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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- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Aggregate Accruals
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Economic Profit
Oracle Corp., economic profit calculation
US$ in millions
| 12 months ended: | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibits fluctuating trends over the periods analyzed. It rose significantly from approximately 10,144 million USD in 2020 to a peak of 14,348 million USD in 2021. This was followed by a notable decline to 7,492 million USD in 2022, and then a recovery trend through 2023 to 2025, reaching 14,158 million USD. Overall, the NOPAT shows volatility with periods of both sharp decreases and recoveries, ending near the higher end of the spectrum.
- Cost of Capital
- The cost of capital displays a steady increasing trajectory throughout the time frame. Starting at 11.67% in 2020, it gradually climbs each year, reaching 14.28% by 2025. This trend suggests a progressively more expensive capital structure or increased market risks and required returns.
- Invested Capital
- Invested capital experiences a decline from 87,978 million USD in 2020 to 77,262 million USD in 2022, indicating possible divestment or depreciation effects. However, from 2022 onwards, there is a marked and sustained increase, reaching 115,423 million USD in 2025, which may imply renewed investment, expansion, or asset accumulation in later years.
- Economic Profit
- The economic profit figures exhibit a concerning pattern. After a minor negative value (-124 million USD) in 2020, it improved significantly to a positive 4,476 million USD in 2021, suggesting value creation above the cost of capital at that time. Subsequently, economic profit turns negative again from 2022 onwards, with increasingly negative values (-2,027 million USD in 2022 to -2,328 million USD in 2025). This indicates that despite the operational profits, the company has not been generating returns exceeding the cost of capital in the most recent periods analyzed, pointing to potential inefficiencies or over-investment issues.
Net Operating Profit after Taxes (NOPAT)
Oracle Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for credit losses.
3 Addition of increase (decrease) in deferred revenues.
4 Addition of increase (decrease) in restructuring plans accrued.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income.
9 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
- Net Income Trend
- The net income showed a rising trend from 2020 to 2021, increasing from 10,135 million USD to 13,746 million USD. However, there was a significant decline in 2022, with net income dropping to 6,717 million USD. Following this decline, the net income gradually increased over the next three years, reaching 8,503 million USD in 2023, 10,467 million USD in 2024, and 12,443 million USD in 2025. Overall, despite the dip in 2022, the net income demonstrates recovery and growth toward the latter years.
- Net Operating Profit After Taxes (NOPAT) Trend
- NNOPAT also increased from 10,144 million USD in 2020 to a peak of 14,348 million USD in 2021. It similarly experienced a large decrease in 2022 to 7,492 million USD. From 2023 onward, NOPAT consistently rose, reaching 10,160 million USD in 2023, 11,940 million USD in 2024, and culminating at 14,158 million USD in 2025. This suggests a strong rebound in operational profitability and effective tax management.
- Comparative Insights
- The patterns for both net income and NOPAT are aligned, with a peak in 2021, a notable downturn in 2022, and a steady recovery through the following years. NOPAT values are consistently close to net income values, indicating relatively stable operating efficiency and tax impact. The data imply that the company managed to improve operating results over time despite the intermediate disturbance in 2022.
Cash Operating Taxes
Oracle Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
- Provision for (benefit from) income taxes
- The provision for income taxes displays a fluctuating trend over the periods observed. It started at a positive amount of 1928 million USD in May 31, 2020, then dropped sharply to a negative value of -747 million USD in May 31, 2021, suggesting a tax benefit for that year. This was followed by a return to positive values with 932 million USD in 2022 and steady increases in subsequent years, reaching 1717 million USD in May 31, 2025. The data indicates variability but an overall upward trend after the negative dip.
- Cash operating taxes
- Cash operating taxes present a generally increasing trajectory from May 31, 2020, through May 31, 2025. Starting at 3101 million USD in 2020, the amount decreased in 2021 to 2197 million USD, but then steadily increased each year thereafter, reaching a peak of 4137 million USD in 2024, with a slight decrease to 4134 million USD in 2025. This suggests progressively higher cash tax outflows during the later years, indicative of either higher taxable income or changes in tax payments.
Invested Capital
Oracle Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
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 revenues.
5 Addition of restructuring plans accrued.
6 Addition of equity equivalents to total Oracle Corporation stockholders’ equity (deficit).
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
9 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases exhibited an overall increasing trend from 2020 through 2025. Starting at $73,695 million in 2020, the amount rose to $87,027 million in 2021, followed by a decline to $79,517 million in 2022. Thereafter, a consistent upward movement occurred, reaching $95,330 million in 2023, slightly declining to $94,414 million in 2024, and finally increasing substantially to $108,952 million in 2025. This pattern indicates fluctuating debt exposures with a notable increase in the last reported period.
- Total Oracle Corporation stockholders’ equity (deficit)
- Stockholders’ equity showed significant volatility and a considerable turnaround over the years. Initially, equity stood at $12,074 million in 2020, sharply declining to $5,238 million in 2021 and turning into a deficit of -$6,220 million by 2022. Subsequently, equity recovered to a positive $1,073 million in 2023, then improved substantially to $8,704 million in 2024, and reached $20,451 million in 2025. This indicates a transition from financial distress or negative equity toward a stronger equity position, reflecting improved capital structure and retained earnings or other comprehensive income gains.
