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
Meta Platforms Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 79,619 – 20.23% × 216,060 = 35,904
The analysis of economic value creation reveals a volatile but ultimately upward trajectory in economic profit over the five-year period ending December 31, 2025. A significant contraction occurred in 2022, followed by a period of aggressive recovery and value expansion.
- Net Operating Profit After Taxes (NOPAT)
- A sharp decline in NOPAT is observed between 2021 and 2022, where earnings dropped from 40,147 million to 20,828 million. However, a robust recovery trend followed, with NOPAT increasing steadily each subsequent year to reach 79,619 million by the end of 2025. This indicates a strong resurgence in operational profitability.
- Invested Capital
- The capital base expanded consistently throughout the period. Invested capital rose from 92,809 million in 2021 to 216,060 million in 2025. The most substantial increase occurred between 2022 and 2023, marking a shift toward more capital-intensive operations or strategic investments.
- Cost of Capital
- The cost of capital remained remarkably stable, fluctuating within a narrow range between 20.04% and 20.55%. This stability indicates that the risk profile and the required rate of return for the company's capital providers did not shift significantly despite the volatility in operational earnings.
- Economic Profit
- Economic profit experienced a near-total erosion in 2022, falling to 436 million as the cost of capital almost entirely offset the NOPAT. Since 2023, economic profit has grown exponentially, reaching 35,904 million by 2025. This growth demonstrates that the increase in NOPAT has significantly outpaced the growth in the capital charge associated with the expanding invested capital base, resulting in substantial value creation for shareholders.
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Net Operating Profit after Taxes (NOPAT)
Meta Platforms Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 25,153 × 4.30% = 1,082
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,247 × 21.00% = 472
7 Addition of after taxes interest expense to net income.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,123 × 21.00% = 446
9 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) exhibited considerable fluctuation over the five-year period. While net income experienced its own volatility, the NOPAT figures demonstrate a distinct pattern of decline followed by substantial recovery and growth.
- Overall Trend
- NOPAT decreased significantly from 2021 to 2022, then demonstrated a recovery in 2023. This recovery accelerated through 2024 and 2025, culminating in a substantial increase by the end of the period. The 2025 NOPAT value is nearly double that of 2021.
- 2021 to 2022
- A marked decrease in NOPAT is observed between 2021 and 2022, falling from US$40,147 million to US$20,828 million. This represents a substantial contraction, indicating a significant change in operational profitability after accounting for taxes. This decline outpaced the decrease in net income during the same period.
- 2022 to 2023
- The period from 2022 to 2023 shows a recovery in NOPAT, increasing to US$38,290 million. While not fully restoring the 2021 level, this represents a considerable improvement and suggests a stabilization of operational performance.
- 2023 to 2025
- Continued growth in NOPAT is evident from 2023 to 2025. NOPAT increased to US$56,844 million in 2024 and further to US$79,619 million in 2025. This sustained upward trend suggests improving operational efficiency and/or increased revenue generation, exceeding the growth rate observed in net income.
- Relationship to Net Income
- While both net income and NOPAT fluctuate, NOPAT appears to be a more sensitive indicator of core operational performance. The larger percentage decline in NOPAT from 2021 to 2022, compared to net income, suggests that factors beyond net income, such as changes in operating expenses or tax impacts, significantly influenced profitability. The accelerated growth in NOPAT from 2023 to 2025, exceeding the growth in net income, indicates a strengthening of core operational profitability.
In summary, the NOPAT figures reveal a period of initial decline followed by a robust recovery and substantial growth, indicating a positive trajectory in underlying operational profitability.
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Cash Operating Taxes
Meta Platforms Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The provision for income taxes and cash operating taxes exhibited distinct patterns over the five-year period. While the provision for income taxes generally increased, the cash operating taxes demonstrated more volatility.
- Provision for Income Taxes
- The provision for income taxes decreased from US$7,914 million in 2021 to US$5,619 million in 2022, representing a substantial decline. It then increased to US$8,330 million in 2023 and remained relatively stable at US$8,303 million in 2024. A significant surge is observed in 2025, reaching US$25,474 million. This final year increase is markedly higher than any prior value in the observed period.
- Cash Operating Taxes
- Cash operating taxes increased from US$7,290 million in 2021 to US$8,950 million in 2022. A slight decrease occurred in 2023, with the value falling to US$8,095 million. The year 2024 saw a considerable increase to US$12,827 million. However, in 2025, cash operating taxes decreased significantly to US$6,745 million.
A notable divergence between the provision for income taxes and cash operating taxes is apparent, particularly in 2025. While the provision for income taxes experienced a large increase, cash operating taxes decreased. This suggests a potential shift in the timing of tax payments or the utilization of tax credits or loss carryforwards. The increase in provision for income taxes in 2025, coupled with the decrease in cash operating taxes, warrants further investigation to understand the underlying reasons for this discrepancy.
