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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Home Depot Inc., economic profit calculation

US$ in millions

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Net operating profit after taxes (NOPAT)¹	16,384)	18,170)	18,148)	14,172)	12,860)	12,276)
Cost of capital²	12.37%	12.07%	12.18%	12.14%	11.75%	12.18%
Invested capital³	55,884)	55,111)	48,299)	49,973)	36,678)	34,178)

Economic profit⁴	9,472)	11,516)	12,265)	8,104)	8,551)	8,115)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

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
= 16,384 – 12.37% × 55,884 = 9,472

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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.	Home Depot Inc. economic profit decreased from 2022 to 2023 and from 2023 to 2024.

Home Depot Inc., NOPAT calculation

US$ in millions

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Net earnings	15,143)	17,105)	16,433)	12,866)	11,242)	11,121)
Deferred income tax expense (benefit)¹	(230)	138)	(254)	(607)	191)	24)
Increase (decrease) in deferred revenue²	(302)	(532)	773)	707)	334)	(23)
Increase (decrease) in equity equivalents³	(532)	(394)	519)	100)	525)	1)
Interest expense	1,943)	1,617)	1,347)	1,347)	1,201)	1,051)
Interest expense, operating lease liability⁴	301)	229)	167)	179)	183)	410)
Adjusted interest expense	2,244)	1,846)	1,514)	1,526)	1,384)	1,461)
Tax benefit of interest expense⁵	(471)	(388)	(318)	(321)	(291)	(307)
Adjusted interest expense, after taxes⁶	1,773)	1,459)	1,196)	1,206)	1,093)	1,154)
Net operating profit after taxes (NOPAT)	16,384)	18,170)	18,148)	14,172)	12,860)	12,276)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net earnings.

⁴ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 8,132 × 3.70% = 301

⁵ 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,244 × 21.00% = 471

⁶ Addition of after taxes interest expense to net earnings.

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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.	Home Depot Inc. NOPAT increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Home Depot Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Provision for income taxes	4,781)	5,372)	5,304)	4,112)	3,473)	3,435)
Less: Deferred income tax expense (benefit)	(230)	138)	(254)	(607)	191)	24)
Add: Tax savings from interest expense	471)	388)	318)	321)	291)	307)
Cash operating taxes	5,482)	5,622)	5,876)	5,040)	3,573)	3,718)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

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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.	Home Depot Inc. cash operating taxes decreased from 2022 to 2023 and from 2023 to 2024.

Home Depot Inc., invested capital calculation (financing approach)

US$ in millions

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Short-term debt	—)	—)	1,035)	—)	974)	1,339)
Current installments of long-term debt	1,368)	1,231)	2,447)	1,416)	1,839)	1,056)
Long-term debt, excluding current installments	42,743)	41,962)	36,604)	35,822)	28,670)	26,807)
Operating lease liability¹	8,132)	7,171)	6,183)	6,184)	5,894)	4,750)
Total reported debt & leases	52,243)	50,364)	46,269)	43,422)	37,377)	33,952)
Stockholders’ equity (deficit)	1,044)	1,562)	(1,696)	3,299)	(3,116)	(1,878)
Net deferred tax (assets) liabilities²	550)	700)	565)	826)	567)	370)
Deferred revenue³	2,762)	3,064)	3,596)	2,823)	2,116)	1,782)
Equity equivalents⁴	3,312)	3,764)	4,161)	3,649)	2,683)	2,152)
Accumulated other comprehensive (income) loss, net of tax⁵	477)	718)	704)	671)	739)	772)
Adjusted stockholders’ equity (deficit)	4,833)	6,044)	3,169)	7,619)	306)	1,046)
Construction in progress⁶	(1,192)	(1,297)	(1,139)	(1,068)	(1,005)	(820)
Invested capital	55,884)	55,111)	48,299)	49,973)	36,678)	34,178)

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Addition of capitalized operating leases.

² Elimination of deferred taxes from assets and liabilities. See details »

³ Addition of deferred revenue.

⁴ Addition of equity equivalents to stockholders’ equity (deficit).

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Home Depot Inc. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Home Depot Inc., cost of capital calculations

Jan 28, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	375,585)	375,585)	÷	425,480)	=	0.88	0.88	×	13.63%	=	12.03%
Debt³	41,763)	41,763)	÷	425,480)	=	0.10	0.10	×	3.65% × (1 – 21.00%)	=	0.28%
Operating lease liability⁴	8,132)	8,132)	÷	425,480)	=	0.02	0.02	×	3.70% × (1 – 21.00%)	=	0.06%
Total:	425,480)					1.00					12.37%

Based on: 10-K (reporting date: 2024-01-28).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 29, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	292,277)	292,277)	÷	341,270)	=	0.86	0.86	×	13.63%	=	11.67%
Debt³	41,822)	41,822)	÷	341,270)	=	0.12	0.12	×	3.61% × (1 – 21.00%)	=	0.35%
Operating lease liability⁴	7,171)	7,171)	÷	341,270)	=	0.02	0.02	×	3.20% × (1 – 21.00%)	=	0.05%
Total:	341,270)					1.00					12.07%

