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
TJX Cos. Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
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
= 5,082 – 15.07% × 22,612 = 1,674
The financial performance, as measured by economic profit, exhibits considerable fluctuation over the observed period. Net operating profit after taxes (NOPAT) initially decreased significantly, followed by a recovery and subsequent growth. The cost of capital consistently increased throughout the period, while invested capital showed an initial rise, a subsequent decline, and then resumed an upward trajectory.
- Economic Profit Trend
- Economic profit experienced a substantial decline from US$952 million in 2020 to a loss of US$2,833 million in 2021. A recovery was observed in 2022, with economic profit reaching US$833 million, and continued to improve to US$857 million in 2023. Further growth is evident in 2024 and 2025, with economic profit reaching US$1,508 million and US$1,674 million respectively. This indicates improving value creation in the later years of the period.
- NOPAT Analysis
- NOPAT decreased dramatically from US$3,536 million in 2020 to US$270 million in 2021. However, NOPAT rebounded strongly to US$3,612 million in 2022 and continued to increase, reaching US$3,803 million in 2023, US$4,636 million in 2024, and US$5,082 million in 2025. This suggests a recovery in operational profitability following the initial downturn.
- Cost of Capital Progression
- The cost of capital demonstrated a consistent upward trend throughout the period, increasing from 13.80% in 2020 to 15.07% in 2025. This increase in the cost of capital likely reflects broader economic conditions and potentially increased risk perception. The rising cost of capital places greater pressure on generating sufficient returns to cover investment costs.
- Invested Capital Fluctuations
- Invested capital increased from US$18,717 million in 2020 to US$22,428 million in 2021, then decreased to US$19,742 million in 2022. It subsequently rose to US$20,404 million in 2023, US$21,125 million in 2024, and US$22,612 million in 2025. These fluctuations may be attributable to capital allocation decisions, asset sales, or changes in working capital requirements.
The positive correlation between NOPAT growth and economic profit improvement in the later years suggests that operational performance is a key driver of value creation. However, the increasing cost of capital necessitates continued focus on profitability and efficient capital allocation to maintain and enhance economic profit.
Net Operating Profit after Taxes (NOPAT)
TJX Cos. Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in deferred gift card revenue.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 9,912 × 3.60% = 357
5 2025 Calculation
Tax benefit of interest expense, excluding capitalized interest = Adjusted interest expense, excluding capitalized interest × Statutory income tax rate
= 433 × 21.00% = 91
6 Addition of after taxes interest expense to net income.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 257 × 21.00% = 54
8 Elimination of after taxes investment income.
The financial data reveals significant fluctuations and an overall upward trajectory in key profitability measures over the analyzed periods.
- Net Income
- Net income shows a sharp decline from 3,272 million US dollars in early 2020 to just 90 million in early 2021, indicating a substantial drop in profitability during that period. However, from 2021 onwards, net income exhibited a strong recovery and consistent growth, rising to 3,283 million in early 2022 and steadily increasing each subsequent year to reach 4,864 million by early 2025.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT follows a similar pattern to net income, with a considerable decrease to 270 million in early 2021 from 3,536 million in early 2020. After this low point, NOPAT experienced a robust rebound and a steady upward trend, increasing to 3,612 million in early 2022 and further climbing to 5,082 million by early 2025.
- Trend Analysis
- Both net income and NOPAT demonstrate a drastic downturn in the 2021 fiscal period, likely reflecting an extraordinary event or disruption impacting profitability. Following this period, both metrics recover strongly and exhibit sustained growth through to 2025, surpassing pre-2021 levels significantly. This recovery and growth suggest improved operational efficiency or favorable business conditions contributing to enhanced financial performance.
Cash Operating Taxes
TJX Cos. Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
The analysis of the annual financial data reveals notable fluctuations and an overall upward trend in key tax-related metrics over the observed periods.
- Provision (benefit) for income taxes
- The provision for income taxes displays significant variability across the years. Initially, a positive provision of 1134 million US dollars was observed in early 2020, followed by a sharp decline to a negative amount of 1 million US dollars in early 2021, indicating a tax benefit or reversal during that period. Subsequently, the provision returned to positive values, increasing from 1115 million US dollars in early 2022 to 1138 million in early 2023. The trend continued upward with a marked increase to 1493 million in early 2024 and further to 1619 million in early 2025. This pattern suggests recovery from an anomalous tax benefit year and a strengthening in tax expense recognition thereafter.
- Cash operating taxes
- Cash operating taxes follow a somewhat parallel trend to the provision for income taxes but with less volatility. There was a decline from 1199 million US dollars in early 2020 to 320 million in early 2021, reflecting a considerable reduction in cash tax payments during that year. From early 2021, cash operating taxes increased notably, reaching 1229 million in early 2022, before slightly decreasing to 1128 million in early 2023. A substantial rise is observed in early 2024 and 2025, climbing to 1532 million and 1628 million, respectively. This rising trend indicates increased cash outflows related to tax obligations in the later periods.
Overall, the data depicts a year of unusual tax benefits or adjustments in 2021, followed by steady increases in both tax provisions and cash taxes, culminating in higher tax expenses and payments by 2024 and 2025. This trend may reflect changes in earnings, tax regulations, or strategic tax planning impacting the company's tax-related financial metrics over the period analyzed.