The volatility in cash operating taxes, especially the fluctuations between 2023, 2024, and 2025, indicates potential impacts from changes in tax laws, accounting adjustments, or strategic tax planning initiatives. The overall trend in the provision for income taxes suggests a growing tax burden, although the 2022 decrease and the 2025 spike require further scrutiny.
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Invested Capital
Meta Platforms Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 reported invested capital demonstrates a consistent upward trend over the five-year period. Simultaneously, both total reported debt & leases and stockholders’ equity have increased, contributing to the growth in invested capital.
- Invested Capital Trend
- Invested capital increased from US$92,809 million in 2021 to US$216,060 million in 2025. This represents a cumulative increase of 132.8% over the period. The rate of increase appears to be accelerating, with larger absolute increases observed in later years.
- Debt & Leases
- Total reported debt & leases exhibited substantial growth, rising from US$14,454 million in 2021 to US$85,081 million in 2025. This signifies a significant reliance on debt financing, with the most substantial increase occurring between 2023 and 2025. The growth rate of debt & leases consistently outpaced that of stockholders’ equity.
- Stockholders’ Equity
- Stockholders’ equity also increased, moving from US$124,879 million in 2021 to US$217,243 million in 2025. While positive, the growth in equity was less pronounced than the growth in debt. The increase was relatively steady year-over-year, though the absolute increase was larger between 2022 and 2023, and again between 2023 and 2024.
- Relationship between Components and Invested Capital
- The increase in invested capital is directly attributable to the combined growth of both debt & leases and stockholders’ equity. The increasing proportion of debt within the capital structure suggests a shift towards greater financial leverage. The consistent growth in invested capital, coupled with the increasing reliance on debt, warrants further investigation into the company’s capital allocation efficiency and its ability to generate returns exceeding the cost of capital.
The observed trends suggest a company actively investing in its operations and growth, funded by a combination of equity and, increasingly, debt. Continued monitoring of these figures is recommended to assess the sustainability of this growth strategy and the associated financial risks.
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Cost of Capital
Meta Platforms Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 1,867,596) | 1,867,596) | ÷ | 1,951,153) | = | 0.96 | 0.96 | × | 20.96% | = | 20.06% | ||
| Long-term debt and finance lease liabilities3 | 58,404) | 58,404) | ÷ | 1,951,153) | = | 0.03 | 0.03 | × | 5.53% × (1 – 21.00%) | = | 0.13% | ||
| Operating lease liability4 | 25,153) | 25,153) | ÷ | 1,951,153) | = | 0.01 | 0.01 | × | 4.30% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 1,951,153) | 1.00 | 20.23% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 1,740,624) | 1,740,624) | ÷ | 1,789,397) | = | 0.97 | 0.97 | × | 20.96% | = | 20.38% | ||
| Long-term debt and finance lease liabilities3 | 28,539) | 28,539) | ÷ | 1,789,397) | = | 0.02 | 0.02 | × | 5.31% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 20,234) | 20,234) | ÷ | 1,789,397) | = | 0.01 | 0.01 | × | 3.90% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 1,789,397) | 1.00 | 20.49% | ||||||||||
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 | 1,210,942) | 1,210,942) | ÷ | 1,248,961) | = | 0.97 | 0.97 | × | 20.96% | = | 20.32% | ||
| Long-term debt and finance lease liabilities3 | 19,170) | 19,170) | ÷ | 1,248,961) | = | 0.02 | 0.02 | × | 4.61% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 18,849) | 18,849) | ÷ | 1,248,961) | = | 0.02 | 0.02 | × | 3.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 1,248,961) | 1.00 | 20.42% | ||||||||||
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 | 489,413) | 489,413) | ÷ | 515,398) | = | 0.95 | 0.95 | × | 20.96% | = | 19.90% | ||
| Long-term debt and finance lease liabilities3 | 9,317) | 9,317) | ÷ | 515,398) | = | 0.02 | 0.02 | × | 4.06% × (1 – 21.00%) | = | 0.06% | ||
| Operating lease liability4 | 16,668) | 16,668) | ÷ | 515,398) | = | 0.03 | 0.03 | × | 3.20% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 515,398) | 1.00 | 20.04% | ||||||||||
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 | 647,169) | 647,169) | ÷ | 661,623) | = | 0.98 | 0.98 | × | 20.96% | = | 20.50% | ||
| Long-term debt and finance lease liabilities3 | 581) | 581) | ÷ | 661,623) | = | 0.00 | 0.00 | × | 2.70% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 13,873) | 13,873) | ÷ | 661,623) | = | 0.02 | 0.02 | × | 2.80% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 661,623) | 1.00 | 20.55% | ||||||||||
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 »
Economic Spread Ratio
Meta Platforms Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 35,904) | 22,843) | 9,435) | 436) | 21,078) | |
| Invested capital2 | 216,060) | 165,969) | 141,324) | 101,764) | 92,809) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 16.62% | 13.76% | 6.68% | 0.43% | 22.71% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Alphabet Inc. | 26.55% | 22.43% | 15.79% | 7.40% | 26.69% | |
| Comcast Corp. | 1.94% | -1.26% | -3.13% | -7.60% | -2.60% | |
| Netflix Inc. | 0.65% | -4.05% | -10.30% | -10.82% | -6.22% | |
| Trade Desk Inc. | 9.11% | -7.94% | -14.60% | -17.26% | -10.45% | |
| Walt Disney Co. | -12.60% | -16.00% | -17.52% | -15.32% | -18.32% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 35,904 ÷ 216,060 = 16.62%
