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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

Target Corp., economic profit calculation

US$ in millions

12 months ended:	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Net operating profit after taxes (NOPAT)¹	4,953)	3,821)	7,872)	5,024)	3,896)	3,683)
Cost of capital²	12.14%	12.12%	12.64%	12.54%	11.83%	11.49%
Invested capital³	34,307)	30,226)	30,151)	30,495)	27,256)	26,047)

Economic profit⁴	786)	157)	4,060)	1,199)	673)	690)

Based on: 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), 10-K (reporting date: 2019-02-02).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,953 – 12.14% × 34,307 = 786

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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.	Target Corp. economic profit decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.

Target Corp., NOPAT calculation

US$ in millions

12 months ended:	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Net earnings	4,138)	2,780)	6,946)	4,368)	3,281)	2,937)
Deferred income tax expense (benefit)¹	298)	582)	522)	(184)	178)	322)
Increase (decrease) in equity equivalents²	298)	582)	522)	(184)	178)	322)
Net interest expense	502)	478)	421)	977)	477)	461)
Interest expense, operating lease liability³	152)	103)	90)	86)	92)	85)
Adjusted net interest expense	654)	581)	511)	1,063)	569)	546)
Tax benefit of net interest expense⁴	(137)	(122)	(107)	(223)	(119)	(115)
Adjusted net interest expense, after taxes⁵	517)	459)	404)	840)	449)	431)
(Income) loss from discontinued operations, net of tax⁶	—)	—)	—)	—)	(12)	(7)
Net operating profit after taxes (NOPAT)	4,953)	3,821)	7,872)	5,024)	3,896)	3,683)

Based on: 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), 10-K (reporting date: 2019-02-02).

¹ Elimination of deferred tax expense. See details »

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

³ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,608 × 4.22% = 152

⁴ 2024 Calculation
Tax benefit of net interest expense = Adjusted net interest expense × Statutory income tax rate
= 654 × 21.00% = 137

⁵ Addition of after taxes interest expense to net earnings.

⁶ Elimination of discontinued operations.

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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.	Target Corp. NOPAT decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.

Target Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Provision for income taxes	1,159)	638)	1,961)	1,178)	921)	746)
Less: Deferred income tax expense (benefit)	298)	582)	522)	(184)	178)	322)
Add: Tax savings from net interest expense	137)	122)	107)	223)	119)	115)
Cash operating taxes	998)	178)	1,546)	1,585)	862)	539)

Based on: 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), 10-K (reporting date: 2019-02-02).

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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.	Target Corp. cash operating taxes decreased from 2022 to 2023 but then increased from 2023 to 2024 not reaching 2022 level.

Target Corp., invested capital calculation (financing approach)

US$ in millions

	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Current portion of long-term debt and other borrowings	1,116)	130)	171)	1,144)	161)	1,052)
Long-term debt and other borrowings, excluding current portion	14,922)	16,009)	13,549)	11,536)	11,338)	10,223)
Operating lease liability¹	3,608)	2,934)	2,747)	2,429)	2,475)	2,170)
Total reported debt & leases	19,646)	19,073)	16,467)	15,109)	13,974)	13,445)
Shareholders’ investment	13,432)	11,232)	12,827)	14,440)	11,833)	11,297)
Net deferred tax (assets) liabilities²	2,472)	2,190)	1,561)	970)	1,114)	960)
Equity equivalents³	2,472)	2,190)	1,561)	970)	1,114)	960)
Accumulated other comprehensive (income) loss, net of tax⁴	460)	419)	553)	756)	868)	805)
Adjusted shareholders’ investment	16,364)	13,841)	14,941)	16,166)	13,815)	13,062)
Construction-in-progress⁵	(1,703)	(2,688)	(1,257)	(780)	(533)	(460)
Invested capital	34,307)	30,226)	30,151)	30,495)	27,256)	26,047)

Based on: 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), 10-K (reporting date: 2019-02-02).

¹ Addition of capitalized operating leases.

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

³ Addition of equity equivalents to shareholders’ investment.

⁴ Removal of accumulated other comprehensive income.

