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
Motorola Solutions Inc., economic profit 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 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
= 1,871 – 12.83% × 8,921 = 727
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes shows an overall upward trend from 2019 through 2023. Starting at $984 million in 2019, NOPAT increased to $1,129 million in 2020, followed by a larger increase to $1,409 million in 2021. However, in 2022, NOPAT experienced a decline to $1,222 million before rising significantly to $1,871 million in 2023, reaching its highest value in the period analyzed.
- Cost of Capital
- The cost of capital remained relatively stable but showed a slight increasing trend over the five-year period. From 12.31% in 2019, it marginally decreased to 12.19% in 2020, then increased gradually in subsequent years to 12.39% in 2021, 12.7% in 2022, and 12.83% in 2023. This suggests a mildly rising expense associated with financing or investment risk.
- Invested Capital
- Invested capital exhibited a steady increase throughout the timeframe. Beginning at $6,887 million at the end of 2019, it grew annually to reach $8,921 million by the end of 2023. The consistent growth in invested capital indicates ongoing expansion or reinvestment in the company’s assets or operations.
- Economic Profit
- Economic profit demonstrated a variable pattern with general growth. It started at $137 million in 2019, doubled to $278 million in 2020, and increased further to $436 million in 2021. A considerable drop to $162 million occurred in 2022, followed by a sharp recovery and rise to $727 million in 2023. Despite fluctuations, economic profit improved notably over the period, particularly in the final year.
Net Operating Profit after Taxes (NOPAT)
Motorola Solutions Inc., NOPAT calculation
US$ 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
= 532 × 4.34% = 23
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 272 × 21.00% = 57
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
= 33 × 21.00% = 7
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 $8,921 million in 2023. The continuous rise in invested capital aligns with the increased debt levels and improving equity, suggesting ongoing investment in operational assets or expansion initiatives funded through a combination of debt and equity resources.
Cost of Capital
Motorola Solutions Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 53,810) | 53,810) | ÷ | 60,742) | = | 0.89 | 0.89 | × | 14.07% | = | 12.47% | ||
| Long-term debt3 | 6,400) | 6,400) | ÷ | 60,742) | = | 0.11 | 0.11 | × | 3.94% × (1 – 21.00%) | = | 0.33% | ||
| Operating lease liability4 | 532) | 532) | ÷ | 60,742) | = | 0.01 | 0.01 | × | 4.34% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 60,742) | 1.00 | 12.83% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | 44,716) | 44,716) | ÷ | 51,153) | = | 0.87 | 0.87 | × | 14.07% | = | 12.30% | ||
| Long-term debt3 | 5,900) | 5,900) | ÷ | 51,153) | = | 0.12 | 0.12 | × | 3.94% × (1 – 21.00%) | = | 0.36% | ||
| Operating lease liability4 | 537) | 537) | ÷ | 51,153) | = | 0.01 | 0.01 | × | 4.07% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 51,153) | 1.00 | 12.70% | ||||||||||
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 | 37,174) | 37,174) | ÷ | 43,811) | = | 0.85 | 0.85 | × | 14.07% | = | 11.94% | ||
| Long-term debt3 | 6,200) | 6,200) | ÷ | 43,811) | = | 0.14 | 0.14 | × | 3.77% × (1 – 21.00%) | = | 0.42% | ||
| Operating lease liability4 | 437) | 437) | ÷ | 43,811) | = | 0.01 | 0.01 | × | 3.11% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 43,811) | 1.00 | 12.39% | ||||||||||
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 | 30,606) | 30,606) | ÷ | 36,934) | = | 0.83 | 0.83 | × | 14.07% | = | 11.66% | ||
| Long-term debt3 | 5,800) | 5,800) | ÷ | 36,934) | = | 0.16 | 0.16 | × | 3.92% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 528) | 528) | ÷ | 36,934) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 36,934) | 1.00 | 12.19% | ||||||||||
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 | 31,456) | 31,456) | ÷ | 37,575) | = | 0.84 | 0.84 | × | 14.07% | = | 11.78% | ||
| Long-term debt3 | 5,500) | 5,500) | ÷ | 37,575) | = | 0.15 | 0.15 | × | 4.17% × (1 – 21.00%) | = | 0.48% | ||
| Operating lease liability4 | 619) | 619) | ÷ | 37,575) | = | 0.02 | 0.02 | × | 3.61% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 37,575) | 1.00 | 12.31% | ||||||||||
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 | 727) | 162) | 436) | 278) | 137) | |
| Invested capital2 | 8,921) | 8,350) | 7,857) | 6,976) | 6,887) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 8.15% | 1.94% | 5.55% | 3.99% | 1.98% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Apple Inc. | 140.33% | 201.82% | 198.16% | 146.09% | — | |
| Arista Networks Inc. | 27.44% | 22.96% | 38.01% | 20.41% | — | |
| Cisco Systems Inc. | 8.49% | 8.38% | 7.63% | 11.85% | — | |
| Dell Technologies Inc. | 0.87% | 4.99% | 0.40% | -0.80% | — | |
| Super Micro Computer Inc. | 7.41% | -1.90% | -9.59% | -12.45% | — | |
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 × 727 ÷ 8,921 = 8.15%
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates significant fluctuations over the observed five-year period. It increased from 137 million USD in 2019 to 278 million USD in 2020, showing a substantial improvement. This upward trend continued more robustly in 2021, reaching 436 million USD. However, in 2022, the economic profit sharply declined to 162 million USD, indicating a notable decrease. In 2023, the economic profit rebounded strongly to 727 million USD, marking the highest value within the period and indicating a significant recovery and growth.
