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.
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Motorola Solutions Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
Motorola Solutions Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
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
= – × =
The financial data over the five-year period exhibits several notable trends regarding profitability, capital costs, and invested capital.
- Net Operating Profit After Taxes (NOPAT)
- There is an overall upward trend in NOPAT from 2019 to 2023, rising from $984 million to $1,871 million. The increase from 2019 through 2021 is consistent and significant, reaching $1,409 million in 2021. Although there is a decline in 2022 to $1,222 million, the figure rebounds strongly in 2023, achieving the highest level within the period.
- Cost of Capital
- The cost of capital shows a gradual increase over the period, moving from 12.3% in 2019 to 12.81% in 2023. This incremental rise suggests increasing costs associated with financing the company's invested capital over the years, which may impact profitability assessments.
- Invested Capital
- Invested capital has steadily increased each year, from $6,887 million in 2019 to $8,921 million in 2023. This growth reflects ongoing investment or reinvestment into company assets or operations.
- Economic Profit
- Economic profit demonstrates considerable volatility during the timeframe. It more than doubles from $138 million in 2019 to $279 million in 2020 and further climbs to $437 million in 2021. However, it subsequently experiences a sharp decline to $163 million in 2022 before rising markedly to $728 million in 2023, the highest recorded value. This pattern may be influenced by both changes in NOPAT and the increasing cost of capital and invested capital base.
In summary, the company has achieved growth in operating profits and invested capital over the analyzed period, while facing a moderately rising cost of capital. The economic profit's fluctuations suggest periods of varying efficiency in generating returns above the cost of capital, with a notable recovery in the most recent year.
Net Operating Profit after Taxes (NOPAT)
Motorola Solutions Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in reorganization of businesses accruals.
4 Addition of increase (decrease) in equity equivalents to net earnings attributable to Motorola Solutions, Inc..
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net earnings attributable to Motorola Solutions, Inc..
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net earnings attributable to Motorola Solutions, Inc.
- The net earnings demonstrate a consistent upward trend throughout the five-year period. Starting at 868 million US dollars in 2019, the figure increased each year, reaching 1709 million US dollars by 2023. This growth suggests a steady enhancement of profitability and successful operational execution over the years.
- Net operating profit after taxes (NOPAT)
- The NOPAT values generally follow an increasing pattern from 2019 to 2023. Beginning at 984 million US dollars in 2019, NOPAT peaked at 1409 million US dollars in 2021 before experiencing a decline to 1222 million US dollars in 2022. It then rose sharply to 1871 million US dollars in 2023, indicating a strong recovery and improved operational efficiency in the latest period. The fluctuation observed in 2022 may warrant further analysis to understand the causes behind the temporary dip.
Cash Operating Taxes
Motorola Solutions Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The financial data reflects the annual trends in income tax expense and cash operating taxes over the five-year period ending in 2023.
- Income Tax Expense
- Between 2019 and 2021, there was a consistent upward trend, with the income tax expense increasing from 130 million USD in 2019 to 302 million USD in 2021. However, in 2022, this figure experienced a significant decline to 148 million USD. Subsequently, it surged markedly to 432 million USD in 2023, representing the highest value in the reported period.
- Cash Operating Taxes
- Cash operating taxes also exhibited an upward trajectory from 265 million USD in 2019 to 315 million USD in 2021. In 2022, this amount rose sharply to 534 million USD, followed by a slight decrease to 514 million USD in 2023. Despite this minor reduction in the final year, cash operating taxes remained substantially elevated compared to the earlier years.
Overall, the data indicates that both income tax expense and cash operating taxes generally increased over the period, with notable fluctuations in the last two years. Income tax expense demonstrated volatility with a sharp decrease followed by a substantial increase, whereas cash operating taxes showed a strong upward spike in 2022 and then a moderate decline in 2023. These patterns suggest changing tax liabilities or operational circumstances impacting taxable income and actual cash tax payments.
Invested Capital
Motorola Solutions Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
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 reorganization of businesses accruals.
