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
Medtronic PLC, economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2026 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,540 – 11.74% × 71,088 = -2,806
The analysis of economic value added reveals a consistent period of negative economic profit, indicating that the organization failed to generate returns exceeding its cost of capital across the observed timeframe. While economic value destruction persisted throughout the period, there is a visible trend toward the reduction of these losses in the final years.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated significant volatility, with an initial increase to 4,888 million US$ in 2022, followed by a decline to a period low of 3,736 million US$ in 2024. However, a strong recovery trend is observed in the subsequent periods, with figures rising to 4,980 million US$ in 2025 and reaching 5,540 million US$ by 2026.
- Cost of Capital and Invested Capital
- The cost of capital remained relatively stable with a slight downward trajectory, moving from 12.30% in 2021 to 11.74% in 2026. During the same period, the invested capital base showed minimal fluctuation, maintaining a range between 68,670 million US$ and 72,405 million US$, suggesting a consistent level of capital employment.
- Economic Profit Trajectory
- Economic profit remained negative for all reported years, reflecting that the return on invested capital was consistently lower than the cost of capital. The deficit was most pronounced in 2021 at -4,856 million US$. Although the economic loss fluctuated between 2022 and 2024, a marked improvement is observed toward the end of the period, with the deficit narrowing to -2,806 million US$ by 2026. This narrowing of the loss is primarily attributable to the growth in NOPAT occurring against a stable capital base and a slightly decreasing cost of capital.
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Net Operating Profit after Taxes (NOPAT)
Medtronic PLC, NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances and credit losses.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring reserve.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Medtronic.
6 2026 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,187 × 4.00% = 47
7 2026 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 762 × 21.00% = 160
8 Addition of after taxes interest expense to net income attributable to Medtronic.
9 2026 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0
10 Elimination of after taxes investment income.
The analysis of operational profitability and net earnings reveals a cyclical trajectory characterized by a peak in 2022, a subsequent contraction reaching a trough in 2024, and a strong recovery phase through 2026.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT exhibits significant volatility over the observed period. An initial increase is noted from US$ 4,049 million in 2021 to US$ 4,888 million in 2022, followed by a two-year decline that brings the value down to US$ 3,736 million by 2024. A robust recovery is observed thereafter, with NOPAT ascending to US$ 4,980 million in 2025 and reaching a period high of US$ 5,540 million in 2026. This upward movement in the final two years indicates an expansion in core operational efficiency.
- Net Income Performance
- Net income attributable to the entity mirrors the general trajectory of NOPAT but demonstrates different magnitudes of change. A sharp increase occurred in 2022, reaching US$ 5,039 million, which was followed by a contraction to US$ 3,758 million in 2023 and a further slight decrease to US$ 3,676 million in 2024. The recovery phase aligns with NOPAT, with net income climbing to US$ 4,801 million by 2026.
- Relationship Between Operational Profit and Net Earnings
- A comparison between NOPAT and net income reveals that operational profitability generally exceeds the final net income, which is typical given that NOPAT excludes the impact of financing costs. A notable anomaly is observed in 2022, where net income (US$ 5,039 million) surpassed NOPAT (US$ 4,888 million), suggesting the influence of non-operating income or one-time gains. In the subsequent years, the gap widens significantly; by 2026, NOPAT exceeds net income by US$ 739 million, reflecting a strengthening of the core operating engine relative to the final bottom line.
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Cash Operating Taxes
Medtronic PLC, cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
The analysis of tax metrics from April 2021 to April 2026 reveals a period of volatility characterized by a consistent divergence between accounting tax provisions and actual cash tax outflows.
- Cash Operating Taxes Trend
- Cash operating taxes exhibited a strong upward trajectory between 2021 and 2023, rising from 925 million US$ to a peak of 1,979 million US$. Following this peak, expenditures experienced a moderate decline, eventually stabilizing near 1,428 million US$ in the 2025 and 2026 periods.
- Income Tax Provision Volatility
- The income tax provision demonstrated more pronounced fluctuations than the cash tax outflows. After an initial increase from 265 million US$ in 2021 to 455 million US$ in 2022, a sharp spike occurred in 2023, reaching 1,580 million US$. This was followed by a downward trend to 936 million US$ by 2025, before rebounding to 1,299 million US$ in 2026.
- Comparison of Cash Taxes versus Provisions
- A persistent discrepancy is observed where cash operating taxes exceed the income tax provision in every reporting period. This indicates that the actual cash outflows for taxes are consistently higher than the tax expenses recognized for accounting purposes. While the variance was substantial in the early periods—reaching 731 million US$ in 2022—the gap narrowed significantly by 2026, reducing to 129 million US$.
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Invested Capital
Medtronic PLC, invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
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 deferred revenue.
5 Addition of restructuring reserve.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
9 Subtraction of available-for-sale debt securities.
The analysis of invested capital from 2021 to 2026 reveals a period of relative stability, with total invested capital fluctuating within a narrow range between approximately $68.6 billion and $72.4 billion. While the total capital base remained consistent, there were notable shifts in the underlying composition of debt and equity.
