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:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Aggregate Accruals
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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 a fluctuating pattern in economic profit. While initial years exhibited strong economic profit, a noticeable decline is observed in subsequent periods.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from US$7,923 million in 2021 to US$8,736 million in 2022, indicating improved operational profitability. However, NOPAT then decreased significantly to US$6,512 million in 2023 and further to US$5,023 million in 2024. A slight recovery to US$5,439 million is seen in 2025, but remains below the levels achieved in 2021 and 2022.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating between 16.44% and 16.78%. The minimal variation suggests consistent market conditions and risk assessment related to the company’s financing structure.
- Invested Capital
- Invested capital consistently increased over the five-year period, rising 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
- Economic profit peaked at US$5,789 million in 2022, aligning with the highest NOPAT. A substantial decrease is then evident, falling to US$2,797 million in 2023, US$722 million in 2024, and US$699 million in 2025. This decline, despite increasing invested capital, suggests that the returns generated from those investments are not consistently exceeding the cost of capital. The diminishing economic profit signals a potential erosion of value creation.
The increasing invested capital coupled with the declining economic profit from 2022 to 2025 warrants further investigation. While the company continues to invest, the returns on those investments appear to be diminishing relative to the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Texas Instruments Inc., NOPAT calculation
US$ 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 31.59% in 2021 and increased slightly to 32.96% 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 12.38%. This decline accelerated in subsequent years, reaching 2.76% in 2024 and further decreasing to 2.45% in 2025. This consistent reduction suggests a weakening ability to generate returns exceeding the cost of invested capital.
The decrease 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 a more competitive market environment.
- Relationship to Economic Profit and Invested Capital
- Economic profit increased from US$5,184 million in 2021 to US$5,789 million in 2022, but then decreased significantly to US$2,797 million in 2023, and continued to fall to US$722 million in 2024 and US$699 million in 2025. Simultaneously, invested capital rose steadily from US$16,409 million in 2021 to US$28,591 million in 2025. The combination of declining economic profit and increasing invested capital is the primary driver of the observed decline in the economic spread ratio.
The trend warrants further investigation to determine the underlying causes. Potential factors could include increased competition, rising input costs, less efficient capital projects, or a change in the company’s business mix towards lower-margin activities. A sustained low economic spread ratio could signal a need to reassess capital allocation strategies and improve operational efficiency.
Economic Profit Margin
Texas Instruments Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 margin exhibited a declining trend over the five-year period. Initially strong, the margin decreased significantly from 2021 to 2025. This decline occurred alongside fluctuations in both economic profit and revenue.
- Economic Profit Margin Trend
- The economic profit margin began at 28.26% in 2021, increasing slightly to 28.90% in 2022. A substantial decrease was then observed in 2023, falling to 15.96%. This downward trajectory continued in subsequent years, with the margin reaching 4.61% in 2024 and further declining to 3.96% in 2025.
- Relationship to Economic Profit
- Economic profit peaked in 2022 at US$5,789 million before experiencing a considerable reduction to US$2,797 million in 2023. Further declines followed, reaching US$722 million in 2024 and US$699 million in 2025. The decreasing economic profit directly contributed to the observed decline in the economic profit margin.
- Relationship to Revenue
- Revenue increased from US$18,344 million in 2021 to US$20,028 million in 2022. However, revenue then decreased to US$17,519 million in 2023 and continued to fall to US$15,641 million in 2024. A slight recovery was noted in 2025, with revenue reaching US$17,682 million. While revenue fluctuations existed, the substantial decrease in economic profit appears to be the primary driver of the declining economic profit margin, as the revenue decrease from 2022 to 2025 was not proportional to the economic profit decrease.
The consistent reduction in the economic profit margin suggests a diminishing ability to generate profit exceeding the cost of capital. Further investigation into the factors contributing to the decline in economic profit is warranted.