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.
Economic Profit
AT&T Inc., economic profit 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 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
= 32,194 – 8.37% × 337,331 = 3,946
The period under review demonstrates significant fluctuations in economic profit. Initial positive economic profit diminished substantially, followed by a recovery towards the end of the analyzed timeframe. Net operating profit after taxes (NOPAT) and cost of capital both experienced changes that influenced the resulting economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT began at US$32,698 million in 2021, decreased dramatically to US$1,500 million in 2022, then rose to US$22,742 million in 2023. A further decrease to US$18,826 million occurred in 2024 before a substantial increase to US$32,194 million in 2025. This indicates considerable volatility in core operational profitability.
- Cost of Capital
- The cost of capital increased from 7.02% in 2021 to 7.62% in 2022, decreased slightly to 7.30% in 2023, and then increased significantly to 8.51% in 2024. It experienced a minor decrease to 8.37% in 2025. These fluctuations suggest changes in the risk profile of the company or broader market conditions impacting funding costs.
- Invested Capital
- Invested capital decreased from US$439,195 million in 2021 to US$309,447 million in 2022. It then increased to US$326,144 million in 2023, decreased slightly to US$314,065 million in 2024, and rose again to US$337,331 million in 2025. The changes in invested capital suggest adjustments in the company’s asset base and investment strategy.
- Economic Profit
- Economic profit started at US$1,881 million in 2021, then experienced a substantial decline to a loss of US$22,088 million in 2022. It remained negative, though less severe, at a loss of US$1,066 million in 2023, before worsening to a loss of US$7,898 million in 2024. Finally, economic profit turned positive again, reaching US$3,946 million in 2025. The negative economic profit in 2022, 2023, and 2024 indicates that the company’s returns were insufficient to cover its cost of capital during those years. The return to positive economic profit in 2025 suggests improved performance relative to the cost of capital.
The significant drop in NOPAT in 2022, coupled with a rising cost of capital, was the primary driver of the substantial negative economic profit observed that year. The subsequent recovery in economic profit in 2025 is attributable to the combined effect of increased NOPAT and a relatively stable cost of capital.
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Net Operating Profit after Taxes (NOPAT)
AT&T Inc., NOPAT calculation
US$ 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 allowance for credit loss.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AT&T.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 22,524 × 4.60% = 1,036
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 7,840 × 21.00% = 1,646
6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 399 × 21.00% = 84
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
Net operating profit after taxes (NOPAT) exhibited significant fluctuation over the five-year period. While net income attributable to AT&T also showed volatility, the NOPAT figures present a distinct pattern of initial decline, subsequent recovery, and further growth. A substantial decrease in NOPAT is observed between 2021 and 2022, followed by a period of recovery and expansion through 2025.
- NOPAT Trend
- In 2021, NOPAT stood at US$32,698 million. This value decreased dramatically to US$1,500 million in 2022, representing a significant contraction in operating profitability. A strong recovery occurred in 2023, with NOPAT reaching US$22,742 million. This upward trend continued into 2024, with NOPAT reported at US$18,826 million, although at a slower rate of increase than the prior year. Finally, NOPAT experienced substantial growth in 2025, reaching US$32,194 million, nearly returning to the level observed in 2021.
- Relationship to Net Income
- The divergence between NOPAT and net income is notable. While net income experienced a substantial loss in 2022, NOPAT, though significantly reduced, remained positive. This suggests that non-operating items contributed substantially to the net loss in 2022. In 2023 and 2025, NOPAT growth outpaced net income growth, indicating improved core operational performance relative to other financial influences. The difference between NOPAT and net income suggests the presence of significant interest expense, non-recurring items, or tax adjustments impacting the bottom line.
The fluctuations in NOPAT warrant further investigation to understand the underlying drivers. The sharp decline in 2022 requires detailed analysis of operational performance, cost structures, and any significant one-time events. The subsequent recovery and growth demonstrate an ability to improve operational profitability, but the slower growth rate in 2024 suggests potential headwinds or challenges to sustaining the momentum. The strong performance in 2025 indicates a return to robust operational profitability.
