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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

Amazon.com Inc., economic profit calculation

US$ in millions

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	31,856)	(5,619)	37,525)	24,183)	16,097)
Cost of capital²	14.12%	13.54%	14.06%	14.30%	14.13%
Invested capital³	326,668)	269,358)	202,836)	150,160)	127,843)

Economic profit⁴	(14,278)	(42,097)	9,009)	2,707)	(1,968)

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
= 31,856 – 14.12% × 326,668 = -14,278

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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.	Amazon.com Inc. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Amazon.com Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss)	30,425)	(2,722)	33,364)	21,331)	11,588)
Deferred income tax expense (benefit)¹	(5,876)	(8,148)	(310)	(554)	796)
Increase (decrease) in allowance for doubtful accounts²	300)	300)	—)	382)	223)
Increase (decrease) in unearned revenue³	4,800)	2,100)	2,419)	1,418)	2,254)
Increase (decrease) in equity equivalents⁴	(776)	(5,748)	2,109)	1,246)	3,273)
Interest expense	3,182)	2,367)	1,809)	1,647)	1,600)
Interest expense, operating lease liability⁵	2,496)	1,933)	1,283)	977)	801)
Adjusted interest expense	5,678)	4,300)	3,092)	2,624)	2,401)
Tax benefit of interest expense⁶	(1,192)	(903)	(649)	(551)	(504)
Adjusted interest expense, after taxes⁷	4,486)	3,397)	2,443)	2,073)	1,897)
(Gain) loss on marketable securities	65)	298)	(47)	(36)	(4)
Interest income	(2,949)	(989)	(448)	(555)	(832)
Investment income, before taxes	(2,884)	(691)	(495)	(591)	(836)
Tax expense (benefit) of investment income⁸	606)	145)	104)	124)	176)
Investment income, after taxes⁹	(2,278)	(546)	(391)	(467)	(660)
Net operating profit after taxes (NOPAT)	31,856)	(5,619)	37,525)	24,183)	16,097)

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 doubtful accounts.

³ Addition of increase (decrease) in unearned revenue.

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

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 75,639 × 3.30% = 2,496

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 5,678 × 21.00% = 1,192

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

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,884 × 21.00% = 606

⁹ 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.	Amazon.com Inc. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Amazon.com Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision (benefit) for income taxes, net	7,120)	(3,217)	4,791)	2,863)	2,374)
Less: Deferred income tax expense (benefit)	(5,876)	(8,148)	(310)	(554)	796)
Add: Tax savings from interest expense	1,192)	903)	649)	551)	504)
Less: Tax imposed on investment income	606)	145)	104)	124)	176)
Cash operating taxes	13,583)	5,689)	5,646)	3,844)	1,907)

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.	Amazon.com Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Amazon.com Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of lease liabilities, finance leases	2,032)	4,397)	8,083)	10,374)	9,884)
Current portion of long-term debt	8,494)	2,999)	1,491)	1,155)	1,305)
Long-term lease liabilities, finance leases, excluding current portion	10,077)	11,386)	15,670)	18,060)	17,095)
Long-term debt, excluding current portion	58,314)	67,150)	48,744)	31,816)	23,414)
Operating lease liability¹	75,639)	69,040)	58,330)	39,099)	25,835)
Total reported debt & leases	154,556)	154,972)	132,318)	100,504)	77,533)
Stockholders’ equity	201,875)	146,043)	138,245)	93,404)	62,060)
Net deferred tax (assets) liabilities²	(13,197)	(7,513)	494)	866)	1,321)
Allowance for doubtful accounts³	1,700)	1,400)	1,100)	1,100)	718)
Unearned revenue⁴	20,927)	16,127)	14,027)	11,608)	10,190)
Equity equivalents⁵	9,430)	10,014)	15,621)	13,574)	12,229)
Accumulated other comprehensive (income) loss, net of tax⁶	3,040)	4,487)	1,376)	180)	986)
Adjusted stockholders’ equity	214,345)	160,544)	155,242)	107,158)	75,275)
Construction in progress⁷	(28,840)	(30,020)	(24,895)	(15,228)	(6,036)
Marketable securities⁸	(13,393)	(16,138)	(59,829)	(42,274)	(18,929)
Invested capital	326,668)	269,358)	202,836)	150,160)	127,843)

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 unearned revenue.

