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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Economic Profit
Meta Platforms Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The economic value creation trajectory exhibits a period of significant volatility followed by a phase of aggressive expansion. While economic profit reached a near-break-even point in 2022, the subsequent three years demonstrate a robust recovery and an accelerating capacity to generate returns exceeding the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A sharp contraction is observed in 2022, with NOPAT declining by approximately 48% to 20,828 million. This trough was followed by a consistent and rapid recovery, with values increasing each year to reach 79,619 million by 2025, representing a significant expansion in operating profitability.
- Invested Capital
- There is a continuous upward trend in invested capital, which grew from 92,809 million in 2021 to 216,060 million in 2025. The most pronounced increase occurred between 2022 and 2023, indicating a strategic intensification of capital deployment.
- Cost of Capital
- The cost of capital remained remarkably stable throughout the period, fluctuating within a narrow range between 20.02% and 20.53%. This consistency suggests a steady weighted average cost of capital and a stable risk profile despite fluctuations in operating performance.
- Economic Profit
- Economic profit experienced a severe compression in 2022, falling to 453 million, which indicates that the operating profit barely covered the required return on invested capital. From 2023 onward, a strong recovery trend is evident, with economic profit ascending to 35,940 million by 2025. This progression confirms that the growth in NOPAT outpaced the growth in the capital charge, resulting in substantial value creation for the entity.
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
= × =
6 2025 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 2025 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 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$79,619 million in 2025. This sustained upward trend suggests improving operational efficiency and/or increased revenue generation, exceeding the growth rate observed in net income.
- Relationship to Net Income
- While both net income and NOPAT fluctuate, NOPAT appears to be a more sensitive indicator of core operational performance. The larger percentage decline in NOPAT from 2021 to 2022, compared to net income, suggests that factors beyond net income, such as changes in operating expenses or tax impacts, significantly influenced profitability. The accelerated growth in NOPAT from 2023 to 2025, exceeding the growth in net income, indicates a strengthening of core operational profitability.
In summary, the NOPAT figures reveal a period of initial decline followed by a robust recovery and substantial growth, indicating a positive trajectory in underlying operational profitability.
Cash Operating Taxes
Meta Platforms Inc., cash operating taxes calculation
US$ 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$6,745 million.
A notable divergence between the provision for income taxes and cash operating taxes is apparent, particularly in 2025. While the provision for income taxes experienced a large increase, cash operating taxes decreased. This suggests a potential shift in the timing of tax payments or the utilization of tax credits or loss carryforwards. The increase in provision for income taxes in 2025, coupled with the decrease in cash operating taxes, warrants further investigation to understand the underlying reasons for this discrepancy.
The volatility in cash operating taxes, especially the fluctuations between 2023, 2024, and 2025, indicates potential impacts from changes in tax laws, accounting adjustments, or strategic tax planning initiatives. The overall trend in the provision for income taxes suggests a growing tax burden, although the 2022 decrease and the 2025 spike require further scrutiny.
Invested Capital
Meta Platforms Inc., invested capital calculation (financing approach)
US$ 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$217,243 million in 2025. While positive, the growth in equity was less pronounced than the growth in debt. The increase was relatively steady year-over-year, though the absolute increase was larger between 2022 and 2023, and again between 2023 and 2024.
- Relationship between Components and Invested Capital
- The increase in invested capital is directly attributable to the combined growth of both debt & leases and stockholders’ equity. The increasing proportion of debt within the capital structure suggests a shift towards greater financial leverage. The consistent growth in invested capital, coupled with the increasing reliance on debt, warrants further investigation into the company’s capital allocation efficiency and its ability to generate returns exceeding the cost of capital.
The observed trends suggest a company actively investing in its operations and growth, funded by a combination of equity and, increasingly, debt. Continued monitoring of these figures is recommended to assess the sustainability of this growth strategy and the associated financial risks.
Cost of Capital
Meta Platforms Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| 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 »
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 | ||||||
| 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: 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 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory concerning economic value addition exhibits a sharp V-shaped recovery pattern. After a significant contraction in 2022, there is a sustained and accelerating upward trend in the company's ability to generate returns above its cost of capital, despite a continuously expanding capital base.
- Economic Profit Trends
- A severe decline in economic profit is observed between 2021 and 2022, where values plummeted from US$ 21,094 million to US$ 453 million. This downturn was followed by a consistent recovery phase, with profit rising to US$ 9,459 million in 2023 and continuing to climb to US$ 35,940 million by the end of 2025. This suggests a successful reversal of the factors that impaired value creation during the 2022 fiscal year.
- Invested Capital Growth
- Invested capital shows a steady and uninterrupted increase over the analyzed period. The capital base grew from US$ 92,809 million in 2021 to US$ 216,060 million in 2025. The acceleration of this growth is particularly evident after 2022, indicating substantial ongoing investment in the company's infrastructure or strategic assets.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of the economic profit, falling from 22.73% in 2021 to a near-zero level of 0.44% in 2022. This indicates that during 2022, the return on invested capital barely exceeded the cost of capital. However, the ratio rebounded to 6.69% in 2023 and expanded to 16.63% by 2025. The widening spread demonstrates increasing efficiency in deploying invested capital to generate surplus value, although the 2025 ratio remains below the 2021 peak.
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 | ||||||
| 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: 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 × ÷ =
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by a severe contraction in economic value creation during 2022, followed by a sustained and robust recovery in both absolute economic profit and profit margins.
- Economic Profit Trajectory
- Economic profit experienced a precipitous decline from US$ 21,094 million in 2021 to US$ 453 million in 2022, representing a near-complete erosion of economic value added. A strong recovery followed, with profit increasing to US$ 9,459 million in 2023 and accelerating to US$ 35,940 million by 2025, surpassing previous peaks.
- Adjusted Revenue Growth
- Revenue remained relatively stable during the 2022 downturn, decreasing marginally from US$ 118,154 million to US$ 116,539 million. Following this period of stagnation, a consistent upward trend is observed, with revenue expanding to US$ 135,051 million in 2023, US$ 164,598 million in 2024, and reaching US$ 201,274 million by 2025.
- Economic Profit Margin Analysis
- The economic profit margin reflects extreme volatility, dropping from 17.85% in 2021 to a marginal 0.39% in 2022. A progressive recovery is evident over the subsequent three years, with margins rising to 7.00% in 2023 and 13.90% in 2024. By 2025, the margin returned to 17.86%, indicating that the organization restored its capital efficiency to 2021 levels while operating on a significantly larger revenue scale.