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Cash Operating Taxes
AT&T Inc., cash operating taxes calculation
US$ 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 reported income tax expense demonstrates fluctuation over the five-year period. A decrease is observed from 2021 to 2022, followed by increases in 2022 and 2023, a further increase in 2024, and then a decrease in 2025. However, cash operating taxes exhibit a different pattern, showing a more substantial increase between 2021 and 2024 before declining in the most recent year.
- Income Tax Expense Trend
- Income tax expense began at US$5,468 million in 2021, decreased to US$3,780 million in 2022, and then increased to US$4,225 million in 2023. This upward trend continued into 2024, reaching US$4,445 million, before decreasing to US$3,621 million in 2025. The largest single-year decrease occurred between 2021 and 2022, while the largest single-year increase occurred between 2022 and 2023.
- Cash Operating Taxes Trend
- Cash operating taxes increased from US$1,603 million in 2021 to US$2,134 million in 2022. A significant increase is then observed, rising to US$4,298 million in 2023 and further to US$5,277 million in 2024. In 2025, cash operating taxes decreased substantially to US$2,308 million. The period between 2021 and 2024 shows a consistent upward trajectory, while 2025 represents a considerable decline.
- Relationship Between Income Tax Expense and Cash Operating Taxes
- While both metrics relate to taxation, their movements diverge. Cash operating taxes generally increased at a faster rate than income tax expense between 2021 and 2024. The substantial decrease in cash operating taxes in 2025, while income tax expense also decreased, suggests a potential shift in the timing of tax payments or changes in tax planning strategies. The difference between the two metrics indicates the presence of deferred tax items or other non-cash tax effects.
The fluctuations in both income tax expense and cash operating taxes warrant further investigation to understand the underlying drivers. The significant divergence in trends between the two metrics, particularly in 2025, suggests a need to examine the components of each figure in greater detail.
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Invested Capital
AT&T Inc., invested capital calculation (financing approach)
US$ 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 equity equivalents to stockholders’ equity attributable to AT&T.
5 Removal of accumulated other comprehensive income.
6 Subtraction of under construction.
7 Subtraction of investment securities.
The reported invested capital exhibited considerable fluctuation over the five-year period. Total reported debt & leases and stockholders’ equity attributable to AT&T both experienced significant changes, contributing to the observed trends in invested capital.
- Invested Capital Trend
- Invested capital decreased substantially from US$439,195 million in 2021 to US$309,447 million in 2022, representing a decline of approximately 29.7%. A moderate increase followed, with invested capital reaching US$326,144 million in 2023. This was followed by a slight decrease to US$314,065 million in 2024. The most recent year, 2025, shows a further increase to US$337,331 million.
- Debt & Leases
- Total reported debt & leases decreased significantly from US$202,321 million in 2021 to US$158,096 million in 2022, a reduction of roughly 21.8%. The level remained relatively stable through 2023 at US$158,423 million, before decreasing again to US$144,456 million in 2024. In 2025, debt & leases increased to US$158,624 million, approaching the 2022 level.
- Stockholders’ Equity
- Stockholders’ equity attributable to AT&T experienced a substantial decrease from US$166,332 million in 2021 to US$97,500 million in 2022, a decline of approximately 41.2%. Subsequent years showed a recovery, with equity increasing to US$103,297 million in 2023, US$104,372 million in 2024, and further to US$110,533 million in 2025. While recovering, equity levels remained below those observed in 2021.
The fluctuations in invested capital appear to be driven primarily by the significant changes in both debt & leases and stockholders’ equity. The substantial decrease in both components in 2022 resulted in the largest drop in invested capital during the period. The subsequent recovery in equity, coupled with relatively stable debt levels in 2023-2025, contributed to the stabilization and modest increase in invested capital observed in those years.
