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
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Economic Profit
Amazon.com Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes experienced significant fluctuations over the analyzed periods. From 2020 to 2021, there was a marked increase, climbing from 24,183 million USD to 37,525 million USD. However, in 2022, NOPAT turned negative, declining sharply to -5,619 million USD. This negative trend was reversed in 2023, with a recovery to 31,856 million USD, followed by a strong upward movement in 2024, reaching 58,988 million USD, the highest in the series.
- Cost of Capital
- The cost of capital exhibited modest variations across the years. It started at 15.57% in 2020, slightly decreased to 15.3% in 2021, and further declined to 14.73% in 2022. However, it again increased in the subsequent years to 15.37% in 2023 and 15.68% in 2024, showing an overall stable but slightly increasing trend in the latter part of the period.
- Invested Capital
- Invested capital showed a steady and consistent increase throughout the period. The amount rose from 150,160 million USD in 2020 to 202,836 million USD in 2021, then expanded to 269,358 million USD in 2022. This upward momentum continued robustly in 2023 and 2024, with values reaching 326,668 million USD and 375,421 million USD, respectively, indicating substantial ongoing investments or asset accumulation.
- Economic Profit
- The economic profit reflected a volatile pattern closely connected to changes in NOPAT and invested capital. In 2020, economic profit was positive at 802 million USD, followed by a significant improvement to 6,486 million USD in 2021. However, it deteriorated drastically in 2022 to -45,288 million USD, influenced by the negative NOPAT and increased capital base. Despite partial recovery in 2023 to -18,346 million USD, economic profit remained negative. Finally, in 2024, economic profit returned to slightly positive territory at 134 million USD, suggesting improved profitability relative to the cost of capital.
- Overall Insights
- The data reveal a business with growing invested capital and fluctuating profitability. The sharp downturn in both NOPAT and economic profit in 2022 highlights a challenging period, potentially due to operational or market difficulties. The recovery in subsequent years in NOPAT and return to slight positive economic profit in 2024 indicate efforts to restore value creation. The cost of capital remained relatively stable, with minor increases towards the end of the timeline, which could impact future investment decisions and profitability assessments. Monitoring the company's ability to maintain NOPAT growth and convert it into consistent positive economic profit will be crucial for evaluating financial health going forward.
Net Operating Profit after Taxes (NOPAT)
Amazon.com Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss).
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss)
- The net income fluctuated significantly over the five-year period. Beginning at $21,331 million in 2020, there was a substantial increase to $33,364 million in 2021. However, 2022 marked a notable downturn with a net loss of $2,722 million. This negative performance rebounded sharply in the subsequent years, reaching $30,425 million in 2023 and further rising to $59,248 million in 2024. The data indicates a strong recovery and growth trajectory after the loss experienced in 2022.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT followed a similar pattern to net income, starting at $24,183 million in 2020 and rising to $37,525 million in 2021. It then experienced a sharp decline to a negative $5,619 million in 2022, deeper than the net income loss in the same year, indicating challenges in operating profitability. However, a significant recovery occurred in 2023 with NOPAT increasing to $31,856 million, followed by a strong increase to $58,988 million in 2024. This suggests an improvement in the company's core operational efficiency and profitability in the last two years.
- Overall Analysis
- The financial results reveal volatility, with a peak in 2021, a pronounced downturn in 2022, and substantial recovery and growth by 2024. The presence of negative figures in 2022 for both net income and NOPAT indicates operational and profitability challenges during that year. The subsequent rebound in 2023 and 2024 demonstrates strong adaptive or strategic measures resulting in enhanced earnings and operating profit, achieving new highs at the end of the evaluated period.
Cash Operating Taxes
Amazon.com Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
- Provision (benefit) for income taxes, net
- The net provision for income taxes showed considerable volatility over the observed periods. In 2020 and 2021, the provision increased significantly from 2,863 million USD to 4,791 million USD. However, the year 2022 presented an unusual pattern with a net tax benefit of -3,217 million USD, indicating a reversal or tax benefit situation rather than a conventional tax expense. Subsequently, the provision rose again sharply to 7,120 million USD in 2023 and further to 9,265 million USD in 2024, reflecting a substantial increase in tax obligations or adjustments during these years.
- Cash operating taxes
- Cash operating taxes exhibited a steadily increasing trend from 3,844 million USD in 2020 to 5,646 million USD in 2021, followed by a more moderate rise to 5,689 million USD in 2022. In 2023, there was a notable surge to 13,583 million USD, nearly doubling the previous year's amount. This upward momentum continued in 2024 with cash operating taxes reaching 14,023 million USD. The substantial increase observed in the last two years suggests significant growth in actual tax payments, potentially correlated with rising taxable income or changes in tax rates and regulations.
Invested Capital
Amazon.com Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
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.