Based on: 10-K (reporting date: 2023-01-29).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 30, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	327,624)	327,624)	÷	377,475)	=	0.87	0.87	×	13.63%	=	11.83%
Debt³	43,668)	43,668)	÷	377,475)	=	0.12	0.12	×	3.48% × (1 – 21.00%)	=	0.32%
Operating lease liability⁴	6,183)	6,183)	÷	377,475)	=	0.02	0.02	×	2.70% × (1 – 21.00%)	=	0.03%
Total:	377,475)					1.00					12.18%

Based on: 10-K (reporting date: 2022-01-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Jan 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	315,312)	315,312)	÷	365,551)	=	0.86	0.86	×	13.63%	=	11.75%
Debt³	44,055)	44,055)	÷	365,551)	=	0.12	0.12	×	3.68% × (1 – 21.00%)	=	0.35%
Operating lease liability⁴	6,184)	6,184)	÷	365,551)	=	0.02	0.02	×	2.90% × (1 – 21.00%)	=	0.04%
Total:	365,551)					1.00					12.14%

Based on: 10-K (reporting date: 2021-01-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Feb 2, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	195,345)	195,345)	÷	237,480)	=	0.82	0.82	×	13.63%	=	11.21%
Debt³	36,241)	36,241)	÷	237,480)	=	0.15	0.15	×	3.98% × (1 – 21.00%)	=	0.48%
Operating lease liability⁴	5,894)	5,894)	÷	237,480)	=	0.02	0.02	×	3.10% × (1 – 21.00%)	=	0.06%
Total:	237,480)					1.00					11.75%

Based on: 10-K (reporting date: 2020-02-02).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Feb 3, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	209,808)	209,808)	÷	245,293)	=	0.86	0.86	×	13.63%	=	11.66%
Debt³	30,736)	30,736)	÷	245,293)	=	0.13	0.13	×	3.93% × (1 – 21.00%)	=	0.39%
Operating lease liability⁴	4,750)	4,750)	÷	245,293)	=	0.02	0.02	×	8.63% × (1 – 21.00%)	=	0.13%
Total:	245,293)					1.00					12.18%

Based on: 10-K (reporting date: 2019-02-03).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Home Depot Inc., economic spread ratio calculation, comparison to benchmarks

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	9,472)	11,516)	12,265)	8,104)	8,551)	8,115)
Invested capital²	55,884)	55,111)	48,299)	49,973)	36,678)	34,178)
Performance Ratio
Economic spread ratio³	16.95%	20.90%	25.39%	16.22%	23.31%	23.74%
Benchmarks
Economic Spread Ratio, Competitors⁴
Amazon.com Inc.	—	-4.37%	-15.63%	4.44%	1.80%	-1.54%
Lowe’s Cos. Inc.	21.52%	16.40%	24.62%	12.11%	8.23%	-1.30%
TJX Cos. Inc.	10.41%	7.38%	7.32%	-9.61%	8.10%	7.37%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 9,472 ÷ 55,884 = 16.95%

⁴ Click competitor name to see calculations.

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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.	Home Depot Inc. economic spread ratio deteriorated from 2022 to 2023 and from 2023 to 2024.

Home Depot Inc., economic profit margin calculation, comparison to benchmarks

	Jan 28, 2024	Jan 29, 2023	Jan 30, 2022	Jan 31, 2021	Feb 2, 2020	Feb 3, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	9,472)	11,516)	12,265)	8,104)	8,551)	8,115)

Net sales	152,669)	157,403)	151,157)	132,110)	110,225)	108,203)
Add: Increase (decrease) in deferred revenue	(302)	(532)	773)	707)	334)	(23)
Adjusted net sales	152,367)	156,871)	151,930)	132,817)	110,559)	108,180)
Performance Ratio
Economic profit margin²	6.22%	7.34%	8.07%	6.10%	7.73%	7.50%
Benchmarks
Economic Profit Margin, Competitors³
Amazon.com Inc.	—	-2.46%	-8.16%	1.91%	0.70%	-0.69%
Lowe’s Cos. Inc.	6.47%	4.19%	6.70%	3.84%	3.05%	-0.45%
TJX Cos. Inc.	4.05%	3.02%	2.97%	-6.69%	3.63%	3.29%

Based on: 10-K (reporting date: 2024-01-28), 10-K (reporting date: 2023-01-29), 10-K (reporting date: 2022-01-30), 10-K (reporting date: 2021-01-31), 10-K (reporting date: 2020-02-02), 10-K (reporting date: 2019-02-03).

¹ Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 9,472 ÷ 152,367 = 6.22%

³ Click competitor name to see calculations.

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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.	Home Depot Inc. economic profit margin deteriorated from 2022 to 2023 and from 2023 to 2024.

Home Depot Inc. (NYSE:HD)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin