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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T-Mobile US Inc. pages available for free this week:
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2013
- Net Profit Margin since 2013
- Operating Profit Margin since 2013
- Price to Earnings (P/E) since 2013
- Analysis of Revenues
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Economic Profit
T-Mobile US 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 financial data reveals several notable trends over the analyzed periods. Net operating profit after taxes (NOPAT) experienced fluctuations, initially declining from 7,224 million US dollars in 2020 to 6,394 million in 2021, then recovering to 7,149 million in 2022. Subsequently, there was a pronounced increase, reaching 14,313 million in 2023 and further improving to 18,486 million by 2024. This upward trajectory in recent years suggests enhanced operational efficiency or revenue growth driving improved profitability.
The cost of capital demonstrates a gradual increase over the periods, starting at 7.4% in 2020 and rising to 8.38% by 2024. This rising cost reflects a higher required return by investors or increased risk associated with the company's capital structure or market conditions.
Invested capital shows relatively stable growth, beginning at 177,902 million US dollars in 2020 and slowly increasing to 187,599 million by 2024. The moderate rise indicates continued investment or asset accumulation, maintaining a consistent capital base.
Examining economic profit provides insights into value creation beyond accounting profits. Economic profit was negative throughout 2020 to 2022, reaching its lowest point at -7,333 million US dollars in 2022. However, a significant turnaround occurs in 2023, with economic profit nearly breaching neutrality at -312 million, followed by a positive economic profit of 2,758 million in 2024. This shift marks improved capital efficiency and suggests that the company began generating returns exceeding its cost of capital during the latest periods.
Overall, the financial indicators depict a company recovering from earlier profit declines and increasing its operational profitability while managing invested capital steadily. The rising cost of capital introduces upward pressure on required returns, yet the transition to positive economic profit signals improved value generation and efficient capital utilization in the most recent years.
- Net Operating Profit After Taxes (NOPAT)
- Decreased initially, then showed strong growth from 2022 onward, reaching highest levels by 2024.
- Cost of Capital
- Experienced a gradual upward trend, increasing from 7.4% to 8.38% over the analyzed period.
- Invested Capital
- Maintained steady growth, indicating consistent capital investment and asset base expansion.
- Economic Profit
- Persistently negative until 2022, followed by a significant turnaround to positive territory in 2024, reflecting enhanced value creation above capital costs.
Net Operating Profit after Taxes (NOPAT)
T-Mobile US 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 allowance for credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring initiatives.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income.
9 Elimination of discontinued operations.
The financial data reveals significant fluctuations and overall growth in the profitability metrics over the five-year period.
- Net Income
-
Net income shows a moderate decline from 3,064 million USD in 2020 to 2,590 million USD in 2022. Subsequently, there is a marked increase to 8,317 million USD in 2023, followed by a further rise to 11,339 million USD in 2024. This indicates a strong recovery and substantial growth in the last two years after a period of decline.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT exhibits a decrease from 7,224 million USD in 2020 to 6,394 million USD in 2021, before increasing to 7,149 million USD in 2022. A significant surge is observed thereafter, with NOPAT reaching 14,313 million USD in 2023 and further climbing to 18,486 million USD in 2024. This trend reflects an improvement in operating efficiency and profitability after the initial decline.
Overall, while both net income and NOPAT experienced declines in the early years of the data, the subsequent periods demonstrate substantial growth. The acceleration in profitability metrics from 2023 onwards suggests successful operational improvements or favorable market conditions contributing to strengthened financial performance.
Cash Operating Taxes
T-Mobile US 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).
The analysis of the company's tax-related financial data over the five-year period reveals fluctuating trends with a notable increase in the most recent years.
- Income tax expense
- The income tax expense displays variability across the years. Initially, there was a decrease from $786 million in 2020 to $327 million in 2021, followed by a moderate increase to $556 million in 2022. However, a significant surge occurred in 2023, with the expense rising sharply to $2,682 million, and this upward trend continued into 2024, reaching $3,373 million. This pattern suggests a considerable change in taxable income or tax rates impacting the corporation during the latest two years.
- Cash operating taxes
- Cash operating taxes showed a gradual upward trend over the period. Starting at $895 million in 2020, this figure increased steadily to $1,053 million in 2021 and $1,058 million in 2022. The growth continued more modestly to $1,069 million in 2023 and then more notably to $1,244 million in 2024. The consistent increase indicates higher cash outflows related to operating taxes, potentially reflecting growth in operating activities or changes in tax payment structures.
Invested Capital
T-Mobile US Inc., invested capital calculation (financing approach)
US$ 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 allowance for doubtful accounts receivable.
