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
Walmart Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 27,292 – 11.44% × 174,675 = 7,309
The analysis of economic profit reveals a volatile trajectory characterized by a significant mid-period decline followed by a robust recovery and accelerated growth. The period begins with a positive economic profit that quickly transitions into negative territory, indicating a phase where operating returns failed to cover the cost of invested capital, before rebounding strongly in the final three years.
- Net Operating Profit After Taxes (NOPAT)
- A V-shaped trend is observed in operational profitability. NOPAT declined from 18,130 million US$ in January 2021 to a low of 13,880 million US$ in January 2023. This downward trend reversed sharply starting in 2024, with profitability increasing consistently to reach 27,292 million US$ by January 2026, representing a substantial expansion in operational efficiency and earning power.
- Cost of Capital and Invested Capital
- The cost of capital exhibits a steady and uninterrupted upward trend, rising from 10.55% in 2021 to 11.44% in 2026. Simultaneously, invested capital experienced a contraction from 164,411 million US$ in 2021 to 149,558 million US$ in 2023, followed by a period of reinvestment that brought the total to 174,675 million US$ by 2026. The increasing cost of capital creates a higher hurdle for value creation, requiring higher NOPAT to maintain positive economic profit.
- Economic Profit Dynamics
- Economic profit shifted from a modest positive value of 793 million US$ in 2021 to significant deficits of -1,549 million US$ and -2,288 million US$ in 2022 and 2023, respectively. This erosion of value coincided with the period of declining NOPAT. However, the subsequent surge in operational profits far outpaced the combined effect of rising capital costs and increased invested capital. Consequently, economic profit returned to positive territory in 2024 and accelerated rapidly to 7,309 million US$ by 2026, signifying a period of aggressive value creation for the organization.
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Net Operating Profit after Taxes (NOPAT)
Walmart Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to consolidated net income attributable to Walmart.
3 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 15,572 × 6.70% = 1,043
4 2026 Calculation
Tax benefit of interest expense, debt and finance lease = Adjusted interest expense, debt and finance lease × Statutory income tax rate
= 3,842 × 21.00% = 807
5 Addition of after taxes interest expense to consolidated net income attributable to Walmart.
6 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 368 × 21.00% = 77
7 Elimination of after taxes investment income.
The financial performance, as indicated by the provided figures, reveals distinct trends in both consolidated net income attributable to Walmart and net operating profit after taxes (NOPAT) over the six-year period. NOPAT demonstrates more volatility than consolidated net income, with fluctuations occurring throughout the observed timeframe.
- NOPAT Trend
- NOPAT experienced a decrease from US$18,130 million in 2021 to US$13,880 million in 2023, representing a decline over two consecutive years. A subsequent recovery began in 2024, with NOPAT reaching US$18,517 million. This upward trajectory continued through 2025 and 2026, culminating in US$27,292 million. The rate of increase accelerated between 2024 and 2026, suggesting improving operational efficiency or revenue generation.
- Relationship between NOPAT and Consolidated Net Income
- While both metrics generally move in the same direction, the magnitude of change differs. Consolidated net income decreased from US$13,510 million in 2021 to US$11,680 million in 2023, a smaller decline than that observed in NOPAT. The subsequent recovery in net income, reaching US$21,893 million by 2026, was also less pronounced in percentage terms compared to the NOPAT recovery. This divergence suggests factors beyond core operational profitability are influencing net income, such as changes in non-operating items or tax rates.
The period between 2021 and 2023 indicates a period of challenge, as evidenced by the declines in both NOPAT and net income. However, the subsequent years demonstrate a strong recovery and growth phase, particularly for NOPAT, indicating a potential improvement in the underlying business performance. The increasing NOPAT values from 2024 onwards suggest a strengthening of the company’s ability to generate profit from its core operations.
- Growth Rates
- The most significant growth in NOPAT occurred between 2025 and 2026, with an increase of approximately US$5,289 million. This represents a substantial acceleration compared to the growth observed between 2024 and 2025. The period from 2021 to 2022 saw a decrease in NOPAT, while the period from 2022 to 2023 also showed a decrease, highlighting the initial challenges faced.
