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
Verizon Communications Inc., economic profit calculation
US$ in millions
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
= 25,872 – 7.68% × 329,613 = 559
The financial trajectory of economic profit exhibits significant volatility over the five-year period, characterized by a transition from value creation to value destruction in 2023, followed by a partial recovery that remains fragile. While operational profitability has rebounded from a mid-period trough, the simultaneous increase in the capital base and the cost of capital has constrained the ability to generate substantial economic value.
- Net Operating Profit After Taxes (NOPAT)
- A fluctuating trend is observed in operational earnings. After a decline from 29,903 million USD in 2021 to a low of 19,450 million USD in 2023, NOPAT recovered to 25,872 million USD by 2025. This indicates a recovery in core operational efficiency following a sharp contraction in 2023.
- Invested Capital and Cost of Capital
- Invested capital demonstrates a consistent upward trend, growing from 290,004 million USD in 2021 to 329,613 million USD in 2025. Concurrently, the cost of capital has remained relatively stable, though a slight upward movement is noted in the final two years, reaching 7.68% in 2025. The steady expansion of the capital base increases the threshold of NOPAT required to maintain positive economic profit.
- Economic Profit Performance
- Economic profit experienced a sharp decline, falling from 7,878 million USD in 2021 to a negative 3,207 million USD in 2023, signaling a period where the return on invested capital fell below the cost of capital. Although the figure returned to positive territory in 2024 at 1,577 million USD, it declined again to 559 million USD in 2025.
- Analysis of Value Divergence
- A divergence is observable in 2025; despite an increase in NOPAT, economic profit decreased. This is attributed to the accelerated growth in invested capital and the rise in the cost of capital, which together increased the total capital charge more rapidly than the growth in operational profit. Consequently, the marginal return on the new capital invested in 2025 failed to exceed the cost of that capital, leading to a compression of the overall economic profit.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
Verizon Communications Inc., NOPAT calculation
US$ in millions
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 credit losses.
3 Addition of increase (decrease) in equity equivalents to net income attributable to Verizon.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 23,493 × 4.30% = 1,010
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 7,704 × 21.00% = 1,618
6 Addition of after taxes interest expense to net income attributable to Verizon.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 329 × 21.00% = 69
8 Elimination of after taxes investment income.
Net income attributable to Verizon and Net Operating Profit After Taxes (NOPAT) both exhibited fluctuations over the five-year period. NOPAT generally tracked above net income, as expected, reflecting the adjustments made to arrive at an operating profit figure. A notable decline in both metrics occurred between 2021 and 2023, followed by recoveries in subsequent years.
- NOPAT Trend
- NOPAT decreased from US$29,903 million in 2021 to US$19,450 million in 2023, representing a substantial reduction. This decline suggests a weakening in core operational profitability during this period. However, NOPAT rebounded in 2024 to US$24,675 million and continued to increase to US$25,872 million in 2025, indicating a recovery in operating performance. The 2024 and 2025 values, while improved, did not reach the levels observed in 2021.
- Relationship between NOPAT and Net Income
- The difference between NOPAT and net income attributable to Verizon varied across the period. In 2021, NOPAT exceeded net income by approximately US$7,838 million. This difference narrowed in 2022 to around US$6,783 million. The gap widened significantly in 2023, with NOPAT exceeding net income by US$7,836 million, likely due to the more pronounced decline in net income. In 2024, the difference was approximately US$7,129 million, and in 2025, it was around US$8,698 million. These variations suggest changes in non-operating items or tax impacts influencing the disparity between the two profit measures.
The recovery in NOPAT during 2024 and 2025 is a positive sign, but the levels remain below the 2021 peak. Further investigation would be required to understand the drivers behind the initial decline and the subsequent recovery in NOPAT, including analysis of revenue growth, operating expenses, and tax rates.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cash Operating Taxes
Verizon Communications Inc., cash operating taxes calculation
US$ in millions
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 income tax provision and cash operating taxes exhibited distinct trends over the five-year period. While the income tax provision generally decreased then stabilized, cash operating taxes demonstrated more volatility.
- Income Tax Provision
- The income tax provision decreased from US$6,802 million in 2021 to US$6,523 million in 2022, representing a 4.1% decline. A more substantial decrease was observed in 2023, falling to US$4,892 million. This trend reversed slightly in 2024, with the provision increasing to US$5,030 million, and continued with a further increase to US$5,064 million in 2025. Overall, the income tax provision shows an initial decline followed by a period of relative stability.
- Cash Operating Taxes
- Cash operating taxes increased significantly from US$3,436 million in 2021 to US$4,451 million in 2022, a rise of 29.6%. This was followed by a decrease to US$3,774 million in 2023. A substantial increase occurred in 2024, reaching US$5,750 million, before decreasing to US$4,273 million in 2025. The fluctuations in cash operating taxes suggest potential impacts from changes in tax laws, deferred tax asset realization, or timing differences between book and tax accounting.
The divergence between the income tax provision and cash operating taxes is notable. The income tax provision, representing the accounting expense, decreased initially and then stabilized, while cash operating taxes experienced larger swings. This difference suggests that non-cash components of the income tax provision, such as deferred taxes, play a significant role in the overall tax expense recognition. The increase in cash operating taxes in 2024, followed by a decrease in 2025, warrants further investigation to understand the underlying drivers of these changes.
- Relationship between Items
- In 2021, cash operating taxes were approximately 50.5% of the income tax provision. This percentage increased to 68.2% in 2022, decreased to 77.1% in 2023, rose to 114.3% in 2024, and then decreased to 84.3% in 2025. These shifts in the ratio indicate a changing relationship between reported tax expense and actual cash outflows for taxes.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Invested Capital
Verizon Communications Inc., invested capital calculation (financing approach)
US$ in millions
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 equity equivalents to equity attributable to Verizon.
5 Removal of accumulated other comprehensive income.
6 Subtraction of work in progress.
7 Subtraction of marketable securities.
The reported invested capital exhibited an overall increasing trend between December 31, 2021, and December 31, 2025. However, this progression was not consistently upward, with some fluctuations observed during the period.
- Invested Capital Trend
- Invested capital began at US$290,004 million in 2021 and increased to US$301,478 million in 2022, representing a growth of approximately 3.9%. A further, albeit smaller, increase was noted in 2023, reaching US$304,400 million. The upward trend continued in 2024, with invested capital reaching US$307,881 million. A more substantial increase occurred between 2024 and 2025, with invested capital rising to US$329,613 million, marking the highest value within the observed timeframe.
- Debt & Leases
- Total reported debt and leases generally decreased from US$177,930 million in 2021 to US$168,357 million in 2024. However, an increase was observed in 2025, with debt and leases rising to US$181,643 million. This suggests a potential shift in financing strategy or increased borrowing activity towards the end of the period.
- Equity Attributable to Verizon
- Equity attributable to Verizon demonstrated consistent growth throughout the period. Starting at US$81,790 million in 2021, equity increased to US$91,144 million in 2022, US$92,430 million in 2023, US$99,237 million in 2024, and ultimately reached US$104,460 million in 2025. This consistent increase in equity likely contributed to the overall growth in invested capital.
The combined effect of fluctuations in debt and consistent growth in equity contributed to the overall trend in invested capital. The significant increase in invested capital between 2024 and 2025 warrants further investigation to determine the underlying drivers, potentially including significant capital expenditures or acquisitions.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cost of Capital
Verizon Communications Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 206,371) | 206,371) | ÷ | 386,679) | = | 0.53 | 0.53 | × | 9.31% | = | 4.97% | ||
| Short-term and long-term debt, including finance leases3 | 156,815) | 156,815) | ÷ | 386,679) | = | 0.41 | 0.41 | × | 7.81% × (1 – 21.00%) | = | 2.50% | ||
| Operating lease liability4 | 23,493) | 23,493) | ÷ | 386,679) | = | 0.06 | 0.06 | × | 4.30% × (1 – 21.00%) | = | 0.21% | ||
| Total: | 386,679) | 1.00 | 7.68% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 170,619) | 170,619) | ÷ | 334,327) | = | 0.51 | 0.51 | × | 9.31% | = | 4.75% | ||
| Short-term and long-term debt, including finance leases3 | 139,365) | 139,365) | ÷ | 334,327) | = | 0.42 | 0.42 | × | 7.63% × (1 – 21.00%) | = | 2.51% | ||
| Operating lease liability4 | 24,343) | 24,343) | ÷ | 334,327) | = | 0.07 | 0.07 | × | 4.10% × (1 – 21.00%) | = | 0.24% | ||
| Total: | 334,327) | 1.00 | 7.50% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 166,994) | 166,994) | ÷ | 338,963) | = | 0.49 | 0.49 | × | 9.31% | = | 4.59% | ||
| Short-term and long-term debt, including finance leases3 | 147,701) | 147,701) | ÷ | 338,963) | = | 0.44 | 0.44 | × | 7.70% × (1 – 21.00%) | = | 2.65% | ||
| Operating lease liability4 | 24,268) | 24,268) | ÷ | 338,963) | = | 0.07 | 0.07 | × | 3.60% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 338,963) | 1.00 | 7.44% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 168,037) | 168,037) | ÷ | 334,502) | = | 0.50 | 0.50 | × | 9.31% | = | 4.68% | ||
| Short-term and long-term debt, including finance leases3 | 140,773) | 140,773) | ÷ | 334,502) | = | 0.42 | 0.42 | × | 7.38% × (1 – 21.00%) | = | 2.45% | ||
| Operating lease liability4 | 25,692) | 25,692) | ÷ | 334,502) | = | 0.08 | 0.08 | × | 3.20% × (1 – 21.00%) | = | 0.19% | ||
