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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- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Reportable Segments
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Analysis of Debt
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Economic Profit
Axon Enterprise Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data of the company reveals notable fluctuations in its key performance metrics over the five-year period from 2018 to 2022. The analysis focuses on net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT displays significant variability throughout the period. Beginning at $78.1 million in 2018, it sharply declined to $17.9 million in 2019. After this decline, there was a recovery trend with values increasing to $51.8 million in 2020. In 2021, NOPAT slightly decreased to $38.5 million but then experienced a remarkable surge to $326.2 million in 2022. This trend indicates a period of recovery followed by substantial growth in the latest year.
- Cost of Capital
- The cost of capital remained relatively stable over the analyzed years, with a minor fluctuation around 12.9%. The percentage was 12.89% in 2018 and slightly increased to 12.92% in 2019 and 2020, holding steady in 2021 at 12.91% before experiencing a slight decrease to 12.37% in 2022. This stability suggests consistent financing costs despite the changing profit and capital levels.
- Invested Capital
- Invested capital shows a consistent upward trend, increasing from approximately $631.7 million in 2018 to $1.6 billion in 2022. There was a decline in 2019 to $500.3 million but from 2020 onwards, invested capital grew substantially each year, nearly doubling from $722.7 million in 2020 to $1.26 billion in 2021, and further increasing to $1.61 billion in 2022. This trend indicates increasing resource allocation and capital investment by the company.
- Economic Profit
- Economic profit follows a concerning trajectory initially, moving deeper into negative territory from -$3.4 million in 2018 to -$46.8 million in 2019 and slightly improving but still negative at -$41.6 million in 2020. The negative trend continued in 2021 with a further decline to -$124.6 million. However, a positive turnaround occurred in 2022, with economic profit rising sharply to $127.2 million, signifying value creation over and above the cost of capital during that year.
Overall, the data reflect a company that experienced challenges in profitability and value generation early in the period, accompanied by fluctuating invested capital and stable cost of capital. The substantial increase in both NOPAT and economic profit in the final year emphasizes a strong recovery and effective use of expanded invested capital that has led to positive economic profitability. This suggests improved operational efficiency and effective capital management in the most recent year analyzed.
Net Operating Profit after Taxes (NOPAT)
Axon Enterprise Inc., NOPAT calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in accrued warranty expense.
5 Addition of increase (decrease) in equity equivalents to net income (loss).
6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss).
- Net Income (Loss)
- The company experienced significant fluctuations in net income over the analyzed period. Starting with a substantial net income of $29,205 thousand in 2018, there was a sharp decline to $882 thousand in 2019, followed by a transition into losses in 2020 and 2021, with amounts of -$1,724 thousand and -$60,018 thousand, respectively. In 2022, the company reversed this trend dramatically, recording a significant net income of $147,139 thousand. This volatility indicates periods of financial difficulty followed by a substantial recovery and profitability improvement in the most recent year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a somewhat different pattern, though it also showed variability. The value started at $78,057 thousand in 2018 and then decreased considerably to $17,857 thousand in 2019. In 2020, NOPAT increased to $51,762 thousand, suggesting operational profitability improvement despite the net loss reported that year. A decline occurred again in 2021 to $38,523 thousand; however, a substantial increase to $326,174 thousand was evident in 2022. This increase in 2022 indicates enhanced operational efficiency and profitability on an after-tax basis.
- Overall Trends and Insights
- The data reveal a period of instability between 2018 and 2021, characterized by fluctuating and often negative net income, contrasted with positive but volatile NOPAT values. The divergence between net income and NOPAT especially during 2020 and 2021 suggests that non-operating factors or extraordinary charges may have negatively impacted net income. The strong recovery in 2022 across both net income and NOPAT points to improved financial health, possibly driven by operational improvements or a favorable change in the cost or revenue structure. The considerable growth in 2022 in both metrics reflects a pivotal turnaround likely resulting from strategic adjustments or market conditions.
Cash Operating Taxes
Axon Enterprise Inc., cash operating taxes calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
- Provision for income taxes (income tax benefit)
- Over the five-year period, the provision for income taxes exhibited significant volatility and fluctuation. Initially, there was a negative provision in 2018, indicating an income tax benefit of 1,101 thousand US dollars. This turned positive in 2019, reaching 1,188 thousand US dollars, followed by another shift back to a negative provision in 2020 at -4,567 thousand US dollars. The most pronounced change occurred in 2021 with a substantial negative provision amounting to -81,357 thousand US dollars, suggesting a major income tax benefit that year. However, in 2022, the provision reversed to a positive figure of 49,379 thousand US dollars.
- Cash operating taxes
- Cash operating taxes demonstrated a generally increasing trend over the analyzed period, with a pronounced exception in 2021. Starting at 7,666 thousand US dollars in 2018, the amount increased steadily to 9,266 thousand US dollars in 2019 and further to 12,034 thousand US dollars in 2020. In 2021, there was a sharp decline, with cash operating taxes reported as negative 851 thousand US dollars, indicating a cash inflow or refund situation. Subsequently, in 2022, the cash operating taxes surged significantly to 27,888 thousand US dollars, more than doubling the previous peak.