Overall, the figures suggest a business that navigated a period of decline before experiencing a robust recovery and growth phase, with NOPAT demonstrating a particularly strong positive trend in the later years of the observed period.
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Cash Operating Taxes
Walmart Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
The provision for income taxes and cash operating taxes exhibited fluctuating patterns over the observed six-year period. While both metrics moved in similar directions, notable differences in magnitude and specific year-over-year changes were present.
- Provision for Income Taxes
- The provision for income taxes decreased significantly from US$6,858 million in 2021 to US$4,756 million in 2022, representing a substantial reduction. This was followed by an increase to US$5,724 million in 2023, and a more modest increase to US$5,578 million in 2024. Further increases were observed in 2025, reaching US$6,152 million, and again in 2026, culminating in US$7,199 million. Overall, the provision for income taxes demonstrates a general upward trend from 2022 to 2026, although with intermediate fluctuations.
- Cash Operating Taxes
- Cash operating taxes initially increased from US$5,505 million in 2021 to US$6,080 million in 2022. A slight decrease was then recorded in 2023, with the figure falling to US$5,868 million. Subsequent years saw increases, reaching US$6,392 million in 2024 and US$7,482 million in 2025. A notable decrease occurred in 2026, with cash operating taxes reported at US$5,652 million. The trend in cash operating taxes is characterized by volatility, with a peak in 2025 and a subsequent decline in 2026.
- Relationship between Provision and Cash Taxes
- In 2021, cash operating taxes were approximately 79.9% of the provision for income taxes. This percentage increased to 128.1% in 2022, indicating a higher proportion of cash taxes paid relative to the accounting provision. The ratio decreased to 102.1% in 2023, 114.7% in 2024, 121.5% in 2025, and then dropped to 78.4% in 2026. These fluctuations suggest changes in the timing of tax payments, utilization of tax credits, or differences between taxable income and accounting income.
The divergence between the provision for income taxes and cash operating taxes, particularly the significant decrease in cash operating taxes in 2026, warrants further investigation to understand the underlying drivers. The overall trend suggests increasing tax obligations from 2022 to 2026, despite the fluctuations observed in both metrics.
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Invested Capital
Walmart Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to total Walmart shareholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in process.
The reported invested capital exhibited fluctuations over the observed period. Initially, a decrease is noted, followed by a period of stabilization and subsequent growth. A closer examination of the components contributing to invested capital – total reported debt & leases and total shareholders’ equity – provides further insight into these trends.
- Invested Capital Trend
- Invested capital decreased from US$164,411 million in 2021 to US$149,558 million in 2023, representing a cumulative decline of approximately 9.0%. However, beginning in 2024, invested capital began to increase, reaching US$174,675 million by 2026. This represents a growth of approximately 17.5% from the 2023 low.
- Debt & Leases
- Total reported debt & leases decreased from US$63,246 million in 2021 to US$57,323 million in 2022, a reduction of 9.3%. It then experienced a modest increase to US$61,321 million in 2024 before rising more substantially to US$67,095 million in 2026. This suggests a recent shift towards increased reliance on debt financing.
- Shareholders’ Equity
- Total shareholders’ equity increased from US$80,925 million in 2021 to US$83,253 million in 2022, a growth of 3.1%. A decrease was observed in 2023, falling to US$76,693 million. However, shareholders’ equity then demonstrated consistent growth, reaching US$99,617 million in 2026. This indicates a strengthening of the company’s equity position in the later years of the period.
The interplay between debt and equity appears to influence the overall trend in invested capital. The initial decline in invested capital coincided with a decrease in both debt and equity, while the subsequent increase was driven by growth in both components, with a more pronounced increase in shareholders’ equity. The recent increase in debt levels, while contributing to the overall growth in invested capital, warrants further investigation to assess its potential impact on financial risk.
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Cost of Capital
Walmart Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,008,668) | 1,008,668) | ÷ | 1,074,374) | = | 0.94 | 0.94 | × | 11.93% | = | 11.20% | ||
| Debt and finance lease obligations3 | 50,134) | 50,134) | ÷ | 1,074,374) | = | 0.05 | 0.05 | × | 4.40% × (1 – 21.00%) | = | 0.16% | ||
| Operating lease liability4 | 15,572) | 15,572) | ÷ | 1,074,374) | = | 0.01 | 0.01 | × | 6.70% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 1,074,374) | 1.00 | 11.44% | ||||||||||
Based on: 10-K (reporting date: 2026-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 684,238) | 684,238) | ÷ | 742,143) | = | 0.92 | 0.92 | × | 11.93% | = | 11.00% | ||
| Debt and finance lease obligations3 | 43,581) | 43,581) | ÷ | 742,143) | = | 0.06 | 0.06 | × | 4.41% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 14,324) | 14,324) | ÷ | 742,143) | = | 0.02 | 0.02 | × | 6.50% × (1 – 21.00%) | = | 0.10% | ||
| Total: | 742,143) | 1.00 | 11.30% | ||||||||||
Based on: 10-K (reporting date: 2025-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 488,962) | 488,962) | ÷ | 549,135) | = | 0.89 | 0.89 | × | 11.93% | = | 10.62% | ||
| Debt and finance lease obligations3 | 45,743) | 45,743) | ÷ | 549,135) | = | 0.08 | 0.08 | × | 4.28% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 14,430) | 14,430) | ÷ | 549,135) | = | 0.03 | 0.03 | × | 6.40% × (1 – 21.00%) | = | 0.13% | ||
| Total: | 549,135) | 1.00 | 11.04% | ||||||||||
Based on: 10-K (reporting date: 2024-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 375,801) | 375,801) | ÷ | 434,053) | = | 0.87 | 0.87 | × | 11.93% | = | 10.33% | ||
| Debt and finance lease obligations3 | 43,951) | 43,951) | ÷ | 434,053) | = | 0.10 | 0.10 | × | 4.06% × (1 – 21.00%) | = | 0.32% | ||
| Operating lease liability4 | 14,301) | 14,301) | ÷ | 434,053) | = | 0.03 | 0.03 | × | 6.00% × (1 – 21.00%) | = | 0.16% | ||
| Total: | 434,053) | 1.00 | 10.81% | ||||||||||
Based on: 10-K (reporting date: 2023-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 400,219) | 400,219) | ÷ | 462,256) | = | 0.87 | 0.87 | × | 11.93% | = | 10.33% | ||
| Debt and finance lease obligations3 | 47,545) | 47,545) | ÷ | 462,256) | = | 0.10 | 0.10 | × | 3.86% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 14,492) | 14,492) | ÷ | 462,256) | = | 0.03 | 0.03 | × | 5.90% × (1 – 21.00%) | = | 0.15% | ||
| Total: | 462,256) | 1.00 | 10.79% | ||||||||||
Based on: 10-K (reporting date: 2022-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 371,093) | 371,093) | ÷ | 444,270) | = | 0.84 | 0.84 | × | 11.93% | = | 9.97% | ||
| Debt and finance lease obligations3 | 58,802) | 58,802) | ÷ | 444,270) | = | 0.13 | 0.13 | × | 4.05% × (1 – 21.00%) | = | 0.42% | ||
| Operating lease liability4 | 14,375) | 14,375) | ÷ | 444,270) | = | 0.03 | 0.03 | × | 6.10% × (1 – 21.00%) | = | 0.16% | ||
| Total: | 444,270) | 1.00 | 10.55% | ||||||||||
Based on: 10-K (reporting date: 2021-01-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance lease obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Walmart Inc., economic spread ratio calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 7,309) | 3,773) | 1,365) | (2,288) | (1,549) | 793) | |
| Invested capital2 | 174,675) | 161,279) | 155,389) | 149,558) | 156,225) | 164,411) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 4.18% | 2.34% | 0.88% | -1.53% | -0.99% | 0.48% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 5.30% | 5.04% | 5.73% | 0.94% | 5.03% | 3.44% | |
| Target Corp. | -4.41% | -2.98% | -2.02% | -3.79% | 8.89% | -0.58% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 7,309 ÷ 174,675 = 4.18%
4 Click competitor name to see calculations.
The trajectory of economic value creation from January 31, 2021, to January 31, 2026, is characterized by a distinct U-shaped recovery. After a period of economic value erosion between 2022 and 2023, there is a sustained and accelerating increase in both absolute economic profit and the efficiency of capital utilization.
- Economic Profit
- An initial economic profit of 793 million USD in 2021 transitioned into significant losses, reaching a trough of negative 2,288 million USD by January 31, 2023. Subsequently, a strong reversal occurred, with figures rising to 1,365 million USD in 2024 and escalating to 7,309 million USD by January 31, 2026, indicating a substantial restoration of value creation.
- Invested Capital
- Capital investment levels experienced a gradual contraction from 164,411 million USD in 2021 to a minimum of 149,558 million USD in 2023. This was followed by a consistent expansion phase, with invested capital growing to 174,675 million USD by 2026, suggesting a strategic re-investment in the asset base aligned with the recovery of economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility of economic profit, declining from a positive 0.48% in 2021 to a low of negative 1.53% in 2023. This negative spread indicates a period where the return on invested capital was insufficient to cover the cost of capital. From 2024 onward, a rapid improvement is observed, with the ratio climbing to 4.18% by 2026, reflecting a widening and positive gap between the return on capital and its associated cost.
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Economic Profit Margin
Walmart Inc., economic profit margin calculation, comparison to benchmarks
| Jan 31, 2026 | Jan 31, 2025 | Jan 31, 2024 | Jan 31, 2023 | Jan 31, 2022 | Jan 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 7,309) | 3,773) | 1,365) | (2,288) | (1,549) | 793) | |
| Net sales | 706,413) | 674,538) | 642,637) | 605,881) | 567,762) | 555,233) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 1.03% | 0.56% | 0.21% | -0.38% | -0.27% | 0.14% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.79% | 0.71% | 0.76% | 0.14% | 0.71% | 0.51% | |
| Target Corp. | -1.59% | -1.01% | -0.65% | -1.05% | 2.53% | -0.19% | |
Based on: 10-K (reporting date: 2026-01-31), 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-01-31), 10-K (reporting date: 2023-01-31), 10-K (reporting date: 2022-01-31), 10-K (reporting date: 2021-01-31).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 7,309 ÷ 706,413 = 1.03%
3 Click competitor name to see calculations.
An analysis of the financial performance reveals a significant recovery in value creation following a period of economic loss. While revenue growth remained steady and positive throughout the analyzed period, economic profit experienced a volatile trajectory, characterized by a sharp decline followed by an accelerating upward trend.
- Economic Profit Trends
- A contraction occurred between 2021 and 2023, with economic profit falling from 793 million US$ to a low of -2,288 million US$. This indicates a period where returns did not cover the cost of capital. However, a strong reversal began in 2024, with profits climbing to 1,365 million US$ and expanding rapidly to reach 7,309 million US$ by 2026, signaling a substantial increase in the generation of economic value.
- Net Sales Performance
- Consistent growth is observed in net sales, which rose linearly from 555,233 million US$ in 2021 to 706,413 million US$ by 2026. This steady increase in the top line demonstrates a stable expansion of market presence and sales volume, regardless of the fluctuations observed in economic profit.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of the absolute economic profit. The margin shifted from a positive 0.14% in 2021 to a negative peak of -0.38% in 2023, reflecting a temporary phase of value destruction. From 2024 onward, the margin recovered to 0.21% and grew aggressively to 1.03% by 2026. The fact that the margin grew at a faster rate than net sales suggests a significant improvement in operational efficiency or a more favorable relationship between return on invested capital and the cost of capital.
Overall, the data indicates that the company transitioned from a period of underperformance relative to its cost of capital into a phase of high-efficiency value creation. The acceleration in the economic profit margin during the final three years suggests that revenue growth is now being leveraged more effectively to produce economic surplus.
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