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 – 8.52% × 337,331 = 3,470
The analysis of economic profit from 2021 to 2025 reveals significant volatility in value creation, characterized by a severe contraction in 2022 and a gradual recovery culminating in positive economic profit by 2025.
- Net Operating Profit After Taxes (NOPAT)
- A dramatic decline in NOPAT is observed in 2022, falling from 32,698 million US$ to 1,500 million US$. While a recovery followed in 2023 and 2024, the most significant rebound occurred in 2025, with NOPAT reaching 32,194 million US$, nearly returning to 2021 levels.
- Invested Capital Trends
- Invested capital experienced a substantial reduction in 2022, decreasing from 439,195 million US$ to 309,447 million US$. Following this contraction, the capital base remained relatively stable, with a slight upward trend reaching 337,331 million US$ by 2025, suggesting a period of restructuring followed by moderate reinvestment.
- Cost of Capital Fluctuations
- The cost of capital exhibited a general upward trajectory, rising from 7.13% in 2021 to a peak of 8.65% in 2024, before settling at 8.52% in 2025. This increase in the required rate of return placed additional pressure on the company's ability to generate positive economic profit.
- Economic Profit and Value Creation
- Economic profit shifted from a positive 1,404 million US$ in 2021 to a substantial deficit of -22,467 million US$ in 2022. Value destruction persisted through 2024, with economic profit remaining negative despite the recovery in NOPAT, largely due to the elevated cost of capital. Value creation resumed in 2025, with economic profit returning to a positive 3,470 million US$, indicating that the operating returns finally exceeded the cost of the capital employed.
Overall, the period was marked by a significant disruption in 2022 that severely impaired economic value added. The subsequent years demonstrate a successful operational recovery, although the increased cost of capital delayed the return to positive economic profit until 2025.
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Net Operating Profit after Taxes (NOPAT)
AT&T Inc., NOPAT calculation
US$ 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$110,533 million in 2025. While recovering, equity levels remained below those observed in 2021.
The fluctuations in invested capital appear to be driven primarily by the significant changes in both debt & leases and stockholders’ equity. The substantial decrease in both components in 2022 resulted in the largest drop in invested capital during the period. The subsequent recovery in equity, coupled with relatively stable debt levels in 2023-2025, contributed to the stabilization and modest increase in invested capital observed in those years.
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Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 189,786) | 189,786) | ÷ | 343,842) | = | 0.55 | 0.55 | × | 12.68% | = | 7.00% | ||
| 5.000% Perpetual Preferred Stock, Series A | 967) | 967) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 5.00% | = | 0.01% | ||
| 4.750% Perpetual Preferred Stock, Series C | 1,331) | 1,331) | ÷ | 343,842) | = | 0.00 | 0.00 | × | 4.75% | = | 0.02% | ||
| Debt3 | 129,234) | 129,234) | ÷ | 343,842) | = | 0.38 | 0.38 | × | 4.20% × (1 – 21.00%) | = | 1.25% | ||
| Operating lease liability4 | 22,524) | 22,524) | ÷ | 343,842) | = | 0.07 | 0.07 | × | 4.60% × (1 – 21.00%) | = | 0.24% | ||
| Total: | 343,842) | 1.00 | 8.52% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 12.68% | = | 7.19% | ||
| 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 | 8.65% | ||||||||||
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 | × | 12.68% | = | 5.52% | ||
| 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 | 7.41% | ||||||||||
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 | × | 12.68% | = | 6.07% | ||
| 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 | 7.75% | ||||||||||
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 | × | 12.68% | = | 5.39% | ||
| 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 | 7.13% | ||||||||||
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 | 3,470) | (8,353) | (1,429) | (22,467) | 1,404) | |
| Invested capital2 | 337,331) | 314,065) | 326,144) | 309,447) | 439,195) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 1.03% | -2.66% | -0.44% | -7.26% | 0.32% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| T-Mobile US Inc. | 1.26% | 1.31% | -0.31% | -4.08% | -4.01% | |
| Verizon Communications Inc. | 0.30% | 0.64% | -0.93% | 2.10% | 2.85% | |
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 × 3,470 ÷ 337,331 = 1.03%
4 Click competitor name to see calculations.
The financial performance from 2021 to 2025 is characterized by significant volatility in economic value creation, marked by a period of substantial value destruction followed by a recovery to positive economic profit.
- Economic Profit Trends
- A sharp transition occurred between 2021 and 2022, where economic profit fell from 1,404 million US$ to a deficit of 22,467 million US$. While a partial recovery was observed in 2023 with losses narrowing to 1,429 million US$, a subsequent decline occurred in 2024, with economic profit falling again to negative 8,353 million US$. A positive trajectory was finally established by 2025, with economic profit reaching 3,470 million US$, indicating a return to value creation.
- Invested Capital Dynamics
- Invested capital experienced a significant reduction of approximately 29.5% between 2021 and 2022, decreasing from 439,195 million US$ to 309,447 million US$. Following this contraction, the capital base remained relatively stable, fluctuating between 314,065 million US$ and 337,331 million US$ through 2025. This suggests a structural realignment of the capital base early in the period followed by a period of incremental growth.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the volatility of economic profit, starting at 0.32% in 2021 before plummeting to -7.26% in 2022. This negative spread indicates that the return on invested capital was significantly lower than the cost of capital during this period. Although the ratio improved to -0.44% in 2023, it dipped again to -2.66% in 2024. The ratio returned to positive territory in 2025, reaching 1.03%, which signifies that the organization is once again generating returns in excess of its cost of capital.
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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 | 3,470) | (8,353) | (1,429) | (22,467) | 1,404) | |
| Operating revenues | 125,648) | 122,336) | 122,428) | 120,741) | 168,864) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.76% | -6.83% | -1.17% | -18.61% | 0.83% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US Inc. | 2.81% | 3.01% | -0.73% | -9.56% | -9.23% | |
| Verizon Communications Inc. | 0.72% | 1.46% | -2.11% | 4.62% | 6.18% | |
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 × 3,470 ÷ 125,648 = 2.76%
3 Click competitor name to see calculations.
The financial performance over the analyzed five-year period is characterized by significant volatility in economic value creation, marked by a sharp contraction in 2022 and a subsequent inconsistent recovery process that ultimately returned to positive territory by 2025.
- Operating Revenue Trends
- A substantial reduction in operating revenues occurred between 2021 and 2022, with figures dropping from 168,864 million to 120,741 million. Following this decline, revenues exhibited relative stability, remaining within a narrow range between 2022 and 2024 before trending upward to reach 125,648 million by the end of 2025.
- Economic Profit Volatility
- Economic profit experienced a severe reversal, moving from a positive 1,404 million in 2021 to a deficit of 22,467 million in 2022. Although the deficit narrowed considerably to 1,429 million in 2023, a subsequent decline was observed in 2024, where losses widened to 8,353 million. The trend reversed in 2025, resulting in a positive economic profit of 3,470 million.
- Economic Profit Margin Fluctuations
- The economic profit margin mirrors the volatility of the absolute economic profit, falling from 0.83% in 2021 to a low of -18.61% in 2022. The margin showed an improvement to -1.17% in 2023, followed by a regression to -6.83% in 2024. The cycle concludes with a margin of 2.76% in 2025, signifying a return to the generation of economic value exceeding the cost of capital.
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