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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

TJX Cos. Inc., economic profit calculation

US$ in thousands

	12 months ended:	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

Based on: 10-K (filing date: 2021-03-31), 10-K (filing date: 2020-03-27), 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	TJX Cos. Inc.’s economic profit increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

TJX Cos. Inc., NOPAT calculation

US$ in thousands

	12 months ended:	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in equity equivalents²
	Interest expense, excluding capitalized interest
	Interest expense, operating lease liability³
	Adjusted interest expense, excluding capitalized interest
	Tax benefit of interest expense, excluding capitalized interest⁴
	Adjusted interest expense, excluding capitalized interest, after taxes⁵
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁶
	Investment income, after taxes⁷
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2021-03-31), 10-K (filing date: 2020-03-27), 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in equity equivalents to net income.

³ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

⁴ 2021 Calculation
Tax benefit of interest expense, excluding capitalized interest = Adjusted interest expense, excluding capitalized interest × Statutory income tax rate
= × 21.00% =

⁵ Addition of after taxes interest expense to net income.

⁶ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

⁷ Elimination of after taxes investment income.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	TJX Cos. Inc.’s NOPAT increased from 2019 to 2020 but then decreased significantly from 2020 to 2021.

TJX Cos. Inc., cash operating taxes calculation

US$ in thousands

	12 months ended:	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016
	Provision (benefit) for income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, excluding capitalized interest
	Less: Tax imposed on investment income
	Cash operating taxes

Based on: 10-K (filing date: 2021-03-31), 10-K (filing date: 2020-03-27), 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29).

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	TJX Cos. Inc.’s cash operating taxes decreased from 2019 to 2020 and from 2020 to 2021.

TJX Cos. Inc., invested capital calculation (financing approach)

US$ in thousands

		Jan 30, 2021	Feb 1, 2020	Feb 2, 2019	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016
	Current portion of long-term debt
	Long-term debt, exclusive of current installments
	Operating lease liability¹
	Total reported debt & leases
	Shareholders’ equity
	Net deferred tax (assets) liabilities²
	Equity equivalents³
	Accumulated other comprehensive (income) loss, net of tax⁴
	Adjusted shareholders’ equity
	Short-term investments⁵
	Invested capital

Based on: 10-K (filing date: 2021-03-31), 10-K (filing date: 2020-03-27), 10-K (filing date: 2019-04-03), 10-K (filing date: 2018-04-04), 10-K (filing date: 2017-03-28), 10-K (filing date: 2016-03-29).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of equity equivalents to shareholders’ equity.

⁴ Removal of accumulated other comprehensive income.

⁵ Subtraction of short-term investments.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	TJX Cos. Inc.’s invested capital increased from 2019 to 2020 and from 2020 to 2021.

TJX Cos. Inc., cost of capital calculations


Equity²	÷	=	×		=
Long-term debt, inclusive of current installments³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

Based on: 10-K (filing date: 2021-03-31).

¹ US$ in thousands

² Equity. See details »