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 – 7.72% × 26,309,034 = 399,368
The financial performance from February 2019 to February 2024 exhibits a period of substantial growth in value creation followed by a significant contraction in the final fiscal year. While the company consistently expanded its capital base, the ability to generate returns above the cost of capital peaked in 2023 before declining sharply.
- Net Operating Profit After Taxes (NOPAT)
- A consistent upward trajectory was observed from 2019 through 2023, with NOPAT increasing from 1,981,150 thousand to a peak of 3,664,406 thousand. A notable surge occurred between January 2020 and January 2021, where profit grew by approximately 44%. However, this trend reversed sharply by February 2024, with NOPAT falling to 2,431,523 thousand, representing a significant reduction in operational profitability.
- Invested Capital and Cost of Capital
- Invested capital demonstrated steady and uninterrupted growth over the six-year period, rising from 18,107,408 thousand in 2019 to 26,309,034 thousand in 2024. This indicates a continuous commitment to asset expansion and capital deployment. Concurrently, the cost of capital remained relatively stable, fluctuating within a narrow band between 7.72% and 8.50%. The lowest cost of capital was recorded in the most recent period, February 2024, at 7.72%.
- Economic Profit Trends
- Economic profit followed a pattern of acceleration and subsequent decline. Value creation increased from 510,280 thousand in 2019 to a maximum of 1,654,311 thousand in February 2023. Despite the increase in invested capital, the sharp decline in NOPAT in 2024 led to a precipitous drop in economic profit to 399,368 thousand. This represents the lowest level of economic profit since 2019, suggesting that the return on invested capital has fallen closer to the cost of capital threshold.
The divergence observed in the final year is particularly noteworthy; while the company reached its highest level of invested capital and its lowest cost of capital, the collapse in NOPAT overrode these advantages, resulting in a substantial erosion of 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 | × | 10.04% | = | 6.51% | ||
| 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 | 7.72% | ||||||||||
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 | × | 10.04% | = | 7.22% | ||
| 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 | 8.12% | ||||||||||
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 | × | 10.04% | = | 7.87% | ||
| 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 | 8.50% | ||||||||||
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 | × | 10.04% | = | 7.63% | ||
| 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 | 8.36% | ||||||||||
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 | × | 10.04% | = | 7.54% | ||
| 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 | 8.33% | ||||||||||
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 | × | 10.04% | = | 7.36% | ||
| 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 | 8.12% | ||||||||||
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 | 399,368) | 1,654,311) | 1,285,431) | 1,358,520) | 553,048) | 510,280) | |
| 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 | 1.52% | 6.68% | 5.98% | 6.50% | 2.89% | 2.82% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 6.50% | 1.70% | 5.78% | 4.18% | 0.42% | — | |
| Target Corp. | -2.09% | -3.86% | 8.82% | -0.66% | — | — | |
| Walmart Inc. | 1.06% | -1.35% | -0.81% | 0.65% | — | — | |
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 × 399,368 ÷ 26,309,034 = 1.52%
4 Click competitor name to see calculations.
The financial performance over the six-year period demonstrates a phase of substantial expansion in economic value creation followed by a sharp contraction in the most recent fiscal year. While invested capital increased consistently, the ability to generate economic profit fluctuated, reaching a peak in February 2023 before experiencing a significant decline.
- Economic Profit Trends
- Economic profit exhibited a general upward trajectory from 2019 to 2023, rising from $510.3 million to a peak of $1.65 billion. This growth phase was characterized by a notable surge between 2020 and 2021. However, the period ending February 2, 2024, saw a precipitous drop to $399.4 million, marking the lowest level of economic profit within the analyzed timeframe.
- Invested Capital Growth
- A consistent and uninterrupted increase in invested capital is observed, growing from $18.1 billion in 2019 to $26.3 billion in 2024. This indicates a steady expansion of the capital base and continuous investment in the business throughout the period.
- Economic Spread Ratio Analysis
- The economic spread ratio remained relatively stable between 2.82% and 2.89% during the first two years, then climbed significantly to a peak of 6.68% by February 2023. This indicates a period of heightened capital efficiency where the return on invested capital significantly exceeded the cost of capital. This trend reversed sharply in 2024, with the ratio falling to 1.52%, suggesting a severe compression in the spread and a diminished ability to generate value above the required cost of capital.
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Economic Profit Margin
Dollar General Corp., economic profit margin calculation, comparison to benchmarks
| Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 399,368) | 1,654,311) | 1,285,431) | 1,358,520) | 553,048) | 510,280) | |
| 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 | 1.03% | 4.37% | 3.76% | 4.03% | 1.99% | 1.99% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.86% | 0.25% | 0.82% | 0.62% | 0.07% | — | |
| Target Corp. | -0.67% | -1.07% | 2.51% | -0.21% | — | — | |
| Walmart Inc. | 0.26% | -0.33% | -0.22% | 0.19% | — | — | |
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 × 399,368 ÷ 38,691,609 = 1.03%
3 Click competitor name to see calculations.
The financial performance concerning economic value added indicates a period of significant expansion followed by a sharp contraction in the most recent fiscal year. While top-line revenue demonstrated consistent growth, the ability to generate economic profit above the cost of capital proved volatile, culminating in a substantial decline in the final reporting period.
- Net Sales Trajectory
- A continuous upward trend in net sales is observed from February 1, 2019, through February 2, 2024. Revenue increased steadily from approximately 25.6 billion US dollars to 38.7 billion US dollars, reflecting a consistent expansion of the company's scale of operations over the six-year period.
- Economic Profit Performance
- Economic profit exhibited significant growth between 2020 and 2023, rising from 553.05 million US dollars to a peak of 1.65 billion US dollars. This growth phase was interrupted by a severe contraction in February 2024, where economic profit dropped to 399.37 million US dollars, representing the lowest absolute value within the analyzed timeframe.
- Economic Profit Margin Dynamics
- The economic profit margin remained stagnant at 1.99% between 2019 and 2020 before experiencing a sharp increase to 4.03% in 2021. The margin reached its maximum efficiency of 4.37% in February 2023. However, a precipitous decline to 1.03% occurred in February 2024. This divergence suggests that while sales continued to grow, the cost of capital or operational expenses increased disproportionately, significantly eroding the economic value generated per dollar of sales.
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