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
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,752 – 11.28% × 43,254 = -2,128
Item | Description | The company |
---|---|---|
Economic profit | Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. | Hewlett Packard Enterprise Co. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level. |
Net Operating Profit after Taxes (NOPAT)
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in product warranty liability.
5 Addition of increase (decrease) in accrued restructuring.
6 Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to HPE.
7 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,160 × 3.80% = 44
8 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 370 × 21.00% = 78
9 Addition of after taxes interest expense to net earnings (loss) attributable to HPE.
10 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0
11 Elimination of after taxes investment income.
12 Elimination of discontinued operations.
Item | Description | The company |
---|---|---|
NOPAT | Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. | Hewlett Packard Enterprise Co. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level. |
Cash Operating Taxes
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
Item | Description | The company |
---|---|---|
Cash operating taxes | Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. | Hewlett Packard Enterprise Co. cash operating taxes decreased from 2021 to 2022 but then slightly increased from 2022 to 2023. |
Invested Capital
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
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 deferred revenue.
5 Addition of product warranty liability.
6 Addition of accrued restructuring.
7 Addition of equity equivalents to total HPE stockholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of available-for-sale investments.
Item | Description | The company |
---|---|---|
Invested capital | Capital is an approximation of the economic book value of all cash invested in going-concern business activities. | Hewlett Packard Enterprise Co. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level. |
Cost of Capital
Hewlett Packard Enterprise Co., cost of capital calculations
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 22,217) | 22,217) | ÷ | 35,577) | = | 0.62 | 0.62 | × | 15.86% | = | 9.90% | ||
Short-term and long-term debt3 | 12,200) | 12,200) | ÷ | 35,577) | = | 0.34 | 0.34 | × | 4.73% × (1 – 21.00%) | = | 1.28% | ||
Operating lease liability4 | 1,160) | 1,160) | ÷ | 35,577) | = | 0.03 | 0.03 | × | 3.80% × (1 – 21.00%) | = | 0.10% | ||
Total: | 35,577) | 1.00 | 11.28% |
Based on: 10-K (reporting date: 2023-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 20,881) | 20,881) | ÷ | 34,100) | = | 0.61 | 0.61 | × | 15.86% | = | 9.71% | ||
Short-term and long-term debt3 | 12,200) | 12,200) | ÷ | 34,100) | = | 0.36 | 0.36 | × | 3.70% × (1 – 21.00%) | = | 1.05% | ||
Operating lease liability4 | 1,019) | 1,019) | ÷ | 34,100) | = | 0.03 | 0.03 | × | 3.20% × (1 – 21.00%) | = | 0.08% | ||
Total: | 34,100) | 1.00 | 10.83% |
Based on: 10-K (reporting date: 2022-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 19,673) | 19,673) | ÷ | 35,403) | = | 0.56 | 0.56 | × | 15.86% | = | 8.81% | ||
Short-term and long-term debt3 | 14,600) | 14,600) | ÷ | 35,403) | = | 0.41 | 0.41 | × | 3.49% × (1 – 21.00%) | = | 1.14% | ||
Operating lease liability4 | 1,130) | 1,130) | ÷ | 35,403) | = | 0.03 | 0.03 | × | 2.70% × (1 – 21.00%) | = | 0.07% | ||
Total: | 35,403) | 1.00 | 10.02% |
Based on: 10-K (reporting date: 2021-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 15,677) | 15,677) | ÷ | 33,863) | = | 0.46 | 0.46 | × | 15.86% | = | 7.34% | ||
Short-term and long-term debt3 | 17,100) | 17,100) | ÷ | 33,863) | = | 0.50 | 0.50 | × | 3.58% × (1 – 21.00%) | = | 1.43% | ||
Operating lease liability4 | 1,086) | 1,086) | ÷ | 33,863) | = | 0.03 | 0.03 | × | 2.60% × (1 – 21.00%) | = | 0.07% | ||
Total: | 33,863) | 1.00 | 8.84% |
Based on: 10-K (reporting date: 2020-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 20,726) | 20,726) | ÷ | 38,674) | = | 0.54 | 0.54 | × | 15.86% | = | 8.50% | ||
Short-term and long-term debt3 | 14,600) | 14,600) | ÷ | 38,674) | = | 0.38 | 0.38 | × | 3.84% × (1 – 21.00%) | = | 1.15% | ||
Operating lease liability4 | 3,349) | 3,349) | ÷ | 38,674) | = | 0.09 | 0.09 | × | 3.84% × (1 – 21.00%) | = | 0.26% | ||
Total: | 38,674) | 1.00 | 9.91% |
Based on: 10-K (reporting date: 2019-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 20,477) | 20,477) | ÷ | 36,066) | = | 0.57 | 0.57 | × | 15.86% | = | 9.00% | ||
Short-term and long-term debt3 | 12,200) | 12,200) | ÷ | 36,066) | = | 0.34 | 0.34 | × | 3.98% × (1 – 23.30%) | = | 1.03% | ||
Operating lease liability4 | 3,389) | 3,389) | ÷ | 36,066) | = | 0.09 | 0.09 | × | 3.98% × (1 – 23.30%) | = | 0.29% | ||
Total: | 36,066) | 1.00 | 10.32% |
Based on: 10-K (reporting date: 2018-10-31).