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Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 189,786) | 189,786) | ÷ | 343,842) | = | 0.55 | 0.55 | × | 12.42% | = | 6.86% | ||
| 5.000% Perpetual Preferred Stock, Series A | 967) | 967) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 5.00% | = | 0.01% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,331) | 1,331) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 129,234) | 129,234) | ÷ | 343,842) | = | 0.38 | 0.38 | × | 4.20% × (1 – 21.00%) | = | 1.25% | ||
| Operating lease liability4 | 22,524) | 22,524) | ÷ | 343,842) | = | 0.07 | 0.07 | × | 4.60% × (1 – 21.00%) | = | 0.24% | ||
| Total: | 343,842) | 1.00 | 8.37% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 182,039) | 182,039) | ÷ | 320,946) | = | 0.57 | 0.57 | × | 12.42% | = | 7.05% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,010) | 1,010) | ÷ | 320,946) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,390) | 1,390) | ÷ | 320,946) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 115,583) | 115,583) | ÷ | 320,946) | = | 0.36 | 0.36 | × | 4.20% × (1 – 21.00%) | = | 1.19% | ||
| Operating lease liability4 | 20,924) | 20,924) | ÷ | 320,946) | = | 0.07 | 0.07 | × | 4.50% × (1 – 21.00%) | = | 0.23% | ||
| Total: | 320,946) | 1.00 | 8.51% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 120,167) | 120,167) | ÷ | 276,051) | = | 0.44 | 0.44 | × | 12.42% | = | 5.41% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,008) | 1,008) | ÷ | 276,051) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,381) | 1,381) | ÷ | 276,051) | = | 0.01 | 0.01 | × | 4.75% | = | 0.02% | ||
| Debt3 | 132,403) | 132,403) | ÷ | 276,051) | = | 0.48 | 0.48 | × | 4.23% × (1 – 21.00%) | = | 1.60% | ||
| Operating lease liability4 | 21,092) | 21,092) | ÷ | 276,051) | = | 0.08 | 0.08 | × | 4.10% × (1 – 21.00%) | = | 0.25% | ||
| Total: | 276,051) | 1.00 | 7.30% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 137,321) | 137,321) | ÷ | 286,836) | = | 0.48 | 0.48 | × | 12.42% | = | 5.95% | ||
| 5.000% Perpetual Preferred Stock, Series A | 881) | 881) | ÷ | 286,836) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,221) | 1,221) | ÷ | 286,836) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 125,207) | 125,207) | ÷ | 286,836) | = | 0.44 | 0.44 | × | 4.10% × (1 – 21.00%) | = | 1.41% | ||
| Operating lease liability4 | 22,206) | 22,206) | ÷ | 286,836) | = | 0.08 | 0.08 | × | 3.70% × (1 – 21.00%) | = | 0.23% | ||
| Total: | 286,836) | 1.00 | 7.62% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 171,001) | 171,001) | ÷ | 402,190) | = | 0.43 | 0.43 | × | 12.42% | = | 5.28% | ||
| 5.000% Perpetual Preferred Stock, Series A | 1,286) | 1,286) | ÷ | 402,190) | = | 0.00 | 0.00 | × | 5.00% | = | 0.02% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,838) | 1,838) | ÷ | 402,190) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 203,098) | 203,098) | ÷ | 402,190) | = | 0.50 | 0.50 | × | 3.80% × (1 – 21.00%) | = | 1.52% | ||
| Operating lease liability4 | 24,967) | 24,967) | ÷ | 402,190) | = | 0.06 | 0.06 | × | 3.70% × (1 – 21.00%) | = | 0.18% | ||
| Total: | 402,190) | 1.00 | 7.02% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
AT&T 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 | 3,946) | (7,898) | (1,066) | (22,088) | 1,881) | |
| Invested capital2 | 337,331) | 314,065) | 326,144) | 309,447) | 439,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.17% | -2.51% | -0.33% | -7.14% | 0.43% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | 1.46% | 1.53% | -0.12% | -3.89% | -3.83% | |
| Verizon Communications Inc. | 0.48% | 0.81% | -0.77% | 2.27% | 3.02% | |
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 × 3,946 ÷ 337,331 = 1.17%
4 Click competitor name to see calculations.
The economic spread ratio exhibited significant fluctuations over the five-year period. Initially positive, it transitioned to negative values before recovering in the final year. This movement correlates with substantial shifts in economic profit, while invested capital also demonstrated considerable change.
