Name: Automatic Data Processing Inc. (NASDAQ:ADP) | Economic Value Added (EVA)
Creator: Stock Analysis on Net

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

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Automatic Data Processing Inc., economic profit calculation

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Net operating profit after taxes (NOPAT)¹	2,334,712)	2,508,856)	2,290,136)	1,628,778)	1,771,847)	1,527,436)
Cost of capital²	13.35%	13.31%	13.37%	13.33%	13.23%	13.10%
Invested capital³	10,152,600)	9,580,300)	9,463,158)	7,289,794)	7,519,836)	7,921,908)

Economic profit⁴	978,990)	1,233,661)	1,025,364)	656,809)	776,730)	489,951)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,334,712 – 13.35% × 10,152,600 = 978,990

Between June 30, 2016, and June 30, 2021, a consistent trend of positive economic profit is observed, indicating that the organization successfully generated returns exceeding its cost of capital throughout the analyzed period. The overall trajectory reflects a period of significant growth in operational profitability and a strategic shift in capital investment.

Net Operating Profit After Taxes (NOPAT): NOPAT exhibited a general upward trend, rising from 1,527,436 thousand dollars in 2016 to a peak of 2,508,856 thousand dollars in 2020. While a slight dip occurred in 2018 and a minor contraction was noted in 2021, the overall growth demonstrates an increase in the company's capacity to generate operating earnings after tax.
Invested Capital: The capital base underwent two distinct phases. From 2016 to 2018, invested capital decreased from 7,921,908 thousand dollars to 7,289,794 thousand dollars. This was followed by a period of rapid expansion starting in 2019, with invested capital reaching 10,152,600 thousand dollars by June 30, 2021, representing a significant increase in the resources deployed to the business.
Cost of Capital: The cost of capital remained highly stable over the six-year period, fluctuating within a narrow range between 13.10% and 13.37%. This consistency suggests a stable risk profile and a steady cost of financing throughout the timeframe.
Economic Profit: Economic profit remained positive across all years, confirming the creation of economic value. The profit grew from 489,951 thousand dollars in 2016 to a maximum of 1,233,661 thousand dollars in 2020. The decline to 978,990 thousand dollars in 2021 is attributable to the combination of a decrease in NOPAT and an increase in invested capital, which heightened the total capital charge for that period.

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Automatic Data Processing Inc., NOPAT calculation

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Net earnings	2,598,500)	2,466,500)	2,292,800)	1,620,800)	1,733,400)	1,492,500)
Deferred income tax expense (benefit)¹	(251,100)	26,000)	9,300)	500)	8,100)	700)
Increase (decrease) in allowance for doubtful accounts²	(12,900)	37,600)	3,600)	1,700)	11,500)	2,600)
Increase (decrease) in deferred revenues³	(16,800)	(36,900)	(53,800)	(20,000)	10,000)	23,000)
Increase (decrease) in equity equivalents⁴	(280,800)	26,700)	(40,900)	(17,800)	29,600)	26,300)
Interest expense	59,700)	107,100)	129,900)	102,700)	80,000)	56,200)
Interest expense, operating lease liability⁵	9,634)	10,118)	15,200)	14,153)	12,510)	13,101)
Adjusted interest expense	69,334)	117,218)	145,100)	116,853)	92,510)	69,301)
Tax benefit of interest expense⁶	(14,560)	(24,616)	(30,471)	(32,836)	(32,379)	(24,255)
Adjusted interest expense, after taxes⁷	54,774)	92,602)	114,629)	84,017)	60,132)	45,046)
(Gain) loss on marketable securities	(11,300)	(12,900)	900)	2,500)	(2,200)	5,000)
Interest income on corporate funds	(36,500)	(84,500)	(97,600)	(83,500)	(76,700)	(62,400)
Investment income, before taxes	(47,800)	(97,400)	(96,700)	(81,000)	(78,900)	(57,400)
Tax expense (benefit) of investment income⁸	10,038)	20,454)	20,307)	22,761)	27,615)	20,090)
Investment income, after taxes⁹	(37,762)	(76,946)	(76,393)	(58,239)	(51,285)	(37,310)
(Income) loss from discontinued operations, net of tax¹⁰	—)	—)	—)	—)	—)	900)
Net operating profit after taxes (NOPAT)	2,334,712)	2,508,856)	2,290,136)	1,628,778)	1,771,847)	1,527,436)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in deferred revenues.