- Invested Capital
- Invested capital shows a consistent upward trend across the years. Starting at 6,887 million USD in 2019, the invested capital gradually increased each year, reaching 6,976 million USD in 2020, 7,857 million USD in 2021, 8,350 million USD in 2022, and finally 8,921 million USD in 2023. This steady increase suggests continuous investment or asset growth within the company over the period.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, experienced notable variability. It nearly doubled from 1.98% in 2019 to 3.99% in 2020, followed by a further increase to 5.55% in 2021, indicating an improvement in the return over the cost of capital. In 2022, the ratio dropped back to 1.94%, reflecting a reduced economic advantage during that year. A substantial increase occurred in 2023, with the ratio climbing sharply to 8.15%, the highest over the analyzed period, suggesting a strong increase in profitability relative to capital cost.
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 | 727) | 162) | 436) | 278) | 137) | |
| Net sales | 9,978) | 9,112) | 8,171) | 7,414) | 7,887) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 7.28% | 1.78% | 5.33% | 3.76% | 1.73% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Apple Inc. | 22.07% | 23.85% | 23.02% | 19.15% | — | |
| Arista Networks Inc. | 20.71% | 15.82% | 22.26% | 15.92% | — | |
| Cisco Systems Inc. | 8.45% | 9.40% | 8.50% | 12.36% | — | |
| Dell Technologies Inc. | 0.48% | 2.61% | 0.34% | -0.68% | — | |
| Super Micro Computer Inc. | 2.51% | -0.81% | -3.46% | -4.62% | — | |
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 × 727 ÷ 9,978 = 7.28%
3 Click competitor name to see calculations.
The financial data demonstrates fluctuating trends in economic profit, net sales, and economic profit margin over the five-year period presented.
- Economic Profit
- There is an overall upward trend in economic profit, increasing from 137 million US dollars in 2019 to a peak of 727 million US dollars in 2023. However, this growth is not linear; a notable rise occurs from 2019 to 2021, reaching 436 million US dollars, followed by a significant decline to 162 million US dollars in 2022, before sharply rising again in 2023.
- Net Sales
- Net sales exhibit a generally positive trajectory throughout the period. An initial decrease is recorded from 7,887 million US dollars in 2019 to 7,414 million in 2020. Subsequently, net sales steadily increase each year, reaching 9,978 million US dollars by 2023. This signals a recovery and consistent growth in revenue after the slight decline in 2020.
- Economic Profit Margin
- The economic profit margin follows a pattern similar to economic profit, though with more pronounced percentage changes. The margin grows from 1.73% in 2019 to 5.33% in 2021, indicating improving profitability. However, it sharply decreases to 1.78% in 2022, before escalating significantly to 7.28% in 2023, the highest margin in the five-year span. This variability suggests fluctuations in cost management or operational efficiency affecting overall profitability.
In summary, the data portrays a company experiencing volatility in economic profit and its margin, with a notable downturn in 2022 that impacted profitability despite growing sales. The strong rebound in 2023 in both economic profit and margin suggests effective strategic actions or favorable market conditions contributing to improved financial performance.