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.
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- Income Statement
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Return on Assets (ROA) since 2006
- Current Ratio since 2006
- Debt to Equity since 2006
- Price to Sales (P/S) since 2006
- Analysis of Revenues
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Economic Profit
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 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The company's net operating profit after taxes demonstrated a significant upward trajectory over the analyzed period. Beginning with a negative figure in 2019, there was a transformation to positive profitability in 2020 followed by consistent and substantial increases each year through 2023, culminating in a value exceeding 1.5 billion US dollars. This evolution indicates a strengthening operational performance and effective management of operating expenses and revenues over time.
- Cost of Capital
- The cost of capital remained relatively stable throughout the years, fluctuating slightly between 17.76% and 19.28% but showing no clear directional trend. Notably, the highest cost of capital was recorded in 2022 at 19.28%, followed by a slight decrease in 2023. The persistence of elevated cost levels suggests continued market or company-specific risks influencing capital costs during this period.
- Invested Capital
- Invested capital exhibited variability across the years. It increased modestly from 2019 to 2021, reflecting potential expansions or capital investments. However, there was a decline in 2022 before a sharp increase in 2023 that brought the invested capital to its highest point within the period analyzed. This pattern may reflect strategic investment cycles or asset acquisitions aligned with operational growth objectives.
- Economic Profit
- Economic profit showed a steady improvement from substantial negative values in 2019 through to a small positive figure in 2023. Although economic profit remained negative for the first four years, it trended positively each year, with the margin of negative economic profit reducing significantly by 2022. The transition to positive economic profit in 2023 indicates that the company succeeded in generating returns above its cost of capital, signaling enhanced value creation for shareholders.
Net Operating Profit after Taxes (NOPAT)
First Solar Inc., NOPAT calculation
US$ in thousands
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
= × =
7 2023 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
10 Elimination of after taxes investment income.
- Net Income (Loss)
- The net income data over the five-year period exhibits notable volatility and a marked improvement towards the end of the timeline. In 2019, the company recorded a significant net loss of approximately $114.9 million. This was followed by a substantial turnaround in 2020 with net income reaching nearly $398.4 million, indicating a strong recovery. The positive trend continued in 2021, with net income increasing modestly to about $468.7 million. However, 2022 saw a reversal, with net income again falling into a loss of approximately $44.2 million. Importantly, 2023 demonstrated a dramatic rebound, achieving a peak net income of about $830.8 million, the highest in the observed period.
- Net Operating Profit After Taxes (NOPAT)
- The Net Operating Profit After Taxes shows a consistent upward trend throughout the period under review, reflecting improving operating efficiency. Starting from a negative value of roughly $94.5 million in 2019, NOPAT turned positive by 2020 at approximately $214.3 million. It continued to grow significantly, reaching around $568.0 million in 2021, demonstrating effective operational performance. The growth accelerated in 2022, with NOPAT rising to about $826.9 million. The most substantial increase occurred in 2023 where NOPAT almost doubled from the previous year to approximately $1.54 billion, indicating strong underlying profitability and likely improvements in operational control or revenue generation capabilities.
- Overall Trends and Insights
- The financial performance shows a notable improvement in operational profitability (NOPAT) across the entire time span, suggesting enhanced core business efficiency. Meanwhile, net income figures indicate more volatility, particularly with losses in 2019 and 2022 interrupting an otherwise positive trend. The drastic increase in net income and NOPAT in 2023 points to a possible significant positive development impacting profitability, such as operational expansions, cost reductions, or favorable market conditions. The divergence between the smoother upward trend in NOPAT and the fluctuations in net income implies that non-operating items or extraordinary events may be influencing the net income results in certain years.
Cash Operating Taxes
First Solar Inc., cash operating taxes calculation
US$ in thousands
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).
- Income Tax Expense (Benefit)
- The income tax expense shows significant fluctuations over the analyzed period. In 2019 and 2020, the company recorded negative values indicating income tax benefits of -5,480 and -107,294 thousand US dollars respectively. However, beginning in 2021, there was a reversal to positive income tax expenses, with the company incurring 103,469 thousand US dollars in 2021, followed by slightly reduced expenses of 52,764 and 60,513 thousand US dollars in 2022 and 2023 respectively. This pattern indicates a shift from benefiting from tax credits or other tax advantages to a tax expense liability, stabilizing somewhat in the last two years but remaining significantly above the 2019 figure.
- Cash Operating Taxes
- Cash operating taxes also exhibited considerable volatility during the period. In 2019, the company paid 42,935 thousand US dollars in cash taxes. In 2020, this figure dropped sharply to a negative 119,248 thousand US dollars, indicating possible tax refunds or credits realized in that year. From 2021 onwards, cash operating taxes returned to positive figures, with 23,041 thousand US dollars in 2021, rising to 54,928 and 56,472 thousand US dollars in 2022 and 2023 respectively. The upward trend in cash taxes paid in the latter years suggests increasing taxable income or reduced available tax credits.
Invested Capital
First Solar Inc., invested capital calculation (financing approach)
US$ in thousands
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.
- Total reported debt & leases
- The total reported debt and leases exhibited a fluctuating trend over the five-year period. It decreased steadily from approximately 595 million US dollars at the end of 2019 to around 234 million US dollars by the end of 2022. However, there was a significant increase in 2023, with this figure rising sharply to about 624 million US dollars, exceeding the initial level recorded in 2019.
- Stockholders’ equity
- Stockholders’ equity showed a consistent upward trend throughout the period under review. Starting at roughly 5.1 billion US dollars in 2019, it increased gradually each year, reaching approximately 6.7 billion US dollars by the end of 2023. Despite a slight dip between 2021 and 2022, the overall movement indicates strengthening equity and possibly retained earnings or capital injections over time.
- Invested capital
- Invested capital also displayed variability across the years. From about 4.9 billion US dollars in 2019, it rose modestly to approximately 5.7 billion US dollars in 2021, followed by a decrease to roughly 5.05 billion US dollars in 2022. Notably, there was a marked surge in 2023, with invested capital reaching nearly 7.84 billion US dollars, representing the highest level in the observed period and suggesting increased resource deployment or asset acquisition during that year.
Cost of Capital
First Solar Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
Economic Spread Ratio
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- There is a clear upward trend in economic profit over the five-year period. The figure improved significantly, moving from a substantial negative value of approximately -964 million US dollars in 2019 to a positive value of about 58 thousand US dollars by the end of 2023. This indicates an ongoing recovery and improvement in the company's ability to generate profit above its cost of capital.
- Invested Capital
- The invested capital shows fluctuations with an overall upward trajectory. It increased from roughly 4.89 billion US dollars in 2019 to about 5.11 billion in 2020, and then to 5.69 billion in 2021. However, there was a noticeable decrease in 2022 to approximately 5.05 billion US dollars, followed by a substantial increase to around 7.84 billion US dollars in 2023. This growth in invested capital in the latest year may suggest expanded investments or acquisitions.
- Economic Spread Ratio
- The economic spread ratio has steadily improved over the years but remained negative until 2023. It started at -19.69% in 2019, rose to -14.32%, then to -8.66%, and further reduced the negative gap to -2.92% in 2022. In 2023, it crossed into positive territory at 0.74%, indicating that the return on invested capital has finally exceeded the cost of capital after several years of underperformance.
Economic Profit Margin
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 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a clear upward trend over the five-year period. Starting with a significant negative value in 2019, the negative amount gradually decreases each year, moving closer to breakeven. By 2023, the company achieves a positive economic profit, indicating a turnaround from prior losses and an improvement in value creation.
- Adjusted Net Sales
- Adjusted net sales experienced a decline from 2019 to 2020, reflecting a drop in revenue during that time. However, from 2020 onwards, the sales steadily increased each year, reaching the highest level in 2023. This recovery and subsequent growth suggest strengthening market demand or successful sales strategies implemented over the latter years.
- Economic Profit Margin
- The economic profit margin follows a similar trajectory to economic profit itself. Initially deeply negative in 2019 and 2020, it improves significantly by reducing the negative margin in 2021 and 2022 and ultimately turns positive in 2023. This progression indicates enhanced efficiency and profitability relative to sales over time.