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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Texas Instruments Inc. pages available for free this week:
- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Economic Profit
Texas Instruments 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 period under review demonstrates fluctuating financial performance as measured by economic profit. Net operating profit after taxes (NOPAT) initially increased before declining, while invested capital consistently rose throughout the period. The cost of capital remained relatively stable. These factors combined to produce a decreasing trend in economic profit.
- NOPAT Trend
- Net operating profit after taxes exhibited an initial increase from US$7,923 million in 2021 to US$8,736 million in 2022. However, a subsequent decline was observed, falling to US$6,512 million in 2023 and further to US$5,023 million in 2024. A slight recovery to US$5,439 million occurred in 2025, but remained below the 2022 peak.
- Cost of Capital
- The cost of capital remained consistently high, fluctuating narrowly between 16.42% and 16.76% over the five-year period. This stability suggests that the company’s risk profile, as perceived by investors, did not undergo significant changes during this time.
- Invested Capital Trend
- Invested capital demonstrated a consistent upward trend, increasing from US$16,409 million in 2021 to US$28,591 million in 2025. This indicates ongoing investment in the business, potentially through capital expenditures or acquisitions.
- Economic Profit Trend
- Economic profit peaked at US$5,792 million in 2022, mirroring the high NOPAT. However, it experienced a substantial decline in subsequent years, decreasing to US$2,800 million in 2023, US$726 million in 2024, and stabilizing at US$704 million in 2025. This decline suggests that while the company continued to generate profit, it did so at a decreasing rate relative to the capital invested.
The combination of rising invested capital and declining NOPAT resulted in a significant reduction in economic profit. While the cost of capital remained stable, its high level amplified the impact of the NOPAT decline on economic profit. The stabilization of economic profit in 2025 suggests a potential leveling off of the negative trend, but remains considerably lower than earlier levels.
Net Operating Profit after Taxes (NOPAT)
Texas Instruments Inc., NOPAT calculation
US$ 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 accounts receivable allowances.
3 Addition of increase (decrease) in accrued restructuring.
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 and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
Net income and net operating profit after taxes (NOPAT) exhibited similar patterns over the five-year period. Both metrics increased from 2021 to 2022, followed by a decline through 2024, and a partial recovery in 2025. However, the magnitude of change differed between the two measures.
- Overall Trend
- From 2021 to 2022, both net income and NOPAT demonstrated growth, increasing from US$7,769 million and US$7,923 million, respectively, to US$8,749 million and US$8,736 million. This represents a period of positive financial performance. A subsequent downturn occurred between 2022 and 2024, with both metrics decreasing. Net income fell to US$4,799 million and NOPAT to US$5,023 million. A modest recovery was then observed in 2025, with net income reaching US$5,001 million and NOPAT reaching US$5,439 million.
- NOPAT Analysis
- NOPAT began at US$7,923 million in 2021 and peaked at US$8,736 million in 2022, representing a year-over-year increase of approximately 10.3%. The subsequent decline saw NOPAT decrease by approximately 42.6% between 2022 and 2024. The 2025 value indicates a partial recovery, with an increase of approximately 8.2% from 2024. The fluctuations in NOPAT suggest sensitivity to underlying operational factors or broader economic conditions.
- Relationship to Net Income
- NOPAT closely tracked net income throughout the period. The difference between the two values remained relatively small each year, indicating that non-operating items had a limited impact on overall profitability. In 2021, NOPAT exceeded net income by US$154 million. This difference narrowed in 2022 to just US$13 million. The gap widened again in 2023, 2024, and 2025, reaching US$22 million, US$224 million, and US$438 million respectively, suggesting a growing divergence due to non-operating factors in later years.
Cash Operating Taxes
Texas Instruments Inc., cash operating taxes calculation
US$ 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. Both metrics experienced fluctuations, though cash operating taxes demonstrated a more pronounced variance than the provision for income taxes.
- Provision for Income Taxes
- The provision for income taxes initially increased from US$1,150 million in 2021 to US$1,283 million in 2022, representing a growth of approximately 11.57%. A subsequent decrease was observed in 2023, falling to US$908 million. This downward trend continued into 2024 with a further reduction to US$654 million, before modestly increasing to US$709 million in 2025. Overall, the provision for income taxes decreased from 2022 to 2025.
- Cash Operating Taxes
- Cash operating taxes showed a significant increase from US$1,176 million in 2021 to US$1,521 million in 2022, a rise of approximately 29.12%. This was followed by a decrease to US$1,286 million in 2023. The decline continued into 2024, reaching US$978 million, and further decreased to US$849 million in 2025. The trend indicates a substantial reduction in cash operating taxes from the peak in 2022 to the end of the period.
The difference between the provision for income taxes and cash operating taxes narrowed from US$26 million in 2021 to US$238 million in 2022. However, this difference reversed in subsequent years, becoming a negative value of US$378 million in 2023, US$324 million in 2024, and US$140 million in 2025. This suggests a growing divergence between reported tax expense and actual cash outflows for taxes, potentially due to timing differences or tax planning strategies.
The most substantial changes occurred between 2022 and 2023 for both metrics, with both experiencing notable declines. The period from 2023 to 2025 shows a more moderate, but continued, decrease in cash operating taxes, while the provision for income taxes stabilized somewhat.
