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.
Economic Profit
Costco Wholesale Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,238 – 15.59% × 44,219 = 2,345
The analysis of economic value creation reveals a general upward trajectory in economic profit, characterized by a period of volatility between 2022 and 2023 followed by a sustained expansion phase through 2026.
- Net Operating Profit After Taxes (NOPAT)
- A strong overall growth trend is observed in operating profitability, with NOPAT rising from 5,292 million USD in 2021 to 9,238 million USD by 2026. Although a contraction occurred in 2023, where figures dropped to 5,694 million USD, the subsequent years show a robust recovery and accelerated growth in earnings power.
- Invested Capital and Cost of Capital
- Invested capital has expanded from 28,508 million USD to 44,219 million USD, indicating a significant increase in the resource base deployed to generate profits. Concurrently, the cost of capital has remained remarkably stable, moving marginally from 15.12% to 15.59%. This suggests that the increase in economic profit is driven by operational efficiency and scale rather than a reduction in the cost of funding.
- Economic Profit Trends
- Value creation remained positive throughout the entire period, confirming that the returns generated exceeded the required cost of capital. A sharp decline in economic profit is evident in 2023, falling to 328 million USD, which coincided with a dip in NOPAT and a peak in invested capital. Following this trough, economic profit rebounded strongly to 1,892 million USD in 2024 and continued to trend upward, reaching 2,345 million USD by 2026.
The correlation between rising NOPAT and the steady cost of capital indicates that the organization is successfully scaling its operations while maintaining a consistent risk profile, leading to an increase in the total economic value added to the firm.
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Net Operating Profit after Taxes (NOPAT)
Costco Wholesale Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income attributable to Costco.
4 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,606 × 3.20% = 83
5 2026 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 228 × 21.00% = 48
6 Addition of after taxes interest expense to net income attributable to Costco.
7 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 601 × 21.00% = 126
8 Elimination of after taxes investment income.
The financial performance from 2021 to 2026 demonstrates a robust upward trajectory in both net profitability and operational earnings, indicating sustained growth in the entity's capacity to generate value.
- Net Income Trends
- Net income attributable to the organization shows consistent year-over-year growth, increasing from 5,007 million USD in 2021 to 9,226 million USD by 2026. This steady progression reflects a stable increase in bottom-line profitability over the six-year period.
- NOPAT Analysis and Volatility
- Net operating profit after taxes (NOPAT) exhibits a general upward trend, rising from 5,292 million USD in 2021 to 9,238 million USD in 2026. A notable deviation is observed in 2023, where NOPAT decreased to 5,694 million USD from 6,421 million USD in 2022, before resuming a strong recovery in 2024.
- Operational vs. Net Profitability Correlation
- A comparison between NOPAT and net income reveals that NOPAT typically exceeded net income for most of the period. However, 2023 marks a significant divergence where net income surpassed NOPAT. By 2026, the two metrics nearly converge, with NOPAT at 9,238 million USD and net income at 9,226 million USD, indicating an alignment between operational efficiency and final net earnings.
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Cash Operating Taxes
Costco Wholesale Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
An overall upward trajectory is observed in both the provision for income taxes and cash operating taxes from 2021 through 2025, indicating a general increase in taxable income. While the provision for income taxes maintained a consistent year-over-year increase through 2026, cash operating taxes experienced a slight decline in the final year of the analyzed period.
- Provision for Income Taxes Trend
- A steady growth pattern is evident, with the provision rising from 1,601 million USD in 2021 to 3,025 million USD in 2026. This consistent increase suggests a stable expansion of the accounting tax liability over the six-year duration.
- Cash Operating Taxes Trend
- Cash tax outflows exhibited a strong increase from 1,580 million USD in 2021, peaking at 2,750 million USD in 2025. This growth was followed by a moderate contraction to 2,641 million USD in 2026, marking the only annual decrease in the set.
- Provision versus Cash Outflow Correlation
- The relationship between the accounting provision and actual cash payments remained relatively tight between 2021 and 2025. However, a significant divergence emerged in 2026, where the provision for income taxes reached its highest point of 3,025 million USD while cash operating taxes decreased. This gap suggests a growth in deferred tax liabilities or the application of specific tax strategies that reduced immediate cash outflows relative to the reported tax expense.
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Invested Capital
Costco Wholesale Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to total Costco stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of short-term investments.
