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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
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
= 416,610 – 14.93% × 1,231,421 = 232,710
Item | Description | The company |
---|---|---|
Economic profit | Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. | Monolithic Power Systems Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022. |
Net Operating Profit after Taxes (NOPAT)
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 warranty reserves.
3 Addition of increase (decrease) in equity equivalents to net income.
4 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,797 × 2.10% = 80
5 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 80 × 21.00% = 17
6 Addition of after taxes interest expense to net income.
7 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 14,273 × 21.00% = 2,997
8 Elimination of after taxes investment income.
Item | Description | The company |
---|---|---|
NOPAT | Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. | Monolithic Power Systems Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022. |
Cash Operating Taxes
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).
Item | Description | The company |
---|---|---|
Cash operating taxes | Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. | Monolithic Power Systems Inc. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022. |
Invested Capital
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 warranty reserves.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of debt investments.
Item | Description | The company |
---|---|---|
Invested capital | Capital is an approximation of the economic book value of all cash invested in going-concern business activities. | Monolithic Power Systems Inc. invested capital increased from 2020 to 2021 and from 2021 to 2022. |
Cost of Capital
Monolithic Power Systems Inc., cost of capital calculations
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 22,851,153) | 22,851,153) | ÷ | 22,854,950) | = | 1.00 | 1.00 | × | 14.94% | = | 14.93% | ||
Operating lease liability3 | 3,797) | 3,797) | ÷ | 22,854,950) | = | 0.00 | 0.00 | × | 2.10% × (1 – 21.00%) | = | 0.00% | ||
Total: | 22,854,950) | 1.00 | 14.93% |
Based on: 10-K (reporting date: 2022-12-31).
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 21,461,113) | 21,461,113) | ÷ | 21,466,920) | = | 1.00 | 1.00 | × | 14.94% | = | 14.93% | ||
Operating lease liability3 | 5,807) | 5,807) | ÷ | 21,466,920) | = | 0.00 | 0.00 | × | 2.00% × (1 – 21.00%) | = | 0.00% | ||
Total: | 21,466,920) | 1.00 | 14.93% |
Based on: 10-K (reporting date: 2021-12-31).
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 17,748,850) | 17,748,850) | ÷ | 17,751,949) | = | 1.00 | 1.00 | × | 14.94% | = | 14.93% | ||
Operating lease liability3 | 3,099) | 3,099) | ÷ | 17,751,949) | = | 0.00 | 0.00 | × | 2.70% × (1 – 21.00%) | = | 0.00% | ||
Total: | 17,751,949) | 1.00 | 14.93% |
Based on: 10-K (reporting date: 2020-12-31).
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 7,075,661) | 7,075,661) | ÷ | 7,078,018) | = | 1.00 | 1.00 | × | 14.94% | = | 14.93% | ||
Operating lease liability3 | 2,357) | 2,357) | ÷ | 7,078,018) | = | 0.00 | 0.00 | × | 3.70% × (1 – 21.00%) | = | 0.00% | ||
Total: | 7,078,018) | 1.00 | 14.93% |
Based on: 10-K (reporting date: 2019-12-31).
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 5,844,301) | 5,844,301) | ÷ | 5,847,178) | = | 1.00 | 1.00 | × | 14.94% | = | 14.93% | ||
Operating lease liability3 | 2,877) | 2,877) | ÷ | 5,847,178) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Total: | 5,847,178) | 1.00 | 14.93% |
Based on: 10-K (reporting date: 2018-12-31).
Economic Spread Ratio
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 232,710) | 146,340) | 65,409) | 30,421) | 37,710) | |
Invested capital2 | 1,231,421) | 683,433) | 635,280) | 460,591) | 428,429) | |
Performance Ratio | ||||||
Economic spread ratio3 | 18.90% | 21.41% | 10.30% | 6.60% | 8.80% | |
Benchmarks | ||||||
Economic Spread Ratio, Competitors4 | ||||||
Advanced Micro Devices Inc. | -19.46% | 37.26% | 11.01% | -7.11% | — | |
Analog Devices Inc. | -8.52% | -11.79% | -6.84% | -5.30% | -8.07% | |
Applied Materials Inc. | 28.45% | 23.97% | 12.15% | 11.79% | 19.88% | |
Broadcom Inc. | 7.79% | -1.58% | -7.12% | -6.81% | -2.63% | |
First Solar Inc. | -1.27% | -7.07% | -12.74% | -18.20% | — | |
Intel Corp. | -7.05% | 10.13% | 15.79% | 13.87% | — | |
KLA Corp. | 26.83% | 15.47% | 4.35% | 5.86% | — | |
Lam Research Corp. | 24.01% | 19.38% | 3.44% | 0.08% | — | |
Micron Technology Inc. | 1.37% | -3.18% | -8.75% | 1.43% | — | |
NVIDIA Corp. | 32.73% | 13.16% | -0.84% | 59.76% | — | |
Qualcomm Inc. | 30.19% | 27.60% | 12.64% | 14.02% | — | |
Texas Instruments Inc. | 36.13% | 34.75% | 29.90% | 29.58% | — |
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 × 232,710 ÷ 1,231,421 = 18.90%
4 Click competitor name to see calculations.
Performance ratio | Description | The company |
---|---|---|
Economic spread ratio | The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. | Monolithic Power Systems Inc. economic spread ratio improved from 2020 to 2021 but then slightly deteriorated from 2021 to 2022. |
Economic Profit Margin
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 232,710) | 146,340) | 65,409) | 30,421) | 37,710) | |
Revenue | 1,794,148) | 1,207,798) | 844,452) | 627,921) | 582,382) | |
Performance Ratio | ||||||
Economic profit margin2 | 12.97% | 12.12% | 7.75% | 4.84% | 6.48% | |
Benchmarks | ||||||
Economic Profit Margin, Competitors3 | ||||||
Advanced Micro Devices Inc. | -48.26% | 14.05% | 4.92% | -3.60% | — | |
Analog Devices Inc. | -31.94% | -75.76% | -22.22% | -16.22% | -24.24% | |
Applied Materials Inc. | 16.43% | 15.29% | 9.25% | 8.17% | 11.74% | |
Broadcom Inc. | 14.57% | -3.73% | -19.65% | -18.10% | -5.62% | |
First Solar Inc. | -1.81% | -13.46% | -25.53% | -27.16% | — | |
Intel Corp. | -9.91% | 11.34% | 16.63% | 15.53% | — | |
KLA Corp. | 22.69% | 15.25% | 4.87% | 8.18% | — | |
Lam Research Corp. | 17.72% | 15.63% | 4.00% | 0.09% | — | |
Micron Technology Inc. | 2.35% | -5.31% | -17.25% | 2.38% | — | |
NVIDIA Corp. | 21.94% | 10.29% | -1.09% | 24.40% | — | |
Qualcomm Inc. | 20.11% | 16.62% | 9.54% | 12.39% | — | |
Texas Instruments Inc. | 31.69% | 31.08% | 26.80% | 24.79% | — |
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 ÷ Revenue
= 100 × 232,710 ÷ 1,794,148 = 12.97%
3 Click competitor name to see calculations.
Performance ratio | Description | The company |
---|---|---|
Economic profit margin | The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. | Monolithic Power Systems Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022. |