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
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Assets (ROA) since 2012
- Aggregate Accruals
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Economic Profit
Meta Platforms 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
= – × =
The period demonstrates fluctuating financial performance as measured by economic profit. Net operating profit after taxes (NOPAT) exhibited volatility, increasing significantly from 2020 to 2021, declining in 2022, and then recovering with substantial growth in both 2023 and 2024. Invested capital consistently increased throughout the period, indicating ongoing investment in the business. The cost of capital remained relatively stable, fluctuating within a narrow range. Consequently, economic profit mirrored the trends in NOPAT, showing peaks in 2021 and 2024, and a trough in 2022.
- NOPAT Trend
- NOPAT increased from US$27,980 million in 2020 to US$40,147 million in 2021, representing a substantial gain. A significant decrease followed in 2022, with NOPAT falling to US$20,828 million. However, NOPAT rebounded strongly in 2023 to US$38,290 million and continued to grow to US$56,844 million in 2024, reaching a new high for the period.
- Cost of Capital Stability
- The cost of capital remained relatively consistent across the five years. It began at 16.94% in 2020, decreased slightly to 16.83% in 2021, further decreased to 16.43% in 2022, and then increased to 16.73% in 2023 and 16.79% in 2024. This stability suggests consistent risk and financing conditions over the period.
- Invested Capital Growth
- Invested capital showed a consistent upward trend, increasing from US$80,951 million in 2020 to US$92,809 million in 2021, US$101,764 million in 2022, US$141,324 million in 2023, and reaching US$165,969 million in 2024. This indicates a continuous commitment to expanding the capital base of the business.
- Economic Profit Analysis
- Economic profit followed the pattern of NOPAT, peaking at US$24,529 million in 2021, declining to US$4,110 million in 2022, and then recovering to US$14,644 million in 2023. The most recent year, 2024, saw economic profit reach US$28,980 million, the highest value in the observed period. This suggests that the company generated value for its investors in all years, but with varying degrees of success, with 2021 and 2024 being particularly strong years.
The increasing invested capital coupled with the fluctuating NOPAT resulted in dynamic economic profit figures. The substantial growth in both NOPAT and economic profit in 2024 suggests improved operational efficiency and value creation despite the continued investment in the business.
Net Operating Profit after Taxes (NOPAT)
Meta Platforms Inc., NOPAT calculation
US$ 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 deferred revenue.
3 Addition of increase (decrease) in accrued severance and other personnel liabilities.
4 Addition of increase (decrease) in equity equivalents to net income.
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.
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
- The net income demonstrates variability over the analyzed period. It increased significantly from 29,146 million US dollars in 2020 to 39,370 million US dollars in 2021. However, in 2022, there is a notable decline to 23,200 million US dollars. This downward trend reverses in 2023, with net income rising sharply to 39,098 million US dollars and continuing the upward trajectory to reach 62,360 million US dollars in 2024. Overall, the trend reflects periods of both volatility and robust growth, culminating in a substantial increase by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT follows a similar pattern to net income, with an increase from 27,980 million US dollars in 2020 to 40,147 million US dollars in 2021. Subsequently, it decreases to 20,828 million US dollars in 2022, which aligns with the downturn observed in net income for the same year. In 2023, NOPAT recovers significantly to 38,290 million US dollars, and continues to improve, reaching 56,844 million US dollars in 2024. This trend suggests operational profitability experienced fluctuations but ultimately improved substantially by the end of the period, indicating enhanced operational efficiency or favorable business conditions in the latter years.
Cash Operating Taxes
Meta Platforms 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 for Income Taxes
- The provision for income taxes exhibited a fluctuating trend over the analyzed periods. It increased significantly from 4,034 million US dollars in 2020 to 7,914 million US dollars in 2021, indicating higher estimated tax obligations. Subsequently, it declined to 5,619 million in 2022, showing a reduction in estimated tax expense. However, the provision rose again to 8,330 million in 2023 and slightly decreased to 8,303 million in 2024, stabilizing at a higher level compared to earlier years. This pattern suggests variability in taxable income or changes in tax regulations impacting the company's tax liabilities.
- Cash Operating Taxes
- Cash operating taxes demonstrated an overall upward trajectory with some volatility. Beginning at 4,959 million US dollars in 2020, the cash taxes paid increased to 7,290 million in 2021. An increase continued in 2022 reaching 8,950 million, followed by a decrease to 8,095 million in 2023. In 2024, cash operating taxes rose sharply to 12,827 million, marking the highest value in the series. The sharp increase in the final period suggests stronger cash outflows related to tax payments, possibly due to tax timing differences, higher taxable income, or changes in tax payment schedules.
- Comparative Observations
- While the provision for income taxes reflects estimated tax expenses, cash operating taxes represent actual cash paid. The data shows instances where cash taxes surpassed the provision, notably in 2022 and 2024, which may point to timing differences or adjustments based on prior estimates. The significant rise in cash operating taxes in 2024 contrasts with the relatively stable provision, highlighting a potential shift in cash tax management or tax obligations becoming due. Overall, the tax-related expenses and payments show variability but an increasing trend, especially on a cash basis, which could affect the company's liquidity and cash flow management.
Invested Capital
Meta Platforms 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 deferred revenue.
