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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

Visa Inc., economic profit calculation

US$ in millions

12 months ended:	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Net operating profit after taxes (NOPAT)¹	15,234)	13,020)	11,433)	12,431)	9,137)	8,706)
Cost of capital²	12.24%	12.18%	12.10%	12.23%	12.17%	11.92%
Invested capital³	60,981)	60,806)	61,524)	50,974)	47,578)	51,080)

Economic profit⁴	7,772)	5,616)	3,987)	6,196)	3,349)	2,616)

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 15,234 – 12.24% × 60,981 = 7,772

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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.	Visa Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Visa Inc., NOPAT calculation

US$ in millions

12 months ended:	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Net income	14,957)	12,311)	10,866)	12,080)	10,301)	6,699)
Deferred income tax expense (benefit)¹	(336)	871)	307)	214)	(1,287)	1,698)
Increase (decrease) in equity equivalents²	(336)	871)	307)	214)	(1,287)	1,698)
Interest expense	538)	513)	516)	533)	612)	563)
Interest expense, operating lease liability³	11)	13)	13)	23)	22)	18)
Adjusted interest expense	549)	526)	529)	556)	634)	581)
Tax benefit of interest expense⁴	(115)	(110)	(111)	(117)	(159)	(203)
Adjusted interest expense, after taxes⁵	434)	415)	418)	439)	476)	377)
(Gain) loss on marketable securities	227)	(731)	(200)	(383)	(470)	(105)
Investment income, before taxes	227)	(731)	(200)	(383)	(470)	(105)
Tax expense (benefit) of investment income⁶	(48)	154)	42)	80)	118)	37)
Investment income, after taxes⁷	179)	(577)	(158)	(303)	(353)	(68)
Net operating profit after taxes (NOPAT)	15,234)	13,020)	11,433)	12,431)	9,137)	8,706)

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

¹ Elimination of deferred tax expense. See details »

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

³ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 520 × 2.15% = 11

⁴ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 549 × 21.00% = 115

⁵ Addition of after taxes interest expense to net income.

⁶ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= -227 × 21.00% = -48

⁷ Elimination of after taxes investment income.

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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.	Visa Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Visa Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Income tax provision	3,179)	3,752)	2,924)	2,804)	2,505)	4,995)
Less: Deferred income tax expense (benefit)	(336)	871)	307)	214)	(1,287)	1,698)
Add: Tax savings from interest expense	115)	110)	111)	117)	159)	203)
Less: Tax imposed on investment income	(48)	154)	42)	80)	118)	37)
Cash operating taxes	3,678)	2,838)	2,686)	2,626)	3,833)	3,463)

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

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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.	Visa Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

Visa Inc., invested capital calculation (financing approach)

US$ in millions

	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Current maturities of debt	2,250)	999)	2,999)	—)	—)	1,749)
Long-term debt, excluding current maturities	20,200)	19,978)	21,071)	16,729)	16,630)	16,618)
Operating lease liability¹	520)	574)	570)	701)	667)	561)
Total reported debt & leases	22,970)	21,551)	24,640)	17,430)	17,297)	18,928)
Equity	35,581)	37,589)	36,210)	34,684)	34,006)	32,760)
Net deferred tax (assets) liabilities²	5,245)	6,048)	5,174)	4,783)	4,604)	5,899)
Equity equivalents³	5,245)	6,048)	5,174)	4,783)	4,604)	5,899)
Accumulated other comprehensive (income) loss, net of tax⁴	2,369)	(436)	(354)	650)	(547)	(878)
Adjusted equity	43,195)	43,201)	41,030)	40,117)	38,063)	37,781)
Construction-in-progress⁵	(285)	(226)	(163)	(180)	(153)	(139)
Investment securities⁶	(4,899)	(3,720)	(3,983)	(6,393)	(7,629)	(5,490)
Invested capital	60,981)	60,806)	61,524)	50,974)	47,578)	51,080)

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

¹ Addition of capitalized operating leases.

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

³ Addition of equity equivalents to equity.

⁴ Removal of accumulated other comprehensive income.

⁵ Subtraction of construction-in-progress.

⁶ Subtraction of investment securities.

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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.	Visa Inc. invested capital decreased from 2020 to 2021 but then slightly increased from 2021 to 2022.

Visa Inc., cost of capital calculations

Sep 30, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	433,243)	433,243)	÷	453,663)	=	0.95	0.95	×	12.71%	=	12.13%
Debt³	19,900)	19,900)	÷	453,663)	=	0.04	0.04	×	2.90% × (1 – 21.00%)	=	0.10%
Operating lease liability⁴	520)	520)	÷	453,663)	=	0.00	0.00	×	2.15% × (1 – 21.00%)	=	0.00%
Total:	453,663)					1.00					12.24%

Based on: 10-K (reporting date: 2022-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	428,731)	428,731)	÷	451,805)	=	0.95	0.95	×	12.71%	=	12.06%
Debt³	22,500)	22,500)	÷	451,805)	=	0.05	0.05	×	2.99% × (1 – 21.00%)	=	0.12%
Operating lease liability⁴	574)	574)	÷	451,805)	=	0.00	0.00	×	2.23% × (1 – 21.00%)	=	0.00%
Total:	451,805)					1.00					12.18%