4 Addition of deferred revenue.
5 Addition of restructuring initiatives.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
The financial data over the five-year period displays several notable trends in key capital structure metrics. The total reported debt and leases have shown a consistent and gradual increase each year. This trend indicates a growing reliance on debt financing, as the total amount rose from approximately $104.2 billion at the end of 2020 to about $110.3 billion by the end of 2024.
In contrast, stockholders’ equity presented a different pattern. It increased from 2020 to 2022, peaking at nearly $69.7 billion, but then declined in the subsequent years, reaching approximately $61.7 billion by the end of 2024. This decline in equity after 2022 may suggest dividend distributions, share repurchases, or reduced retained earnings impacting the equity base.
Invested capital exhibited a steady rise over the period, though the rate of increase slowed towards the latter years. The invested capital grew from about $177.9 billion in 2020 to nearly $187.6 billion in 2024. This rise primarily reflects the combined effect of incremental increases in both debt and equity, despite the decrease in equity in later years.
- Total Reported Debt & Leases
- Consistently increased each year, signaling a rising debt burden and possibly a strategic shift towards leveraging external financing.
- Stockholders’ Equity
- Increased initially but then showed a declining trend after 2022, which may indicate capital return actions or earnings impacts on retained earnings.
- Invested Capital
- Grew steadily throughout the period, reflecting an overall expansion in capital resources, supported mainly by debt increases given the equity decline in the later years.
Overall, the period reflects a growing balance sheet with a greater proportion of financing coming through debt, coupled with a decreasing equity base after a certain point. This could suggest increased financial risk or a deliberate strategy to optimize the capital structure and shareholder returns. Further analysis on profitability and cash flows would be necessary to assess the sustainability of these trends.
Cost of Capital
T-Mobile US Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing 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 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing 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 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing 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 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term and long-term debt, including financing 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 Short-term and long-term debt, including financing lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
T-Mobile US 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 | ||||||
| AT&T Inc. | ||||||
| Verizon Communications Inc. | ||||||
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.
- Economic Profit
- The economic profit showed a significant negative value from 2020 through 2023, indicating losses in these years. It started at -5945 million in 2020 and worsened to -7333 million in 2022. However, a notable improvement is observed in 2023 with the loss substantially narrowing to -312 million. By 2024, economic profit turns positive, reaching 2758 million, signaling a strong recovery and potential profitability.
- Invested Capital
- The invested capital displayed a steady but modest increase over the five-year period. It rose from 177,902 million in 2020 to 187,599 million by 2024. The growth in invested capital was relatively stable and incremental, indicating ongoing investment or capital deployment in the business.
- Economic Spread Ratio
- The economic spread ratio remained negative from 2020 through 2023, reflecting that the returns generated on invested capital were below the cost of capital during these years. It declined slightly from -3.34% in 2020 to -3.94% in 2022, then showed significant improvement in 2023 to -0.17%, closing the gap on the cost of capital. By 2024, the ratio turned positive at 1.47%, suggesting the company generated returns exceeding its cost of capital, consistent with the positive economic profit in the same year.
Economic Profit Margin
T-Mobile US 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 | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AT&T Inc. | ||||||
| Verizon Communications Inc. | ||||||
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 revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues exhibited relative stability over the five-year period, with values ranging between approximately $68.8 billion and $81.8 billion. After an increase from 2020 to 2021, revenues slightly declined in 2022 and 2023 before increasing again in 2024. This reflects a general trend of steady revenue generation with moderate fluctuations rather than consistent growth.
- Economic Profit
- The economic profit showed a significant improvement over the period. Initially, economic profit was negative, indicating losses, with values close to -$5.9 billion in 2020 and deepening to nearly -$7.3 billion in 2022. However, thereafter, a substantial turnaround occurred, with economic profit improving to nearly break even in 2023 and then turning positive at approximately $2.8 billion in 2024. This pattern suggests enhanced operational efficiency or improved cost management contributing to profitability.
- Economic Profit Margin
- The economic profit margin followed a similar trajectory to the absolute economic profit values. It was negative throughout the initial three years, showing marginal deterioration from -8.64% in 2020 to -9.22% in 2022. Noticeable improvement was observed in 2023, with the margin approaching zero (-0.4%), and then turning positive at 3.37% in 2024. This indicates an improved return on revenue in terms of economic profitability.
- Overall Analysis
- The data reveals that despite relatively stable revenues, the company faced economic losses in the early years, which were progressively reduced and eventually reversed into positive economic profit by 2024. This improvement in economic profit and margin suggests effective corporate actions to enhance profitability, possibly through cost reductions, operational improvements, or strategic initiatives enhancing value creation beyond mere revenue growth.