| Total: | 334,502) | 1.00 | 7.33% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 223,828) | 223,828) | ÷ | 421,420) | = | 0.53 | 0.53 | × | 9.31% | = | 4.95% | ||
| Short-term and long-term debt, including finance leases3 | 170,530) | 170,530) | ÷ | 421,420) | = | 0.40 | 0.40 | × | 7.79% × (1 – 21.00%) | = | 2.49% | ||
| Operating lease liability4 | 27,062) | 27,062) | ÷ | 421,420) | = | 0.06 | 0.06 | × | 3.10% × (1 – 21.00%) | = | 0.16% | ||
| Total: | 421,420) | 1.00 | 7.59% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Verizon Communications Inc., 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 millions) | ||||||
| Economic profit1 | 559) | 1,577) | (3,207) | 5,950) | 7,878) | |
| Invested capital2 | 329,613) | 307,881) | 304,400) | 301,478) | 290,004) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 0.17% | 0.51% | -1.05% | 1.97% | 2.72% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AT&T Inc. | 0.96% | -2.73% | -0.49% | -7.32% | 0.27% | |
| T-Mobile US Inc. | 1.13% | 1.17% | -0.43% | -4.20% | -4.12% | |
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 × 559 ÷ 329,613 = 0.17%
4 Click competitor name to see calculations.
The financial performance indicates a period of significant volatility in value creation, characterized by a sharp contraction in economic profit reaching a nadir in 2023, followed by a partial recovery. Concurrently, there is a sustained increase in the capital base required to support operations, which has placed downward pressure on the efficiency of value generation.
- Invested Capital Trends
- Invested capital exhibited a consistent upward trajectory, increasing from 290,004 million US dollars in 2021 to 329,613 million US dollars by 2025. This steady expansion indicates a continuous commitment of resources into the business over the observed five-year period.
- Economic Profit Performance
- Economic profit experienced a precipitous decline from 7,878 million US dollars in 2021 to a deficit of 3,207 million US dollars in 2023. Although a recovery to positive territory occurred in 2024 with a profit of 1,577 million US dollars, a subsequent decrease to 559 million US dollars in 2025 suggests that the ability to generate returns in excess of the cost of capital remains constrained.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit while accounting for the growing capital base. The ratio fell from a high of 2.72% in 2021 to a negative 1.05% in 2023. While the ratio returned to a positive 0.51% in 2024, it further compressed to 0.17% by 2025, signifying a marked erosion in the spread between the return on invested capital and the cost of that capital.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Economic Profit Margin
Verizon Communications Inc., 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 millions) | ||||||
| Economic profit1 | 559) | 1,577) | (3,207) | 5,950) | 7,878) | |
| Operating revenues | 138,191) | 134,788) | 133,974) | 136,835) | 133,613) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 0.40% | 1.17% | -2.39% | 4.35% | 5.90% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AT&T Inc. | 2.59% | -7.00% | -1.30% | -18.75% | 0.70% | |
| T-Mobile US Inc. | 2.53% | 2.69% | -1.03% | -9.85% | -9.49% | |
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 ÷ Operating revenues
= 100 × 559 ÷ 138,191 = 0.40%
3 Click competitor name to see calculations.
The financial trajectory between 2021 and 2025 is characterized by significant volatility in economic value generation, contrasted against a backdrop of relatively stagnant operating revenues. A peak in economic performance occurred in 2021, followed by a sharp decline that culminated in a negative economic profit during 2023, before a partial and unstable recovery in the subsequent two years.
- Economic Profit Trend
- A substantial contraction is observed from 2021 to 2023, with economic profit falling from 7,878 million USD to a deficit of 3,207 million USD. Although a recovery to positive territory was achieved in 2024 at 1,577 million USD, this momentum diminished by 2025, with the figure dropping to 559 million USD.
- Operating Revenue Stability
- Operating revenues remained remarkably consistent throughout the period, fluctuating within a narrow range between 133,613 million USD and 138,191 million USD. This stability suggests that the fluctuations in economic profit were driven by factors other than top-line growth, such as changes in the cost of capital, capital expenditures, or operating efficiency.
- Economic Profit Margin Analysis
- The economic profit margin reflects the underlying volatility of the value creation process, starting at 5.90% in 2021 and declining to a low of -2.39% in 2023. While the margin returned to positive territory in 2024 at 1.17%, it further compressed to 0.40% by 2025, indicating a diminished ability to generate returns above the cost of capital relative to total revenues.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?