⁵ Subtraction of construction-in-progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Target Corp. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Target Corp., cost of capital calculations

Feb 3, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	76,950)	76,950)	÷	96,038)	=	0.80	0.80	×	14.39%	=	11.53%
Debt³	15,480)	15,480)	÷	96,038)	=	0.16	0.16	×	3.85% × (1 – 21.00%)	=	0.49%
Operating lease liability⁴	3,608)	3,608)	÷	96,038)	=	0.04	0.04	×	4.22% × (1 – 21.00%)	=	0.13%
Total:	96,038)					1.00					12.14%

Based on: 10-K (reporting date: 2024-02-03).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 28, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	75,274)	75,274)	÷	93,968)	=	0.80	0.80	×	14.39%	=	11.53%
Debt³	15,760)	15,760)	÷	93,968)	=	0.17	0.17	×	3.84% × (1 – 21.00%)	=	0.51%
Operating lease liability⁴	2,934)	2,934)	÷	93,968)	=	0.03	0.03	×	3.52% × (1 – 21.00%)	=	0.09%
Total:	93,968)					1.00					12.12%

Based on: 10-K (reporting date: 2023-01-28).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 29, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	99,882)	99,882)	÷	117,512)	=	0.85	0.85	×	14.39%	=	12.23%
Debt³	14,883)	14,883)	÷	117,512)	=	0.13	0.13	×	3.50% × (1 – 21.00%)	=	0.35%
Operating lease liability⁴	2,747)	2,747)	÷	117,512)	=	0.02	0.02	×	3.28% × (1 – 21.00%)	=	0.06%
Total:	117,512)					1.00					12.64%

Based on: 10-K (reporting date: 2022-01-29).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	89,043)	89,043)	÷	106,113)	=	0.84	0.84	×	14.39%	=	12.07%
Debt³	14,641)	14,641)	÷	106,113)	=	0.14	0.14	×	3.70% × (1 – 21.00%)	=	0.40%
Operating lease liability⁴	2,429)	2,429)	÷	106,113)	=	0.02	0.02	×	3.54% × (1 – 21.00%)	=	0.06%
Total:	106,113)					1.00					12.54%

Based on: 10-K (reporting date: 2021-01-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Feb 1, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	52,892)	52,892)	÷	68,601)	=	0.77	0.77	×	14.39%	=	11.09%
Debt³	13,234)	13,234)	÷	68,601)	=	0.19	0.19	×	4.12% × (1 – 21.00%)	=	0.63%
Operating lease liability⁴	2,475)	2,475)	÷	68,601)	=	0.04	0.04	×	3.71% × (1 – 21.00%)	=	0.11%
Total:	68,601)					1.00					11.83%

Based on: 10-K (reporting date: 2020-02-01).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Feb 2, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,820)	39,820)	÷	53,819)	=	0.74	0.74	×	14.39%	=	10.65%
Debt³	11,829)	11,829)	÷	53,819)	=	0.22	0.22	×	4.15% × (1 – 21.00%)	=	0.72%
Operating lease liability⁴	2,170)	2,170)	÷	53,819)	=	0.04	0.04	×	3.91% × (1 – 21.00%)	=	0.12%
Total:	53,819)					1.00					11.49%

Based on: 10-K (reporting date: 2019-02-02).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Target Corp., economic spread ratio calculation, comparison to benchmarks

	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	786)	157)	4,060)	1,199)	673)	690)
Invested capital²	34,307)	30,226)	30,151)	30,495)	27,256)	26,047)
Performance Ratio
Economic spread ratio³	2.29%	0.52%	13.47%	3.93%	2.47%	2.65%
Benchmarks
Economic Spread Ratio, Competitors⁴
Costco Wholesale Corp.	—	4.95%	9.00%	7.38%	3.58%	5.47%
Walmart Inc.	3.83%	1.34%	1.87%	3.25%	3.28%	-1.99%

Based on: 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), 10-K (reporting date: 2019-02-02).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 786 ÷ 34,307 = 2.29%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Target Corp. economic spread ratio deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Target Corp., economic profit margin calculation, comparison to benchmarks

	Feb 3, 2024	Jan 28, 2023	Jan 29, 2022	Jan 30, 2021	Feb 1, 2020	Feb 2, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	786)	157)	4,060)	1,199)	673)	690)
Sales	105,803)	107,588)	104,611)	92,400)	77,130)	74,433)
Performance Ratio
Economic profit margin²	0.74%	0.15%	3.88%	1.30%	0.87%	0.93%
Benchmarks
Economic Profit Margin, Competitors³
Costco Wholesale Corp.	—	0.73%	1.28%	1.10%	0.64%	0.88%
Walmart Inc.	0.92%	0.33%	0.52%	0.96%	1.06%	-0.62%

Based on: 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), 10-K (reporting date: 2019-02-02).

¹ Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × 786 ÷ 105,803 = 0.74%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company 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.	Target Corp. economic profit margin deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Target Corp. (NYSE:TGT)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin