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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

Pfizer 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	(1,277)	31,018)	18,394)	6,095)	17,166)
Cost of capital²	8.04%	9.28%	9.10%	8.70%	8.41%
Invested capital³	154,882)	110,746)	87,670)	103,898)	120,978)

Economic profit⁴	(13,725)	20,745)	10,419)	(2,941)	6,988)

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
= -1,277 – 8.04% × 154,882 = -13,725

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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.	Pfizer Inc. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Pfizer 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 attributable to Pfizer Inc.	2,119)	31,372)	21,979)	9,616)	16,273)
Deferred income tax expense (benefit)¹	(3,443)	(3,764)	(4,293)	(1,468)	427)
Increase (decrease) in allowance for doubtful accounts²	21)	(43)	(16)	15)	(14)
Increase (decrease) in restructuring accruals³	784)	133)	273)	(18)	(319)
Increase (decrease) in equity equivalents⁴	(2,638)	(3,674)	(4,036)	(1,471)	94)
Interest expense	2,209)	1,238)	1,291)	1,449)	1,574)
Interest expense, operating lease liability⁵	120)	97)	83)	42)	46)
Adjusted interest expense	2,329)	1,335)	1,374)	1,491)	1,620)
Tax benefit of interest expense⁶	(489)	(280)	(289)	(313)	(340)
Adjusted interest expense, after taxes⁷	1,840)	1,054)	1,085)	1,178)	1,280)
(Gain) loss on marketable securities	(1,731)	3,082)	(1,374)	(728)	(415)
Interest income	(1,624)	(251)	(36)	(73)	(226)
Investment income, before taxes	(3,355)	2,831)	(1,410)	(801)	(641)
Tax expense (benefit) of investment income⁸	705)	(595)	296)	168)	135)
Investment income, after taxes⁹	(2,650)	2,236)	(1,114)	(633)	(506)
(Income) loss from discontinued operations, net of tax¹⁰	14)	(6)	434)	(2,631)	(4)
Net income (loss) attributable to noncontrolling interest	39)	35)	46)	36)	29)
Net operating profit after taxes (NOPAT)	(1,277)	31,018)	18,394)	6,095)	17,166)

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 allowance for doubtful accounts.

³ Addition of increase (decrease) in restructuring accruals.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to Pfizer Inc..

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,153 × 3.80% = 120

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,329 × 21.00% = 489

⁷ Addition of after taxes interest expense to net income attributable to Pfizer Inc..

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 3,355 × 21.00% = 705

⁹ Elimination of after taxes investment income.

¹⁰ 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.	Pfizer Inc. NOPAT increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Pfizer 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 taxes on income	(1,115)	3,328)	1,852)	477)	1,384)
Less: Deferred income tax expense (benefit)	(3,443)	(3,764)	(4,293)	(1,468)	427)
Add: Tax savings from interest expense	489)	280)	289)	313)	340)
Less: Tax imposed on investment income	705)	(595)	296)	168)	135)
Cash operating taxes	2,113)	7,967)	6,137)	2,090)	1,163)

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.	Pfizer Inc. cash operating taxes increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Pfizer Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term borrowings, including current portion of long-term debt	10,350)	2,945)	2,241)	2,703)	16,195)
Long-term debt, excluding current portion	61,538)	32,884)	36,195)	37,133)	35,955)
Operating lease liability¹	3,153)	3,217)	2,959)	1,435)	1,324)
Total reported debt & leases	75,041)	39,046)	41,395)	41,271)	53,474)
Total Pfizer Inc. shareholders’ equity	89,014)	95,661)	77,201)	63,238)	63,143)
Net deferred tax (assets) liabilities²	(1,128)	(3,746)	(1,269)	3,123)	4,700)
Allowance for doubtful accounts³	470)	449)	492)	508)	527)
Restructuring accruals⁴	1,988)	1,204)	1,071)	798)	933)
Equity equivalents⁵	1,330)	(2,093)	294)	4,429)	6,160)
Accumulated other comprehensive (income) loss, net of tax⁶	7,961)	8,304)	5,897)	11,688)	11,640)
Equity attributable to noncontrolling interests	274)	255)	261)	235)	304)
Adjusted total Pfizer Inc. shareholders’ equity	98,579)	102,127)	83,653)	79,590)	81,247)
Construction in progress⁷	(5,925)	(4,875)	(3,822)	(3,552)	(2,960)
Marketable securities⁸	(12,813)	(25,552)	(33,556)	(13,411)	(10,783)
Invested capital	154,882)	110,746)	87,670)	103,898)	120,978)

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 allowance for doubtful accounts receivable.

⁴ Addition of restructuring accruals.

