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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Economic Profit
Thermo Fisher Scientific Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibited an initial increase from 6,545 million USD in 2020 to 7,465 million USD in 2021, indicating improved operational performance. However, subsequent years saw a decline, falling to 6,425 million USD in 2022 and further down to 5,117 million USD in 2023. The 2024 figure shows a slight recovery, increasing to 5,400 million USD.
- Cost of Capital
- The cost of capital remained relatively stable, fluctuating narrowly between 10.78% and 11.17% over the five-year period. It peaked at 11.17% in 2020 and declined slightly in 2021, before rising again to 11.15% in 2024.
- Invested Capital
- Invested capital has shown a consistent upward trend from 61,158 million USD in 2020 to a peak of 85,573 million USD in 2023. In 2024, invested capital decreased moderately to 82,071 million USD, although it remained significantly higher than the 2020 base.
- Economic Profit
- Economic profit was negative throughout the period, indicating value destruction relative to the invested capital cost. The deficit widened markedly from -288 million USD in 2020 to -4,342 million USD in 2023. Although there was some improvement in 2024, with economic profit improving to -3,753 million USD, it still reflected substantial economic losses.
- Overall Analysis
- Despite an increase in NOPAT in the early period and rising invested capital, the economic profit trend highlights ongoing challenges in generating returns above the cost of capital. The negative economic profit, increasing in magnitude until 2023, suggests that capital investments have not yielded sufficient returns, undermining value creation. The slight recovery in both NOPAT and economic profit in 2024 may indicate initial signs of stabilization, yet the company remains below the breakeven threshold in terms of value generation relative to its capital costs.
Net Operating Profit after Taxes (NOPAT)
Thermo Fisher Scientific Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrued restructuring costs.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Thermo Fisher Scientific Inc..
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 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 attributable to Thermo Fisher Scientific Inc..
9 2024 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 Attributable to Thermo Fisher Scientific Inc.
- The net income shows an overall fluctuating trend during the analyzed period. It increased significantly from 6375 million US dollars in 2020 to a peak of 7725 million US dollars in 2021. However, this was followed by a decline over the next two years, reaching 5995 million US dollars in 2023. A modest recovery is observed in 2024, with net income rising to 6335 million US dollars, though it remains below the 2021 peak.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values illustrate a pattern consistent with net income, with initial growth from 6545 million US dollars in 2020 to 7465 million US dollars in 2021. Subsequently, there is a notable decrease to 6425 million US dollars in 2022, followed by a sharper decline to 5117 million US dollars in 2023. A recovery phase occurs in 2024, where NOPAT increases to 5400 million US dollars, yet it still remains considerably lower than the earlier years.
- Summary of Trends
- The financial performance, as measured by both net income and NOPAT, peaked in 2021 and then experienced a downward adjustment for two consecutive years. Despite some recovery in 2024, neither metric returned to the highs seen in 2021. This pattern suggests a period of robust profitability followed by challenges that impacted the company’s earnings and operating efficiency, with partial improvement toward the end of the period.
Cash Operating Taxes
Thermo Fisher Scientific Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
The financial data reveals notable fluctuations in tax-related expenses over the five-year period ending in 2024. Two key categories, provision for income taxes and cash operating taxes, demonstrate distinct trends.
- Provision for Income Taxes
- The provision for income taxes exhibits significant volatility. Starting at 850 million USD in 2020, it increased sharply to 1,109 million USD in 2021. However, in 2022, the provision decreased substantially to 703 million USD, followed by a further decline to 284 million USD in 2023. A notable rebound occurs in 2024, with the provision rising again to 657 million USD. This pattern suggests variability in the company's tax liabilities or effective tax rate, possibly influenced by changes in pre-tax earnings, tax regulations, or one-time adjustments.
- Cash Operating Taxes
- Cash operating taxes show a generally upward trend with some minor fluctuations. Beginning at 1,227 million USD in 2020, these taxes increased substantially to 1,866 million USD in 2021. The level then remained relatively stable through 2022 at 1,806 million USD and slightly decreased to 1,701 million USD in 2023. In 2024, cash operating taxes resumed growth, reaching 1,946 million USD, the highest in the observed period. This steady increase indicates rising cash outflows for tax payments, which may reflect higher taxable income, changes in tax rates, or both.
In summary, while cash operating taxes demonstrate a mostly consistent upward trajectory, the provision for income taxes is marked by pronounced variability. The divergence in trends between these two items could imply timing differences between tax expenses recorded and actual cash paid or adjustments related to deferred taxes or tax planning strategies.
