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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Freeport-McMoRan Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	4,632)	5,116)	6,188)	1,698)	331)
Cost of capital²	20.07%	20.11%	20.09%	19.27%	15.76%
Invested capital³	35,126)	36,035)	35,043)	32,173)	28,120)

Economic profit⁴	(2,420)	(2,129)	(851)	(4,502)	(4,100)

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
= 4,632 – 20.07% × 35,126 = -2,420

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Freeport-McMoRan Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Freeport-McMoRan Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to common stockholders	1,848)	3,468)	4,306)	599)	(239)
Deferred income tax expense (benefit)¹	373)	299)	211)	298)	45)
Increase (decrease) in deferred revenue²	85)	(115)	126)	53)	(23)
Increase (decrease) in equity equivalents³	458)	184)	337)	351)	22)
Interest expense, net	515)	560)	602)	598)	620)
Interest expense, operating lease liability⁴	20)	14)	13)	12)	14)
Adjusted interest expense, net	535)	574)	615)	610)	634)
Tax benefit of interest expense, net⁵	(112)	(120)	(129)	(128)	(133)
Adjusted interest expense, net, after taxes⁶	423)	453)	486)	482)	501)
(Income) loss from discontinued operations, net of tax⁷	—)	—)	—)	—)	(3)
Net income (loss) attributable to noncontrolling interest	1,903)	1,011)	1,059)	266)	50)
Net operating profit after taxes (NOPAT)	4,632)	5,116)	6,188)	1,698)	331)

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 deferred revenue.

³ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to common stockholders.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 431 × 4.70% = 20

⁵ 2023 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 535 × 21.00% = 112

⁶ Addition of after taxes interest expense to net income (loss) attributable to common stockholders.

⁷ Elimination of discontinued operations.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Freeport-McMoRan Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Freeport-McMoRan Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision for income taxes	2,270)	2,267)	2,299)	944)	510)
Less: Deferred income tax expense (benefit)	373)	299)	211)	298)	45)
Add: Tax savings from interest expense, net	112)	120)	129)	128)	133)
Cash operating taxes	2,009)	2,088)	2,217)	774)	598)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Freeport-McMoRan Inc. cash operating taxes decreased from 2021 to 2022 and from 2022 to 2023.

Freeport-McMoRan Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of debt	766)	1,037)	372)	34)	5)
Long-term debt, less current portion	8,656)	9,583)	9,078)	9,677)	9,821)
Operating lease liability¹	431)	332)	319)	228)	248)
Total reported debt & leases	9,853)	10,952)	9,769)	9,939)	10,074)
Stockholders’ equity	16,693)	15,555)	13,980)	10,174)	9,298)
Net deferred tax (assets) liabilities²	4,446)	4,267)	4,232)	4,408)	4,206)
Deferred revenue³	161)	76)	191)	65)	12)
Equity equivalents⁴	4,607)	4,343)	4,423)	4,473)	4,218)
Accumulated other comprehensive (income) loss, net of tax⁵	274)	320)	388)	583)	676)
Noncontrolling interests	10,617)	9,316)	9,039)	8,494)	8,150)
Adjusted stockholders’ equity	32,191)	29,534)	27,830)	23,724)	22,342)
Construction in progress⁶	(6,885)	(4,419)	(2,477)	(1,454)	(4,265)
Investment securities⁷	(33)	(32)	(79)	(36)	(31)
Invested capital	35,126)	36,035)	35,043)	32,173)	28,120)

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 deferred revenue.

⁴ Addition of equity equivalents to stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of investment securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Freeport-McMoRan Inc. invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Freeport-McMoRan Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,698)	55,698)	÷	65,493)	=	0.85	0.85	×	22.89%	=	19.47%
Long-term debt, including current portion³	9,364)	9,364)	÷	65,493)	=	0.14	0.14	×	5.18% × (1 – 21.00%)	=	0.59%
Operating lease liability⁴	431)	431)	÷	65,493)	=	0.01	0.01	×	4.70% × (1 – 21.00%)	=	0.02%
Total:	65,493)					1.00					20.07%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	60,533)	60,533)	÷	70,962)	=	0.85	0.85	×	22.89%	=	19.52%
Long-term debt, including current portion³	10,097)	10,097)	÷	70,962)	=	0.14	0.14	×	5.04% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	332)	332)	÷	70,962)	=	0.00	0.00	×	4.10% × (1 – 21.00%)	=	0.02%
Total:	70,962)					1.00					20.11%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	63,530)	63,530)	÷	74,479)	=	0.85	0.85	×	22.89%	=	19.52%
Long-term debt, including current portion³	10,630)	10,630)	÷	74,479)	=	0.14	0.14	×	4.88% × (1 – 21.00%)	=	0.55%
Operating lease liability⁴	319)	319)	÷	74,479)	=	0.00	0.00	×	4.20% × (1 – 21.00%)	=	0.01%
Total:	74,479)					1.00					20.09%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	47,984)	47,984)	÷	59,206)	=	0.81	0.81	×	22.89%	=	18.55%
Long-term debt, including current portion³	10,994)	10,994)	÷	59,206)	=	0.19	0.19	×	4.81% × (1 – 21.00%)	=	0.71%
Operating lease liability⁴	228)	228)	÷	59,206)	=	0.00	0.00	×	5.40% × (1 – 21.00%)	=	0.02%
Total:	59,206)					1.00					19.27%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,760)	17,760)	÷	28,247)	=	0.63	0.63	×	22.89%	=	14.39%
Long-term debt, including current portion³	10,239)	10,239)	÷	28,247)	=	0.36	0.36	×	4.64% × (1 – 21.00%)	=	1.33%
Operating lease liability⁴	248)	248)	÷	28,247)	=	0.01	0.01	×	5.50% × (1 – 21.00%)	=	0.04%
Total:	28,247)					1.00					15.76%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Freeport-McMoRan 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	(2,420)	(2,129)	(851)	(4,502)	(4,100)
Invested capital²	35,126)	36,035)	35,043)	32,173)	28,120)
Performance Ratio
Economic spread ratio³	-6.89%	-5.91%	-2.43%	-13.99%	-14.58%
Benchmarks
Economic Spread Ratio, Competitors⁴
Newmont Corp.	-15.02%	-10.90%	-7.61%	0.49%	3.67%

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 × -2,420 ÷ 35,126 = -6.89%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Freeport-McMoRan Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Freeport-McMoRan 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	(2,420)	(2,129)	(851)	(4,502)	(4,100)

Revenues	22,855)	22,780)	22,845)	14,198)	14,402)
Add: Increase (decrease) in deferred revenue	85)	(115)	126)	53)	(23)
Adjusted revenues	22,940)	22,665)	22,971)	14,251)	14,379)
Performance Ratio
Economic profit margin²	-10.55%	-9.39%	-3.71%	-31.59%	-28.52%
Benchmarks
Economic Profit Margin, Competitors³
Newmont Corp.	-46.26%	-21.09%	-17.15%	1.25%	10.89%

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 ÷ Adjusted revenues
= 100 × -2,420 ÷ 22,940 = -10.55%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Freeport-McMoRan Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Freeport-McMoRan Inc. (NYSE:FCX)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin