TJX Cos. Inc. (TJX)

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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
Economic Profit Margin

TJX Cos. Inc., economic profit calculation

USD $ in thousands

12 months ended	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
Net operating profit after taxes (NOPAT)¹
Cost of capital²	%	%	%	%	%	%
Invested capital³

Economic profit⁴

Source: Based on data from TJX Cos. Inc. Annual Reports

2018 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden % × hidden = hidden

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 declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

TJX Cos. Inc., NOPAT calculation

USD $ in thousands

	12 months ended	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in equity equivalents²
	Interest expense, excluding capitalized interest
	Interest expense, operating lease obligations³
	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)

Source: Based on data from TJX Cos. Inc. Annual Reports

2018 Calculations

¹ Elimination of deferred tax expense. See Details »

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

³ Addition of interest expense on capitalized operating leases. See Details »

⁴ Tax benefit of interest expense, excluding capitalized interest = Adjusted interest expense, excluding capitalized interest × Statutory income tax rate
= hidden × 34% = hidden

⁵ Addition of after taxes interest expense to net income.

⁶ Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 34% = hidden

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 declined from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

TJX Cos. Inc., cash operating taxes calculation

USD $ in thousands

	12 months ended	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
	Provision 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

Source: Based on data from TJX Cos. Inc. Annual Reports

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 increased from 2016 to 2017 but then slightly declined from 2017 to 2018 not reaching 2016 level.

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

USD $ in thousands

		Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
	Long-term debt
	PV of operating lease payments¹
	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

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ Addition of capitalized operating leases. See Details »

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 2016 to 2017 and from 2017 to 2018.

TJX Cos. Inc., cost of capital calculations


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 34%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 34%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from TJX Cos. Inc. Annual Reports

¹ USD $ in thousands

² Equity. See Details »

³ Long-term debt. See Details »

⁴ PV of operating lease payments. See Details »

TJX Cos. Inc., economic spread calculation

	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
Selected Financial Data (USD $ in thousands)
Economic profit¹
Invested capital²
Ratio
Economic spread³	%	%	%	%	%	%

Source: Based on data from TJX Cos. Inc. Annual Reports

2018 Calculations

¹ Economic profit. See Details »

² Invested capital. See Details »

³ Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Economic spread	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	TJX Cos. Inc.'s economic spread deteriorated from 2016 to 2017 and from 2017 to 2018.

TJX Cos. Inc., economic profit margin calculation

	Feb 3, 2018	Jan 28, 2017	Jan 30, 2016	Jan 31, 2015	Feb 1, 2014	Feb 2, 2013
Selected Financial Data (USD $ in thousands)
Economic profit¹
Net sales
Ratio
Economic profit margin²	%	%	%	%	%	%

Source: Based on data from TJX Cos. Inc. Annual Reports

2018 Calculations

¹ Economic profit. See Details »

² Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company's profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	TJX Cos. Inc.'s economic profit margin deteriorated from 2016 to 2017 and from 2017 to 2018.

	TJX Cos. Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Feb 3, 2018

Jan 28, 2017

Jan 30, 2016

Jan 31, 2015

Feb 1, 2014

Feb 2, 2013

Economic Spread

Economic Profit Margin