- Invested Capital Volatility
- Invested capital experienced a slight downward trajectory from $72,405 million in 2021 to a trough of $68,670 million in 2024. This was followed by a recovery phase, with values increasing to $70,365 million in 2025 and $71,088 million in 2026. This pattern suggests a disciplined management of the capital base, avoiding aggressive expansion or significant contraction.
- Debt and Lease Obligations
- Total reported debt and leases exhibited a non-linear trend. Following a decrease from $27,404 million in 2021 to $24,984 million in 2022, debt levels climbed steadily, peaking at $29,626 million in 2025. A marginal reduction to $29,148 million was observed in 2026, indicating a period of increased leverage toward the end of the analyzed timeframe.
- Shareholders' Equity Trends
- Shareholders' equity showed an inverse relationship with debt levels during several periods. After reaching a peak of $52,551 million in 2022, equity underwent a consistent decline over the next three years, reaching a low of $48,024 million in 2025. A reversal of this trend occurred in 2026, with equity rising back to $49,463 million.
The interaction between the financing components indicates that the increase in debt and leases, particularly between 2023 and 2025, served as a primary offset to the decline in shareholders' equity. This strategic balancing acted to stabilize the total invested capital, ensuring that the operational resource base remained steady despite the shift in the capital structure toward higher leverage.
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Cost of Capital
Medtronic PLC, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 101,559) | 101,559) | ÷ | 128,128) | = | 0.79 | 0.79 | × | 14.20% | = | 11.25% | ||
| Debt3 | 25,382) | 25,382) | ÷ | 128,128) | = | 0.20 | 0.20 | × | 2.92% × (1 – 21.00%) | = | 0.46% | ||
| Operating lease liability4 | 1,187) | 1,187) | ÷ | 128,128) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 128,128) | 1.00 | 11.74% | ||||||||||
Based on: 10-K (reporting date: 2026-04-24).
1 US$ 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 | 110,624) | 110,624) | ÷ | 138,005) | = | 0.80 | 0.80 | × | 14.20% | = | 11.38% | ||
| Debt3 | 26,271) | 26,271) | ÷ | 138,005) | = | 0.19 | 0.19 | × | 2.66% × (1 – 21.00%) | = | 0.40% | ||
| Operating lease liability4 | 1,110) | 1,110) | ÷ | 138,005) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 138,005) | 1.00 | 11.81% | ||||||||||
Based on: 10-K (reporting date: 2025-04-25).
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 | 102,800) | 102,800) | ÷ | 126,170) | = | 0.81 | 0.81 | × | 14.20% | = | 11.57% | ||
| Debt3 | 22,347) | 22,347) | ÷ | 126,170) | = | 0.18 | 0.18 | × | 2.67% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 1,023) | 1,023) | ÷ | 126,170) | = | 0.01 | 0.01 | × | 3.40% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 126,170) | 1.00 | 11.96% | ||||||||||
Based on: 10-K (reporting date: 2024-04-26).
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 | 116,291) | 116,291) | ÷ | 139,117) | = | 0.84 | 0.84 | × | 14.20% | = | 11.87% | ||
| Debt3 | 21,777) | 21,777) | ÷ | 139,117) | = | 0.16 | 0.16 | × | 2.53% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 1,049) | 1,049) | ÷ | 139,117) | = | 0.01 | 0.01 | × | 2.40% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 139,117) | 1.00 | 12.20% | ||||||||||
Based on: 10-K (reporting date: 2023-04-28).
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 | 117,817) | 117,817) | ÷ | 141,661) | = | 0.83 | 0.83 | × | 14.20% | = | 11.81% | ||
| Debt3 | 22,974) | 22,974) | ÷ | 141,661) | = | 0.16 | 0.16 | × | 2.05% × (1 – 21.00%) | = | 0.26% | ||
| Operating lease liability4 | 870) | 870) | ÷ | 141,661) | = | 0.01 | 0.01 | × | 2.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 141,661) | 1.00 | 12.08% | ||||||||||
Based on: 10-K (reporting date: 2022-04-29).
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 | 167,894) | 167,894) | ÷ | 197,582) | = | 0.85 | 0.85 | × | 14.20% | = | 12.07% | ||
| Debt3 | 28,673) | 28,673) | ÷ | 197,582) | = | 0.15 | 0.15 | × | 1.96% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 1,015) | 1,015) | ÷ | 197,582) | = | 0.01 | 0.01 | × | 2.30% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 197,582) | 1.00 | 12.30% | ||||||||||
Based on: 10-K (reporting date: 2021-04-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Medtronic PLC, economic spread ratio calculation, comparison to benchmarks
| Apr 24, 2026 | Apr 25, 2025 | Apr 26, 2024 | Apr 28, 2023 | Apr 29, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (2,806) | (3,328) | (4,480) | (4,448) | (3,524) | (4,856) | |
| Invested capital2 | 71,088) | 70,365) | 68,670) | 70,505) | 69,629) | 72,405) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -3.95% | -4.73% | -6.52% | -6.31% | -5.06% | -6.71% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Abbott Laboratories | — | -2.25% | -4.49% | -4.67% | -2.43% | -1.95% | |
| Elevance Health Inc. | — | -0.97% | -0.55% | -0.90% | 0.14% | 1.46% | |
| Intuitive Surgical Inc. | — | 0.95% | 3.52% | -2.92% | -3.21% | 12.41% | |
| UnitedHealth Group Inc. | — | -0.99% | 0.12% | 5.02% | 4.06% | 3.91% | |
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2026 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,806 ÷ 71,088 = -3.95%
4 Click competitor name to see calculations.
The financial performance over the analyzed six-year period is characterized by persistent negative economic profit, indicating that the returns generated on invested capital have consistently remained below the required cost of capital. However, a general trend toward recovery is observable, particularly in the final two years of the period.
- Economic Profit Trends
- Economic profit remained negative throughout the entire duration, fluctuating between a peak loss of US$ 4,856 million in April 2021 and a minimum loss of US$ 2,806 million by April 2026. After a period of volatility between 2021 and 2024, where losses expanded again to US$ 4,480 million, a sustained reduction in economic loss is observed from 2025 onwards, suggesting an improvement in value creation efficiency.
- Invested Capital Stability
- Invested capital exhibited relative stability, maintaining a range between approximately US$ 68.7 billion and US$ 72.4 billion. A slight contraction in the capital base occurred in April 2022 and April 2024, followed by a gradual increase reaching US$ 71.088 billion by April 2026. This suggests that the changes in economic profit were not driven by significant divestments or aggressive capital expansions, but rather by operational or cost-of-capital factors.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained negative across all periods, confirming a consistent destruction of economic value. The ratio reached its lowest point of -6.71% in April 2021 and experienced another dip to -6.52% in April 2024. A notable recovery is evident in the latter stages, with the ratio improving to -4.73% in 2025 and further strengthening to -3.95% by April 2026, indicating a narrowing gap between actual returns and the required threshold.
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Economic Profit Margin
Medtronic PLC, economic profit margin calculation, comparison to benchmarks
| Apr 24, 2026 | Apr 25, 2025 | Apr 26, 2024 | Apr 28, 2023 | Apr 29, 2022 | Apr 30, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (2,806) | (3,328) | (4,480) | (4,448) | (3,524) | (4,856) | |
| Net sales | 36,364) | 33,537) | 32,364) | 31,227) | 31,686) | 30,117) | |
| Add: Increase (decrease) in deferred revenue | 54) | (7) | 48) | 6) | 31) | 65) | |
| Adjusted net sales | 36,418) | 33,530) | 32,412) | 31,233) | 31,717) | 30,182) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -7.71% | -9.93% | -13.82% | -14.24% | -11.11% | -16.09% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Abbott Laboratories | — | -3.17% | -6.44% | -6.94% | -3.41% | -2.81% | |
| Elevance Health Inc. | — | -0.39% | -0.25% | -0.37% | 0.06% | 0.68% | |
| Intuitive Surgical Inc. | — | 1.06% | 3.28% | -2.92% | -2.77% | 9.76% | |
| UnitedHealth Group Inc. | — | -0.44% | 0.06% | 2.50% | 2.08% | 1.92% | |
Based on: 10-K (reporting date: 2026-04-24), 10-K (reporting date: 2025-04-25), 10-K (reporting date: 2024-04-26), 10-K (reporting date: 2023-04-28), 10-K (reporting date: 2022-04-29), 10-K (reporting date: 2021-04-30).
1 Economic profit. See details »
2 2026 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -2,806 ÷ 36,418 = -7.71%
3 Click competitor name to see calculations.
The financial performance over the analyzed period is characterized by persistent negative economic profit, indicating that the return on invested capital has remained below the company's cost of capital. However, there is a discernible long-term trend toward value recovery, as the magnitude of the economic loss has decreased relative to total sales.
- Adjusted Net Sales Growth
- A consistent upward trajectory in revenue is observed, with adjusted net sales rising from 30,182 million US$ in 2021 to 36,418 million US$ in 2026. While a slight contraction occurred in 2023, the overall growth pattern indicates a steady expansion of the company's market reach and sales volume.
- Economic Profit Trends
- The economic profit remained in negative territory for the entire period. The most significant deficit was recorded in 2021 at -4,856 million US$. Although losses fluctuated between 2022 and 2024, a sustained improvement emerged in the final two years, with the deficit narrowing to -3,328 million US$ in 2025 and reaching -2,806 million US$ in 2026.
- Economic Profit Margin Analysis
- The economic profit margin demonstrates a general trend of improvement despite periodic volatility. The margin moved from a low of -16.09% in 2021 to -7.71% by 2026. A period of instability is noted between 2022 and 2024, where the margin fluctuated between -11.11% and -14.24%, followed by a significant and steady narrowing of the margin in the 2025 and 2026 fiscal years.
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