- Invested capital
- Invested capital decreased from $87,978 million in 2020 to $77,262 million in 2022, indicating reductions or restructuring in capital allocation during this period. However, from 2022 onward, invested capital rose markedly to $98,251 million in 2023, continuing to $101,930 million in 2024, and further to $115,423 million in 2025. This evolution suggests renewed investment activities and potentially greater operational scale or asset acquisition in the latter years. The confluence of rising invested capital and improving equity alongside increasing debt points to an expansion phase with leveraged financing.
Cost of Capital
Oracle Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Borrowings and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-05-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Oracle Corp., economic spread ratio calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Datadog Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| Workday Inc. | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates significant volatility throughout the observed periods. It starts with a negative value of -124 million USD in 2020, sharply improves to a positive 4476 million USD in 2021, indicating a strong economic value addition during that year. However, from 2022 onward, economic profit declines disproportionately, returning to negative territory and worsening each year from -2027 million USD in 2022 to -2328 million USD in 2025. This pattern suggests challenges in maintaining profitability above the cost of capital after 2021.
- Invested Capital
- The invested capital shows a downward trend initially from 87978 million USD in 2020 to 77262 million USD in 2022, reflecting a possible divestment or asset reduction strategy. After 2022, there is a notable increase, reaching 115423 million USD by 2025. This growth in invested capital may indicate renewed investments or asset acquisitions aimed at supporting future growth initiatives or operational capacity expansions.
- Economic Spread Ratio
- The economic spread ratio largely parallels the economic profit trend, starting negative at -0.14% in 2020 and surging to a favorable 5.48% in 2021, which aligns with the peak in economic profit for that year. From 2022 through 2025, the ratio remains negative, ranging between -2.02% and -3.10%, signaling persistent challenges in generating returns above the cost of capital. The slight improvement towards 2025 from the earlier negative extremes suggests some mitigation efforts but not a complete recovery.
- Summary of Trends
- The overall analysis reveals a peak year of strong value creation in 2021, surrounded by years of underperformance relative to invested capital costs. Despite an increase in invested capital beginning in 2023, the continued negative economic profit and spread ratios imply that this additional investment has not yet translated into commensurate economic value. This situation highlights potential inefficiencies, elevated costs, or external factors impacting profitability and return on capital. Strategic reassessment may be required to enhance economic value in the forthcoming periods.
Economic Profit Margin
Oracle Corp., economic profit margin calculation, comparison to benchmarks
| May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Revenues | |||||||
| Add: Increase (decrease) in deferred revenues | |||||||
| Adjusted revenues | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Accenture PLC | |||||||
| Adobe Inc. | |||||||
| Cadence Design Systems Inc. | |||||||
| CrowdStrike Holdings Inc. | |||||||
| Datadog Inc. | |||||||
| Fair Isaac Corp. | |||||||
| International Business Machines Corp. | |||||||
| Intuit Inc. | |||||||
| Microsoft Corp. | |||||||
| Palantir Technologies Inc. | |||||||
| Palo Alto Networks Inc. | |||||||
| Salesforce Inc. | |||||||
| ServiceNow Inc. | |||||||
| Synopsys Inc. | |||||||
| Workday Inc. | |||||||
Based on: 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues demonstrate a consistent upward trend over the observed periods. Starting at 38,624 million US dollars in 2020, revenues increased steadily each year, reaching 57,586 million US dollars by 2025. Notable growth occurred between 2022 and 2023, where revenues increased from 42,096 million to 50,782 million US dollars, indicating a strong expansion phase during this period.
- Economic Profit
- The economic profit exhibits significant volatility across the years. Initially, it was negative at -124 million USD in 2020, then surged sharply to a positive 4,476 million USD in 2021. However, from 2022 onwards, economic profit turned negative again, worsening progressively to -3,046 million USD in 2023, before showing slight improvements but remaining negative in subsequent years, recording -2,147 million USD in 2024 and -2,328 million USD in 2025. This pattern suggests challenges in generating value beyond the cost of capital despite increasing revenues.
- Economic Profit Margin
- The economic profit margin mirrors the dynamics observed in economic profit. It shifted from a negative margin of -0.32% in 2020 to a strong positive margin of 10.83% in 2021. Following that, margins declined significantly and remained negative through 2022 to 2025, fluctuating between -4.81% and -4.01%. The negative margins in the last four years indicate inefficiencies in profitable growth, despite increasing revenue levels.
- Overall Insight
- Although there has been consistent revenue growth over the years, the company has struggled to convert this top-line growth into sustained economic profit. The pronounced volatility and return to negative economic profit margins highlight potential issues related to cost management, capital costs, or investment returns. The peak positive performance in 2021 appears to be an outlier amid an otherwise challenging performance pattern. Focus may be needed on improving operational efficiencies and strategic investments to regain positive economic profit margins.