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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

CSX Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	4,863)	4,534)	3,545)	4,174)	4,106)
Cost of capital²	13.19%	13.16%	12.66%	12.82%	13.13%
Invested capital³	38,278)	37,644)	37,637)	34,802)	34,219)

Economic profit⁴	(185)	(420)	(1,221)	(286)	(388)

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,863 – 13.19% × 38,278 = -185

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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.	CSX Corp. economic profit increased from 2020 to 2021 and from 2021 to 2022.

CSX Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net earnings	4,166)	3,781)	2,765)	3,331)	3,309)
Deferred income tax expense (benefit)¹	117)	167)	180)	273)	279)
Increase (decrease) in allowance for credit losses²	5)	—)	(2)	4)	—)
Increase (decrease) in equity equivalents³	122)	167)	178)	277)	279)
Interest expense	742)	722)	754)	737)	639)
Interest expense, operating lease liability⁴	28)	27)	25)	28)	49)
Adjusted interest expense	770)	749)	779)	765)	688)
Tax benefit of interest expense⁵	(162)	(157)	(164)	(161)	(144)
Adjusted interest expense, after taxes⁶	608)	591)	615)	604)	544)
Interest income	(42)	(7)	(17)	(48)	(32)
Investment income, before taxes	(42)	(7)	(17)	(48)	(32)
Tax expense (benefit) of investment income⁷	9)	1)	4)	10)	7)
Investment income, after taxes⁸	(33)	(6)	(13)	(38)	(25)
Net operating profit after taxes (NOPAT)	4,863)	4,534)	3,545)	4,174)	4,106)

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in equity equivalents to net earnings.

⁴ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 557 × 5.00% = 28

⁵ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 770 × 21.00% = 162

⁶ Addition of after taxes interest expense to net earnings.

⁷ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 42 × 21.00% = 9

⁸ Elimination of after taxes investment income.

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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.	CSX Corp. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

CSX Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Income tax expense	1,248)	1,170)	862)	985)	995)
Less: Deferred income tax expense (benefit)	117)	167)	180)	273)	279)
Add: Tax savings from interest expense	162)	157)	164)	161)	144)
Less: Tax imposed on investment income	9)	1)	4)	10)	7)
Cash operating taxes	1,284)	1,159)	842)	862)	854)

Based on: 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), 10-K (reporting date: 2018-12-31).

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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.	CSX Corp. cash operating taxes increased from 2020 to 2021 and from 2021 to 2022.

CSX Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current maturities of long-term debt	151)	181)	401)	245)	18)
Long-term debt, excluding current portion	17,896)	16,185)	16,304)	15,993)	14,739)
Operating lease liability¹	557)	542)	500)	550)	303)
Total reported debt & leases	18,604)	16,908)	17,205)	16,788)	15,060)
Shareholders’ equity, attributable to CSX	12,615)	13,490)	13,101)	11,848)	12,563)
Net deferred tax (assets) liabilities²	7,569)	7,383)	7,168)	6,961)	6,690)
Allowance for credit losses³	33)	28)	28)	30)	26)
Equity equivalents⁴	7,602)	7,411)	7,196)	6,991)	6,716)
Accumulated other comprehensive (income) loss, net of tax⁵	388)	408)	598)	675)	661)
Non-controlling minority interest	10)	10)	9)	15)	17)
Adjusted shareholders’ equity, attributable to CSX	20,615)	21,319)	20,904)	19,529)	19,957)
Construction in progress⁶	(745)	(419)	(371)	(431)	(457)
Investments at fair value⁷	(196)	(164)	(101)	(1,084)	(341)
Invested capital	38,278)	37,644)	37,637)	34,802)	34,219)

Based on: 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), 10-K (reporting date: 2018-12-31).

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 equity equivalents to shareholders’ equity, attributable to CSX.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of investments at fair value.

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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.	CSX Corp. invested capital increased from 2020 to 2021 and from 2021 to 2022.

CSX Corp., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	65,323)	65,323)	÷	82,015)	=	0.80	0.80	×	15.70%	=	12.50%
Long-term debt, including current maturities³	16,135)	16,135)	÷	82,015)	=	0.20	0.20	×	4.22% × (1 – 21.00%)	=	0.66%
Operating lease liability⁴	557)	557)	÷	82,015)	=	0.01	0.01	×	5.00% × (1 – 21.00%)	=	0.03%
Total:	82,015)					1.00					13.19%

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

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	77,142)	77,142)	÷	97,123)	=	0.79	0.79	×	15.70%	=	12.47%
Long-term debt, including current maturities³	19,439)	19,439)	÷	97,123)	=	0.20	0.20	×	4.22% × (1 – 21.00%)	=	0.67%
Operating lease liability⁴	542)	542)	÷	97,123)	=	0.01	0.01	×	4.90% × (1 – 21.00%)	=	0.02%
Total:	97,123)					1.00					13.16%

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

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	67,230)	67,230)	÷	88,806)	=	0.76	0.76	×	15.70%	=	11.89%
Long-term debt, including current maturities³	21,076)	21,076)	÷	88,806)	=	0.24	0.24	×	4.02% × (1 – 21.00%)	=	0.75%
Operating lease liability⁴	500)	500)	÷	88,806)	=	0.01	0.01	×	5.00% × (1 – 21.00%)	=	0.02%
Total:	88,806)					1.00					12.66%

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

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	61,519)	61,519)	÷	80,572)	=	0.76	0.76	×	15.70%	=	11.99%
Long-term debt, including current maturities³	18,503)	18,503)	÷	80,572)	=	0.23	0.23	×	4.42% × (1 – 21.00%)	=	0.80%
Operating lease liability⁴	550)	550)	÷	80,572)	=	0.01	0.01	×	5.00% × (1 – 21.00%)	=	0.03%
Total:	80,572)					1.00					12.82%

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

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,544)	55,544)	÷	70,761)	=	0.78	0.78	×	15.70%	=	12.32%
Long-term debt, including current maturities³	14,914)	14,914)	÷	70,761)	=	0.21	0.21	×	4.53% × (1 – 21.00%)	=	0.75%
Operating lease liability⁴	303)	303)	÷	70,761)	=	0.00	0.00	×	16.20% × (1 – 21.00%)	=	0.05%
Total:	70,761)					1.00					13.13%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

CSX Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(185)	(420)	(1,221)	(286)	(388)
Invested capital²	38,278)	37,644)	37,637)	34,802)	34,219)
Performance Ratio
Economic spread ratio³	-0.48%	-1.12%	-3.24%	-0.82%	-1.13%
Benchmarks
Economic Spread Ratio, Competitors⁴
FedEx Corp.	-3.37%	-0.56%	-5.57%	-8.20%	-1.83%
Uber Technologies Inc.	-70.58%	-19.76%	-46.86%	-55.39%	—
Union Pacific Corp.	1.27%	0.43%	-1.15%	0.25%	—
United Parcel Service Inc.	15.85%	21.62%	-8.49%	2.94%	—

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -185 ÷ 38,278 = -0.48%

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.	CSX Corp. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

CSX Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(185)	(420)	(1,221)	(286)	(388)
Revenue	14,853)	12,522)	10,583)	11,937)	12,250)
Performance Ratio
Economic profit margin²	-1.25%	-3.35%	-11.53%	-2.40%	-3.17%
Benchmarks
Economic Profit Margin, Competitors³
FedEx Corp.	-2.39%	-0.43%	-4.63%	-6.24%	-1.49%
Uber Technologies Inc.	-36.18%	-18.20%	-88.51%	-80.14%	—
Union Pacific Corp.	3.06%	1.16%	-3.45%	0.65%	—
United Parcel Service Inc.	7.07%	9.87%	-3.33%	1.44%	—

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -185 ÷ 14,853 = -1.25%

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.	CSX Corp. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.

CSX Corp. (NASDAQ:CSX)

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