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
Becton, Dickinson & Co., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,155 – 11.47% × 45,278 = -3,037
The financial performance from 2016 to 2021 is characterized by a persistent negative economic profit, indicating that the returns generated by operations were insufficient to cover the cost of the capital employed during this period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated considerable volatility throughout the analyzed timeframe. Following an increase in 2017, a sharp decline was observed in 2018. A subsequent recovery trend emerged, culminating in a peak of 2,155 million US dollars in 2021, marking the highest level of operating profit in the sequence.
- Invested Capital Trends
- A period of aggressive capital expansion occurred between 2016 and 2018, with invested capital increasing from 22,258 million US dollars to 47,282 million US dollars. Following this surge, the capital base stabilized, fluctuating narrowly between 45,181 million and 46,312 million US dollars from 2019 through 2021.
- Cost of Capital Stability
- The cost of capital remained relatively constant, oscillating between a low of 10.69% in 2017 and a high of 11.47% in 2021. A marginal but steady upward trend in the cost of capital is evident from 2017 onwards, which incrementally raised the profitability threshold required to generate positive economic value.
- Economic Profit Analysis
- Economic profit remained negative for the entire six-year duration. The deficit widened significantly until 2018, reaching a trough of -4,647 million US dollars. While a recovery trend began thereafter, ending at -3,037 million US dollars in 2021, the consistent negative values signify a sustained inability to exceed the cost of capital charge.
The deepening of economic losses between 2016 and 2018 correlates with the rapid increase in invested capital, suggesting that the additional capital deployed did not yield immediate proportional increases in operating profit. The improvement in economic profit observed by 2021 is primarily attributable to the significant growth in NOPAT, which partially offset the high capital charge.
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Net Operating Profit after Taxes (NOPAT)
Becton, Dickinson & Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in restructuring liability.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 470 × 2.20% = 10
6 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 479 × 21.00% = 101
7 Addition of after taxes interest expense to net income.
8 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 9 × 21.00% = 2
9 Elimination of after taxes investment income.
- Net Income
- The net income figures exhibit considerable fluctuation over the reported periods. Starting at 976 million US dollars in 2016, it increased moderately to 1100 million in 2017. However, 2018 saw a sharp decline to 311 million, representing a significant downturn. This was followed by a strong recovery in 2019, where net income rose to 1233 million. A decline occurred again in 2020, as net income dropped to 874 million. The latest figure in 2021 indicates a substantial increase to 2092 million, marking the highest value in the dataset and demonstrating a notable overall upward trend despite earlier volatility.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT trends are somewhat aligned with net income, but they reflect less volatility. It started at 717 million US dollars in 2016 and sharply increased to 1300 million in 2017, marking a significant improvement. In 2018, NOPAT declined to 570 million, though this drop was less severe in relative terms compared to the net income decline in the same year. Subsequently, NOPAT recovered to 1105 million in 2019 and saw a slight decrease to 991 million in 2020. The year 2021 shows a dramatic increase to 2155 million, the highest point in the period, underscoring strong operational profitability improvements.
- Summary Insights
- Both net income and NOPAT demonstrate cyclical patterns characterized by steep declines followed by significant recoveries. The year 2018 stands out as an outlier with notably lower profitability, suggesting possible operational or market challenges during that period. The firm’s overall financial performance shows strong resilience and upward momentum by 2021, indicating effective management of costs and revenue growth leading to enhanced profitability. The 2021 figures exceeding previous highs imply robust financial health and operational efficiency.
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Cash Operating Taxes
Becton, Dickinson & Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
The financial data reveals significant fluctuations in the income tax provision (benefit) over the observed periods. Initially, the income tax provision shows a negative value in 2017 (-124 million USD), indicating a benefit rather than an expense. This contrasts with the positive provisions in 2016 (97 million USD) and the substantial increase to 862 million USD in 2018. The value dips again in 2019 to a negative figure (-57 million USD), signaling another tax benefit, followed by a recovery to positive values in 2020 and 2021, reaching 111 million USD and 150 million USD, respectively. This volatility suggests variability in taxable income or tax planning strategies affecting provisions for income taxes.