⁵ Addition of equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of 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.	Amazon.com Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Amazon.com Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,784,656)	1,784,656)	÷	1,933,686)	=	0.92	0.92	×	15.07%	=	13.91%
Debt and finance leases³	73,391)	73,391)	÷	1,933,686)	=	0.04	0.04	×	3.76% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	75,639)	75,639)	÷	1,933,686)	=	0.04	0.04	×	3.30% × (1 – 21.00%)	=	0.10%
Total:	1,933,686)					1.00					14.12%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,059,464)	1,059,464)	÷	1,206,729)	=	0.88	0.88	×	15.07%	=	13.23%
Debt and finance leases³	78,225)	78,225)	÷	1,206,729)	=	0.06	0.06	×	3.63% × (1 – 21.00%)	=	0.19%
Operating lease liability⁴	69,040)	69,040)	÷	1,206,729)	=	0.06	0.06	×	2.80% × (1 – 21.00%)	=	0.13%
Total:	1,206,729)					1.00					13.54%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,604,285)	1,604,285)	÷	1,740,471)	=	0.92	0.92	×	15.07%	=	13.89%
Debt and finance leases³	77,856)	77,856)	÷	1,740,471)	=	0.04	0.04	×	3.12% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	58,330)	58,330)	÷	1,740,471)	=	0.03	0.03	×	2.20% × (1 – 21.00%)	=	0.06%
Total:	1,740,471)					1.00					14.06%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,668,109)	1,668,109)	÷	1,774,266)	=	0.94	0.94	×	15.07%	=	14.17%
Debt and finance leases³	67,058)	67,058)	÷	1,774,266)	=	0.04	0.04	×	3.06% × (1 – 21.00%)	=	0.09%
Operating lease liability⁴	39,099)	39,099)	÷	1,774,266)	=	0.02	0.02	×	2.50% × (1 – 21.00%)	=	0.04%
Total:	1,774,266)					1.00					14.30%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance leases. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	1,000,002)	1,000,002)	÷	1,080,586)	=	0.93	0.93	×	15.07%	=	13.95%
Debt and finance leases³	54,749)	54,749)	÷	1,080,586)	=	0.05	0.05	×	3.17% × (1 – 21.00%)	=	0.13%
Operating lease liability⁴	25,835)	25,835)	÷	1,080,586)	=	0.02	0.02	×	3.10% × (1 – 21.00%)	=	0.06%
Total:	1,080,586)					1.00					14.13%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance leases. See details »

⁴ Operating lease liability. See details »

Amazon.com 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 millions)
Economic profit¹	(14,278)	(42,097)	9,009)	2,707)	(1,968)
Invested capital²	326,668)	269,358)	202,836)	150,160)	127,843)
Performance Ratio
Economic spread ratio³	-4.37%	-15.63%	4.44%	1.80%	-1.54%
Benchmarks
Economic Spread Ratio, Competitors⁴
Home Depot Inc.	20.90%	25.39%	16.22%	23.31%	23.74%
Lowe’s Cos. Inc.	16.40%	24.62%	12.11%	8.23%	-1.30%
TJX Cos. Inc.	7.39%	7.32%	-9.60%	8.10%	7.37%

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 × -14,278 ÷ 326,668 = -4.37%

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.	Amazon.com Inc. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Amazon.com 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 millions)
Economic profit¹	(14,278)	(42,097)	9,009)	2,707)	(1,968)

Net sales	574,785)	513,983)	469,822)	386,064)	280,522)
Add: Increase (decrease) in unearned revenue	4,800)	2,100)	2,419)	1,418)	2,254)
Adjusted net sales	579,585)	516,083)	472,241)	387,482)	282,776)
Performance Ratio
Economic profit margin²	-2.46%	-8.16%	1.91%	0.70%	-0.70%
Benchmarks
Economic Profit Margin, Competitors³
Home Depot Inc.	7.34%	8.07%	6.10%	7.73%	7.50%
Lowe’s Cos. Inc.	4.19%	6.70%	3.84%	3.05%	-0.45%
TJX Cos. Inc.	3.02%	2.97%	-6.69%	3.63%	3.29%

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 × -14,278 ÷ 579,585 = -2.46%

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.	Amazon.com Inc. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Amazon.com Inc. (NASDAQ:AMZN)

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