Invested Capital
TJX Cos. Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of deferred gift card revenue.
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
- Total Reported Debt & Leases
- The total reported debt and leases increased significantly from 11,464 million USD in early 2020 to a peak of 15,503 million USD in early 2021. Following this peak, the debt level decreased notably to 12,507 million USD in early 2022 and then remained relatively stable around the 12,500 to 12,800 million USD range through early 2025.
- Shareholders’ Equity
- Shareholders’ equity exhibited a generally upward trend over the period. Starting at 5,948 million USD in 2020, there was a slight decline by early 2021 to 5,833 million USD, followed by a consistent increase thereafter. By early 2025, equity reached 8,393 million USD, marking a significant growth from the initial value.
- Invested Capital
- Invested capital followed a pattern similar to total debt and leases, rising sharply from 18,717 million USD in 2020 to 22,428 million USD in 2021. Subsequently, it decreased to 19,742 million USD in 2022 and then experienced gradual growth over the following years, reaching 22,612 million USD by 2025. This indicates a period of increased investment around 2021, followed by stabilization and moderate growth.
Cost of Capital
TJX Cos. Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 139,559) | 139,559) | ÷ | 152,105) | = | 0.92 | 0.92 | × | 16.19% | = | 14.85% | ||
| Long-term debt, inclusive of current maturities3 | 2,634) | 2,634) | ÷ | 152,105) | = | 0.02 | 0.02 | × | 2.56% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 9,912) | 9,912) | ÷ | 152,105) | = | 0.07 | 0.07 | × | 3.60% × (1 – 21.00%) | = | 0.19% | ||
| Total: | 152,105) | 1.00 | 15.07% | ||||||||||
Based on: 10-K (reporting date: 2025-02-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 110,216) | 110,216) | ÷ | 122,526) | = | 0.90 | 0.90 | × | 16.19% | = | 14.56% | ||
| Long-term debt, inclusive of current maturities3 | 2,630) | 2,630) | ÷ | 122,526) | = | 0.02 | 0.02 | × | 2.56% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 9,680) | 9,680) | ÷ | 122,526) | = | 0.08 | 0.08 | × | 3.30% × (1 – 21.00%) | = | 0.21% | ||
| Total: | 122,526) | 1.00 | 14.81% | ||||||||||
Based on: 10-K (reporting date: 2024-02-03).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 88,229) | 88,229) | ÷ | 100,728) | = | 0.88 | 0.88 | × | 16.19% | = | 14.18% | ||
| Long-term debt, inclusive of current maturities3 | 3,114) | 3,114) | ÷ | 100,728) | = | 0.03 | 0.03 | × | 2.55% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 9,385) | 9,385) | ÷ | 100,728) | = | 0.09 | 0.09 | × | 2.70% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 100,728) | 1.00 | 14.44% | ||||||||||
Based on: 10-K (reporting date: 2023-01-28).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 72,864) | 72,864) | ÷ | 85,516) | = | 0.85 | 0.85 | × | 16.19% | = | 13.79% | ||
| Long-term debt, inclusive of current maturities3 | 3,500) | 3,500) | ÷ | 85,516) | = | 0.04 | 0.04 | × | 2.55% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 9,152) | 9,152) | ÷ | 85,516) | = | 0.11 | 0.11 | × | 2.40% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 85,516) | 1.00 | 14.08% | ||||||||||
Based on: 10-K (reporting date: 2022-01-29).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 79,775) | 79,775) | ÷ | 95,850) | = | 0.83 | 0.83 | × | 16.19% | = | 13.47% | ||
| Long-term debt, inclusive of current maturities3 | 6,654) | 6,654) | ÷ | 95,850) | = | 0.07 | 0.07 | × | 2.94% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 9,421) | 9,421) | ÷ | 95,850) | = | 0.10 | 0.10 | × | 2.60% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 95,850) | 1.00 | 13.83% | ||||||||||
Based on: 10-K (reporting date: 2021-01-30).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 56,052) | 56,052) | ÷ | 67,580) | = | 0.83 | 0.83 | × | 16.19% | = | 13.42% | ||
| Long-term debt, inclusive of current maturities3 | 2,300) | 2,300) | ÷ | 67,580) | = | 0.03 | 0.03 | × | 2.51% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 9,228) | 9,228) | ÷ | 67,580) | = | 0.14 | 0.14 | × | 2.90% × (1 – 21.00%) | = | 0.31% | ||
| Total: | 67,580) | 1.00 | 13.80% | ||||||||||
Based on: 10-K (reporting date: 2020-02-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, inclusive of current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
TJX Cos. Inc., economic spread ratio calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 1,674) | 1,508) | 857) | 833) | (2,833) | 952) | |
| Invested capital2 | 22,612) | 21,125) | 20,404) | 19,742) | 22,428) | 18,717) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 7.40% | 7.14% | 4.20% | 4.22% | -12.63% | 5.09% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Amazon.com Inc. | -1.77% | -5.41% | -10.93% | -21.87% | -2.11% | — | |