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

⁵ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 437,900 × 2.20% = 9,634

⁶ 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 69,334 × 21.00% = 14,560

⁷ Addition of after taxes interest expense to net earnings.

⁸ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 47,800 × 21.00% = 10,038

⁹ Elimination of after taxes investment income.

¹⁰ Elimination of discontinued operations.

An analysis of profitability and operational performance between 2016 and 2021 reveals a general upward trajectory in both net earnings and net operating profit after taxes (NOPAT), although a notable divergence emerged in the final fiscal year.

Net Earnings Trend: Net earnings demonstrated consistent long-term growth, rising from US$ 1,492,500 thousand in 2016 to US$ 2,598,500 thousand in 2021. While a slight contraction was observed in 2018, this was followed by a period of rapid expansion starting in 2019, with earnings increasing by approximately 41% between 2018 and 2019.
NOPAT Performance and Volatility: NOPAT followed a similar growth pattern to net earnings for the majority of the period, peaking at US$ 2,508,856 thousand in 2020. However, unlike net earnings, NOPAT experienced a decline in 2021, falling to US$ 2,334,712 thousand. This indicates a reduction in core operating profitability during the final year of the period despite overall bottom-line growth.
Correlation Between Operating Profit and Net Income: From 2016 to 2020, NOPAT remained closely aligned with or exceeded net earnings, suggesting that operational activities were the primary driver of value creation. The 2021 fiscal year marks a significant shift where net earnings continued to climb while NOPAT decreased, implying that non-operating income or other non-core financial factors contributed to the net profit increase while operational efficiency declined.

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Automatic Data Processing Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Provision for income taxes	762,700)	716,100)	712,800)	550,300)	797,700)	741,300)
Less: Deferred income tax expense (benefit)	(251,100)	26,000)	9,300)	500)	8,100)	700)
Add: Tax savings from interest expense	14,560)	24,616)	30,471)	32,836)	32,379)	24,255)
Less: Tax imposed on investment income	10,038)	20,454)	20,307)	22,761)	27,615)	20,090)
Cash operating taxes	1,018,322)	694,262)	713,664)	559,875)	794,364)	744,765)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

The financial data for the period ending June 30, 2016, through June 30, 2021, reveals a fluctuating trend in tax-related obligations, characterized by a significant contraction in 2018 and a substantial divergence between accrual-based provisions and cash outflows by 2021.

Provision for Income Taxes Trends: The provision for income taxes experienced an initial increase between 2016 and 2017, rising from 741,300 to 797,700 thousand US dollars. A sharp decline occurred in 2018, where the provision fell to 550,300 thousand US dollars, representing the lowest point in the observed period. From 2019 onward, a recovery trend is observed, with the provision stabilizing around 712,000 to 716,000 thousand US dollars before climbing to 762,700 thousand US dollars in 2021.
Cash Operating Taxes Trends: Cash operating taxes largely mirrored the trajectory of the income tax provisions from 2016 to 2019, including the marked decrease in 2018 to 559,875 thousand US dollars. However, a deviation occurred in 2020, where cash operating taxes decreased to 694,262 thousand US dollars despite a slight increase in the tax provision. The most notable variance appeared in 2021, with cash operating taxes surging to 1,018,322 thousand US dollars, the highest value across all recorded years.
Comparative Analysis of Accrual and Cash Taxes: For the majority of the analyzed period, the provision for income taxes and cash operating taxes remained closely aligned, suggesting that accrual-based tax expenses were a reliable proxy for actual cash outflows. This correlation broke down significantly in the final fiscal year. In 2021, the cash operating taxes exceeded the provision for income taxes by approximately 255,622 thousand US dollars. This indicates a substantial increase in cash tax payments relative to the reported tax expense, which may impact the calculation of Economic Value Added (EVA) by increasing the actual cash cost of taxes for that period.