4 Addition of accrued severance and other personnel liabilities.
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.
The financial data reveals notable trends in the company’s leverage, equity base, and invested capital over the five-year period from 2020 to 2024.
- Total Reported Debt & Leases
- This item exhibits a substantial and accelerating increase over the years. From $11,177 million in 2020, the debt and leases almost doubled by 2022 to $27,278 million and then continued to rise sharply to reach $49,769 million in 2024. This trend indicates a significant expansion in the company's liabilities, suggesting increased borrowing or leasing commitments, which could be aimed at financing growth, acquisitions, or capital expenditures.
- Stockholders’ Equity
- Stockholders' equity shows some fluctuations initially, with a slight decrease from $128,290 million in 2020 to $124,879 million in 2021, then a small rise to $125,713 million in 2022. From 2022 onwards, there is a strong upward trend, culminating in a value of $182,637 million in 2024. This pattern reflects an overall strengthening in the company’s net asset base, which may result from retained earnings growth, successful profitability, or equity issuances.
- Invested Capital
- Invested capital consistently grows over the period, increasing from $80,951 million in 2020 to $165,969 million in 2024. The growth pace accelerates especially after 2021, indicating that the company is increasing its long-term investments and assets base substantially. This could correspond with strategic initiatives to enhance operational capacity, assets acquisition, or overall expansion.
Overall, the data illustrates a company that is increasing its financial leverage considerably while simultaneously growing its equity base and invested capital. This combination may suggest an aggressive growth strategy supported by both debt financing and equity strength, potentially positioning the company for expanded operations or investment in new opportunities. However, the rising debt levels also imply greater financial risk that should be managed carefully.
Cost of Capital
Meta Platforms Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (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 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (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 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (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 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (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 Long-term debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Meta Platforms 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 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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.
The economic spread ratio exhibited considerable fluctuation between 2020 and 2024. Initial values were strong, followed by a significant decline, and then a recovery towards levels seen earlier in the period. This movement correlates with changes in economic profit and invested capital.
- Economic Spread Ratio Trend
- In 2020, the economic spread ratio stood at 17.62%. A substantial increase was observed in 2021, reaching 26.43%, indicating a strong relationship between returns generated and capital employed. However, 2022 witnessed a dramatic decrease to 4.04%, suggesting a significant reduction in the efficiency of capital utilization. The ratio partially recovered in 2023 to 10.36%, and continued to rise in 2024, reaching 17.46%, approaching the level observed in 2020.
The economic spread ratio’s movements appear linked to the performance of economic profit. The decline in the ratio in 2022 coincided with a substantial decrease in economic profit, while the subsequent increases in 2023 and 2024 align with the recovery and growth of economic profit. Simultaneously, invested capital consistently increased throughout the period, which likely influenced the ratio’s fluctuations.
- Relationship with Economic Profit and Invested Capital
- The economic spread ratio is calculated using economic profit and invested capital. The increase in invested capital from US$80,951 million in 2020 to US$165,969 million in 2024 suggests a growing scale of operations. However, the ratio’s performance indicates that the increase in economic profit did not always keep pace with the growth in invested capital. The most pronounced example is 2022, where a relatively small economic profit, despite a growing invested capital base, resulted in a significantly lower economic spread ratio.
The return to a ratio of 17.46% in 2024 suggests improved efficiency in generating returns on invested capital compared to 2022 and 2023, but remains slightly below the peak observed in 2021. Continued monitoring of these metrics will be crucial to assess the sustainability of this improvement.
Economic Profit Margin
Meta Platforms Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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 revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited considerable fluctuation between 2020 and 2024. Initial values were strong, followed by a significant decline, and then a recovery towards levels comparable to the earlier period. A detailed examination of the trends is presented below.
- Economic Profit Margin Trend
- The economic profit margin began at 16.58% in 2020, increasing to a peak of 20.76% in 2021. A substantial decrease was then observed in 2022, with the margin falling to 3.53%. A recovery commenced in 2023, with the margin rising to 10.84%, and continued into 2024, reaching 17.61%. This indicates a period of strong profitability followed by a marked downturn and subsequent improvement.
- Relationship to Adjusted Revenue
- Adjusted revenue consistently increased over the five-year period, moving from US$86,066 million in 2020 to US$164,598 million in 2024. However, the economic profit margin did not move in direct correlation with revenue. The decline in margin in 2022 occurred despite a slight decrease in adjusted revenue, suggesting that factors beyond revenue volume impacted profitability. The strong margin recovery in 2024 coincided with a significant increase in adjusted revenue, indicating a potential synergistic effect.
- Economic Profit Fluctuations
- Economic profit itself mirrored the trends observed in the economic profit margin. It rose from US$14,267 million in 2020 to US$24,529 million in 2021, then dropped sharply to US$4,110 million in 2022. Subsequent increases were noted in 2023 (US$14,644 million) and 2024 (US$28,980 million). The magnitude of the economic profit fluctuations suggests sensitivity to underlying economic factors or company-specific operational changes.
In summary, the period under review demonstrates a dynamic relationship between revenue, economic profit, and the resulting economic profit margin. While revenue consistently grew, profitability, as measured by the economic profit margin, experienced significant volatility, highlighting the importance of considering factors beyond revenue generation when assessing overall financial performance.