Cash operating taxes also exhibit variability but with somewhat less drastic changes. The cash tax payment starts at 748 million USD in 2016, sharply decreases to 109 million USD in 2017, then peaks dramatically at 1,285 million USD in 2018. After this peak, there is a decline to 711 million USD in 2019, followed by further decreases and stabilization around 508 million USD in 2020, and a slight increase to 537 million USD in 2021. This pattern may reflect changes in operational profitability, timing differences in tax payments, or varying tax obligations year over year.
- Income Tax Provision (Benefit)
- Displayed considerable volatility with alternating positive and negative values, suggesting fluctuations in reported taxable income or tax expense recognition.
- Peak observed in 2018, with a significant tax expense recorded.
- Negative values in 2017 and 2019 suggest periods where tax benefits or credits were recognized.
- The latter years (2020 and 2021) show moderate positive provisions, indicating a potential stabilization.
- Cash Operating Taxes
- Experienced sharp variations, with the highest cash tax paid in 2018 aligning with the peak in income tax provision.
- Following the 2018 peak, the cash tax outlay declined and stabilized at a lower level by 2020 and 2021.
- This may suggest shifts in operational profitability, timing issues in tax payments, or changes in tax liabilities over these years.
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Invested Capital
Becton, Dickinson & Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
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 restructuring liability.
5 Addition of equity equivalents to shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of short-term investments.
The financial data presented reveals notable trends in the company's capital structure and financing over the six-year period ending September 30, 2021.
- Total Reported Debt & Leases
- This item shows a significant increase from 2016 to 2018, rising from $11,801 million to a peak of $21,951 million in 2018. Subsequently, there is a consistent downward trend from 2018 through 2021, decreasing to $18,080 million. This decline may suggest efforts to reduce leverage or refinance obligations with lower levels of debt.
- Shareholders’ Equity
- Shareholders’ equity exhibits strong growth throughout the period. Starting at $7,633 million in 2016, it more than doubles by 2018 to $20,994 million, then continues increasing steadily to nearly $23,677 million by 2021. This upward trajectory indicates sustained profitability or capital infusions supporting the equity base.
- Invested Capital
- Invested capital reflects the combined financing through debt and equity and follows a similar pattern as debt, increasing from $22,258 million in 2016 to a peak of $47,282 million in 2018. Afterward, invested capital experiences a moderate decline, ending at $45,278 million in 2021. This suggests that while the total capital invested in the business grew substantially initially, it has somewhat plateaued or been optimized in recent years.
Overall, the data indicates an initial period of expansion or increased financing up to 2018, followed by a phase of debt reduction and stability in total invested capital. The continuous growth in shareholders’ equity through this period highlights strengthening financial resilience and potential value creation for shareholders.
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Cost of Capital
Becton, Dickinson & Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 69,432) | 69,432) | ÷ | 90,561) | = | 0.77 | 0.77 | × | 14.24% | = | 10.92% | ||
| 6.125% Cumulative Preferred Stock, Series A | —) | —) | ÷ | 90,561) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | 1,619) | 1,619) | ÷ | 90,561) | = | 0.02 | 0.02 | × | 5.56% | = | 0.10% | ||
| Debt3 | 19,040) | 19,040) | ÷ | 90,561) | = | 0.21 | 0.21 | × | 2.65% × (1 – 21.00%) | = | 0.44% | ||
| Operating lease liability4 | 470) | 470) | ÷ | 90,561) | = | 0.01 | 0.01 | × | 2.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 90,561) | 1.00 | 11.47% | ||||||||||
Based on: 10-K (reporting date: 2021-09-30).
1 US$ 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 | 65,973) | 65,973) | ÷ | 87,672) | = | 0.75 | 0.75 | × | 14.24% | = | 10.71% | ||
| 6.125% Cumulative Preferred Stock, Series A | —) | —) | ÷ | 87,672) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | 1,580) | 1,580) | ÷ | 87,672) | = | 0.02 | 0.02 | × | 5.70% | = | 0.10% | ||
| Debt3 | 19,677) | 19,677) | ÷ | 87,672) | = | 0.22 | 0.22 | × | 3.19% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 442) | 442) | ÷ | 87,672) | = | 0.01 | 0.01 | × | 2.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 87,672) | 1.00 | 11.39% | ||||||||||
Based on: 10-K (reporting date: 2020-09-30).
