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
Advanced Micro Devices Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 621 – 21.14% × 58,227 = -11,690
The financial performance and capital efficiency over the observed periods reveal several significant trends. Net operating profit after taxes (NOPAT) initially shows robust growth, increasing from 1,330 million US dollars in 2020 to a peak of 3,517 million US dollars in 2021. Subsequently, it declines sharply, turning negative in 2022 and 2023 with -138 million and -201 million US dollars respectively, before recovering partially to 621 million US dollars in 2024.
The cost of capital remains relatively stable throughout the periods, fluctuating narrowly around 21%, ranging from 20.96% to 21.27%. This consistency suggests that the risk profile and financing costs have largely remained unchanged despite the fluctuations in operational performance.
Invested capital experiences a substantial increase beginning in 2022. It rises abruptly from 6,195 million US dollars in 2021 to 58,525 million in 2022 and remains at a similarly elevated level through 2023 and 2024, indicating large capital expenditures or acquisitions during this timeframe.
The economic profit figures mirror the trends observed in NOPAT but with more pronounced variations. It grows positively from 404 million US dollars in 2020 to 2,199 million in 2021, then plummets to significant negative values, -12,404 million and -12,446 million US dollars in 2022 and 2023 respectively. Although economic profit improves somewhat in 2024, remaining negative at -11,690 million, the level of negative economic profit indicates that capital returns have been substantially below the cost of capital in the later years.
In summary, the data reflects a period of strong profitability and value creation up to 2021, followed by a marked deterioration in profitability starting in 2022 despite sustained capital investment. The company’s invested capital surge coincides with a decline in both NOPAT and economic profit, suggesting challenges in generating adequate returns on expanded capital. The steady cost of capital in the face of increasing invested capital and declining economic profit highlights increased difficulties in generating shareholder value, pointing toward a need for strategic reassessment of capital deployment and operational efficiency.
Net Operating Profit after Taxes (NOPAT)
Advanced Micro Devices Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in liability for product warranty.
3 Addition of increase (decrease) in liabilities related to the 2024 Restructuring Plan.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 600 × 4.63% = 28
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 120 × 21.00% = 25
7 Addition of after taxes interest expense to net income.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 182 × 21.00% = 38
9 Elimination of after taxes investment income.
The financial data reveals fluctuating profitability and operational efficiency over the five-year period under review.
- Net Income
- Net income experienced growth from 2020 to 2021, increasing from 2,490 million US dollars to 3,162 million US dollars. However, it sharply declined in 2022 to 1,320 million US dollars, and further decreased in 2023 to 854 million US dollars. In 2024, there was a recovery with net income rising to 1,641 million US dollars, though it remained below the peak values seen in 2020 and 2021.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT displayed a volatile pattern during the same period. It increased significantly from 1,330 million US dollars in 2020 to 3,517 million US dollars in 2021, indicating strong operational performance. However, in 2022 and 2023, NOPAT turned negative, with losses of 138 million US dollars and 201 million US dollars respectively, suggesting operational inefficiencies or extraordinary expenses. In 2024, NOPAT returned to a positive figure of 621 million US dollars, though this value remained substantially lower than the earlier years.
Overall, the data indicates that while the company demonstrated solid profitability growth through 2021, it subsequently faced challenges in maintaining operational profitability, as seen in the negative NOPAT values for two consecutive years. The partial recovery in 2024 suggests improvements but does not yet reflect a full return to previous performance levels. The divergence between net income and NOPAT in the recent years may warrant further examination to understand underlying causes such as non-operating items or tax impacts.
Cash Operating Taxes
Advanced Micro Devices Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
- Income Tax Provision (Benefit)
- The income tax provision exhibited considerable volatility over the reported periods. It began with a significant tax benefit of -$1,210 million in 2020, indicating a tax gain or credit. This shifted to a tax expense of $513 million in 2021. Subsequently, the tax provision returned to a benefit state in 2022 and 2023, with figures of -$122 million and -$346 million respectively, before moving back to a tax expense of $381 million in 2024. These fluctuations suggest variability in taxable income or changes in tax strategies and regulations, impacting the company’s tax obligations year over year.
- Cash Operating Taxes
- The cash operating taxes demonstrated an overall upward trend during the period under review. Starting from a relatively low base of $24 million in 2020, the amount escalated to $214 million in 2021. This increase continued sharply to $1,392 million in 2022, followed by a decline to $658 million in 2023. However, in the final period, cash taxes rose again to $1,531 million in 2024, marking the highest value recorded in the series. This pattern indicates increased cash tax payments despite the oscillation in reported tax provisions, which could reflect timing differences between accounting tax expense and actual tax payments or changes in the company’s taxable income and cash flows.