Invested Capital
Thermo Fisher Scientific Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
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 LIFO reserve. See details »
5 Addition of accrued restructuring costs.
6 Addition of equity equivalents to total Thermo Fisher Scientific Inc. shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
9 Subtraction of investments measured at fair value on a recurring basis.
- Total Reported Debt & Leases
- The total reported debt and leases showed a significant increase from 22,545 million USD at the end of 2020 to 36,339 million USD in 2021. Subsequently, it remained relatively stable, with slight fluctuations around the 36,000 million USD mark through 2023, before decreasing to 32,775 million USD by the end of 2024. This pattern suggests a major debt acquisition or lease increase occurred between 2020 and 2021, followed by stabilization and moderate deleveraging in the final year observed.
- Total Shareholders’ Equity
- Shareholders’ equity demonstrated a consistent upward trend throughout the period, increasing from 34,507 million USD in 2020 to 49,584 million USD in 2024. The growth rate appears steady year-over-year, indicating sustained value creation and possible retained earnings or capital injections contributing to strengthening the equity base.
- Invested Capital
- Invested capital experienced a marked increase from 61,158 million USD at the end of 2020 to a peak of 85,573 million USD in 2023. However, in 2024, it declined to 82,071 million USD. The growth in invested capital through most of the period indicates expansion or investment activities, while the slight downturn in the final year could reflect divestitures, asset write-downs, or a moderation in capital expenditures.
Cost of Capital
Thermo Fisher Scientific Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (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 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (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 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (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 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (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 Debt obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Thermo Fisher Scientific Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit has shown a consistent negative trend over the period. Starting at -288 million US dollars in 2020, it declined sharply to -1,138 million in 2021. The deterioration continued with a significant drop to -2,733 million in 2022, reaching the lowest point of -4,342 million in 2023 before slightly improving to -3,753 million in 2024. This persistent negative economic profit indicates challenges in generating value beyond the cost of capital.
- Invested Capital
- Invested capital demonstrated an overall upward trend from 61,158 million US dollars at the end of 2020 to a peak of 85,573 million in 2023. However, it experienced a slight decline to 82,071 million in 2024. This increase in invested capital over the years suggests ongoing investments or asset accumulation to support business operations or growth initiatives.
- Economic Spread Ratio
- The economic spread ratio remained negative throughout the periods, reflecting returns below the cost of capital. It worsened from -0.47% in 2020 to -1.43% in 2021. This deterioration accelerated notably, reaching -3.3% in 2022 and deepening further to -5.07% in 2023. In 2024, there was a slight improvement to -4.57%, though it remained significantly below zero, signaling that returns on invested capital have consistently failed to meet cost of capital requirements.
- Overall Analysis
- The financial data reveals a concerning pattern in value creation, with economic profit persistently negative and declining sharply over the period. Invested capital increased substantially, but the returns generated, as reflected in the economic spread ratio, have been insufficient to cover the cost of capital. Despite a modest recovery in 2024, the company continues to face challenges in generating positive economic profit, suggesting that strategic adjustments may be necessary to enhance operational efficiency and capital allocation effectiveness.
Economic Profit Margin
Thermo Fisher Scientific Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues exhibited a generally increasing trend from 2020 to 2022, growing from approximately 32.2 billion US dollars in 2020 to 44.9 billion in 2022. However, there was a slight decline observed in 2023, with revenues falling to about 42.9 billion, followed by marginal stabilization in 2024, remaining effectively flat at 42.9 billion US dollars.
- Economic Profit
- Economic profit demonstrated a continued downward trend throughout the period under review. Starting with a negative value of 288 million US dollars in 2020, the economic loss deepened significantly to 1.138 billion by the end of 2021. This deterioration accelerated further in 2022 and 2023, with economic profits recorded at negative 2.733 billion and 4.342 billion US dollars respectively. Though there was a slight reduction in economic loss in 2024, the figure remained deeply negative at 3.753 billion US dollars, indicating sustained challenges in generating economic profit.
- Economic Profit Margin
- The economic profit margin correspondingly declined over the years, beginning at a negative 0.89% in 2020 and worsening to -2.9% in 2021. This downward trend intensified substantially in the following years, reaching a margin of -6.08% in 2022 and further falling to -10.13% in 2023. By the end of 2024, the margin showed slight improvement but remained markedly negative at -8.75%. This pattern underscores a declining efficiency in profit generation relative to revenues.
- Overall Insights
- The analysis reveals that while revenue growth was robust in the initial years, economic performance in terms of profit generation experienced significant deterioration, with a deeply negative economic profit and margin. The divergence between increasing revenue and worsening economic profitability suggests rising costs, decreased operational efficiency, or increased capital charges impacting overall financial health. The marginal improvements seen in 2024 in economic profit and margin may indicate early stages of corrective measures, although sustained negative values highlight continued financial challenges.