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 | 70,428) | 70,428) | ÷ | 94,492) | = | 0.75 | 0.75 | × | 14.24% | = | 10.61% | ||
| 6.125% Cumulative Preferred Stock, Series A | 3,065) | 3,065) | ÷ | 94,492) | = | 0.03 | 0.03 | × | 4.96% | = | 0.16% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | —) | —) | ÷ | 94,492) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Debt3 | 20,509) | 20,509) | ÷ | 94,492) | = | 0.22 | 0.22 | × | 3.17% × (1 – 21.00%) | = | 0.54% | ||
| Operating lease liability4 | 490) | 490) | ÷ | 94,492) | = | 0.01 | 0.01 | × | 3.17% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 94,492) | 1.00 | 11.33% | ||||||||||
Based on: 10-K (reporting date: 2019-09-30).
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 | 64,929) | 64,929) | ÷ | 90,033) | = | 0.72 | 0.72 | × | 14.24% | = | 10.27% | ||
| 6.125% Cumulative Preferred Stock, Series A | 3,235) | 3,235) | ÷ | 90,033) | = | 0.04 | 0.04 | × | 4.69% | = | 0.17% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | —) | —) | ÷ | 90,033) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Debt3 | 21,413) | 21,413) | ÷ | 90,033) | = | 0.24 | 0.24 | × | 3.25% × (1 – 24.50%) | = | 0.58% | ||
| Operating lease liability4 | 456) | 456) | ÷ | 90,033) | = | 0.01 | 0.01 | × | 3.25% × (1 – 24.50%) | = | 0.01% | ||
| Total: | 90,033) | 1.00 | 11.03% | ||||||||||
Based on: 10-K (reporting date: 2018-09-30).
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 | 51,120) | 51,120) | ÷ | 73,514) | = | 0.70 | 0.70 | × | 14.24% | = | 9.90% | ||
| 6.125% Cumulative Preferred Stock, Series A | 2,735) | 2,735) | ÷ | 73,514) | = | 0.04 | 0.04 | × | 5.54% | = | 0.21% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | —) | —) | ÷ | 73,514) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Debt3 | 19,409) | 19,409) | ÷ | 73,514) | = | 0.26 | 0.26 | × | 3.34% × (1 – 35.00%) | = | 0.57% | ||
| Operating lease liability4 | 250) | 250) | ÷ | 73,514) | = | 0.00 | 0.00 | × | 3.34% × (1 – 35.00%) | = | 0.01% | ||
| Total: | 73,514) | 1.00 | 10.69% | ||||||||||
Based on: 10-K (reporting date: 2017-09-30).
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 | 35,772) | 35,772) | ÷ | 48,321) | = | 0.74 | 0.74 | × | 14.24% | = | 10.54% | ||
| 6.125% Cumulative Preferred Stock, Series A | —) | —) | ÷ | 48,321) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| 6.00% Mandatory Convertible Preferred Stock, Series B | —) | —) | ÷ | 48,321) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Debt3 | 12,299) | 12,299) | ÷ | 48,321) | = | 0.25 | 0.25 | × | 3.68% × (1 – 35.00%) | = | 0.61% | ||
| Operating lease liability4 | 250) | 250) | ÷ | 48,321) | = | 0.01 | 0.01 | × | 3.68% × (1 – 35.00%) | = | 0.01% | ||
| Total: | 48,321) | 1.00 | 11.16% | ||||||||||
Based on: 10-K (reporting date: 2016-09-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Becton, Dickinson & Co., economic spread ratio calculation, comparison to benchmarks
| Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (3,037) | (4,285) | (4,015) | (4,647) | (2,404) | (1,768) | |
| Invested capital2 | 45,278) | 46,312) | 45,181) | 47,282) | 34,655) | 22,258) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -6.71% | -9.25% | -8.89% | -9.83% | -6.94% | -7.94% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | -1.98% | — | — | — | — | — | |
| Elevance Health Inc. | 1.46% | — | — | — | — | — | |
| Intuitive Surgical Inc. | 12.27% | — | — | — | — | — | |
| Medtronic PLC | -6.73% | — | — | — | — | — | |
| UnitedHealth Group Inc. | 3.91% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -3,037 ÷ 45,278 = -6.71%
