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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Applied Materials Inc., economic profit calculation

US$ in millions

12 months ended:	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Net operating profit after taxes (NOPAT)¹	6,363)	6,533)	6,900)	6,175)	3,885)	2,934)
Cost of capital²	18.52%	18.61%	18.32%	18.42%	17.94%	17.59%
Invested capital³	22,135)	17,777)	14,890)	14,717)	13,090)	10,129)

Economic profit⁴	2,263)	3,225)	4,172)	3,464)	1,537)	1,153)

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

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
= 6,363 – 18.52% × 22,135 = 2,263

Download chart

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.	Applied Materials Inc. economic profit decreased from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc., NOPAT calculation

US$ in millions

12 months ended:	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Net income	7,177)	6,856)	6,525)	5,888)	3,619)	2,706)
Deferred income tax expense (benefit)¹	(678)	(358)	195)	60)	68)	51)
Increase (decrease) in allowance for credit losses²	—)	—)	—)	(1)	—)	(3)
Increase (decrease) in warranty reserves³	42)	46)	44)	41)	5)	(12)
Increase (decrease) in severance and related charges reserves⁴	—)	—)	(17)	17)	—)	—)
Increase (decrease) in equity equivalents⁵	(636)	(312)	222)	117)	73)	36)
Interest expense	247)	238)	228)	236)	240)	237)
Interest expense, operating lease liability⁶	13)	10)	9)	5)	5)	6)
Adjusted interest expense	260)	248)	237)	241)	245)	243)
Tax benefit of interest expense⁷	(55)	(52)	(50)	(51)	(51)	(51)
Adjusted interest expense, after taxes⁸	206)	196)	187)	190)	193)	192)
Interest income	(486)	(262)	(44)	(26)	—)	—)
Investment income, before taxes	(486)	(262)	(44)	(26)	—)	—)
Tax expense (benefit) of investment income⁹	102)	55)	9)	5)	—)	—)
Investment income, after taxes¹⁰	(384)	(207)	(35)	(21)	—)	—)
Net operating profit after taxes (NOPAT)	6,363)	6,533)	6,900)	6,175)	3,885)	2,934)

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

¹ Elimination of deferred tax expense. See details »

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

³ Addition of increase (decrease) in warranty reserves.

⁴ Addition of increase (decrease) in severance and related charges reserves.

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

⁶ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 346 × 3.90% = 13

⁷ 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 260 × 21.00% = 55

⁸ Addition of after taxes interest expense to net income.

⁹ 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 486 × 21.00% = 102

¹⁰ Elimination of after taxes investment income.

Download chart

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.	Applied Materials Inc. NOPAT decreased from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Provision for income taxes	975)	860)	1,074)	883)	547)	563)
Less: Deferred income tax expense (benefit)	(678)	(358)	195)	60)	68)	51)
Add: Tax savings from interest expense	55)	52)	50)	51)	51)	51)
Less: Tax imposed on investment income	102)	55)	9)	5)	—)	—)
Cash operating taxes	1,606)	1,215)	920)	868)	530)	563)

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

Download chart

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.	Applied Materials Inc. cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc., invested capital calculation (financing approach)

US$ in millions

	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Short-term debt	100)	100)	—)	—)	—)	—)
Current portion of long-term debt	699)	—)	—)	—)	—)	600)
Finance lease liabilities, current	—)	102)	—)	—)	—)	—)
Long-term debt, net of current portion	5,460)	5,461)	5,457)	5,452)	5,448)	4,713)
Operating lease liability¹	346)	336)	372)	301)	259)	151)
Total reported debt & leases	6,605)	5,999)	5,829)	5,753)	5,707)	5,464)
Stockholders’ equity	19,001)	16,349)	12,194)	12,247)	10,578)	8,214)
Net deferred tax (assets) liabilities²	(2,382)	(1,719)	(1,344)	(1,615)	(1,702)	(1,755)
Allowance for credit losses³	—)	29)	29)	29)	30)	30)
Warranty reserves⁴	364)	332)	286)	242)	201)	196)
Severance and related charges reserves⁵	—)	—)	—)	17)	—)	—)
Equity equivalents⁶	(2,018)	(1,358)	(1,029)	(1,327)	(1,471)	(1,529)
Accumulated other comprehensive (income) loss, net of tax⁷	168)	217)	202)	260)	299)	180)
Adjusted stockholders’ equity	17,151)	15,208)	11,367)	11,180)	9,406)	6,865)
Construction in progress⁸	(898)	(672)	(389)	(326)	(237)	(120)
Available-for-sale investments⁹	(723)	(2,758)	(1,917)	(1,890)	(1,786)	(2,080)
Invested capital	22,135)	17,777)	14,890)	14,717)	13,090)	10,129)