| Home Depot Inc. | 7.24% | 13.24% | 17.29% | 21.74% | 12.59% | 19.85% | |
| Lowe’s Cos. Inc. | 15.33% | 18.09% | 13.12% | 21.04% | 8.60% | 5.37% | |
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,674 ÷ 22,612 = 7.40%
4 Click competitor name to see calculations.
The economic spread ratio exhibited considerable fluctuation over the observed period. Initially, the ratio stood at 5.09% in February 2020, indicating a positive spread between the return on invested capital and the cost of capital. A significant decline followed in January 2021, with the ratio falling to -12.63%, signifying that returns were insufficient to cover the cost of capital. Subsequent years demonstrated a recovery, with the ratio increasing to 4.22% in January 2022 and remaining relatively stable at 4.20% in January 2023. Further improvement was noted in February 2024, reaching 7.14%, and continuing to 7.40% in February 2025, suggesting a strengthening of profitability relative to invested capital.
- Economic Spread Ratio Trend
- The economic spread ratio demonstrates a clear pattern of initial strength, followed by a substantial downturn, and then a period of recovery and growth. The negative value in January 2021 is a notable outlier, representing a period where the company’s invested capital generated returns below its cost. The subsequent increases suggest improved capital allocation and/or operational efficiency.
Economic profit mirrored the fluctuations in the economic spread ratio. A positive economic profit of US$952 million was recorded in February 2020, followed by a substantial loss of US$2,833 million in January 2021. Economic profit then recovered to US$833 million in January 2022 and US$857 million in January 2023, before increasing to US$1,508 million in February 2024 and US$1,674 million in February 2025. This correlation between economic profit and the economic spread ratio is expected, as the ratio is a percentage representation of the relationship between the two.
- Invested Capital
- Invested capital generally increased throughout the period, rising from US$18,717 million in February 2020 to US$22,612 million in February 2025. This growth in invested capital occurred alongside the recovery in the economic spread ratio, indicating that the company was able to deploy additional capital more effectively over time. The increase was not linear, with a slight decrease observed between January 2021 and January 2022.
The consistent upward trend in both economic profit and the economic spread ratio in the later years of the period suggests improving financial performance and value creation. The company appears to have successfully addressed the challenges experienced in January 2021, demonstrating an ability to generate returns exceeding the cost of capital.
Economic Profit Margin
TJX Cos. Inc., economic profit margin calculation, comparison to benchmarks
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 1,674) | 1,508) | 857) | 833) | (2,833) | 952) | |
| Net sales | 56,360) | 54,217) | 49,936) | 48,550) | 32,137) | 41,717) | |
| Add: Increase (decrease) in deferred gift card revenue | 51) | 52) | 36) | 109) | 75) | 51) | |
| Adjusted net sales | 56,411) | 54,269) | 49,972) | 48,659) | 32,212) | 41,768) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 2.97% | 2.78% | 1.71% | 1.71% | -8.79% | 2.28% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Amazon.com Inc. | -1.17% | -3.16% | -6.16% | -11.41% | -0.91% | — | |
| Home Depot Inc. | 3.31% | 4.85% | 6.08% | 6.91% | 4.74% | 6.59% | |
| Lowe’s Cos. Inc. | 4.82% | 5.44% | 3.35% | 5.72% | 2.72% | 1.99% | |
Based on: 10-K (reporting date: 2025-02-01), 10-K (reporting date: 2024-02-03), 10-K (reporting date: 2023-01-28), 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 1,674 ÷ 56,411 = 2.97%
3 Click competitor name to see calculations.
The economic profit margin exhibited considerable fluctuation over the observed period. Initial profitability was followed by a substantial decline, then a recovery, and ultimately, continued improvement. A detailed examination of the trends reveals key insights into the company’s financial performance.
- Economic Profit Margin Trend
- The economic profit margin began at 2.28% in February 2020. A significant decrease was then recorded, resulting in a negative margin of -8.79% in January 2021. This represents a period of economic loss. The margin partially recovered to 1.71% in January 2022 and remained stable at the same level in January 2023. Further improvement was observed in February 2024, with the margin increasing to 2.78%, and continued into February 2025, reaching 2.97%.
The negative economic profit margin in January 2021 suggests that the company’s returns were insufficient to cover its cost of capital during that period. The subsequent recovery and consistent growth in the margin through February 2025 indicate improving efficiency in generating returns relative to the capital employed. The increase in the economic profit margin correlates with increases in adjusted net sales, suggesting a positive relationship between revenue generation and profitability.
- Relationship to Adjusted Net Sales
- Adjusted net sales decreased from US$41,768 million in February 2020 to US$32,212 million in January 2021, coinciding with the lowest economic profit margin. Sales then increased substantially to US$48,659 million in January 2022 and continued to grow, reaching US$56,411 million in February 2025. This upward trend in sales appears to support the observed improvement in the economic profit margin.
The company demonstrated a capacity to recover from a period of economic loss and achieve increasing profitability as evidenced by the economic profit margin. The positive correlation between adjusted net sales and the economic profit margin suggests that revenue growth is a key driver of improved financial performance.