Invested capital exhibits a general upward trajectory from 2021 to 2026, increasing from US$ 28,508 million to US$ 44,219 million. This expansion is primarily driven by a significant growth in stockholders' equity, which more than offsets a sustained reduction in total reported debt and leases over most of the analyzed period.
- Debt and Lease Obligations
- A steady decline in total reported debt and leases is observed between 2021 and 2025, with values dropping from US$ 11,407 million to US$ 9,935 million. A marginal increase is noted in 2026, reaching US$ 10,181 million, although the overall trend indicates a strategic reduction in leverage relative to the early period.
- Stockholders' Equity
- Equity shows a strong growth pattern, rising from US$ 17,564 million in 2021 to US$ 35,803 million by 2026. A notable contraction occurred in 2024, where equity decreased to US$ 23,622 million from US$ 25,058 million in the previous year, followed by a sharp recovery and acceleration in 2025 and 2026.
- Invested Capital Aggregation
- Total invested capital grew by approximately 55% over the six-year period. The movement of this metric closely correlates with stockholders' equity, experiencing a peak in 2023 at US$ 34,903 million and a subsequent dip in 2024 to US$ 32,993 million. The final two years of the period show the most aggressive expansion, with invested capital reaching US$ 44,219 million by 2026, suggesting a significant increase in the resource base allocated to the business.
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Cost of Capital
Costco Wholesale Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 417,539) | 417,539) | ÷ | 427,247) | = | 0.98 | 0.98 | × | 15.90% | = | 15.54% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 7,102) | 7,102) | ÷ | 427,247) | = | 0.02 | 0.02 | × | 2.49% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 2,606) | 2,606) | ÷ | 427,247) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 427,247) | 1.00 | 15.59% | ||||||||||
Based on: 10-K (reporting date: 2026-08-30).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 405,420) | 405,420) | ÷ | 414,937) | = | 0.98 | 0.98 | × | 15.90% | = | 15.53% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 6,849) | 6,849) | ÷ | 414,937) | = | 0.02 | 0.02 | × | 2.49% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 2,668) | 2,668) | ÷ | 414,937) | = | 0.01 | 0.01 | × | 3.05% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 414,937) | 1.00 | 15.58% | ||||||||||
Based on: 10-K (reporting date: 2025-08-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 402,798) | 402,798) | ÷ | 412,262) | = | 0.98 | 0.98 | × | 15.90% | = | 15.53% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 6,910) | 6,910) | ÷ | 412,262) | = | 0.02 | 0.02 | × | 2.48% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 2,554) | 2,554) | ÷ | 412,262) | = | 0.01 | 0.01 | × | 2.67% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 412,262) | 1.00 | 15.58% | ||||||||||
Based on: 10-K (reporting date: 2024-09-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 250,379) | 250,379) | ÷ | 260,195) | = | 0.96 | 0.96 | × | 15.90% | = | 15.30% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 7,170) | 7,170) | ÷ | 260,195) | = | 0.03 | 0.03 | × | 2.48% × (1 – 21.00%) | = | 0.05% | ||
| Operating lease liability4 | 2,646) | 2,646) | ÷ | 260,195) | = | 0.01 | 0.01 | × | 2.47% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 260,195) | 1.00 | 15.37% | ||||||||||
Based on: 10-K (reporting date: 2023-09-03).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 212,592) | 212,592) | ÷ | 222,974) | = | 0.95 | 0.95 | × | 15.90% | = | 15.16% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 7,661) | 7,661) | ÷ | 222,974) | = | 0.03 | 0.03 | × | 2.42% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 2,721) | 2,721) | ÷ | 222,974) | = | 0.01 | 0.01 | × | 2.26% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 222,974) | 1.00 | 15.25% | ||||||||||
Based on: 10-K (reporting date: 2022-08-28).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 198,529) | 198,529) | ÷ | 210,137) | = | 0.94 | 0.94 | × | 15.90% | = | 15.02% | ||
| Long-term debt, including current portion and finance lease liabilities3 | 8,744) | 8,744) | ÷ | 210,137) | = | 0.04 | 0.04 | × | 2.42% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 2,864) | 2,864) | ÷ | 210,137) | = | 0.01 | 0.01 | × | 2.16% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 210,137) | 1.00 | 15.12% | ||||||||||
Based on: 10-K (reporting date: 2021-08-29).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Costco Wholesale Corp., economic spread ratio calculation, comparison to benchmarks
| Aug 30, 2026 | Aug 31, 2025 | Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,345) | 1,914) | 1,892) | 328) | 1,592) | 980) | |
| Invested capital2 | 44,219) | 37,996) | 32,993) | 34,903) | 31,671) | 28,508) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 5.30% | 5.04% | 5.73% | 0.94% | 5.03% | 3.44% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Target Corp. | -4.41% | -2.98% | -2.02% | -3.79% | 8.89% | -0.58% | |
