Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

salesforce.com inc. (NYSE:CRM)

Economic Value Added (EVA)

Advanced level


Economic Profit

salesforce.com inc., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Net operating profit after taxes (NOPAT)1 2,330  2,601  1,799  1,311  1,016  629 
Cost of capital2 14.14% 14.01% 13.96% 13.67% 13.77% 13.68%
Invested capital3 46,885  29,066  18,985  16,914  10,966  9,522 
 
Economic profit4 (4,299) (1,473) (852) (1,002) (493) (673)

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,33014.14% × 46,885 = -4,299

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. salesforce.com inc.’s economic profit decreased from 2018 to 2019 and from 2019 to 2020.

Net Operating Profit after Taxes (NOPAT)

salesforce.com inc., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Net income (loss) 126  1,110  127  180  (47) (263)
Deferred income tax expense (benefit)1 27  (283) (6) (231) (3)
Increase (decrease) in allowance for doubtful accounts2
Increase (decrease) in unearned revenue3 2,098  1,569  1,552  1,251  970  799 
Increase (decrease) in equity equivalents4 2,126  1,287  1,555  1,022  973  800 
Interest expense 131  154  87  89  72  73 
Interest expense, operating lease liability5 86  161  124  106  82  79 
Adjusted interest expense 217  315  211  195  154  152 
Tax benefit of interest expense6 (46) (66) (71) (68) (54) (53)
Adjusted interest expense, after taxes7 172  249  140  127  100  99 
(Gain) loss on marketable securities (1) (5) (1) — 
Investment income, interest income (117) (61) (36) (22) (14) (10)
Investment income, before taxes (118) (57) (36) (27) (15) (10)
Tax expense (benefit) of investment income8 25  12  12  10 
Investment income, after taxes9 (93) (45) (24) (18) (10) (7)
Net operating profit after taxes (NOPAT) 2,330  2,601  1,799  1,311  1,016  629 

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in unearned revenue.

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

5 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,195 × 2.70% = 86

6 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 217 × 21.00% = 46

7 Addition of after taxes interest expense to net income (loss).

8 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 118 × 21.00% = 25

9 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. salesforce.com inc.’s NOPAT increased from 2018 to 2019 but then slightly decreased from 2019 to 2020.

Cash Operating Taxes

salesforce.com inc., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Provision for (benefit from) income taxes 580  (127) 75  (154) 112  50 
Less: Deferred income tax expense (benefit) 27  (283) (6) (231) (3)
Add: Tax savings from interest expense 46  66  71  68  54  53 
Less: Tax imposed on investment income 25  12  12  10 
Cash operating taxes 574  210  140  135  160  103 

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

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. salesforce.com inc.’s cash operating taxes increased from 2018 to 2019 and from 2019 to 2020.

Invested Capital

salesforce.com inc., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Current portion of debt 1,025  —  —  — 
Noncurrent debt, excluding current portion 2,673  3,173  695  2,008  1,294  1,371 
Operating lease liability1 3,195  3,418  2,724  2,382  1,889  1,811 
Total reported debt & leases 5,872  6,594  4,444  4,390  3,183  3,182 
Stockholders’ equity 33,885  15,605  9,388  7,500  5,003  3,975 
Net deferred tax (assets) liabilities2 152  (104) (12) (5) (4) (7)
Allowance for doubtful accounts3 23  22  21  12  10 
Unearned revenue4 10,662  8,564  7,095  5,543  4,292  3,321 
Equity equivalents5 10,837  8,482  7,104  5,550  4,298  3,323 
Accumulated other comprehensive (income) loss, net of tax6 93  58  27  76  50  24 
Adjusted stockholders’ equity 44,815  24,145  16,520  13,126  9,350  7,322 
Marketable securities7 (3,802) (1,673) (1,978) (602) (1,567) (982)
Invested capital 46,885  29,066  18,985  16,914  10,966  9,522 

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

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 unearned revenue.

5 Addition of equity equivalents to stockholders’ equity.

6 Removal of accumulated other comprehensive income.

7 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. salesforce.com inc.’s invested capital increased from 2018 to 2019 and from 2019 to 2020.

Cost of Capital

salesforce.com inc., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 151,792  151,792  ÷ 157,880  = 0.96 0.96 × 14.61% = 14.05%
Debt3 2,893  2,893  ÷ 157,880  = 0.02 0.02 × 3.54% × (1 – 21.00%) = 0.05%
Operating lease liability4 3,195  3,195  ÷ 157,880  = 0.02 0.02 × 2.70% × (1 – 21.00%) = 0.04%
Total: 157,880  1.00 14.14%

Based on: 10-K (filing date: 2020-03-05).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 119,551  119,551  ÷ 126,146  = 0.95 0.95 × 14.61% = 13.85%
Debt3 3,176  3,176  ÷ 126,146  = 0.03 0.03 × 3.46% × (1 – 21.00%) = 0.07%
Operating lease liability4 3,418  3,418  ÷ 126,146  = 0.03 0.03 × 4.71% × (1 – 21.00%) = 0.10%
Total: 126,146  1.00 14.01%

Based on: 10-K (filing date: 2019-03-08).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 93,200  93,200  ÷ 98,421  = 0.95 0.95 × 14.61% = 13.83%
Debt3 2,497  2,497  ÷ 98,421  = 0.03 0.03 × 2.58% × (1 – 33.80%) = 0.04%
Operating lease liability4 2,724  2,724  ÷ 98,421  = 0.03 0.03 × 4.57% × (1 – 33.80%) = 0.08%
Total: 98,421  1.00 13.96%

Based on: 10-K (filing date: 2018-03-09).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 58,369  58,369  ÷ 63,142  = 0.92 0.92 × 14.61% = 13.50%
Debt3 2,392  2,392  ÷ 63,142  = 0.04 0.04 × 2.43% × (1 – 35.00%) = 0.06%
Operating lease liability4 2,382  2,382  ÷ 63,142  = 0.04 0.04 × 4.46% × (1 – 35.00%) = 0.11%
Total: 63,142  1.00 13.67%

Based on: 10-K (filing date: 2017-03-06).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 47,292  47,292  ÷ 50,780  = 0.93 0.93 × 14.61% = 13.61%
Debt3 1,599  1,599  ÷ 50,780  = 0.03 0.03 × 2.68% × (1 – 35.00%) = 0.05%
Operating lease liability4 1,889  1,889  ÷ 50,780  = 0.04 0.04 × 4.34% × (1 – 35.00%) = 0.10%
Total: 50,780  1.00 13.77%

Based on: 10-K (filing date: 2016-03-07).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 42,003  42,003  ÷ 45,414  = 0.92 0.92 × 14.61% = 13.51%
Debt3 1,600  1,600  ÷ 45,414  = 0.04 0.04 × 2.37% × (1 – 35.00%) = 0.05%
Operating lease liability4 1,811  1,811  ÷ 45,414  = 0.04 0.04 × 4.37% × (1 – 35.00%) = 0.11%
Total: 45,414  1.00 13.68%

Based on: 10-K (filing date: 2015-03-06).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

salesforce.com inc., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (4,299) (1,473) (852) (1,002) (493) (673)
Invested capital2 46,885  29,066  18,985  16,914  10,966  9,522 
Performance Ratio
Economic spread ratio3 -9.17% -5.07% -4.49% -5.92% -4.50% -7.07%
Benchmarks
Economic Spread Ratio, Competitors4
Adobe Inc. 6.25% 3.88% 8.55% 7.69% -1.53%
Alphabet Inc. 20.61% 22.16% 7.56% 14.80% 10.19%
Autodesk Inc. 1.90% -19.18% -31.14% -28.93% -10.40% -9.69%
Facebook Inc. 15.17% 24.28% 24.62% 12.63% -3.22%
International Business Machines Corp. -2.82% -3.12% -5.89% -1.81% 1.95%
Intuit Inc. 21.83% 19.51% 24.12% 22.35% 15.66%
Microsoft Corp. 29.76% 9.16% 24.29% 41.42% 17.69%
Oracle Corp. 3.27% 6.20% -2.85% 4.06% 6.79% 5.46%
ServiceNow Inc. 4.11% 0.12% 0.65% -26.26% -14.25%

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

1 Economic profit. See details »

2 Invested capital. See details »

3 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -4,299 ÷ 46,885 = -9.17%

4 Click competitor name to see calculations.

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. salesforce.com inc.’s economic spread ratio deteriorated from 2018 to 2019 and from 2019 to 2020.

Economic Profit Margin

salesforce.com inc., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Jan 31, 2020 Jan 31, 2019 Jan 31, 2018 Jan 31, 2017 Jan 31, 2016 Jan 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (4,299) (1,473) (852) (1,002) (493) (673)
 
Revenues 17,098  13,282  10,480  8,392  6,667  5,374 
Add: Increase (decrease) in unearned revenue 2,098  1,569  1,552  1,251  970  799 
Adjusted revenues 19,196  14,851  12,032  9,643  7,637  6,173 
Performance Ratio
Economic profit margin2 -22.40% -9.92% -7.08% -10.39% -6.46% -10.90%
Benchmarks
Economic Profit Margin, Competitors3
Adobe Inc. 9.40% 6.35% 11.15% 9.98% -2.34%
Alphabet Inc. 12.78% 14.05% 4.46% 11.81% 9.70%
Autodesk Inc. 2.51% -31.26% -45.34% -43.14% -13.11% -11.61%
Facebook Inc. 14.09% 26.22% 25.19% 17.67% -5.70%
International Business Machines Corp. -4.82% -4.38% -8.01% -2.42% 2.42%
Intuit Inc. 14.53% 12.96% 13.41% 12.63% 9.92%
Microsoft Corp. 20.03% 6.03% 18.56% 21.35% 7.78%
Oracle Corp. 7.44% 11.29% -5.14% 8.33% 11.77% 9.64%
ServiceNow Inc. 3.02% 0.10% 0.52% -19.72% -12.55%

Based on: 10-K (filing date: 2020-03-05), 10-K (filing date: 2019-03-08), 10-K (filing date: 2018-03-09), 10-K (filing date: 2017-03-06), 10-K (filing date: 2016-03-07), 10-K (filing date: 2015-03-06).

1 Economic profit. See details »

2 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -4,299 ÷ 19,196 = -22.40%

3 Click competitor name to see calculations.

Performance 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. salesforce.com inc.’s economic profit margin deteriorated from 2018 to 2019 and from 2019 to 2020.