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

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 warranty reserves.

⁵ Addition of severance and related charges reserves.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of available-for-sale investments.

Download chart

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Applied Materials Inc. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc., cost of capital calculations

Oct 27, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	137,797)	137,797)	÷	144,042)	=	0.96	0.96	×	19.22%	=	18.39%
Debt and finance lease liabilities³	5,899)	5,899)	÷	144,042)	=	0.04	0.04	×	3.90% × (1 – 21.00%)	=	0.13%
Operating lease liability⁴	346)	346)	÷	144,042)	=	0.00	0.00	×	3.90% × (1 – 21.00%)	=	0.01%
Total:	144,042)					1.00					18.52%

Based on: 10-K (reporting date: 2024-10-27).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Oct 29, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	134,591)	134,591)	÷	139,829)	=	0.96	0.96	×	19.22%	=	18.50%
Debt and finance lease liabilities³	4,902)	4,902)	÷	139,829)	=	0.04	0.04	×	3.80% × (1 – 21.00%)	=	0.11%
Operating lease liability⁴	336)	336)	÷	139,829)	=	0.00	0.00	×	3.10% × (1 – 21.00%)	=	0.01%
Total:	139,829)					1.00					18.61%

Based on: 10-K (reporting date: 2023-10-29).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Oct 30, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	88,407)	88,407)	÷	93,579)	=	0.94	0.94	×	19.22%	=	18.16%
Debt and finance lease liabilities³	4,800)	4,800)	÷	93,579)	=	0.05	0.05	×	3.75% × (1 – 21.00%)	=	0.15%
Operating lease liability⁴	372)	372)	÷	93,579)	=	0.00	0.00	×	2.50% × (1 – 21.00%)	=	0.01%
Total:	93,579)					1.00					18.32%

Based on: 10-K (reporting date: 2022-10-30).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Oct 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	129,856)	129,856)	÷	136,557)	=	0.95	0.95	×	19.22%	=	18.28%
Debt and finance lease liabilities³	6,400)	6,400)	÷	136,557)	=	0.05	0.05	×	3.75% × (1 – 21.00%)	=	0.14%
Operating lease liability⁴	301)	301)	÷	136,557)	=	0.00	0.00	×	1.70% × (1 – 21.00%)	=	0.00%
Total:	136,557)					1.00					18.42%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Oct 25, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	80,737)	80,737)	÷	87,596)	=	0.92	0.92	×	19.22%	=	17.72%
Debt and finance lease liabilities³	6,600)	6,600)	÷	87,596)	=	0.08	0.08	×	3.75% × (1 – 21.00%)	=	0.22%
Operating lease liability⁴	259)	259)	÷	87,596)	=	0.00	0.00	×	1.80% × (1 – 21.00%)	=	0.00%
Total:	87,596)					1.00					17.94%

Based on: 10-K (reporting date: 2020-10-25).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Oct 27, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	54,799)	54,799)	÷	61,050)	=	0.90	0.90	×	19.22%	=	17.25%
Debt and finance lease liabilities³	6,100)	6,100)	÷	61,050)	=	0.10	0.10	×	4.12% × (1 – 21.00%)	=	0.33%
Operating lease liability⁴	151)	151)	÷	61,050)	=	0.00	0.00	×	4.12% × (1 – 21.00%)	=	0.01%
Total:	61,050)					1.00					17.59%