1 US$ in millions
2 Equity. See details »
3 Short-term and long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Economic profit1 | (2,128) | (3,682) | (762) | (3,673) | (1,774) | (2,225) | |
Invested capital2 | 43,254) | 41,543) | 42,837) | 42,440) | 43,287) | 44,277) | |
Performance Ratio | |||||||
Economic spread ratio3 | -4.92% | -8.86% | -1.78% | -8.65% | -4.10% | -5.02% | |
Benchmarks | |||||||
Economic Spread Ratio, Competitors4 | |||||||
Apple Inc. | 140.60% | 202.09% | 198.42% | 146.36% | 90.42% | 80.98% | |
Arista Networks Inc. | 28.14% | 23.60% | 38.59% | 20.94% | 26.44% | — | |
Cisco Systems Inc. | 9.07% | 8.94% | 8.19% | 12.39% | 6.59% | — | |
Super Micro Computer Inc. | 9.76% | 0.15% | -7.34% | -10.13% | -5.04% | -2.60% |
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,128 ÷ 43,254 = -4.92%
4 Click competitor name to see calculations.
Performance ratio | Description | The company |
---|---|---|
Economic spread ratio | The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. | Hewlett Packard Enterprise Co. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level. |
Economic Profit Margin
Oct 31, 2023 | Oct 31, 2022 | Oct 31, 2021 | Oct 31, 2020 | Oct 31, 2019 | Oct 31, 2018 | ||
---|---|---|---|---|---|---|---|
Selected Financial Data (US$ in millions) | |||||||
Economic profit1 | (2,128) | (3,682) | (762) | (3,673) | (1,774) | (2,225) | |
Net revenue | 29,135) | 28,496) | 27,784) | 26,982) | 29,135) | 30,852) | |
Add: Increase (decrease) in deferred revenue | 533) | 26) | 165) | 230) | 162) | 208) | |
Adjusted net revenue | 29,668) | 28,522) | 27,949) | 27,212) | 29,297) | 31,060) | |
Performance Ratio | |||||||
Economic profit margin2 | -7.17% | -12.91% | -2.73% | -13.50% | -6.06% | -7.16% | |
Benchmarks | |||||||
Economic Profit Margin, Competitors3 | |||||||
Apple Inc. | 22.12% | 23.88% | 23.05% | 19.18% | 17.65% | 8.04% | |
Arista Networks Inc. | 21.29% | 16.29% | 22.67% | 16.37% | 19.45% | — | |
Cisco Systems Inc. | 9.02% | 10.03% | 9.13% | 12.93% | 6.95% | — | |
Super Micro Computer Inc. | 3.31% | 0.07% | -2.64% | -3.76% | -1.63% | -0.84% |
Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × -2,128 ÷ 29,668 = -7.17%
3 Click competitor name to see calculations.
Performance ratio | Description | The company |
---|---|---|
Economic profit margin | The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. | Hewlett Packard Enterprise Co. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level. |