes. Like provisions, growth moderated in 2024, reaching US$948.1 million, before experiencing a more pronounced decrease to US$731.4 million in 2025. This decline is more substantial than the decrease observed in provisions for income taxes.
The divergence between the two measures in 2025 is noteworthy. The larger decrease in cash operating taxes compared to provisions for income taxes could indicate factors such as tax credits, changes in tax planning strategies, or timing differences between reported provisions and actual cash outflows. Further investigation would be required to determine the underlying causes of this difference.
- Overall Trend
- Both measures initially increased, likely reflecting increased profitability or changes in the tax environment. The subsequent stabilization and decrease in 2025 suggest a potential shift in the company’s tax position or a response to evolving economic conditions. The differing magnitudes of change between provisions and cash taxes warrant further scrutiny to understand the drivers of these trends and their impact on economic value added.
Invested Capital
Sherwin-Williams Co., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of LIFO reserve. See details »
5 Addition of accrual for product warranty claims.
6 Addition of restructuring initiatives.
7 Addition of equity equivalents to shareholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
The invested capital of the company demonstrates a generally increasing trend over the five-year period, though with some fluctuation. Total reported debt & leases and shareholders’ equity both contribute to this invested capital figure, and their individual movements influence the overall trend.
- Invested Capital Trend
- Invested capital increased from US$15,808.1 million in 2021 to US$17,346.3 million in 2022, representing a significant rise. A decrease was then observed in 2023, falling to US$16,412.9 million. This was followed by a modest increase in 2024 to US$16,707.9 million, before a more substantial increase in 2025, reaching US$19,297.8 million. The 2025 value represents the highest level of invested capital over the observed period.
- Debt & Leases
- Total reported debt & leases generally increased throughout the period. From US$11,495.4 million in 2021, it rose to US$12,507.9 million in 2022. A decrease occurred in 2023 to US$11,809.7 million, followed by a slight increase in 2024 to US$12,102.6 million. The most significant increase was observed between 2024 and 2025, with debt & leases reaching US$13,138.0 million.
- Shareholders’ Equity
- Shareholders’ equity exhibited consistent growth throughout the period. It increased from US$2,437.2 million in 2021 to US$3,102.1 million in 2022, US$3,715.8 million in 2023, US$4,051.2 million in 2024, and finally to US$4,598.3 million in 2025. This represents a steady and substantial increase in equity over the five years.
The fluctuations in invested capital appear to be influenced by both debt and equity levels. While debt experienced a dip in 2023, equity continued to grow, partially offsetting the decrease. The substantial increase in invested capital in 2025 is attributable to increases in both debt & leases and shareholders’ equity.
Cost of Capital
Sherwin-Williams Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in thousands
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 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
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 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
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 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
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 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Sherwin-Williams Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Linde plc | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited a fluctuating, yet generally improving, trend over the five-year period. Initially negative, the ratio demonstrates a move towards greater profitability relative to the cost of capital, although it remains negative throughout the observed timeframe.
- Economic Spread Ratio
- In 2021, the economic spread ratio was -2.82%. This indicates that the company’s return on invested capital was 2.82% lower than its cost of capital. The ratio worsened to -3.27% in 2022, suggesting a further decline in value creation relative to invested funds.
- A slight improvement was noted in 2023, with the ratio moving to -3.03%. However, a significant positive shift occurred in 2024, with the ratio increasing to -0.77%. This represents the closest the company came to achieving a positive economic spread during the period.
- The trend reversed somewhat in 2025, with the economic spread ratio declining to -1.79%. While still negative, this value remains considerably better than the ratios observed in 2021, 2022, and 2023.
The economic profit consistently registered as a negative value throughout the period, mirroring the negative economic spread ratios. The magnitude of the economic profit losses decreased substantially from 2022 to 2024, before increasing again in 2025. This suggests that while value creation improved in 2024, it did not fully offset the cost of capital.
- Invested Capital
- Invested capital increased from US$15,808,100 thousand in 2021 to US$17,346,300 thousand in 2022, representing a notable expansion of the capital base. A decrease was observed in 2023, with invested capital falling to US$16,412,900 thousand.
- A modest increase occurred in 2024, reaching US$16,707,900 thousand. The most substantial increase in invested capital occurred in 2025, rising to US$19,297,800 thousand. This increase in capital deployment occurred alongside a less favorable economic spread ratio compared to 2024, potentially indicating a less efficient allocation of capital in the latest year.
The interplay between the economic spread ratio and invested capital suggests a complex relationship. While the company has been increasing its investment base, its ability to generate returns exceeding the cost of capital has been inconsistent. The improvement in the economic spread ratio in 2024 is a positive sign, but the subsequent decline in 2025 warrants further investigation.
Economic Profit Margin
Sherwin-Williams Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Linde plc | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited a fluctuating, yet generally improving, trend over the five-year period. Initially negative, the margin demonstrated a move towards profitability, although remaining in negative territory throughout the analyzed timeframe.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at -2.24%. This figure deteriorated to -2.56% in 2022, representing the lowest point in the observed period. A subsequent improvement was noted in 2023, with the margin increasing to -2.15%. The most significant positive change occurred in 2024, where the margin substantially improved to -0.56%. However, this progress was partially offset in 2025, as the margin decreased to -1.47%.
The economic profit itself mirrored this pattern. While consistently negative, the absolute value of the economic profit decreased from US$446,497 thousand in 2021 to US$129,145 thousand in 2024, before increasing again to US$345,875 thousand in 2025. This suggests that while the company consistently failed to generate returns exceeding its cost of capital, the magnitude of this shortfall lessened considerably in 2024.
- Relationship between Net Sales and Economic Profit Margin
- Net sales increased steadily from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025. Despite this consistent growth in revenue, the economic profit margin remained negative, indicating that the increase in sales was not sufficient to offset the cost of capital. The substantial improvement in the margin in 2024 occurred with only a modest increase in net sales, suggesting operational efficiencies or cost management initiatives may have contributed to the positive shift.
The movement from -2.56% to -0.56% in the economic profit margin between 2022 and 2024 is a key observation. The subsequent increase to -1.47% in 2025 warrants further investigation to determine the underlying factors contributing to this reversal. Overall, the trend suggests a potential, though incomplete, improvement in the company’s ability to generate economic profit.