Based on: 10-K (reporting date: 2019-10-27).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Applied Materials Inc., economic spread ratio calculation, comparison to benchmarks

	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	2,263)	3,225)	4,172)	3,464)	1,537)	1,153)
Invested capital²	22,135)	17,777)	14,890)	14,717)	13,090)	10,129)
Performance Ratio
Economic spread ratio³	10.22%	18.14%	28.02%	23.54%	11.74%	11.38%
Benchmarks
Economic Spread Ratio, Competitors⁴
Advanced Micro Devices Inc.	—	-19.74%	-19.45%	37.27%	11.02%	-7.10%
Analog Devices Inc.	-11.46%	-7.38%	-8.74%	-12.00%	-7.04%	-5.50%
Broadcom Inc.	-6.54%	8.69%	7.18%	-2.17%	-7.66%	-7.35%
Intel Corp.	—	-13.54%	-7.10%	10.07%	15.73%	13.80%
KLA Corp.	20.68%	24.54%	26.81%	15.45%	4.32%	5.84%
Lam Research Corp.	3.83%	9.13%	24.01%	19.38%	3.44%	0.08%
Micron Technology Inc.	-14.35%	-26.45%	1.35%	-3.20%	-8.77%	1.41%
Monolithic Power Systems Inc.	—	11.92%	18.00%	20.52%	9.40%	5.71%
NVIDIA Corp.	68.73%	-9.44%	32.76%	13.19%	-0.81%	59.79%
Qualcomm Inc.	11.33%	3.72%	30.16%	27.56%	12.60%	13.99%
Texas Instruments Inc.	—	15.40%	36.06%	34.68%	29.83%	29.51%

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,263 ÷ 22,135 = 10.22%

⁴ Click competitor name to see calculations.

Download chart

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.	Applied Materials Inc. economic spread ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc., economic profit margin calculation, comparison to benchmarks

	Oct 27, 2024	Oct 29, 2023	Oct 30, 2022	Oct 31, 2021	Oct 25, 2020	Oct 27, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	2,263)	3,225)	4,172)	3,464)	1,537)	1,153)
Net revenue	27,176)	26,517)	25,785)	23,063)	17,202)	14,608)
Performance Ratio
Economic profit margin²	8.33%	12.16%	16.18%	15.02%	8.93%	7.89%
Benchmarks
Economic Profit Margin, Competitors³
Advanced Micro Devices Inc.	—	-50.38%	-48.23%	14.05%	4.92%	-3.60%
Analog Devices Inc.	-52.90%	-26.49%	-32.75%	-77.13%	-22.89%	-16.84%
Broadcom Inc.	-17.87%	15.20%	13.42%	-5.11%	-21.15%	-19.53%
Intel Corp.	—	-23.00%	-9.99%	11.28%	16.56%	15.46%
KLA Corp.	17.75%	19.50%	22.67%	15.23%	4.84%	8.15%
Lam Research Corp.	3.88%	8.01%	17.72%	15.63%	4.00%	0.09%
Micron Technology Inc.	-30.47%	-90.99%	2.31%	-5.35%	-17.29%	2.34%
Monolithic Power Systems Inc.	—	9.66%	12.36%	11.61%	7.07%	4.19%
NVIDIA Corp.	34.70%	-7.47%	21.96%	10.31%	-1.05%	24.41%
Qualcomm Inc.	8.98%	3.27%	20.09%	16.60%	9.51%	12.36%
Texas Instruments Inc.	—	19.86%	31.62%	31.02%	26.74%	24.73%

Based on: 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27).

¹ Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × 2,263 ÷ 27,176 = 8.33%

³ Click competitor name to see calculations.

Download chart

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.	Applied Materials Inc. economic profit margin deteriorated from 2022 to 2023 and from 2023 to 2024.

Applied Materials Inc. (NASDAQ:AMAT)

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