Economic Value Added (EVA)
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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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Thermo Fisher Scientific Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Economic Profit
Thermo Fisher Scientific Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
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
= – × =
The analysis of economic value added reveals a consistent failure to generate positive economic profit between 2021 and 2025. Throughout the observed period, the returns generated from operations were insufficient to cover the cost of the capital employed, resulting in a persistent destruction of economic value.
- Net Operating Profit After Taxes (NOPAT)
- A contraction in operational profitability was evident from 2021 to 2023, with NOPAT declining from 7,514 million to 5,117 million. A recovery trend emerged in 2024 and continued into 2025, where NOPAT rose to 6,467 million. Despite this recovery, the 2025 figure remains below the 2021 baseline.
- Cost of Capital
- The cost of capital exhibited minimal volatility, maintaining a narrow range between 14.23% and 14.73%. This stability indicates a consistent weighted average cost of funding and a steady market risk perception over the five-year duration.
- Invested Capital
- Invested capital followed a general upward trajectory, increasing from 79,776 million in 2021 to 85,573 million in 2023. After a temporary reduction to 82,071 million in 2024, a sharp increase occurred in 2025, reaching 94,150 million. This suggests a significant expansion of the capital base in the final year of the period.
- Economic Profit
- Economic profit remained negative for all five years, indicating that the company failed to meet its minimum required return. The economic loss widened from -3,874 million in 2021 to a peak deficit of -7,381 million in 2023. While a moderate improvement was noted in 2024, the economic profit shifted back to -6,931 million in 2025. The divergence between the recovering NOPAT and the rapidly expanding invested capital in 2025 prevented the company from achieving a positive economic value added state.
Net Operating Profit after Taxes (NOPAT)
Thermo Fisher Scientific Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances.
3 Addition of increase (decrease) in accrued restructuring costs.
4 Addition of increase (decrease) in equity equivalents to net income attributable to Thermo Fisher Scientific Inc..
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income attributable to Thermo Fisher Scientific Inc..
8 2025 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 income attributable to Thermo Fisher Scientific Inc. and Net Operating Profit After Taxes (NOPAT) both demonstrate fluctuations over the five-year period. While net income shows a relatively stable pattern, NOPAT exhibits a more pronounced decline followed by recovery.
- Net Income Trend
- Net income attributable to Thermo Fisher Scientific Inc. decreased from US$7,725 million in 2021 to US$6,950 million in 2022. A further decrease was observed in 2023, reaching US$5,995 million. Subsequently, net income increased to US$6,335 million in 2024 and continued to rise to US$6,704 million in 2025, though it did not return to the 2021 level.
- NOPAT Trend
- NOPAT experienced a more significant decline than net income. Starting at US$7,514 million in 2021, it decreased to US$6,425 million in 2022. The decline accelerated in 2023, falling to US$5,117 million. A modest recovery occurred in 2024, with NOPAT reaching US$5,400 million. The most substantial increase within the observed period occurred between 2024 and 2025, with NOPAT rising to US$6,467 million. Despite this recovery, the 2025 NOPAT figure remains below the 2021 level.
- Relationship between Net Income and NOPAT
- The values for net income and NOPAT are closely aligned throughout the period, suggesting a limited impact from financing costs or non-operating items. The proportional changes in both metrics are similar, indicating that the core operating profitability is the primary driver of overall profitability. However, the magnitude of the NOPAT decline in 2023 was greater than that of net income, potentially indicating changes in the tax rate or other adjustments between net income and NOPAT.
The recovery in both net income and NOPAT in the later years of the period suggests a potential stabilization or improvement in the company’s operating performance. Further investigation would be required to determine the underlying causes of these fluctuations and the sustainability of the recent recovery.
Cash Operating Taxes
Thermo Fisher Scientific Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The provision for income taxes and cash operating taxes exhibited distinct trends between 2021 and 2025. A significant decrease in the provision for income taxes is apparent over the period, while cash operating taxes demonstrate more fluctuation.
- Provision for Income Taxes
- The provision for income taxes decreased substantially from US$1,109 million in 2021 to US$284 million in 2023. A moderate increase was then observed in 2024, reaching US$657 million, followed by a further decrease to US$547 million in 2025. This represents an overall decline of approximately 50.7% from 2021 to 2025.
- Cash Operating Taxes
- Cash operating taxes remained relatively stable between 2021 and 2023, fluctuating around US$1,800 million. A notable increase occurred in 2024, with cash operating taxes rising to US$1,946 million. However, a considerable decrease was recorded in 2025, falling to US$1,290 million. The net change from 2021 to 2025 is a decrease of approximately 30.9%.
The divergence between the provision for income taxes and cash operating taxes suggests potential differences in temporary versus permanent tax differences. The substantial reduction in the provision for income taxes, coupled with the fluctuating cash operating taxes, warrants further investigation into the underlying factors driving these trends, such as changes in tax regulations, deferred tax asset realization, or shifts in the composition of taxable income.