- Economic Spread Ratio
- In 2021, the economic spread ratio stood at 0.43%, indicating a modest positive spread between the return on invested capital and the cost of capital. This ratio experienced a dramatic decline in 2022, falling to -7.14%. This substantial negative value suggests that the company’s returns were significantly lower than its cost of capital. The ratio remained negative in 2023 at -0.33%, though the magnitude of the loss lessened. A further decline was observed in 2024, reaching -2.51%. Finally, the ratio turned positive again in 2025, reaching 1.17%, signifying a return to generating returns exceeding the cost of capital.
The economic spread ratio’s volatility suggests a period of operational or financial instability, followed by a potential recovery. The large negative spread in 2022 warrants further investigation to understand the underlying causes, such as increased costs, decreased revenues, or significant capital investments. The subsequent improvement in 2025 indicates that corrective measures or favorable market conditions may have positively impacted performance.
- Relationship to Economic Profit
- The economic spread ratio closely mirrors the trend in economic profit. The positive ratio in 2021 corresponds with the positive economic profit of US$1,881 million. The substantial negative spread in 2022 aligns with the significant economic loss of US$22,088 million. The return to positive economic profit in 2025 (US$3,946 million) is reflected in the positive economic spread ratio of 1.17%.
The invested capital figures also show considerable movement. It decreased substantially from 2021 to 2022, before increasing again in subsequent years. This fluctuation in invested capital, combined with the changes in economic profit, directly influences the economic spread ratio and highlights the dynamic relationship between capital allocation and profitability.
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Economic Profit Margin
AT&T Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 3,946) | (7,898) | (1,066) | (22,088) | 1,881) | |
| Operating revenues | 125,648) | 122,336) | 122,428) | 120,741) | 168,864) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 3.14% | -6.46% | -0.87% | -18.29% | 1.11% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | 3.26% | 3.50% | -0.28% | -9.11% | -8.83% | |
| Verizon Communications Inc. | 1.14% | 1.85% | -1.74% | 4.99% | 6.56% | |
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 ÷ Operating revenues
= 100 × 3,946 ÷ 125,648 = 3.14%
3 Click competitor name to see calculations.
The economic profit exhibited significant volatility over the five-year period. Initially positive, it transitioned to substantial negative values before recovering to positive territory. This fluctuation is mirrored in the economic profit margin, which demonstrates a corresponding pattern of decline and subsequent improvement.
- Economic Profit
- Economic profit began at US$1,881 million in 2021. A dramatic decrease occurred in 2022, resulting in an economic loss of US$22,088 million. This negative trend continued, albeit less severely, in 2023 with a loss of US$1,066 million. The loss persisted in 2024, reaching US$7,898 million, before a substantial recovery in 2025, yielding a profit of US$3,946 million.
- Operating Revenues
- Operating revenues experienced a considerable decline from US$168,864 million in 2021 to US$120,741 million in 2022. Revenue figures stabilized between 2022 and 2024, fluctuating modestly around US$122 million. A slight increase in operating revenues was observed in 2025, reaching US$125,648 million.
- Economic Profit Margin
- The economic profit margin began at 1.11% in 2021. It sharply decreased to -18.29% in 2022, reflecting the significant economic loss. The margin remained negative in 2023 at -0.87% and further declined to -6.46% in 2024. A substantial positive shift occurred in 2025, with the margin increasing to 3.14%, indicating improved profitability relative to revenue.
The substantial decline in economic profit in 2022 coincided with a significant reduction in operating revenues, suggesting a strong correlation between revenue generation and economic profitability. While revenues showed some stabilization in subsequent years, the economic profit margin did not improve proportionally until 2025, indicating that factors beyond revenue, such as cost management or capital efficiency, likely played a role in the earlier negative performance. The recovery in both economic profit and margin in 2025 suggests a positive shift in these underlying factors.
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