Economic Value Added (EVA)
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
CSX Corp., economic profit calculation
US$ in millions
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 – 17.09% × 38,278 = -1,678
Economic profit remained consistently negative throughout the five-year period from 2018 to 2022, indicating that the net operating profit after taxes (NOPAT) was insufficient to cover the cost of invested capital. While there was a recovery in the latter years, the organization did not achieve positive economic value added during this timeframe.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a general upward trajectory, growing from 4,106 million US$ in 2018 to 4,863 million US$ by 2022. A notable contraction occurred in 2020, where NOPAT declined to 3,545 million US$, before rebounding strongly in 2021 and 2022.
- Invested Capital and Cost of Capital
- Invested capital grew steadily from 34,219 million US$ in 2018 to 38,278 million US$ in 2022. During this same period, the cost of capital remained relatively stable, fluctuating within a narrow range between 16.37% and 17.09%. The combination of an increasing capital base and a stable cost of capital resulted in a rising capital charge over time.
- Economic Profit Trends
- Economic profit reached its lowest point in 2020 at -2,616 million US$, coinciding with the decline in NOPAT. Following this trough, economic profit improved to -1,678 million US$ by 2022. Although the deficit narrowed, the persistent negative values suggest that the returns generated on invested capital were consistently below the required rate of return.
The analysis indicates that although operational profitability (NOPAT) improved significantly after 2020, the growth was not aggressive enough to offset the capital charge associated with the expanding invested capital base. Consequently, the economic profit remained in negative territory, though the trend from 2020 to 2022 shows a movement toward narrowing the economic loss.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
CSX Corp., NOPAT calculation
US$ in millions
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.
The financial data reveals several key trends concerning profitability over the analyzed five-year period. Net earnings exhibited an initial slight increase from 2018 to 2019, growing marginally from 3,309 million USD to 3,331 million USD. This was followed by a noticeable decline in 2020 down to 2,765 million USD, indicating a downturn in earnings performance during that year. Subsequently, net earnings demonstrated a robust recovery, increasing significantly to 3,781 million USD in 2021 and further to 4,166 million USD in 2022, surpassing earlier results. This indicates a strong rebound and an overall positive trajectory post-2020.
Net operating profit after taxes (NOPAT) exhibits a pattern comparable to net earnings, although at consistently higher absolute values. From 2018 to 2019, NOPAT increased slightly from 4,106 million USD to 4,174 million USD, similar to the initial net earnings rise. In 2020, NOPAT declined noticeably to 3,545 million USD, coinciding with the drop observed in net earnings. Afterwards, there was a marked recovery in 2021, with NOPAT rising to 4,534 million USD and continuing upward to 4,863 million USD in 2022, reflecting improvement in operational profitability.
- Net Earnings Trends
- - Slight growth from 2018 to 2019
- - Decline in 2020, possibly reflecting adverse conditions
- - Strong recovery and growth in 2021 and 2022, reaching record highs in the period
- Net Operating Profit After Taxes (NOPAT) Trends
- - Positive growth early in the period (2018-2019)
- - Decrease in 2020 aligned with net earnings downturn
- - Significant rebound in 2021 and continued growth in 2022, indicating operational efficiency improvements
- Overall Insight
- The data suggests resilience in profitability following a challenging 2020, with both net earnings and NOPAT showing strong recovery and growth thereafter. Operational profits consistently exceeded net earnings, implying favorable non-operating factors or financial management contributing positively to net results.
AI Ask an analyst for more
Cash Operating Taxes
CSX Corp., cash operating taxes calculation
US$ in millions
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).
The financial data reflects the progression of income tax expense and cash operating taxes from 2018 to 2022, measured in millions of US dollars.
- Income Tax Expense
- This item shows a fluctuating but generally increasing trend across the five-year period. The expense declined slightly from 995 million in 2018 to 985 million in 2019, followed by a more noticeable decrease to 862 million in 2020. However, from 2020 onward, there was a significant rise to 1,170 million in 2021 and a further increase to 1,248 million in 2022, surpassing earlier years’ figures.
- Cash Operating Taxes
- Cash operating taxes exhibit a similar pattern to income tax expense. Starting at 854 million in 2018, the value increased marginally to 862 million in 2019, then decreased moderately to 842 million in 2020. Subsequently, there was a considerable rise to 1,159 million in 2021 and an additional increase to 1,284 million in 2022. The growth in 2021 and 2022 was strong enough to exceed the levels observed prior to 2020.
