CSX Corp. (CSX)

EVA is registered trademark of Stern Stewart.

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
Economic Profit Margin

CSX Corp., economic profit calculation

USD $ in millions

12 months ended	Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
Net operating profit after taxes (NOPAT)¹
Cost of capital²	%	%	%	%	%
Invested capital³

Economic profit⁴

Source: Based on data from CSX Corp. Annual Reports

2017 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden % × hidden = hidden

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.'s economic profit declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

CSX Corp., NOPAT calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
	Net earnings
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for doubtful accounts²
	Increase (decrease) in restructuring charge liability³
	Increase (decrease) in equity equivalents⁴
	Interest expense
	Interest expense, operating lease obligations⁵
	Adjusted interest expense
	Tax benefit of interest expense⁶
	Adjusted interest expense, after taxes⁷
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁸
	Investment income, after taxes⁹
	Net operating profit after taxes (NOPAT)

Source: Based on data from CSX Corp. Annual Reports

2017 Calculations

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 charge liability.

⁴ Addition of increase (decrease) in equity equivalents to net earnings.

⁵ Addition of interest expense on capitalized operating leases. See Details »

⁶ Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 35% = hidden

⁷ Addition of after taxes interest expense to net earnings.

⁸ Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 35% = hidden

⁹ Elimination of after taxes investment income.

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.'s NOPAT declined from 2015 to 2016 but then slightly increased from 2016 to 2017.

CSX Corp., cash operating taxes calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
	Income tax expense (benefit)
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense
	Less: Tax imposed on investment income
	Cash operating taxes

Source: Based on data from CSX Corp. Annual Reports

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.'s cash operating taxes declined from 2015 to 2016 but then increased from 2016 to 2017 exceeding 2015 level.

CSX Corp., invested capital calculation (financing approach)

USD $ in millions

		Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
	Current maturities of long-term debt
	Long-term debt, excluding current maturities
	PV of operating lease payments¹
	Total reported debt & leases
	Shareholders' equity, attributable to CSX
	Net deferred tax (assets) liabilities²
	Allowance for doubtful accounts³
	Restructuring charge liability⁴
	Equity equivalents⁵
	Accumulated other comprehensive (income) loss, net of tax⁶
	Noncontrolling minority interest
	Adjusted shareholders' equity, attributable to CSX
	Construction in progress⁷
	Investments at fair value⁸
	Invested capital

Source: Based on data from CSX Corp. Annual Reports

¹ Addition of capitalized operating leases. See Details »

² Elimination of deferred taxes from assets and liabilities. See Details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of restructuring charge liability.

⁵ Addition of equity equivalents to shareholders' equity, attributable to CSX.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of investments at fair value.

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.'s invested capital increased from 2015 to 2016 and from 2016 to 2017.

CSX Corp., cost of capital calculations


Equity²	÷	=	×	%	=	%
Long-term debt, including current maturities³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from CSX Corp. Annual Reports

¹ USD $ in millions

² Equity. See Details »

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

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt, including current maturities³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from CSX Corp. Annual Reports

¹ USD $ in millions

² Equity. See Details »

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

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt, including current maturities³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from CSX Corp. Annual Reports

¹ USD $ in millions

² Equity. See Details »

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

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt, including current maturities³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from CSX Corp. Annual Reports

¹ USD $ in millions

² Equity. See Details »

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

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Long-term debt, including current maturities³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from CSX Corp. Annual Reports

¹ USD $ in millions

² Equity. See Details »

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

⁴ PV of operating lease payments. See Details »

CSX Corp., economic spread calculation

	Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
Selected Financial Data (USD $ in millions)
Economic profit¹
Invested capital²
Ratio
Economic spread³	%	%	%	%	%

Source: Based on data from CSX Corp. Annual Reports

2017 Calculations

¹ Economic profit. See Details »

² Invested capital. See Details »

³ Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Economic spread	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.'s economic spread deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

CSX Corp., economic profit margin calculation

	Dec 31, 2017	Dec 30, 2016	Dec 25, 2015	Dec 26, 2014	Dec 27, 2013
Selected Financial Data (USD $ in millions)
Economic profit¹
Revenue
Ratio
Economic profit margin²	%	%	%	%	%

Source: Based on data from CSX Corp. Annual Reports

2017 Calculations

¹ Economic profit. See Details »

² Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company's 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.'s economic profit margin deteriorated from 2015 to 2016 but then slightly improved from 2016 to 2017.

	CSX Corp.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Dec 31, 2017

Dec 30, 2016

Dec 25, 2015

Dec 26, 2014

Dec 27, 2013

Economic Spread

Economic Profit Margin