- Total reported debt & leases
-
Over the five-year period, total reported debt and leases exhibited an overall increasing trend from 100,504 million US dollars in 2020 to a peak of 154,972 million in 2022. This increase suggests a significant rise in the company's leverage or obligations during these years. However, this peak level of debt was relatively maintained in 2023, with a slight decrease to 154,556 million, followed by a further moderate reduction to 147,838 million in 2024. The slight decline in the last two years might indicate strategic deleveraging or improved debt management efforts.
- Stockholders’ equity
-
Stockholders' equity demonstrated strong and consistent growth throughout the period under review. Starting at 93,404 million US dollars in 2020, equity levels increased markedly year over year, reaching 138,245 million in 2021 and continuing upward to 146,043 million in 2022. This growth accelerated significantly during 2023 and 2024, culminating in a sizable equity base of 285,970 million by the end of 2024. The substantial rise in equity in the final years suggests enhanced retained earnings, possible equity issuances, or asset revaluations, which strengthen the company's net asset position and financial stability.
- Invested capital
-
Invested capital showed a continuous and pronounced increase across the five years. Beginning at 150,160 million US dollars in 2020, it increased substantially to 202,836 million in 2021, then accelerated its upward trajectory to 269,358 million in 2022. The growth sustained momentum through 2023 and 2024, reaching 326,668 million and 375,421 million respectively. This pattern indicates significant expansion in the company's total capital employed in operations, possibly due to investments in long-term assets, acquisitions, or business growth initiatives.
Cost of Capital
Amazon.com Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt and finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
Economic Spread Ratio
Amazon.com Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant volatility over the observed periods. Initially, there was a positive economic profit of 802 million USD in 2020, followed by a substantial increase to 6,486 million USD in 2021. However, this was succeeded by a sharp decline into negative territory, with economic losses of 45,288 million USD in 2022 and 18,346 million USD in 2023. By 2024, the economic profit had slightly recovered to a marginally positive figure of 134 million USD.
- Invested Capital
- Invested capital demonstrated consistent growth throughout the periods. Starting at 150,160 million USD in 2020, it increased steadily each year, reaching 202,836 million USD in 2021, 269,358 million USD in 2022, 326,668 million USD in 2023, and eventually attaining 375,421 million USD in 2024. This upward trend indicates ongoing investment and asset accumulation.
- Economic Spread Ratio
- The economic spread ratio, representing the margin between return on invested capital and cost of capital, fluctuated markedly. It began at a modest positive 0.53% in 2020 and peaked at 3.2% in 2021. The ratio then declined steeply into negative values, dropping to -16.81% in 2022 and improving slightly to -5.62% in 2023. By 2024, it returned to a near-zero positive value of 0.04%, indicating minimal economic spread.
- Overall Analysis
- The data reveals a period of notable expansion in invested capital accompanied by considerable instability in economic profitability. The large negative economic profits and economic spread ratios during 2022 and 2023 suggest operational challenges or increased costs relative to returns during these years. The initial improvement in 2021 followed by the severe downturn could indicate effects of external pressures or internal shifts impacting profitability. The modest recovery in 2024, despite continued growth in invested capital, points to cautious optimism but suggests that returns have yet to reach previously achieved positive levels.
Economic Profit Margin
Amazon.com Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- Adjusted net sales have shown a consistent upward trend over the observed periods. From 2020 to 2024, sales increased from 387,482 million US dollars to 641,635 million US dollars, indicating steady growth in revenue-generating activities. This continuous increase suggests expanding market presence or demand for the company's offerings.
- Economic Profit
- The economic profit figures reveal a more volatile pattern. Initially, there was substantial improvement from 802 million US dollars in 2020 to 6,486 million US dollars in 2021. However, this was followed by a sharp deterioration in 2022, with a significant loss of 45,288 million US dollars. Although the loss narrowed in 2023 to 18,346 million US dollars, it remained negative. By 2024, economic profit returned to a marginal positive value of 134 million US dollars, indicating a recovery but still at a minimal level.
- Economic Profit Margin
- The economic profit margin trajectory parallels the economic profit trend. Starting at 0.21% in 2020, it grew to 1.37% in 2021, reflecting improved profitability relative to sales. In 2022, the margin sharply declined to -8.78%, indicating severe operational or cost challenges that outweighed revenue growth. The margin improved in 2023 to -3.17%, yet remained negative, signaling continued pressure on profitability. By 2024, the margin nearly broke even at 0.02%, consistent with the modest economic profit seen that year.
- Overall Insights
- The data reveals that while sales have steadily increased, translating to higher top-line revenue, profitability as measured by economic profit and its margin has been unstable. The pronounced losses in 2022 and 2023 suggest that increased costs or other economic factors significantly impacted profit generation despite growing sales. The gradual improvement in 2024 indicates potential operational adjustments or market factors leading to a recovery in economic profitability, albeit still at a very low level. The divergence between growing sales and fluctuating economic profit suggests that managing costs and improving operating efficiency are critical areas requiring attention to sustain and enhance profitability in the future.