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Automatic Data Processing Inc., invested capital calculation (financing approach)

US$ in thousands

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Obligations under reverse repurchase agreements	23,500)	13,600)	262,000)	—)	—)	—)
Short-term debt	—)	1,001,800)	—)	—)	—)	—)
Long-term debt	2,985,000)	1,002,800)	2,002,200)	2,002,400)	2,002,400)	2,007,700)
Operating lease liability¹	437,900)	439,900)	542,858)	484,694)	428,436)	445,608)
Total reported debt & leases	3,446,400)	2,458,100)	2,807,058)	2,487,094)	2,430,836)	2,453,308)
Stockholders’ equity	5,670,100)	5,752,200)	5,399,900)	3,459,600)	3,977,000)	4,481,600)
Net deferred tax (assets) liabilities²	434,700)	693,200)	595,900)	17,200)	69,700)	150,800)
Allowance for doubtful accounts³	79,600)	92,500)	54,900)	51,300)	49,600)	38,100)
Deferred revenues⁴	566,300)	583,100)	620,000)	604,300)	624,300)	614,300)
Equity equivalents⁵	1,080,600)	1,368,800)	1,270,800)	672,800)	743,600)	803,200)
Accumulated other comprehensive (income) loss, net of tax⁶	(10,600)	14,800)	257,300)	680,800)	379,200)	215,100)
Adjusted stockholders’ equity	6,740,100)	7,135,800)	6,928,000)	4,813,200)	5,099,800)	5,499,900)
Marketable securities⁷	(33,900)	(13,600)	(271,900)	(10,500)	(10,800)	(31,300)
Invested capital	10,152,600)	9,580,300)	9,463,158)	7,289,794)	7,519,836)	7,921,908)

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

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 revenues.

⁵ Addition of equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of marketable securities.

Between June 30, 2016, and June 30, 2021, invested capital exhibited a cyclical trajectory characterized by an initial contraction followed by a period of significant expansion. Total invested capital reached its lowest point in 2018 before experiencing a substantial increase that continued through the end of the analyzed period.

Total Reported Debt and Leases: Debt and lease obligations remained relatively stable between 2016 and 2018, oscillating around the 2.4 billion range. A moderate increase was observed in 2019, followed by a reduction in 2020. However, a sharp escalation occurred by June 30, 2021, with total reported debt and leases rising to 3.45 billion, marking a significant increase in leverage toward the end of the period.
Stockholders' Equity: A downward trend in stockholders' equity was evident from 2016 to 2018, where values declined from 4.48 billion to 3.46 billion. This trend reversed abruptly in 2019, with equity rising to 5.40 billion. This elevated level was largely maintained through 2021, despite a marginal decrease in the final year to 5.67 billion.
Invested Capital Analysis: Invested capital decreased from 7.92 billion in 2016 to a minimum of 7.29 billion in 2018. A significant inflection point occurred in 2019, as invested capital rose to 9.46 billion, driven primarily by the recovery in stockholders' equity. This growth trajectory persisted, with invested capital reaching 10.15 billion by June 30, 2021, reflecting an overall increase in the capital base used to generate economic value.

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Automatic Data Processing Inc., cost of capital calculations

Jun 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	89,693,078)	89,693,078)	÷	93,221,778)	=	0.96	0.96	×	13.81%	=	13.28%
Debt³	3,090,800)	3,090,800)	÷	93,221,778)	=	0.03	0.03	×	2.37% × (1 – 21.00%)	=	0.06%
Operating lease liability⁴	437,900)	437,900)	÷	93,221,778)	=	0.00	0.00	×	2.20% × (1 – 21.00%)	=	0.01%
Total:	93,221,778)					1.00					13.35%

Based on: 10-K (reporting date: 2021-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jun 30, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	57,946,438)	57,946,438)	÷	60,533,038)	=	0.96	0.96	×	13.81%	=	13.22%
Debt³	2,146,700)	2,146,700)	÷	60,533,038)	=	0.04	0.04	×	2.91% × (1 – 21.00%)	=	0.08%
Operating lease liability⁴	439,900)	439,900)	÷	60,533,038)	=	0.01	0.01	×	2.30% × (1 – 21.00%)	=	0.01%
Total:	60,533,038)					1.00					13.31%

Based on: 10-K (reporting date: 2020-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jun 30, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	72,785,232)	72,785,232)	÷	75,660,390)	=	0.96	0.96	×	13.81%	=	13.28%
Debt³	2,332,300)	2,332,300)	÷	75,660,390)	=	0.03	0.03	×	2.80% × (1 – 21.00%)	=	0.07%
Operating lease liability⁴	542,858)	542,858)	÷	75,660,390)	=	0.01	0.01	×	2.80% × (1 – 21.00%)	=	0.02%
Total:	75,660,390)					1.00					13.37%

