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:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Price to Earnings (P/E) since 2005
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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 financial performance from 2021 through 2025 is characterized by a consistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the company's cost of capital throughout the analyzed period. Economic profit remained negative, reaching its lowest point in 2023 before showing slight volatility in the subsequent years.
- Net Operating Profit After Taxes (NOPAT)
- A significant downward trend is observed between 2021 and 2023, with NOPAT decreasing from 7,514 million US$ to 5,117 million US$. A recovery phase began in 2024 and continued into 2025, with profit levels rising to 6,467 million US$, although they remained below the 2021 baseline.
- Invested Capital and Cost of Capital
- Invested capital exhibited a general upward trajectory, growing from 79,776 million US$ in 2021 to 94,150 million US$ by 2025, despite a brief contraction in 2024. Concurrently, the cost of capital remained relatively stable, fluctuating within a narrow range between 14.23% and 14.74%, suggesting a consistent hurdle rate for investments over the five-year period.
- Economic Profit Trends
- The economic profit deficit widened substantially from 2021 to 2023, moving from -3,877 million US$ to -7,383 million US$. This deterioration was driven by the simultaneous decline in NOPAT and the increase in the capital base. While 2024 saw a marginal improvement to -6,695 million US$ due to a reduction in invested capital and a slight rise in NOPAT, the deficit expanded again to -6,933 million US$ in 2025, primarily due to a sharp increase in invested capital that outweighed the growth in operating profits.
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.
An analysis of the financial performance from 2021 to 2025 reveals a sustained period of negative economic value creation. Throughout the five-year window, economic profit remained consistently negative, indicating that the returns generated were insufficient to cover the cost of the capital employed.
- Economic Profit Trends
- Economic profit exhibited a declining trend between 2021 and 2023, with losses widening from US$ 3,877 million to a peak deficit of US$ 7,383 million. A slight recovery was observed in 2024, where the loss narrowed to US$ 6,695 million, before increasing again to US$ 6,933 million by the end of 2025.
- Invested Capital Dynamics
- The capital base showed an overall upward trajectory, increasing from US$ 79,776 million in 2021 to US$ 94,150 million in 2025. A temporary contraction occurred in 2024, with invested capital dipping to US$ 82,071 million, followed by a substantial increase in the final year of the analysis.
- Economic Spread Ratio Performance
- The economic spread ratio remained negative throughout the period, confirming a persistent gap between the return on invested capital and the cost of capital. The ratio deteriorated from -4.86% in 2021 to its lowest point of -8.63% in 2023. Following this trough, a gradual improvement trend is evident, with the ratio ascending to -8.16% in 2024 and reaching -7.36% by 2025, suggesting a marginal reduction in the rate of value destruction over the final two years.
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 over the five-year period from 2021 to 2025. This indicates that the entity consistently failed to generate returns exceeding its cost of capital, resulting in a destruction of shareholder value throughout the observed timeframe.
- Economic Profit Trends
- Economic profit exhibited a significant downward trajectory between 2021 and 2023, with losses expanding from -3,877 million USD to a peak deficit of -7,383 million USD. Although a moderate recovery was observed in 2024, with the deficit narrowing to -6,695 million USD, the figure returned to a downward trend in 2025, closing at -6,933 million USD.
- Revenue Dynamics and Correlation
- Revenues experienced fluctuations, rising from 39,211 million USD in 2021 to 44,915 million USD in 2022. A decline to 42,857 million USD in 2023 aligned with the period of maximum economic loss. While revenues rebounded to 44,556 million USD by 2025, the growth in top-line scale did not correlate with a return to positive economic profit, suggesting that increased revenue did not sufficiently offset the cost of the capital employed.
- Economic Profit Margin Analysis
- The economic profit margin showed a marked deterioration in the early part of the period, dropping from -9.89% in 2021 to its lowest point of -17.23% in 2023. A marginal improvement occurred in 2024 and 2025, with margins stabilizing at -15.61% and -15.56%, respectively. This stabilization indicates a plateau in capital inefficiency, although the organization remains significantly below the threshold required for economic value creation.