Invested Capital
Texas Instruments Inc., invested capital calculation (financing approach)
US$ 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 allowance for doubtful accounts receivable.
4 Addition of accrued restructuring.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of investments measured at fair value.
Invested capital has demonstrated 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. The rate of increase in invested capital appears to be accelerating in later years.
- Total Reported Debt & Leases
- Total reported debt & leases increased from US$8,206 million in 2021 to US$14,779 million in 2025. The largest single-year increase occurred between 2022 and 2023, rising by US$2,635 million. Growth slowed between 2023 and 2024, but remained substantial at US$2,588 million. The increase from 2024 to 2025 was minimal, at US$392 million.
- Stockholders’ Equity
- Stockholders’ equity exhibited growth from US$13,333 million in 2021 to US$16,273 million in 2025. The rate of growth was most pronounced between 2021 and 2023, increasing by US$3,564 million. Growth slowed considerably between 2023 and 2024, with a marginal increase, and then decreased slightly in 2025.
- Invested Capital
- Invested capital increased steadily from US$16,409 million in 2021 to US$28,591 million in 2025. The increase from 2021 to 2022 was US$1,154 million. The increase from 2022 to 2023 was US$5,027 million, representing a significant acceleration. This trend continued from 2023 to 2024 with an increase of US$3,577 million, and then US$2,424 million from 2024 to 2025. The growth in invested capital is largely driven by the increases in both debt and equity, with debt contributing a larger proportion of the increase in recent years.
The consistent rise in invested capital suggests ongoing investment in operations and/or acquisitions. The increasing reliance on debt financing, particularly between 2022 and 2024, warrants further investigation to assess the associated financial risk and the returns generated from these investments.
Cost of Capital
Texas Instruments Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Texas Instruments 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 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
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 economic spread ratio demonstrates a significant declining trend over the five-year period. While initially strong, the ratio exhibits a substantial decrease, indicating a diminishing competitive advantage or efficiency in capital allocation.
- Economic Spread Ratio
- The economic spread ratio began at 31.61% in 2021 and increased slightly to 32.98% in 2022. This suggests a period of strong profitability relative to the cost of capital. However, a marked downturn commenced in 2023, with the ratio falling to 12.40%. This decline accelerated in subsequent years, reaching 2.77% in 2024 and further decreasing to 2.46% in 2025. This consistent reduction suggests a weakening ability to generate returns exceeding the cost of invested capital.
The decline in the economic spread ratio coincides with increases in invested capital. While economic profit remained positive throughout the period, its rate of growth slowed considerably, and the increasing capital base was not translating into proportional gains in economic profit. This suggests potential inefficiencies in deploying capital or increased competitive pressures impacting profitability.
- Relationship to Economic Profit and Invested Capital
- Economic profit increased from US$5,187 million in 2021 to US$5,792 million in 2022, but then decreased significantly to US$2,800 million in 2023, and continued to fall to US$726 million in 2024 and US$704 million in 2025. Simultaneously, invested capital rose steadily from US$16,409 million in 2021 to US$28,591 million in 2025. The combination of decreasing economic profit and increasing invested capital directly contributes to the observed decline in the economic spread ratio.
The consistent decrease in the economic spread ratio warrants further investigation. Potential areas of focus include an analysis of the underlying drivers of profitability, a review of capital allocation strategies, and an assessment of the competitive landscape to understand the factors contributing to the diminishing returns on invested capital.
Economic Profit Margin
Texas Instruments Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
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 ÷ Revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit exhibited a fluctuating pattern over the five-year period. Initially increasing from 2021 to 2022, it subsequently declined significantly in the following years, reaching its lowest point in 2024 before experiencing a slight recovery in 2025. Revenue also demonstrated variability, peaking in 2022 and then decreasing to a low in 2024, followed by an increase in 2025.
- Economic Profit
- Economic profit increased from US$5,187 million in 2021 to US$5,792 million in 2022, representing a growth of approximately 11.7%. However, a substantial decrease was observed in subsequent years, falling to US$2,800 million in 2023, US$726 million in 2024, and slightly recovering to US$704 million in 2025. This indicates diminishing profitability based on economic profit calculations.
- Revenue
- Revenue followed a similar trend to economic profit, increasing from US$18,344 million in 2021 to US$20,028 million in 2022, a rise of roughly 9.2%. A decline then occurred, with revenue decreasing to US$17,519 million in 2023 and further to US$15,641 million in 2024. Revenue showed a partial recovery in 2025, reaching US$17,682 million. The revenue trend suggests potential market or operational challenges impacting sales.
- Economic Profit Margin
- The economic profit margin mirrored the trends in economic profit, starting at 28.28% in 2021 and increasing to 28.92% in 2022. A consistent decline followed, dropping to 15.98% in 2023, 4.64% in 2024, and stabilizing at 3.98% in 2025. This downward trajectory suggests a decreasing ability to generate economic profit from each dollar of revenue. The substantial decrease in the economic profit margin from 2022 to 2024 is particularly noteworthy, indicating a significant erosion of profitability relative to revenue.
The observed correlation between economic profit, revenue, and economic profit margin suggests that changes in revenue directly influence economic profit, and consequently, the economic profit margin. The declining trend in both economic profit margin and economic profit from 2022 to 2024 warrants further investigation to identify the underlying causes, such as increased costs, pricing pressures, or decreased operational efficiency.