Invested Capital
Advanced Micro Devices Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of liability for product warranty.
4 Addition of liabilities related to the 2024 Restructuring Plan.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of short-term investments.
- Total reported debt & leases
- The total reported debt and leases experienced a moderate increase from 572 million USD in 2020 to 732 million USD in 2021. However, there was a significant surge in 2022, reaching 2956 million USD, more than quadrupling the previous year's amount. Following this peak, the debt slightly increased to 3109 million USD in 2023 before declining to 2321 million USD in 2024. Overall, despite fluctuations, the values remain substantially elevated relative to the initial years, indicating increased financial leverage or obligations.
- Stockholders’ equity
- Stockholders' equity showed steady growth from 5837 million USD in 2020 to 7497 million USD in 2021. A substantial rise occurred in 2022, jumping dramatically to 54750 million USD, with continued growth in subsequent years reaching 55892 million USD in 2023 and 57568 million USD in 2024. This marked increase in equity suggests either significant retained earnings, capital infusions, or revaluation adjustments with an emphasis on strengthening the company's financial foundation over time.
- Invested capital
- Invested capital followed a similar trend to stockholders' equity, beginning at 4364 million USD in 2020 and increasing to 6195 million USD in 2021. A notable surge occurred in 2022, reaching 58525 million USD, which was maintained with a slight decrease to 57883 million USD in 2023 and a minor uptick to 58227 million USD in 2024. The fluctuations suggest strategic capital allocation or acquisitions that contributed to a substantial increase in the total capital invested in the business.
Cost of Capital
Advanced Micro Devices Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 181,510) | 181,510) | ÷ | 183,653) | = | 0.99 | 0.99 | × | 21.36% | = | 21.11% | ||
| Debt3 | 1,543) | 1,543) | ÷ | 183,653) | = | 0.01 | 0.01 | × | 3.39% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 600) | 600) | ÷ | 183,653) | = | 0.00 | 0.00 | × | 4.63% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 183,653) | 1.00 | 21.14% | ||||||||||
Based on: 10-K (reporting date: 2024-12-28).
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 | 270,951) | 270,951) | ÷ | 273,963) | = | 0.99 | 0.99 | × | 21.36% | = | 21.12% | ||
| Debt3 | 2,371) | 2,371) | ÷ | 273,963) | = | 0.01 | 0.01 | × | 3.26% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 641) | 641) | ÷ | 273,963) | = | 0.00 | 0.00 | × | 4.57% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 273,963) | 1.00 | 21.15% | ||||||||||
Based on: 10-K (reporting date: 2023-12-30).
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 | 126,929) | 126,929) | ÷ | 129,699) | = | 0.98 | 0.98 | × | 21.36% | = | 20.90% | ||
| Debt3 | 2,281) | 2,281) | ÷ | 129,699) | = | 0.02 | 0.02 | × | 3.26% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 489) | 489) | ÷ | 129,699) | = | 0.00 | 0.00 | × | 3.83% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 129,699) | 1.00 | 20.96% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
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 | 144,012) | 144,012) | ÷ | 144,772) | = | 0.99 | 0.99 | × | 21.36% | = | 21.25% | ||
| Debt3 | 341) | 341) | ÷ | 144,772) | = | 0.00 | 0.00 | × | 7.50% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 419) | 419) | ÷ | 144,772) | = | 0.00 | 0.00 | × | 3.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 144,772) | 1.00 | 21.27% | ||||||||||
Based on: 10-K (reporting date: 2021-12-25).
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 | 103,734) | 103,734) | ÷ | 104,618) | = | 0.99 | 0.99 | × | 21.36% | = | 21.18% | ||
| Debt3 | 642) | 642) | ÷ | 104,618) | = | 0.01 | 0.01 | × | 7.54% × (1 – 21.00%) | = | 0.04% | ||
| Operating lease liability4 | 242) | 242) | ÷ | 104,618) | = | 0.00 | 0.00 | × | 5.29% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 104,618) | 1.00 | 21.22% | ||||||||||
Based on: 10-K (reporting date: 2020-12-26).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Advanced Micro Devices Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (11,690) | (12,446) | (12,404) | 2,199) | 404) | |
| Invested capital2 | 58,227) | 57,883) | 58,525) | 6,195) | 4,364) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -20.08% | -21.50% | -21.19% | 35.50% | 9.25% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Analog Devices Inc. | -12.41% | -8.33% | -9.69% | -12.95% | -7.95% | |
| Applied Materials Inc. | 8.87% | 16.77% | 26.68% | 22.19% | 10.43% | |
| Broadcom Inc. | -7.47% | 7.76% | 6.31% | -3.00% | -8.43% | |
| Intel Corp. | -25.73% | -14.71% | -8.21% | 8.86% | 14.48% | |
| KLA Corp. | 19.55% | 23.43% | 25.73% | 14.33% | 3.26% | |
| Lam Research Corp. | 2.51% | 7.82% | 22.73% | 18.09% | 2.22% | |
| Micron Technology Inc. | -15.44% | -27.50% | 0.25% | -4.32% | -9.84% | |
| NVIDIA Corp. | 67.59% | -10.57% | 31.63% | 12.07% | -1.94% | |
| Qualcomm Inc. | 10.28% | 2.71% | 29.15% | 26.56% | 11.60% | |
| Texas Instruments Inc. | 5.56% | 15.19% | 35.84% | 34.46% | 29.61% | |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -11,690 ÷ 58,227 = -20.08%