5 Addition of equity equivalents to total Motorola Solutions, Inc. stockholders’ equity (deficit).
6 Removal of accumulated other comprehensive income.
- Total reported debt & leases
- The total reported debt and leases exhibited a generally increasing trend over the analyzed period. Starting at $5,748 million in 2019, debt slightly decreased to $5,703 million in 2020, then rose to $6,130 million in 2021. This upward momentum continued in 2022 reaching $6,551 million and remained nearly stable at $6,550 million in 2023. Overall, the data suggests a gradual increase in debt levels, particularly from 2020 onward, indicating a potential expansion or capital investment strategy funded through increased leverage.
- Total Motorola Solutions, Inc. stockholders’ equity (deficit)
- Stockholders’ equity showed significant improvement throughout the period. Initially in a deficit of $700 million in 2019, the negative equity reduced consistently each year, moving to a deficit of $558 million in 2020 and further narrowing to a near break-even position with a $40 million deficit in 2021. By 2022, the company achieved positive equity of $116 million, which substantially increased to $724 million by 2023. This positive trend indicates strengthening financial stability and improved capital structure, reflecting enhanced retained earnings, reduced losses, or equity injections.
- Invested capital
- Invested capital demonstrated steady growth over the five-year period. Starting at $6,887 million in 2019, the total capital invested increased incrementally each year, reaching $6,976 million in 2020, $7,857 million in 2021, $8,350 million in 2022, and culminating at $8,921 million in 2023. The continuous rise in invested capital aligns with the increased debt levels and improving equity, suggesting ongoing investment in operational assets or expansion initiatives funded through a combination of debt and equity resources.
Cost of Capital
Motorola Solutions Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Motorola Solutions Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a fluctuating trend over the five-year period. Starting at 138 million USD in 2019, it more than doubled to 279 million USD in 2020 and increased further to 437 million USD in 2021. However, there was a notable decline to 163 million USD in 2022, followed by a significant rebound to 728 million USD in 2023, reaching the highest level within the observed timeframe.
- Invested Capital
- Invested capital showed a steady upward trajectory throughout the period. The amount increased gradually each year, from 6,887 million USD in 2019 to 8,921 million USD in 2023, indicating consistent capital investment and growth in the company's asset base over time.
- Economic Spread Ratio
- The economic spread ratio demonstrated substantial variability. It began at 2% in 2019, doubled to 4.01% in 2020, and continued rising to 5.56% in 2021. However, the ratio dropped sharply to 1.95% in 2022, before surging to 8.16% in 2023, marking the highest margin achieved during the period and suggesting enhanced efficiency or profitability relative to capital employed in the most recent year.
- Overall Insights
- Despite fluctuations in certain metrics, the general trend indicates improved economic profitability by the end of 2023, with substantial growth in both economic profit and economic spread ratio. The consistent increase in invested capital underscores ongoing investment activities. The volatility, particularly in economic profit and spread ratio during 2022, may warrant further investigation into the factors influencing performance during that year. The recovery and peak performance in 2023 suggest a strong rebound and potential operational efficiency gains.
Economic Profit Margin
Motorola Solutions Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | ||||||
| Arista Networks Inc. | ||||||
| Cisco Systems Inc. | ||||||
| Dell Technologies Inc. | ||||||
| Super Micro Computer Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Net Sales
- The net sales demonstrated a generally increasing trend from 2019 to 2023. Starting at 7,887 million USD in 2019, sales experienced a slight dip to 7,414 million USD in 2020. Subsequently, there was a steady rise over the following years, reaching 9,978 million USD by the end of 2023. This indicates a recovery and growth trajectory in the company's top-line revenue.
- Economic Profit
- The economic profit showed significant fluctuations during the period analyzed. It increased substantially from 138 million USD in 2019 to 279 million USD in 2020, followed by a further increase to 437 million USD in 2021. However, there was a sharp decline in 2022, with economic profit falling to 163 million USD. Notably, the economic profit rebounded strongly in 2023, reaching the highest level within the period at 728 million USD. This pattern suggests volatility but a strong recovery towards the end of the period.
- Economic Profit Margin
- The economic profit margin closely mirrored the trend observed in economic profit. It increased from 1.74% in 2019 to 3.77% in 2020 and further to 5.35% in 2021. In 2022, there was a significant decline to 1.79%, indicating reduced profitability relative to sales during that year. However, the margin surged to 7.3% in 2023, the highest point within the period, signifying improved efficiency and profitability relative to revenue.