- Relationship between Provision and Cash Taxes
- In 2021, cash operating taxes exceeded the provision for income taxes by US$757 million. This difference narrowed in 2022 to US$1,103 million and further decreased in 2023 to US$1,417 million. The gap widened again in 2024 to US$1,289 million before decreasing significantly in 2025 to US$743 million. This fluctuating difference highlights the impact of timing differences between reported income tax expense and actual cash tax payments.
The observed trends indicate a complex tax profile, and continued monitoring of these figures is recommended to assess potential impacts on future cash flows and overall financial performance.
Invested Capital
Thermo Fisher Scientific Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 accrued restructuring costs.
5 Addition of equity equivalents to total Thermo Fisher Scientific Inc. shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of investments measured at fair value on a recurring basis.
The invested capital of the company demonstrates an overall increasing trend between 2021 and 2025, though with some fluctuation. Total reported debt & leases and total shareholders’ equity both contribute to this figure, and their individual movements influence the overall invested capital.
- Invested Capital Trend
- Invested capital increased from US$79,776 million in 2021 to US$82,814 million in 2022, representing a growth of approximately 3.8%. Further growth was observed in 2023, reaching US$85,573 million. A slight decrease occurred in 2024, with invested capital falling to US$82,071 million. However, a significant increase is noted in 2025, with invested capital reaching US$94,150 million.
- Debt & Leases
- Total reported debt & leases remained relatively stable between 2021 and 2023, fluctuating around US$36 billion. A decrease was observed in 2024, falling to US$32,775 million. This downward trend was reversed in 2025, with debt & leases increasing substantially to US$40,855 million.
- Shareholders’ Equity
- Total shareholders’ equity exhibited consistent growth throughout the period. It increased from US$40,793 million in 2021 to US$43,978 million in 2022, US$46,735 million in 2023, and US$49,584 million in 2024. This growth continued into 2025, reaching US$53,407 million. The consistent increase in shareholders’ equity contributes to the overall growth in invested capital.
The increase in invested capital in 2025 is primarily driven by a substantial rise in debt & leases, despite continued growth in shareholders’ equity. The dip in invested capital in 2024 is attributable to the decrease in debt & leases, partially offset by the continued growth in shareholders’ equity. These fluctuations suggest potential shifts in the company’s capital structure and financing strategies.
Cost of Capital
Thermo Fisher Scientific Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Thermo Fisher Scientific Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
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.
The analysis of the economic value added metrics reveals a consistent failure to generate positive economic profit over the five-year period from 2021 to 2025. The company experienced a deepening of economic losses through 2023, followed by a period of marginal stabilization and a slight trend toward recovery in the spread ratio through 2025.
- Economic Profit Trends
- Economic profit remained negative throughout the entire period, indicating that the generated returns were insufficient to cover the cost of capital. Losses expanded from -3,874 million US$ in 2021 to a peak deficit of -7,381 million US$ in 2023. While there was a slight improvement in 2024, the economic profit returned to a decline in 2025, ending the period at -6,931 million US$.
- Invested Capital Dynamics
- Invested capital exhibited a general upward trajectory, increasing from 79,776 million US$ in 2021 to 94,150 million US$ by 2025. A notable contraction occurred in 2024, where capital decreased to 82,071 million US$, before a significant expansion in 2025. This suggests a period of capital reallocation or divestment in 2024 followed by aggressive reinvestment or acquisition activity in the final year.
- Economic Spread Ratio Performance
- The economic spread ratio remained negative across all reported years, confirming that the return on invested capital was consistently lower than the weighted average cost of capital. The ratio deteriorated from -4.86% in 2021 to its lowest point of -8.62% in 2023. However, a corrective trend is observable from 2024 onward, with the ratio improving to -8.15% in 2024 and further recovering to -7.36% in 2025, suggesting a gradual reduction in the gap between capital costs and investment returns.
Economic Profit Margin
Thermo Fisher Scientific Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
An analysis of the economic value added reveals a persistent trend of negative economic profit from 2021 through 2025. The organization consistently failed to generate returns exceeding its cost of capital during this period, indicating that the value of the invested capital was not being optimally utilized to create shareholder wealth.
- Economic Profit Trajectory
- Economic profit experienced a significant deterioration between 2021 and 2023, with losses widening from -3,874 million USD to a peak deficit of -7,381 million USD. A partial recovery occurred in 2024, where the loss narrowed to -6,692 million USD, followed by a slight decline back to -6,931 million USD in 2025. This pattern suggests a period of intensifying value erosion followed by a phase of relative stabilization at a high deficit level.
- Revenue Fluctuations
- Revenues demonstrated volatility, rising from 39,211 million USD in 2021 to a peak of 44,915 million USD in 2022, before contracting to 42,857 million USD in 2023. Subsequent years showed marginal growth, ending at 44,556 million USD in 2025. The lack of a direct positive correlation between revenue growth and economic profit suggests that scale increases did not translate into improved capital efficiency.
- Economic Profit Margin Analysis
- The economic profit margin exhibited a downward trend in the first three years, dropping from -9.88% in 2021 to -17.22% in 2023. This represents a significant contraction in the efficiency of value creation relative to total sales. From 2024 onward, the margin showed signs of stabilization, shifting to -15.61% and -15.55% in 2025, though it remained substantially below the break-even threshold required for positive economic value added.