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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Economic Profit
AT&T 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 reveal notable fluctuations and trends across key financial metrics over the analyzed periods.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits significant volatility, with a notable peak in 2021 amounting to 32,698 million US dollars, contrasting sharply with the relatively moderate figures in other years. After declining dramatically to 1,500 million in 2022, NOPAT partially recovered to 22,742 million in 2023, followed by a decline to 18,826 million in 2024. This pattern indicates inconsistent profitability performance over the period, with 2021 being an outlier year in terms of elevated profitability.
- Cost of Capital
- The cost of capital fluctuates moderately over the five-year span, starting at 7.57% in 2020 and reaching a low of 6.91% in 2021. It then rises gradually to 8.37% by 2024, reflecting increasing capital costs. This upward trend in the cost of capital, especially towards the later years, could exert pressure on profitability and investment returns.
- Invested Capital
- Invested capital shows variability, with an initial increase from 412,041 million US dollars in 2020 to 439,195 million in 2021, followed by a sharp decline to 309,447 million in 2022. Subsequent years show modest recoveries, with invested capital reaching 326,144 million in 2023 and slightly decreasing to 314,065 million in 2024. This decline and partial recovery pattern suggest adjustments in asset base or capital allocation strategies during the analyzed timeframe.
- Economic Profit
- Economic profit remains predominantly negative across the years except for a positive figure of 2,349 million in 2021. The substantial negative economic profits, such as -26,700 million in 2020 and -21,717 million in 2022, indicate that the return on invested capital frequently falls short of the cost of capital. The marginal negative values in 2023 and the more significant negative figure in 2024 point to ongoing challenges in generating economic value despite some improvement in 2023.
Overall, the data suggest a highly volatile financial performance with inconsistent operating profits and persistent challenges in value creation. The rising cost of capital and fluctuating invested capital emphasize the importance of strategic focus on capital efficiency and profitability improvement moving forward.
Net Operating Profit after Taxes (NOPAT)
AT&T 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 loss.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to AT&T.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to AT&T.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
The financial data indicates notable fluctuations in profitability metrics over the five-year period.
- Net Income (Loss) Attributable to the Company
- The net income demonstrates significant volatility, beginning with a substantial loss of approximately 5,176 million US dollars at the end of 2020. This is followed by a sharp turnaround in 2021, with net income reaching an impressive 20,081 million US dollars. However, this positive result was not sustained, as net income reverted to a loss of around 8,524 million in 2022. Subsequently, the company recovered again with net income of 14,400 million in 2023, before experiencing a moderate decline to 10,948 million in 2024. The pattern suggests a cyclical or event-driven influence on profitability, with pronounced peaks and troughs.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibits a similar pattern of fluctuations, though trends show a stronger positive trajectory post-2020. Starting from 4,489 million in 2020, there was a notable surge to 32,698 million in 2021, reaching the peak value within the dataset. A sharp drop to 1,500 million follows in 2022, indicating substantial operational or performance challenges. Recovery is evident thereafter, with NOPAT climbing back to 22,742 million in 2023 and slightly declining to 18,826 million in 2024. These variations highlight periods of operational strength and weakness, indicating potential impacts from market conditions, restructuring, or other internal and external factors affecting operating efficiency and profitability.
Overall, both net income and NOPAT metrics reflect high volatility but suggest a capacity for rapid recovery following downturns. Despite these fluctuations, the company managed to maintain generally positive operating profitability from 2021 onwards, although net income was less consistent. The downward adjustments in the latest year indicate caution and emphasize the need to monitor ongoing financial performance and underlying factors driving the variability.
Cash Operating Taxes
AT&T 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).
- Income Tax Expense
- The income tax expense shows a marked increase from 965 million US dollars in 2020 to a peak of 5,468 million US dollars in 2021. This sharp rise is followed by a decline to 3,780 million US dollars in 2022. Subsequently, the tax expense exhibits a gradual increase over the next two periods, reaching 4,445 million US dollars by the end of 2024. Overall, the trend highlights significant volatility with an initial surge, a drop, and then stabilization at a relatively high level compared to the starting point.
- Cash Operating Taxes
- Cash operating taxes present a steady upward trajectory throughout the analyzed period. The values begin at 1,602 million US dollars in 2020 and remain relatively stable into 2021 at 1,603 million US dollars. After this point, there is a substantial increase to 2,134 million US dollars in 2022, followed by a pronounced rise to 4,298 million US dollars in 2023 and further growth to 5,277 million US dollars in 2024. This consistent increase indicates growing cash tax payments, potentially reflecting heightened operational profitability or changes in tax regulation or payment timing.
- Comparative Observation
- Comparing both items, cash operating taxes have increased consistently every year following a plateau in the first two years, whereas income tax expense has shown more fluctuation. The disparity between income tax expense and cash operating taxes narrows over time, especially from 2023 onwards, suggesting a possible alignment between reported tax expenses and actual cash tax outflows in the most recent periods.
