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
Dollar General Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
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
= 2,431,523 – 7.90% × 26,309,034 = 353,933
Between 2019 and 2024, economic profit exhibited a period of substantial growth followed by a sharp contraction in the final year. Economic profit rose from US$ 474.9 million in 2019 to a peak of US$ 1.61 billion in 2023, before falling to US$ 353.9 million in 2024.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a strong upward trajectory from 2019 through 2023, with a notable acceleration in 2021. Profitability reached its zenith in 2023 at US$ 3.66 billion. However, a significant reversal occurred in 2024, as NOPAT declined to US$ 2.43 billion, marking the lowest level of operating profit since 2020.
- Invested Capital and Cost of Capital
- Invested capital grew consistently over the six-year period, increasing from US$ 18.11 billion in 2019 to US$ 26.31 billion in 2024. This indicates a steady expansion of the asset base. During the same period, the cost of capital remained relatively stable, fluctuating minimally between a high of 8.71% in 2022 and a low of 7.90% in 2024.
- Economic Profit Analysis
- The growth in economic profit from 2019 to 2023 was driven by NOPAT increasing at a rate that comfortably exceeded the growth of the capital charge. The sharp decline in economic profit in 2024 is the result of a negative divergence: while invested capital continued to rise to its highest level in the period, NOPAT dropped precipitously. This combination compressed the margin between operating returns and the cost of capital, resulting in a significant reduction in economic value added.
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Net Operating Profit after Taxes (NOPAT)
Dollar General Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 11,090,582 × 4.30% = 476,895
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 803,676 × 21.00% = 168,772
6 Addition of after taxes interest expense to net income.
The financial performance from February 2019 to February 2024 is characterized by a period of robust operational expansion followed by a sharp contraction in the final fiscal year. Both net income and net operating profit after taxes (NOPAT) exhibit a synchronized growth phase between 2019 and 2021, after which their trajectories diverge before simultaneously declining.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT shows a sustained upward trajectory from February 2019, increasing from $1.98 billion to a peak of $3.66 billion in February 2023. This growth indicates a strong expansion in the core operational profitability of the business over a four-year span. However, this trend reversed sharply in February 2024, with NOPAT falling to $2.43 billion, marking a significant reduction in operational earnings compared to the previous year's peak.
- Net Income Trajectory
- Net income grew steadily from $1.59 billion in 2019 to a peak of $2.66 billion in January 2021. Following this peak, net income experienced a period of instability and relative stagnation, fluctuating between $2.40 billion and $2.42 billion during 2022 and 2023. A substantial decline occurred in February 2024, with net income dropping to $1.66 billion, effectively erasing much of the gains achieved since 2019.
- Comparative Analysis of Operating vs. Bottom-Line Profitability
- A consistent positive variance exists between NOPAT and net income across all reported periods, with NOPAT remaining higher than net income. A notable divergence is observed between 2021 and 2023; while NOPAT continued to climb toward its highest point in 2023, net income failed to maintain a similar growth rate and began to plateau. This suggests that while operational efficiency improved or expanded during this window, non-operating factors—such as increased interest expenses or tax burdens—likely pressured the final net earnings. The simultaneous collapse of both metrics in 2024 indicates a broader systemic decline in both operational and overall financial performance.
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Cash Operating Taxes
Dollar General Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
The financial data reveals a fluctuating trend in tax obligations from 2019 through 2024, characterized by a significant surge in the middle of the period followed by a subsequent decline.
- Cash Operating Tax Trends
- Cash operating taxes experienced steady growth from US$ 457.1 million in February 2019 to a peak of US$ 823.4 million in January 2021. Following this peak, a downward trajectory was observed, with payments decreasing to US$ 553.2 million by February 2024.
- Provision for Income Taxes Correlation
- The provision for income taxes largely mirrored the movement of cash operating taxes, also reaching a maximum of US$ 749.3 million in January 2021. A sharp reduction is noted in the final period, falling to US$ 458.2 million in February 2024, returning to levels comparable to those observed in 2019.
- Analysis of Cash-to-Provision Variance
- A divergence between accrued tax provisions and actual cash outflows is evident across the observed timeframe. Between 2019 and 2021, cash operating taxes consistently exceeded the provision for income taxes, indicating higher immediate liquidity outflows than the recognized accounting expense. This pattern reversed in 2022 and 2023, where cash operating taxes were lower than the provision, before returning to a state where cash outflows exceeded the provision in February 2024.
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Invested Capital
Dollar General Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
A consistent upward trajectory in invested capital is observed from February 1, 2019, to February 2, 2024, with the total increasing from approximately 18.11 billion USD to 26.31 billion USD. This represents a significant expansion of the capital base required to generate economic value over the six-year period.
- Total Reported Debt and Leases
- A sustained increase in debt and lease obligations is evident, rising from 11.09 billion USD in 2019 to 18.09 billion USD in 2024. The most pronounced acceleration occurred between January 28, 2022, and February 3, 2023, where obligations grew by approximately 3.41 billion USD in a single year, indicating a period of intensified leveraging.