⁵ Addition of equity equivalents to total Pfizer Inc. shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of marketable 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.	Pfizer Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Pfizer Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	155,569)	155,569)	÷	230,072)	=	0.68	0.68	×	10.22%	=	6.91%
Preferred stock, no par value, at stated value (book value)	—)	—)	÷	230,072)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	71,350)	71,350)	÷	230,072)	=	0.31	0.31	×	4.43% × (1 – 21.00%)	=	1.09%
Operating lease liability⁴	3,153)	3,153)	÷	230,072)	=	0.01	0.01	×	3.80% × (1 – 21.00%)	=	0.04%
Total:	230,072)					1.00					8.04%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	237,687)	237,687)	÷	273,849)	=	0.87	0.87	×	10.22%	=	8.87%
Preferred stock, no par value, at stated value (book value)	—)	—)	÷	273,849)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	32,945)	32,945)	÷	273,849)	=	0.12	0.12	×	3.97% × (1 – 21.00%)	=	0.38%
Operating lease liability⁴	3,217)	3,217)	÷	273,849)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.03%
Total:	273,849)					1.00					9.28%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	258,449)	258,449)	÷	305,649)	=	0.85	0.85	×	10.22%	=	8.64%
Preferred stock, no par value, at stated value (book value)	—)	—)	÷	305,649)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	44,241)	44,241)	÷	305,649)	=	0.14	0.14	×	3.79% × (1 – 21.00%)	=	0.43%
Operating lease liability⁴	2,959)	2,959)	÷	305,649)	=	0.01	0.01	×	2.80% × (1 – 21.00%)	=	0.02%
Total:	305,649)					1.00					9.10%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	188,635)	188,635)	÷	238,306)	=	0.79	0.79	×	10.22%	=	8.09%
Preferred stock, no par value, at stated value (book value)	—)	—)	÷	238,306)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	48,236)	48,236)	÷	238,306)	=	0.20	0.20	×	3.71% × (1 – 21.00%)	=	0.59%
Operating lease liability⁴	1,435)	1,435)	÷	238,306)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.01%
Total:	238,306)					1.00					8.70%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	189,174)	189,174)	÷	247,552)	=	0.76	0.76	×	10.22%	=	7.81%
Preferred stock, no par value, at stated value (book value)	17)	17)	÷	247,552)	=	0.00	0.00	×	6.25%	=	0.00%
Debt³	57,037)	57,037)	÷	247,552)	=	0.23	0.23	×	3.23% × (1 – 21.00%)	=	0.59%
Operating lease liability⁴	1,324)	1,324)	÷	247,552)	=	0.01	0.01	×	3.50% × (1 – 21.00%)	=	0.01%
Total:	247,552)					1.00					8.41%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Pfizer 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	(13,725)	20,745)	10,419)	(2,941)	6,988)
Invested capital²	154,882)	110,746)	87,670)	103,898)	120,978)
Performance Ratio
Economic spread ratio³	-8.86%	18.73%	11.88%	-2.83%	5.78%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-3.93%	5.49%	4.87%	-2.99%	7.29%
Amgen Inc.	2.82%	7.50%	7.48%	11.80%	14.01%
Bristol-Myers Squibb Co.	2.02%	-0.68%	1.57%	-14.00%	-3.67%
Eli Lilly & Co.	3.24%	10.57%	12.26%	18.92%	15.76%
Gilead Sciences Inc.	5.93%	2.42%	8.95%	-4.11%	7.20%
Johnson & Johnson	0.06%	5.29%	10.35%	5.13%	4.04%
Merck & Co. Inc.	-8.50%	11.69%	11.82%	4.66%	11.24%
Regeneron Pharmaceuticals Inc.	21.06%	24.18%	67.18%	39.05%	28.30%
Thermo Fisher Scientific Inc.	-4.47%	-2.69%	-0.86%	0.14%	-3.75%

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 × -13,725 ÷ 154,882 = -8.86%

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.	Pfizer Inc. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Pfizer 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	(13,725)	20,745)	10,419)	(2,941)	6,988)
Revenues	58,496)	100,330)	81,288)	41,908)	51,750)
Performance Ratio
Economic profit margin²	-23.46%	20.68%	12.82%	-7.02%	13.50%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-4.93%	7.77%	8.31%	-6.76%	13.75%
Amgen Inc.	7.34%	12.01%	12.38%	18.88%	23.58%
Bristol-Myers Squibb Co.	3.03%	-1.06%	2.72%	-29.68%	-14.09%
Eli Lilly & Co.	2.79%	9.00%	11.32%	18.94%	15.17%
Gilead Sciences Inc.	10.08%	4.08%	15.84%	-8.48%	10.23%
Johnson & Johnson	0.07%	6.35%	10.84%	6.12%	4.77%
Merck & Co. Inc.	-9.89%	14.58%	17.17%	5.55%	12.88%
Regeneron Pharmaceuticals Inc.	19.21%	24.34%	45.43%	38.05%	23.49%
Thermo Fisher Scientific Inc.	-8.92%	-4.96%	-1.76%	0.27%	-7.72%

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 ÷ Revenues
= 100 × -13,725 ÷ 58,496 = -23.46%

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.	Pfizer Inc. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Pfizer Inc. (NYSE:PFE)

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