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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

First Solar Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	1,542,086)	826,891)	567,988)	214,327)	(94,458)
Cost of capital²	17.34%	17.66%	17.07%	16.96%	16.30%
Invested capital³	7,840,426)	5,054,301)	5,692,249)	5,111,222)	4,894,577)

Economic profit⁴	182,189)	(65,469)	(403,782)	(652,603)	(892,157)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,542,086 – 17.34% × 7,840,426 = 182,189

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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.	First Solar Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

First Solar Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss)	830,777)	(44,166)	468,693)	398,355)	(114,933)
Deferred income tax expense (benefit)¹	(13,232)	(6,053)	80,360)	11,538)	(60,411)
Increase (decrease) in allowance for credit losses²	572)	378)	(2,345)	1,623)	24)
Increase (decrease) in deferred revenue³	797,243)	910,129)	64,079)	(160,923)	216,886)
Increase (decrease) in product warranty liability⁴	(8,296)	(18,766)	(42,543)	(34,701)	(90,895)
Increase (decrease) in equity equivalents⁵	776,287)	885,688)	99,551)	(182,463)	65,604)
Interest expense, net	12,965)	12,225)	13,107)	24,036)	27,066)
Interest expense, operating lease liability⁶	2,442)	2,539)	4,443)	5,888)	5,316)
Adjusted interest expense, net	15,407)	14,764)	17,550)	29,924)	32,382)
Tax benefit of interest expense, net⁷	(3,236)	(3,100)	(3,686)	(6,284)	(6,800)
Adjusted interest expense, net, after taxes⁸	12,172)	11,663)	13,865)	23,640)	25,581)
(Gain) loss on marketable securities	9)	—)	(11,696)	(15,346)	(40,621)
Interest income	(97,667)	(33,284)	(6,179)	(16,559)	(48,886)
Investment income, before taxes	(97,658)	(33,284)	(17,875)	(31,905)	(89,507)
Tax expense (benefit) of investment income⁹	20,508)	6,990)	3,754)	6,700)	18,796)
Investment income, after taxes¹⁰	(77,150)	(26,294)	(14,121)	(25,205)	(70,711)
Net operating profit after taxes (NOPAT)	1,542,086)	826,891)	567,988)	214,327)	(94,458)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in product warranty liability.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss).

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 46,969 × 5.20% = 2,442

⁷ 2023 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 15,407 × 21.00% = 3,236

⁸ Addition of after taxes interest expense to net income (loss).

⁹ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 97,658 × 21.00% = 20,508

¹⁰ 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.	First Solar Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

First Solar Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense (benefit)	60,513)	52,764)	103,469)	(107,294)	(5,480)
Less: Deferred income tax expense (benefit)	(13,232)	(6,053)	80,360)	11,538)	(60,411)
Add: Tax savings from interest expense, net	3,236)	3,100)	3,686)	6,284)	6,800)
Less: Tax imposed on investment income	20,508)	6,990)	3,754)	6,700)	18,796)
Cash operating taxes	56,472)	54,928)	23,041)	(119,248)	42,935)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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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.	First Solar Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

First Solar Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of debt	96,238)	—)	3,896)	41,540)	17,510)
Finance lease liabilities, current	51)	—)	—)	—)	—)
Long-term debt, noncurrent portion	464,068)	184,349)	236,005)	237,691)	454,187)
Finance lease liabilities, noncurrent	17,063)	—)	—)	—)	—)
Operating lease liability¹	46,969)	49,782)	158,693)	203,040)	123,617)
Total reported debt & leases	624,389)	234,131)	398,594)	482,271)	595,314)
Stockholders’ equity	6,687,469)	5,836,055)	5,959,551)	5,520,928)	5,096,767)
Net deferred tax (assets) liabilities²	(100,048)	(49,751)	(31,463)	(80,428)	(124,278)
Allowance for credit losses³	1,614)	1,042)	664)	3,009)	1,386)
Deferred revenue⁴	2,005,183)	1,207,940)	297,811)	233,732)	394,655)
Product warranty liability⁵	25,491)	33,787)	52,553)	95,096)	129,797)
Equity equivalents⁶	1,932,240)	1,193,018)	319,565)	251,409)	401,560)
Accumulated other comprehensive (income) loss, net of tax⁷	174,131)	191,817)	96,362)	61,726)	79,334)
Adjusted stockholders’ equity	8,793,840)	7,220,890)	6,375,478)	5,834,063)	5,577,661)
Construction in progress⁸	(1,223,998)	(1,121,938)	(461,708)	(419,766)	(243,107)
Marketable securities and restricted marketable securities⁹	(353,805)	(1,278,782)	(620,115)	(785,346)	(1,035,291)
Invested capital	7,840,426)	5,054,301)	5,692,249)	5,111,222)	4,894,577)

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

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 deferred revenue.

⁵ Addition of product warranty liability.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of marketable securities and restricted marketable 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.	First Solar Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

First Solar Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	15,492,026)	15,492,026)	÷	16,069,951)	=	0.96	0.96	×	17.82%	=	17.18%
Debt and finance lease liabilities³	530,956)	530,956)	÷	16,069,951)	=	0.03	0.03	×	6.04% × (1 – 21.00%)	=	0.16%
Operating lease liability⁴	46,969)	46,969)	÷	16,069,951)	=	0.00	0.00	×	5.20% × (1 – 21.00%)	=	0.01%
Total:	16,069,951)					1.00					17.34%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,031,862)	18,031,862)	÷	18,242,630)	=	0.99	0.99	×	17.82%	=	17.61%
Debt and finance lease liabilities³	160,986)	160,986)	÷	18,242,630)	=	0.01	0.01	×	4.96% × (1 – 21.00%)	=	0.03%
Operating lease liability⁴	49,782)	49,782)	÷	18,242,630)	=	0.00	0.00	×	5.10% × (1 – 21.00%)	=	0.01%
Total:	18,242,630)					1.00					17.66%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,040,959)	8,040,959)	÷	8,443,517)	=	0.95	0.95	×	17.82%	=	16.97%
Debt and finance lease liabilities³	243,865)	243,865)	÷	8,443,517)	=	0.03	0.03	×	2.80% × (1 – 21.00%)	=	0.06%
Operating lease liability⁴	158,693)	158,693)	÷	8,443,517)	=	0.02	0.02	×	2.80% × (1 – 21.00%)	=	0.04%
Total:	8,443,517)					1.00					17.07%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	8,587,018)	8,587,018)	÷	9,087,134)	=	0.94	0.94	×	17.82%	=	16.84%
Debt and finance lease liabilities³	297,076)	297,076)	÷	9,087,134)	=	0.03	0.03	×	2.90% × (1 – 21.00%)	=	0.07%
Operating lease liability⁴	203,040)	203,040)	÷	9,087,134)	=	0.02	0.02	×	2.90% × (1 – 21.00%)	=	0.05%
Total:	9,087,134)					1.00					16.96%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	5,335,103)	5,335,103)	÷	5,962,933)	=	0.89	0.89	×	17.82%	=	15.94%
Debt and finance lease liabilities³	504,213)	504,213)	÷	5,962,933)	=	0.08	0.08	×	4.30% × (1 – 21.00%)	=	0.29%
Operating lease liability⁴	123,617)	123,617)	÷	5,962,933)	=	0.02	0.02	×	4.30% × (1 – 21.00%)	=	0.07%
Total:	5,962,933)					1.00					16.30%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

First Solar Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	182,189)	(65,469)	(403,782)	(652,603)	(892,157)
Invested capital²	7,840,426)	5,054,301)	5,692,249)	5,111,222)	4,894,577)
Performance Ratio
Economic spread ratio³	2.32%	-1.30%	-7.09%	-12.77%	-18.23%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	-19.80%	-19.51%	37.21%	10.96%	-7.16%
Analog Devices Inc.	-7.16%	-8.52%	-11.79%	-6.84%	-5.30%
Applied Materials Inc.	18.54%	28.41%	23.93%	12.12%	11.75%
Broadcom Inc.	9.36%	7.80%	-1.57%	-7.11%	-6.81%
Intel Corp.	-13.47%	-7.04%	10.14%	15.81%	13.88%
KLA Corp.	24.55%	26.81%	15.45%	4.33%	5.84%
Lam Research Corp.	9.09%	23.97%	19.34%	3.40%	0.05%
Micron Technology Inc.	-26.45%	1.35%	-3.20%	-8.77%	1.41%
NVIDIA Corp.	-9.53%	32.67%	13.10%	-0.90%	59.70%
Qualcomm Inc.	3.74%	30.18%	27.59%	12.62%	14.01%
Texas Instruments Inc.	15.48%	36.14%	34.76%	29.91%	29.59%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 182,189 ÷ 7,840,426 = 2.32%

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.	First Solar Inc. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

First Solar Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	182,189)	(65,469)	(403,782)	(652,603)	(892,157)

Net sales	3,318,602)	2,619,319)	2,923,377)	2,711,332)	3,063,117)
Add: Increase (decrease) in deferred revenue	797,243)	910,129)	64,079)	(160,923)	216,886)
Adjusted net sales	4,115,845)	3,529,448)	2,987,456)	2,550,409)	3,280,003)
Performance Ratio
Economic profit margin²	4.43%	-1.85%	-13.52%	-25.59%	-27.20%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	-50.53%	-48.38%	14.03%	4.90%	-3.63%
Analog Devices Inc.	-25.71%	-31.94%	-75.75%	-22.22%	-16.22%
Applied Materials Inc.	12.43%	16.40%	15.27%	9.22%	8.15%
Broadcom Inc.	16.37%	14.58%	-3.71%	-19.63%	-18.09%
Intel Corp.	-22.88%	-9.90%	11.36%	16.64%	15.55%
KLA Corp.	19.50%	22.67%	15.23%	4.85%	8.16%
Lam Research Corp.	7.98%	17.70%	15.60%	3.96%	0.05%
Micron Technology Inc.	-91.00%	2.31%	-5.35%	-17.30%	2.34%
NVIDIA Corp.	-7.54%	21.90%	10.24%	-1.17%	24.37%
Qualcomm Inc.	3.29%	20.10%	16.62%	9.53%	12.38%
Texas Instruments Inc.	19.96%	31.69%	31.09%	26.81%	24.80%

Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 182,189 ÷ 4,115,845 = 4.43%

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.	First Solar Inc. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.

First Solar Inc. (NASDAQ:FSLR)

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