- Shareholders' Equity
- Equity levels remained relatively stagnant and exhibited volatility compared to debt. After peaking at 6.70 billion USD in January 31, 2020, equity entered a period of gradual decline, reaching a low of 5.54 billion USD by February 3, 2023. A notable recovery occurred in the final year, with equity returning to 6.75 billion USD by February 2, 2024.
- Invested Capital Composition
- The growth in total invested capital has been driven almost exclusively by the accumulation of debt and lease liabilities. While the total capital base grew by approximately 45% over the period, shareholders' equity ended the period nearly flat compared to its 2019 starting point. This shift indicates an increasing reliance on external financing and lease obligations to fund the company's asset base and operational expansion.
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Cost of Capital
Dollar General Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,122,041) | 33,122,041) | ÷ | 51,068,786) | = | 0.65 | 0.65 | × | 10.30% | = | 6.68% | ||
| Long-term obligations, including current portion3 | 6,856,163) | 6,856,163) | ÷ | 51,068,786) | = | 0.13 | 0.13 | × | 4.49% × (1 – 21.00%) | = | 0.48% | ||
| Operating lease liability4 | 11,090,582) | 11,090,582) | ÷ | 51,068,786) | = | 0.22 | 0.22 | × | 4.30% × (1 – 21.00%) | = | 0.74% | ||
| Total: | 51,068,786) | 1.00 | 7.90% | ||||||||||
Based on: 10-K (reporting date: 2024-02-02).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 45,094,716) | 45,094,716) | ÷ | 62,672,927) | = | 0.72 | 0.72 | × | 10.30% | = | 7.41% | ||
| Long-term obligations, including current portion3 | 6,926,511) | 6,926,511) | ÷ | 62,672,927) | = | 0.11 | 0.11 | × | 4.25% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 10,651,700) | 10,651,700) | ÷ | 62,672,927) | = | 0.17 | 0.17 | × | 3.90% × (1 – 21.00%) | = | 0.52% | ||
| Total: | 62,672,927) | 1.00 | 8.31% | ||||||||||
Based on: 10-K (reporting date: 2023-02-03).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 52,555,043) | 52,555,043) | ÷ | 67,072,297) | = | 0.78 | 0.78 | × | 10.30% | = | 8.07% | ||
| Long-term obligations, including current portion3 | 4,442,986) | 4,442,986) | ÷ | 67,072,297) | = | 0.07 | 0.07 | × | 3.74% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 10,074,268) | 10,074,268) | ÷ | 67,072,297) | = | 0.15 | 0.15 | × | 3.70% × (1 – 21.00%) | = | 0.44% | ||
| Total: | 67,072,297) | 1.00 | 8.71% | ||||||||||
Based on: 10-K (reporting date: 2022-01-28).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,929,041) | 44,929,041) | ÷ | 59,094,767) | = | 0.76 | 0.76 | × | 10.30% | = | 7.83% | ||
| Long-term obligations, including current portion3 | 4,706,259) | 4,706,259) | ÷ | 59,094,767) | = | 0.08 | 0.08 | × | 3.74% × (1 – 21.00%) | = | 0.24% | ||
| Operating lease liability4 | 9,459,467) | 9,459,467) | ÷ | 59,094,767) | = | 0.16 | 0.16 | × | 3.90% × (1 – 21.00%) | = | 0.49% | ||
| Total: | 59,094,767) | 1.00 | 8.56% | ||||||||||
Based on: 10-K (reporting date: 2021-01-29).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,027,608) | 36,027,608) | ÷ | 47,954,115) | = | 0.75 | 0.75 | × | 10.30% | = | 7.74% | ||
| Long-term obligations, including current portion3 | 3,142,019) | 3,142,019) | ÷ | 47,954,115) | = | 0.07 | 0.07 | × | 3.46% × (1 – 21.00%) | = | 0.18% | ||
| Operating lease liability4 | 8,784,488) | 8,784,488) | ÷ | 47,954,115) | = | 0.18 | 0.18 | × | 4.20% × (1 – 21.00%) | = | 0.61% | ||
| Total: | 47,954,115) | 1.00 | 8.53% | ||||||||||
Based on: 10-K (reporting date: 2020-01-31).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 30,485,674) | 30,485,674) | ÷ | 41,575,960) | = | 0.73 | 0.73 | × | 10.30% | = | 7.56% | ||
| Long-term obligations, including current portion3 | 2,864,280) | 2,864,280) | ÷ | 41,575,960) | = | 0.07 | 0.07 | × | 3.62% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 8,226,006) | 8,226,006) | ÷ | 41,575,960) | = | 0.20 | 0.20 | × | 3.62% × (1 – 21.00%) | = | 0.57% | ||
| Total: | 41,575,960) | 1.00 | 8.32% | ||||||||||
Based on: 10-K (reporting date: 2019-02-01).