4 Click competitor name to see calculations.
Between 2016 and 2021, the company consistently operated with a negative economic profit, indicating that the returns generated were insufficient to cover the cost of the capital employed. A period of significant capital expansion occurred between 2016 and 2018, which coincided with a deepening of economic losses, followed by a trend of stabilization and marginal improvement in the spread ratio through 2021.
- Economic Profit
- Economic profit remained negative throughout the analyzed period, exhibiting a downward trend from 2016 to 2018, where losses peaked at -4,647 million US dollars. Following this low point, a gradual recovery was observed, with the economic loss narrowing to -3,037 million US dollars by September 30, 2021, although the company did not achieve a positive value.
- Invested Capital
- A substantial increase in invested capital was recorded between 2016 and 2018, rising from 22,258 million US dollars to 47,282 million US dollars. After this rapid expansion, the capital base stabilized, fluctuating within a narrow range between approximately 45,181 million and 46,312 million US dollars from 2019 through 2021.
- Economic Spread Ratio
- The economic spread ratio remained negative for the entire duration, confirming that the return on invested capital was consistently below the cost of capital. The ratio reached its most unfavorable level of -9.83% in 2018, mirroring the peak in invested capital and economic losses. However, a positive trajectory is observed toward the end of the period, with the ratio improving to -6.71% by 2021, representing the strongest performance relative to the cost of capital within the six-year timeframe.
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Economic Profit Margin
Becton, Dickinson & Co., economic profit margin calculation, comparison to benchmarks
| Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (3,037) | (4,285) | (4,015) | (4,647) | (2,404) | (1,768) | |
| Revenues | 20,248) | 17,117) | 17,290) | 15,983) | 12,093) | 12,483) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -15.00% | -25.03% | -23.22% | -29.07% | -19.88% | -14.16% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Abbott Laboratories | -2.85% | — | — | — | — | — | |
| Elevance Health Inc. | 0.68% | — | — | — | — | — | |
| Intuitive Surgical Inc. | 9.66% | — | — | — | — | — | |
| Medtronic PLC | -16.16% | — | — | — | — | — | |
| UnitedHealth Group Inc. | 1.92% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × -3,037 ÷ 20,248 = -15.00%
3 Click competitor name to see calculations.
An analysis of the economic value added indicates that the entity consistently operated below its cost of capital from 2016 through 2021, as evidenced by the continuous negative values for economic profit. While top-line revenue experienced substantial growth over the six-year period, the economic profit margin remained negative, reflecting a persistent gap between the returns generated and the capital charges required.
- Revenue Trajectory
- Revenues exhibited a general upward trend, rising from 12,483 million US dollars in 2016 to 20,248 million US dollars in 2021. A brief stagnation occurred between 2019 and 2020, but a strong recovery followed in 2021, marking the highest revenue level in the analyzed period.
- Economic Profit Trends
- Economic profit deteriorated sharply between 2016 and 2018, moving from negative 1,768 million US dollars to a peak deficit of negative 4,647 million US dollars. Following this low point, a recovery trend emerged; although profit remained negative, the deficit narrowed to negative 3,037 million US dollars by September 30, 2021.
- Economic Profit Margin Fluctuations
- The economic profit margin mirrored the volatility of the absolute economic profit. The margin worsened from -14.16% in 2016 to its lowest point of -29.07% in 2018, indicating a period of significant capital inefficiency. A subsequent improvement trend is observed, with the margin recovering to -15.00% by 2021, suggesting that the entity began to narrow the deficit relative to its total revenue.
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