Based on: 10-K (reporting date: 2021-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	442,859)	442,859)	÷	470,029)	=	0.94	0.94	×	12.71%	=	11.97%
Debt³	26,600)	26,600)	÷	470,029)	=	0.06	0.06	×	2.90% × (1 – 21.00%)	=	0.13%
Operating lease liability⁴	570)	570)	÷	470,029)	=	0.00	0.00	×	2.29% × (1 – 21.00%)	=	0.00%
Total:	470,029)					1.00					12.10%

Based on: 10-K (reporting date: 2020-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	387,474)	387,474)	÷	406,575)	=	0.95	0.95	×	12.71%	=	12.11%
Debt³	18,400)	18,400)	÷	406,575)	=	0.05	0.05	×	3.31% × (1 – 21.00%)	=	0.12%
Operating lease liability⁴	701)	701)	÷	406,575)	=	0.00	0.00	×	3.31% × (1 – 21.00%)	=	0.00%
Total:	406,575)					1.00					12.23%

Based on: 10-K (reporting date: 2019-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	309,344)	309,344)	÷	326,611)	=	0.95	0.95	×	12.71%	=	12.03%
Debt³	16,600)	16,600)	÷	326,611)	=	0.05	0.05	×	3.31% × (1 – 25.00%)	=	0.13%
Operating lease liability⁴	667)	667)	÷	326,611)	=	0.00	0.00	×	3.31% × (1 – 25.00%)	=	0.01%
Total:	326,611)					1.00					12.17%

Based on: 10-K (reporting date: 2018-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	249,160)	249,160)	÷	268,893)	=	0.93	0.93	×	12.71%	=	11.77%
Debt³	19,171)	19,171)	÷	268,893)	=	0.07	0.07	×	3.12% × (1 – 35.00%)	=	0.14%
Operating lease liability⁴	561)	561)	÷	268,893)	=	0.00	0.00	×	3.12% × (1 – 35.00%)	=	0.00%
Total:	268,893)					1.00					11.92%

Based on: 10-K (reporting date: 2017-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Visa Inc., economic spread ratio calculation, comparison to benchmarks

	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	7,772)	5,616)	3,987)	6,196)	3,349)	2,616)
Invested capital²	60,981)	60,806)	61,524)	50,974)	47,578)	51,080)
Performance Ratio
Economic spread ratio³	12.75%	9.24%	6.48%	12.16%	7.04%	5.12%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	8.92%	10.76%	11.33%	10.05%	10.29%	—
Adobe Inc.	11.09%	13.50%	5.77%	3.87%	1.52%	—
International Business Machines Corp.	-9.30%	-4.31%	-4.05%	-0.32%	—	—
Intuit Inc.	-4.93%	2.82%	6.15%	19.82%	17.52%	—
Microsoft Corp.	24.04%	33.05%	31.07%	26.19%	7.85%	—
Oracle Corp.	-0.82%	7.24%	1.54%	4.26%	-4.74%	—
Palo Alto Networks Inc.	6.83%	-1.86%	-2.90%	0.35%	-2.47%	—
Salesforce Inc.	-9.48%	-7.16%	-10.20%	-6.20%	—	—
ServiceNow Inc.	4.50%	5.71%	7.33%	6.74%	—	—
Synopsys Inc.	3.07%	-2.95%	-2.78%	-5.77%	-7.15%	—

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 7,772 ÷ 60,981 = 12.75%

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.	Visa Inc. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

Visa Inc., economic profit margin calculation, comparison to benchmarks

	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	7,772)	5,616)	3,987)	6,196)	3,349)	2,616)
Net revenues	29,310)	24,105)	21,846)	22,977)	20,609)	18,358)
Performance Ratio
Economic profit margin²	26.52%	23.30%	18.25%	26.97%	16.25%	14.25%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	4.30%	5.52%	5.76%	4.65%	4.32%	—
Adobe Inc.	12.91%	16.82%	8.28%	5.82%	2.49%	—
International Business Machines Corp.	-16.14%	-8.22%	-7.04%	-0.54%	—	—
Intuit Inc.	-9.49%	3.58%	6.93%	13.21%	11.64%	—
Microsoft Corp.	23.04%	27.44%	23.07%	19.37%	5.57%	—
Oracle Corp.	-1.50%	14.32%	3.52%	7.76%	-8.55%	—
Palo Alto Networks Inc.	7.95%	-2.50%	-4.70%	0.38%	-3.66%	—
Salesforce Inc.	-26.33%	-16.43%	-25.12%	-12.20%	—	—
ServiceNow Inc.	3.62%	4.94%	5.98%	4.94%	—	—
Synopsys Inc.	4.33%	-4.69%	-4.77%	-9.97%	-12.20%	—

Based on: 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenues
= 100 × 7,772 ÷ 29,310 = 26.52%

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.	Visa Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.

Visa Inc. (NYSE:V)

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