Based on: 10-K (reporting date: 2019-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jun 30, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	58,812,610)	58,812,610)	÷	61,286,304)	=	0.96	0.96	×	13.81%	=	13.25%
Debt³	1,989,000)	1,989,000)	÷	61,286,304)	=	0.03	0.03	×	2.92% × (1 – 28.10%)	=	0.07%
Operating lease liability⁴	484,694)	484,694)	÷	61,286,304)	=	0.01	0.01	×	2.92% × (1 – 28.10%)	=	0.02%
Total:	61,286,304)					1.00					13.33%

Based on: 10-K (reporting date: 2018-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jun 30, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,498,904)	49,498,904)	÷	51,999,240)	=	0.95	0.95	×	13.81%	=	13.14%
Debt³	2,071,900)	2,071,900)	÷	51,999,240)	=	0.04	0.04	×	2.92% × (1 – 35.00%)	=	0.08%
Operating lease liability⁴	428,436)	428,436)	÷	51,999,240)	=	0.01	0.01	×	2.92% × (1 – 35.00%)	=	0.02%
Total:	51,999,240)					1.00					13.23%

Based on: 10-K (reporting date: 2017-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jun 30, 2016

	Capital (fair value)¹	Weights					Cost of capital
Equity²	40,905,387)	40,905,387)	÷	43,499,695)	=	0.94	0.94	×	13.81%	=	12.98%
Debt³	2,148,700)	2,148,700)	÷	43,499,695)	=	0.05	0.05	×	2.94% × (1 – 35.00%)	=	0.09%
Operating lease liability⁴	445,608)	445,608)	÷	43,499,695)	=	0.01	0.01	×	2.94% × (1 – 35.00%)	=	0.02%
Total:	43,499,695)					1.00					13.10%

Based on: 10-K (reporting date: 2016-06-30).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

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Automatic Data Processing Inc., economic spread ratio calculation, comparison to benchmarks

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Selected Financial Data (US$ in thousands)
Economic profit¹	978,990)	1,233,661)	1,025,364)	656,809)	776,730)	489,951)
Invested capital²	10,152,600)	9,580,300)	9,463,158)	7,289,794)	7,519,836)	7,921,908)
Performance Ratio
Economic spread ratio³	9.64%	12.88%	10.84%	9.01%	10.33%	6.18%
Benchmarks
Economic Spread Ratio, Competitors⁴
Accenture PLC	5.71%	6.31%	—	—	—	—
Adobe Inc.	8.84%	1.12%	—	—	—	—
AppLovin Corp.	-30.15%	—	—	—	—	—
Cadence Design Systems Inc.	6.80%	—	—	—	—	—
Datadog Inc.	-4.01%	—	—	—	—	—
International Business Machines Corp.	-6.14%	—	—	—	—	—
Intuit Inc.	0.10%	—	—	—	—	—
Microsoft Corp.	27.54%	—	—	—	—	—
Oracle Corp.	0.51%	—	—	—	—	—
Palantir Technologies Inc.	-40.26%	—	—	—	—	—
Palo Alto Networks Inc.	-5.19%	—	—	—	—	—
Salesforce Inc.	-12.49%	—	—	—	—	—
ServiceNow Inc.	1.95%	—	—	—	—	—
Synopsys Inc.	-6.91%	-6.71%	—	—	—	—
Workday Inc.	-19.37%	—	—	—	—	—

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 978,990 ÷ 10,152,600 = 9.64%

⁴ Click competitor name to see calculations.

Between June 30, 2016, and June 30, 2021, a fluctuating yet overall positive trend in economic value creation is evident. The period is characterized by an initial phase of capital optimization followed by a significant expansion in the capital base, which ultimately influenced the efficiency of value generation.