1 US$ in thousands
2 Equity. See details »
3 Long-term obligations, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dollar General Corp., economic spread ratio calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 353,933) | 1,606,867) | 1,240,574) | 1,316,217) | 514,788) | 474,927) | |
| Invested capital2 | 26,309,034) | 24,763,719) | 21,499,995) | 20,896,699) | 19,125,860) | 18,107,408) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 1.35% | 6.49% | 5.77% | 6.30% | 2.69% | 2.62% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 6.42% | 1.62% | 5.70% | 4.10% | 0.34% | — | |
| Target Corp. | -2.02% | -3.79% | 8.89% | -0.58% | — | — | |
| Walmart Inc. | 0.88% | -1.53% | -0.99% | 0.48% | — | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 353,933 ÷ 26,309,034 = 1.35%
4 Click competitor name to see calculations.
The financial trajectory from February 2019 to February 2024 is characterized by a consistent expansion of the invested capital base alongside significant volatility in economic profit and the resulting economic spread ratio. While the capital employed in the business grew steadily over the six-year period, the efficiency of this capital in generating value above the cost of capital fluctuated substantially, culminating in a sharp decline in the most recent fiscal year.
- Invested Capital Growth
- A continuous upward trend in invested capital is observed, rising from $18.1 billion in 2019 to $26.3 billion in 2024. This represents a steady increase in the resources deployed to support operations, indicating a long-term strategy of capital expansion.
- Economic Profit Volatility
- Economic profit exhibited a period of strong growth between 2019 and 2023. After starting at $474.9 million in 2019, value creation accelerated sharply in 2021, reaching a peak of $1.6 billion in February 2023. However, this trend reversed abruptly in February 2024, with economic profit falling to $353.9 million, the lowest level recorded in the analyzed period.
- Economic Spread Ratio Performance
- The economic spread ratio mirrors the volatility of economic profit, reflecting the spread between the return on invested capital and the cost of that capital. The ratio remained stable near 2.6% in 2019 and 2020 before surging to 6.3% in 2021. Despite a slight dip in 2022, the ratio peaked at 6.49% in 2023, indicating maximum efficiency in value creation. This was followed by a severe contraction to 1.35% in 2024, signaling a significant reduction in the excess return generated per unit of invested capital.
The divergence between the steadily increasing invested capital and the collapsing economic spread ratio in 2024 suggests a diminishing return on newly deployed capital. The sharp decline in the spread ratio indicates that while the scale of the operation increased, the ability to generate economic profit relative to the capital base was severely compromised in the final reporting period.
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Economic Profit Margin
Dollar General Corp., economic profit margin calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 353,933) | 1,606,867) | 1,240,574) | 1,316,217) | 514,788) | 474,927) | |
| Net sales | 38,691,609) | 37,844,863) | 34,220,449) | 33,746,839) | 27,753,973) | 25,625,043) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.91% | 4.25% | 3.63% | 3.90% | 1.85% | 1.85% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.85% | 0.24% | 0.81% | 0.61% | 0.06% | — | |
| Target Corp. | -0.65% | -1.05% | 2.53% | -0.19% | — | — | |
| Walmart Inc. | 0.21% | -0.38% | -0.27% | 0.14% | — | — | |
Based on: 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31), 10-K (reporting date: 2019-02-01).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 353,933 ÷ 38,691,609 = 0.91%
3 Click competitor name to see calculations.
An evaluation of financial performance from February 2019 through February 2024 reveals a period of sustained revenue growth contrasted by significant volatility in economic profit and the resulting economic profit margin. While top-line expansion remained consistent, the company's ability to generate value above its cost of capital fluctuated considerably, culminating in a sharp decline in the final reported period.
- Net Sales Trend
- A consistent upward trajectory in net sales is observed over the six-year period. Revenue grew from 25,625,043 thousand USD in February 2019 to 38,691,609 thousand USD by February 2024. This represents steady organic or inorganic growth, with a notable acceleration occurring between January 2020 and January 2021.
- Economic Profit Trajectory
- Economic profit exhibited substantial volatility. After remaining relatively stable between 2019 and 2020, economic profit surged to 1,316,217 thousand USD in 2021 and reached a peak of 1,606,867 thousand USD in February 2023. However, this growth trend reversed abruptly in February 2024, with economic profit falling to 353,933 thousand USD, the lowest level recorded in the provided timeframe.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility of the absolute economic profit. The margin remained stagnant at 1.85% from 2019 to 2020 before expanding to a peak of 4.25% in February 2023. This suggests a period of heightened capital efficiency and value creation. Conversely, the margin contracted sharply to 0.91% in February 2024, indicating a significant decrease in the efficiency of capital utilization relative to the scale of sales.
The divergence between the continued growth in net sales and the precipitous drop in economic profit margin by February 2024 suggests that increased revenue did not translate into increased economic value. The sharp decline in the margin indicates that the cost of capital or operational expenses increased significantly relative to the operating profit during the final fiscal year.
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