Invested Capital
Axon Enterprise Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
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 deferred revenue.
5 Addition of accrued warranty expense.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction-in-process.
9 Subtraction of investments.
The financial data reveals several notable trends in the company's capital structure and financial positioning over the five-year period ending in 2022.
- Total Reported Debt & Leases
- There is a relatively stable and moderate level of debt from 2018 through 2021, fluctuating between approximately 10.6 million and 27 million USD. However, in 2022, this figure experiences a dramatic increase to over 717 million USD. This sharp rise indicates a significant change in the company's financing strategy or capital structure, suggesting either a substantial new borrowing, lease obligation, or financial arrangement undertaken in the latest period.
- Stockholders’ Equity
- Stockholders' equity shows steady growth throughout all years, moving from around 467 million USD in 2018 to approximately 1.27 billion USD in 2022. The increase suggests consistent retention of earnings or capital injections, strengthening the company's net worth and reflecting profitable operations or equity financing activities.
- Invested Capital
- Invested capital fluctuates during the initial years, decreasing from roughly 632 million USD in 2018 to 500 million USD in 2019, then rising again to 723 million USD in 2020. From 2020 onward, invested capital increases significantly, peaking at approximately 1.61 billion USD by the end of 2022. This upward trend illustrates increased capital employed in the business, likely fuelled by the substantial growth in reported debt and equity, indicating expanded operational scale or investment in long-term assets.
Overall, the data suggests a period of gradual growth and stability up to 2021, followed by a marked increase in financial leverage and total capital employed in 2022. The spike in reported debt and leases may raise considerations regarding risk and debt service capacity, while the ongoing growth in equity and invested capital reflects a larger asset base and potentially heightened business activities.
Cost of Capital
Axon Enterprise Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Convertible notes3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Axon Enterprise Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit displayed a negative trend from 2018 through 2021, starting at -3,385 thousand US dollars and reaching a low point of -124,561 thousand US dollars in 2021. In 2022, there was a significant turnaround, with economic profit increasing sharply to a positive 127,227 thousand US dollars, indicating improved profitability and value creation in that year.
- Invested Capital
- Invested capital showed a fluctuating but overall increasing pattern over the five-year period. It declined from 631,660 thousand US dollars in 2018 to 500,291 thousand US dollars in 2019. Following this dip, invested capital rose substantially to 722,746 thousand US dollars in 2020 and continued its upward trajectory to 1,262,920 thousand US dollars in 2021, then further increased to 1,607,800 thousand US dollars in 2022. This suggests ongoing investment and expansion in assets or resources over time.
- Economic Spread Ratio
- The economic spread ratio was negative throughout 2018 to 2021, indicating the return on invested capital was below the cost of capital for these years. It started at -0.54% in 2018, sharply dropped to -9.35% in 2019, slightly improved to -5.76% in 2020, but then worsened again to -9.86% in 2021. In 2022, the ratio turned positive to 7.91%, reflecting a shift to earning returns above the capital cost, which aligns with the observed positive economic profit in the same year.
Economic Profit Margin
Axon Enterprise Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2022. A significant change is observed in the economic profit figures, which initially show negative values, indicating the company incurred economic losses from 2018 through 2021. However, in 2022, there is a marked turnaround with economic profit becoming positive at 127,227 thousand US dollars, suggesting a substantial improvement in value creation during that year.
Adjusted net sales demonstrate a consistent and robust growth trajectory. Sales increased steadily each year from 476,219 thousand US dollars in 2018 to 1,346,663 thousand US dollars in 2022. The rate of growth accelerates noticeably from 2020 onward, reflecting possibly successful market expansion or increased demand.
The economic profit margin echoes the trends seen in economic profit. It remained negative from 2018 through 2021, ranging between -0.71% and -11.98%, with the largest deficit recorded in 2021. The shift to a positive margin of 9.45% in 2022 aligns with the change in economic profit, indicating enhanced operational efficiency, improved cost management, or better capital utilization in the most recent year.
- Economic Profit
- Primarily negative during 2018-2021, indicating economic losses, followed by a strong positive shift in 2022.
- Adjusted Net Sales
- Consistent and accelerating growth year-on-year, more than doubling from 2018 to 2022.
- Economic Profit Margin
- Negative margins through 2021 reflecting economic loss, with a significant turnaround to a positive margin in 2022.
Overall, the data suggest that despite several years of economic challenges and operating losses, the company achieved a notable recovery in 2022. The simultaneous growth in sales and the jump to positive economic profits and margin imply improved business fundamentals, likely driven by increased revenue generation capacity and improved profitability measures. This could reflect strategic initiatives yielding results or favorable market conditions enhancing performance.