Economic Profit Trends: Economic profit exhibited significant growth over the analyzed period, rising from 489,951 thousand dollars in 2016 to a peak of 1,233,661 thousand dollars in 2020. While a moderate decline was observed in 2018, the general trajectory remained upward until 2021, when profit contracted to 978,990 thousand dollars.
Invested Capital Deployment: A distinct shift in capital management occurred after 2018. From 2016 to 2018, invested capital steadily decreased from 7,921,908 thousand dollars to 7,289,794 thousand dollars. This was followed by a sharp increase in 2019, with the capital base expanding to 9,463,158 thousand dollars and continuing a growth trend to reach 10,152,600 thousand dollars by 2021.
Economic Spread Ratio Analysis: The economic spread ratio, reflecting the efficiency of value generation relative to capital employed, demonstrated considerable volatility. The ratio rose from 6.18% in 2016 to a peak of 12.88% in 2020. The subsequent decline to 9.64% in 2021 is attributable to the simultaneous occurrence of decreasing economic profit and an increasing base of invested capital, indicating a compression in the spread achieved over the cost of capital.

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Automatic Data Processing Inc., economic profit margin calculation, comparison to benchmarks

	Jun 30, 2021	Jun 30, 2020	Jun 30, 2019	Jun 30, 2018	Jun 30, 2017	Jun 30, 2016
Selected Financial Data (US$ in thousands)
Economic profit¹	978,990)	1,233,661)	1,025,364)	656,809)	776,730)	489,951)

Revenues	15,005,400)	14,589,800)	14,175,200)	13,325,800)	12,379,800)	11,667,800)
Add: Increase (decrease) in deferred revenues	(16,800)	(36,900)	(53,800)	(20,000)	10,000)	23,000)
Adjusted revenues	14,988,600)	14,552,900)	14,121,400)	13,305,800)	12,389,800)	11,690,800)
Performance Ratio
Economic profit margin²	6.53%	8.48%	7.26%	4.94%	6.27%	4.19%
Benchmarks
Economic Profit Margin, Competitors³
Accenture PLC	2.93%	3.21%	—	—	—	—
Adobe Inc.	11.02%	1.61%	—	—	—	—
AppLovin Corp.	-60.37%	—	—	—	—	—
Cadence Design Systems Inc.	6.90%	—	—	—	—	—
Datadog Inc.	-3.19%	—	—	—	—	—
International Business Machines Corp.	-11.67%	—	—	—	—	—
Intuit Inc.	0.13%	—	—	—	—	—
Microsoft Corp.	22.86%	—	—	—	—	—
Oracle Corp.	1.01%	—	—	—	—	—
Palantir Technologies Inc.	-66.31%	—	—	—	—	—
Palo Alto Networks Inc.	-6.99%	—	—	—	—	—
Salesforce Inc.	-28.65%	—	—	—	—	—
ServiceNow Inc.	1.69%	—	—	—	—	—
Synopsys Inc.	-10.99%	-11.52%	—	—	—	—
Workday Inc.	-25.28%	—	—	—	—	—

Based on: 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30), 10-K (reporting date: 2018-06-30), 10-K (reporting date: 2017-06-30), 10-K (reporting date: 2016-06-30).

¹ Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × 978,990 ÷ 14,988,600 = 6.53%

³ Click competitor name to see calculations.

An analysis of the economic performance from June 30, 2016, to June 30, 2021, reveals a period of consistent revenue growth contrasted by volatility in economic value creation. While adjusted revenues maintained a steady upward trajectory, economic profit and the corresponding profit margin experienced fluctuations, peaking in 2020 before contracting in 2021.

Revenue Growth Pattern: Adjusted revenues demonstrated uninterrupted growth over the six-year period, increasing from 11.69 billion USD in 2016 to 14.99 billion USD in 2021. This indicates a consistent expansion of the company's operational scale.
Economic Profit Volatility: Economic profit exhibited a non-linear trend. Following an initial increase in 2017, a decline was observed in 2018. A subsequent strong recovery led to a peak of 1.23 billion USD in 2020, followed by a reduction to 978.99 million USD in 2021.
Economic Profit Margin Analysis: The economic profit margin mirrored the volatility of absolute economic profit. The margin expanded from 4.19% in 2016 to a high of 8.48% in 2020, suggesting a significant improvement in the efficiency of generating value above the cost of capital during that interval. However, the margin declined to 6.53% in 2021, indicating a contraction in the rate of value creation relative to the growing revenue base.

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Automatic Data Processing Inc. (NASDAQ:ADP)

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