4 Click competitor name to see calculations.
The financial trajectory indicates a period of significant volatility in value creation, characterized by a sharp contraction in 2022 followed by a sustained recovery through 2025. While the scale of invested capital has expanded consistently, the efficiency of capital utilization relative to its cost experienced a severe temporary decline before returning to a strong growth path.
- Economic Profit Trends
- Economic profit experienced a precipitous decline from US$ 21,078 million in 2021 to US$ 436 million in 2022, marking a period of minimal value addition. A robust recovery phase followed, with economic profit rising to US$ 9,435 million in 2023, US$ 22,843 million in 2024, and peaking at US$ 35,904 million by 2025. This trajectory demonstrates an accelerating capacity to generate returns in excess of the required cost of capital.
- Invested Capital Expansion
- A continuous upward trend in invested capital is observed, growing from US$ 92,809 million in 2021 to US$ 216,060 million by 2025. This represents a total increase of approximately 132% over the period. The most significant acceleration in capital deployment occurred between 2022 and 2023, suggesting substantial strategic investments were made even while economic profit was at its lowest point.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a critical compression in 2022, dropping from 22.71% to 0.43%, indicating that the return on capital barely exceeded the cost of capital. Subsequently, the ratio recovered steadily to 6.68% in 2023, 13.76% in 2024, and 16.62% in 2025. Although the absolute economic profit in 2025 is higher than in 2021, the spread ratio remains lower than the 2021 peak, which is attributable to the significantly larger base of invested capital.
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Economic Profit Margin
Meta Platforms Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 35,904) | 22,843) | 9,435) | 436) | 21,078) | |
| Revenue | 200,966) | 164,501) | 134,902) | 116,609) | 117,929) | |
| Add: Increase (decrease) in deferred revenue | 308) | 97) | 149) | (70) | 225) | |
| Adjusted revenue | 201,274) | 164,598) | 135,051) | 116,539) | 118,154) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 17.84% | 13.88% | 6.99% | 0.37% | 17.84% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Alphabet Inc. | 20.35% | 14.57% | 9.73% | 5.28% | 17.70% | |
| Comcast Corp. | 3.64% | -2.18% | -5.41% | -13.42% | -5.12% | |
| Netflix Inc. | 0.62% | -4.22% | -11.52% | -12.91% | -7.26% | |
| Trade Desk Inc. | 6.65% | -7.97% | -13.23% | -20.41% | -13.44% | |
| Walt Disney Co. | -22.05% | -29.12% | -34.21% | -31.54% | -46.68% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × 35,904 ÷ 201,274 = 17.84%
3 Click competitor name to see calculations.
The company's capacity to generate economic value underwent a significant cycle of contraction and subsequent expansion between 2021 and 2025. After a sharp decline in performance in 2022, there is a clear trend of recovery and accelerated growth in both absolute economic profit and operational efficiency.
- Economic Profit Trajectory
- A severe contraction is observed in economic profit, which fell from 21,078 million US$ in 2021 to 436 million US$ in 2022. This represents a near-total erosion of economic value added during that period. However, a consistent recovery followed, with profit rising to 9,435 million US$ in 2023, 22,843 million US$ in 2024, and peaking at 35,904 million US$ by 2025.
- Adjusted Revenue Growth
- Revenue remained relatively stagnant between 2021 and 2022, shifting from 118,154 million US$ to 116,539 million US$. Following this plateau, a strong growth phase occurred, with adjusted revenue increasing to 135,051 million US$ in 2023 and continuing an upward trend to reach 201,274 million US$ by the end of 2025.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility of the absolute profit figures. A precipitous drop from 17.84% in 2021 to 0.37% in 2022 indicates a period where the company barely exceeded its cost of capital. From 2023 onward, margins expanded steadily—reaching 6.99% in 2023 and 13.88% in 2024—before returning to the 17.84% level seen in 2021. This recovery is particularly notable as it was achieved on a significantly larger revenue base, suggesting a substantial improvement in the efficiency of value creation.
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