4 Click competitor name to see calculations.
- Economic Profit
- Economic profit exhibited significant volatility over the analyzed period. It increased sharply from 404 million US dollars in 2020 to a peak of 2,199 million US dollars in 2021. However, from 2022 onwards, the company experienced substantial economic losses, reaching -12,404 million US dollars in 2022 and maintaining similarly negative levels in 2023 and 2024, with slight improvement but still large negative figures.
- Invested Capital
- Invested capital showed a strong upward trend. It rose steadily from 4,364 million US dollars in 2020 to over 6,195 million in 2021. Subsequently, there was a dramatic increase to 58,525 million in 2022. Levels stabilized around 57,883 million and 58,227 million in the following two years, indicating a substantial increase in capital investment during this period.
- Economic Spread Ratio
- The economic spread ratio followed a pattern similar to economic profit. A positive spread of 9.25% in 2020 surged to 35.5% in 2021, signifying strong returns on invested capital. However, starting in 2022, this metric turned negative, dropping to -21.19% and remaining negative through 2023 and 2024, reflecting declining efficiency or profitability relative to capital invested.
Economic Profit Margin
Advanced Micro Devices Inc., economic profit margin calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (11,690) | (12,446) | (12,404) | 2,199) | 404) | |
| Net revenue | 25,785) | 22,680) | 23,601) | 16,434) | 9,763) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -45.34% | -54.87% | -52.56% | 13.38% | 4.14% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Analog Devices Inc. | -57.30% | -29.90% | -36.31% | -83.17% | -25.84% | |
| Applied Materials Inc. | 7.22% | 11.24% | 15.41% | 14.16% | 7.94% | |
| Broadcom Inc. | -20.41% | 13.58% | 11.81% | -7.06% | -23.27% | |
| Intel Corp. | -44.71% | -24.98% | -11.54% | 9.92% | 15.25% | |
| KLA Corp. | 16.78% | 18.61% | 21.76% | 14.12% | 3.65% | |
| Lam Research Corp. | 2.55% | 6.87% | 16.78% | 14.59% | 2.58% | |
| Micron Technology Inc. | -32.80% | -94.60% | 0.43% | -7.22% | -19.42% | |
| NVIDIA Corp. | 34.13% | -8.36% | 21.21% | 9.44% | -2.51% | |
| Qualcomm Inc. | 8.15% | 2.39% | 19.42% | 16.00% | 8.76% | |
| Texas Instruments Inc. | 9.30% | 19.58% | 31.43% | 30.82% | 26.54% | |
Based on: 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × -11,690 ÷ 25,785 = -45.34%
3 Click competitor name to see calculations.
- Net Revenue
- Net revenue demonstrated a consistent upward trend over the analyzed periods. Starting from 9,763 million USD in 2020, it increased significantly to 16,434 million USD in 2021, followed by continued growth to 23,601 million USD in 2022. Although there was a slight dip to 22,680 million USD in 2023, net revenue rebounded in 2024 reaching the highest value of 25,785 million USD within the observed timeframe.
- Economic Profit
- Economic profit showed a volatile and deteriorating trend. The company recorded a positive economic profit of 404 million USD in 2020, which increased markedly to 2,199 million USD in 2021. However, from 2022 onwards, it turned sharply negative, with losses of -12,404 million USD in 2022, -12,446 million USD in 2023, and a marginal improvement to -11,690 million USD in 2024. This indicates significant challenges in generating returns above the cost of capital during the latter years.
- Economic Profit Margin
- Economic profit margin followed a similar pattern as economic profit. It was positive at 4.14% in 2020 and increased notably to 13.38% in 2021, reflecting improved economic profitability. However, it reversed dramatically in subsequent years, declining to -52.56% in 2022 and further to -54.87% in 2023. There was a minor recovery in 2024, with the margin improving to -45.34%, but it remained substantially negative, indicating poor economic returns relative to revenue.