Invested Capital
AT&T 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 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.
- Total reported debt & leases
-
The total reported debt and leases showed an initial increase from 182,984 million USD in 2020 to 202,321 million USD in 2021, reflecting a rising leverage or financing need in that period. Subsequently, there was a marked decline to 158,096 million USD in 2022, which remained relatively stable in 2023 at 158,423 million USD before continuing to decrease to 144,456 million USD by the end of 2024. The overall trend from 2021 to 2024 indicates a strategic reduction in debt obligations, potentially aimed at deleveraging and improving financial stability.
- Stockholders’ equity attributable to AT&T
-
Stockholders' equity attributable to the company gradually increased from 161,673 million USD in 2020 to 166,332 million USD in 2021. However, a significant drop occurred in 2022, bringing equity down to 97,500 million USD. Following this decline, there was a modest recovery to 103,297 million USD in 2023 and a slight increase to 104,372 million USD in 2024. This decline in 2022 could signify a major event such as restructuring, asset revaluation, or other factors impacting retained earnings or equity components, with partial recovery in the subsequent years.
- Invested capital
-
Invested capital exhibited an upward trajectory from 412,041 million USD in 2020 to 439,195 million USD in 2021, suggesting an increase in capital investment or assets employed in operations. However, this was followed by a notable decrease to 309,447 million USD in 2022, partly recovering to 326,144 million USD in 2023 before decreasing again to 314,065 million USD in 2024. The fluctuations in invested capital closely mirror the changes in equity, indicating possible asset disposals, changes in working capital, or other operational adjustments that influenced the capital base over the period.
Cost of Capital
AT&T Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 5.000% Perpetual Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 4.750% Perpetual Preferred Stock, Series C | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
AT&T 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 | ||||||
| T-Mobile US 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 shows significant volatility over the analyzed period. It was deeply negative at -26,700 million US dollars in 2020, improved remarkably to a positive 2,349 million in 2021, then declined sharply back to negative values of -21,717 million in 2022. The subsequent years show continued negative economic profit, though the magnitude of losses decreased somewhat to -710 million in 2023 and -7,451 million in 2024. This pattern indicates fluctuating operational efficiency or capital cost impacts influencing profitability.
- Invested Capital
- The invested capital demonstrates a general decline after peaking in 2021. Starting at 412,041 million US dollars in 2020, it increased to 439,195 million in 2021, followed by a significant reduction to 309,447 million in 2022. In the last two years, the invested capital has slightly increased to 326,144 million in 2023 but decreased again to 314,065 million in 2024. This trend suggests a possible strategic reduction or restructuring of capital investments post-2021.
- Economic Spread Ratio
- The economic spread ratio aligns closely with the economic profit trend, showing negative values for most of the period. It was substantially negative at -6.48% in 2020, turned positive at 0.53% in 2021, then deteriorated again to -7.02% in 2022. In 2023 and 2024, the ratio remained negative but closer to zero, at -0.22% and -2.37% respectively. This fluctuation indicates challenges in generating returns exceeding the cost of capital consistently.
Economic Profit Margin
AT&T 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 | ||||||
| Operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| T-Mobile US 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 ÷ Operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Operating Revenues
- The operating revenues displayed a decreasing trend from 2020 through 2022, dropping from approximately $171.8 billion in 2020 to $120.7 billion in 2022. However, in the years 2023 and 2024, the revenues stabilized around $122.4 billion and $122.3 billion respectively, indicating a period of revenue stagnation after the initial decline.
- Economic Profit
- The economic profit showed significant volatility across the analyzed periods. It started with a substantial negative value of about -$26.7 billion in 2020, improved markedly to a positive $2.3 billion in 2021, and then deteriorated again sharply to -$21.7 billion in 2022. The values slightly improved in 2023 and 2024 but remained negative, at -$710 million and -$7.4 billion respectively. This pattern highlights unstable profitability, with brief recovery followed by renewed losses.
- Economic Profit Margin
- The economic profit margin followed a pattern consistent with the economic profit figures. It began at a negative margin of -15.55% in 2020, turned positive at 1.39% in 2021, and then declined sharply to -17.99% in 2022. The margin saw modest improvement in the subsequent years but stayed negative at -0.58% in 2023 and -6.09% in 2024. This indicates that profitability relative to operating revenues was generally negative, with only a brief instance of positive margin in 2021.
- Summary
- The financial data reflects challenges in maintaining consistent profitability. Operating revenues decreased significantly up to 2022 but showed signs of stabilization thereafter. Economic profit and economic profit margin exhibited pronounced fluctuations, with a notable brief improvement in 2021 but resumed negative trends subsequently. Overall, the company experienced volatility in generating economic profit, with persistent negative returns after 2021, underscoring potential issues in cost management, capital efficiency, or revenue quality that affect sustained profitability.