| Walmart Inc. | 4.18% | 2.34% | 0.88% | -1.53% | -0.99% | 0.48% | |
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,345 ÷ 44,219 = 5.30%
4 Click competitor name to see calculations.
The analysis of value creation indicators reveals a general trajectory of growth in economic profitability and capital deployment, interrupted by a period of significant volatility during the 2023 fiscal year.
- Economic Profit
- An overall upward trend is observed, with economic profit increasing from 980 million USD in 2021 to 2,345 million USD by 2026. A sharp contraction occurred in 2023, where profit fell to 328 million USD, representing the lowest point in the period. This was followed by a strong recovery in 2024, with values climbing to 1,892 million USD and continuing a steady ascent through 2026.
- Invested Capital
- The capital base expanded from 28,508 million USD in 2021 to 44,219 million USD in 2026. Growth was consistent through 2023, reaching 34,903 million USD, before a marginal decrease to 32,993 million USD was recorded in 2024. Following this brief contraction, invested capital accelerated upward, showing significant increases in both 2025 and 2026.
- Economic Spread Ratio
- The economic spread ratio exhibits a pattern closely correlated with economic profit. After rising from 3.44% in 2021 to 5.03% in 2022, the ratio experienced a severe decline to 0.94% in 2023. A rapid recovery followed, peaking at 5.73% in 2024. The ratio subsequently stabilized, concluding the analyzed period at 5.30% in 2026, indicating a sustained ability to generate returns above the cost of capital.
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Economic Profit Margin
Costco Wholesale Corp., economic profit margin calculation, comparison to benchmarks
| Aug 30, 2026 | Aug 31, 2025 | Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 2,345) | 1,914) | 1,892) | 328) | 1,592) | 980) | |
| Net sales | 297,247) | 269,912) | 249,625) | 237,710) | 222,730) | 192,052) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.79% | 0.71% | 0.76% | 0.14% | 0.71% | 0.51% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Target Corp. | -1.59% | -1.01% | -0.65% | -1.05% | 2.53% | -0.19% | |
| Walmart Inc. | 1.03% | 0.56% | 0.21% | -0.38% | -0.27% | 0.14% | |
Based on: 10-K (reporting date: 2026-08-30), 10-K (reporting date: 2025-08-31), 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 2,345 ÷ 297,247 = 0.79%
3 Click competitor name to see calculations.
An analysis of economic value creation reveals a period of overall growth characterized by a significant anomaly during the 2023 fiscal year. While revenue streams expanded consistently across the observed period, the capacity to generate economic profit experienced a sharp contraction before returning to a trajectory of steady improvement.
- Net Sales Performance
- A consistent and uninterrupted upward trend in net sales is observed, increasing from 192,052 million USD in 2021 to 297,247 million USD by 2026. This indicates a sustained expansion of the top-line revenue base over the six-year period.
- Economic Profit Volatility
- Economic profit demonstrated significant fluctuations, starting at 980 million USD in 2021 and rising to 1,592 million USD in 2022. A substantial decline occurred in 2023, where profit dropped to 328 million USD. However, a strong recovery followed, with values climbing to 1,892 million USD in 2024 and reaching a peak of 2,345 million USD by 2026.
- Economic Profit Margin Analysis
- The economic profit margin closely mirrored the volatility of the absolute economic profit. The margin rose from 0.51% in 2021 to 0.71% in 2022, before falling sharply to 0.14% in 2023. Following this contraction, the margin rebounded to 0.76% in 2024 and reached its highest point of 0.79% in 2026. This suggests that while the 2023 period saw a temporary degradation in capital efficiency relative to sales, the subsequent years demonstrate an improved ability to generate value above the cost of capital.
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