Overall, both income tax expense and cash operating taxes suffered declines in 2020, possibly reflecting economic conditions or operational factors impacting taxable income or tax payments during that year. The subsequent two years show recovery and robust increases, indicating higher taxable profits or changes in tax rates or policies. Notably, cash operating taxes slightly outpaced income tax expense in the last two years, which could suggest timing differences or changes in tax payment structures.
AI Ask an analyst for more
Invested Capital
CSX Corp., invested capital calculation (financing approach)
US$ in millions
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.
- Total reported debt & leases
- The total reported debt and leases demonstrated an overall increasing trend across the observed periods. Starting at $15,060 million at the end of 2018, the figure rose steadily to $18,604 million by the end of 2022. There was a noticeable increment from 2019 to 2020, followed by a slight decline in 2021, and then an uptick again in 2022 reaching the highest value in the series.
- Shareholders’ equity, attributable to CSX
- Shareholders’ equity showed fluctuations during the five-year period. Beginning at $12,563 million in 2018, it decreased to $11,848 million in 2019. Subsequently, the equity improved, peaking at $13,490 million in 2021, before declining again to $12,615 million in 2022. This pattern suggests variable equity performance with no consistent growth trajectory.
- Invested capital
- Invested capital displayed a consistent growth pattern over the period examined. The value increased incrementally from $34,219 million in 2018 to $38,278 million in 2022. The growth was steady with modest year-to-year increases, indicating a gradual expansion of the capital base over time.
AI Ask an analyst for more
Cost of Capital
CSX Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 65,323) | 65,323) | ÷ | 82,015) | = | 0.80 | 0.80 | × | 20.60% | = | 16.40% | ||
| Long-term debt, including current maturities3 | 16,135) | 16,135) | ÷ | 82,015) | = | 0.20 | 0.20 | × | 4.22% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 557) | 557) | ÷ | 82,015) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 82,015) | 1.00 | 17.09% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 77,142) | 77,142) | ÷ | 97,123) | = | 0.79 | 0.79 | × | 20.60% | = | 16.36% | ||
| 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 | 17.05% | ||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 67,230) | 67,230) | ÷ | 88,806) | = | 0.76 | 0.76 | × | 20.60% | = | 15.59% | ||
| 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 | 16.37% | ||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 61,519) | 61,519) | ÷ | 80,572) | = | 0.76 | 0.76 | × | 20.60% | = | 15.73% | ||
| 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 | 16.56% | ||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 55,544) | 55,544) | ÷ | 70,761) | = | 0.78 | 0.78 | × | 20.60% | = | 16.17% | ||
| 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 | 16.98% | ||||||||||
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 »
Economic Spread Ratio
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 | (1,678) | (1,884) | (2,616) | (1,587) | (1,703) | |
| Invested capital2 | 38,278) | 37,644) | 37,637) | 34,802) | 34,219) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -4.38% | -5.00% | -6.95% | -4.56% | -4.98% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| FedEx Corp. | -6.35% | -3.82% | — | — | — | |
| Uber Technologies Inc. | -73.74% | -22.90% | — | — | — | |
| Union Pacific Corp. | -1.50% | -2.36% | — | — | — | |
| United Airlines Holdings Inc. | -3.37% | -10.29% | — | — | — | |
| United Parcel Service Inc. | 11.65% | 17.48% | — | — | — | |
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 × -1,678 ÷ 38,278 = -4.38%
4 Click competitor name to see calculations.
The financial performance from 2018 to 2022 is characterized by a persistent inability to generate positive economic profit, indicating that the returns on invested capital did not exceed the company's cost of capital during this period. While there are signs of recovery in the latter years, the overall economic value added remained negative.
- Economic Profit
- Economic profit remained in negative territory throughout the five-year analysis period. A slight improvement was noted in 2019, followed by a significant deterioration in 2020, where losses peaked at -2,616 million US dollars. Subsequent years showed a recovery trend, with the deficit narrowing to -1,884 million US dollars in 2021 and reaching the period's highest point of -1,678 million US dollars by the end of 2022.
- Invested Capital
- There was a consistent upward trend in invested capital, which grew from 34,219 million US dollars in 2018 to 38,278 million US dollars in 2022. The most substantial increase occurred between 2019 and 2020, coinciding with the period of the greatest economic profit deficit.
- Economic Spread Ratio
- The economic spread ratio mirrored the volatility of the economic profit, remaining negative across all reporting dates. The ratio improved slightly from -4.98% in 2018 to -4.56% in 2019, before dropping to a period low of -6.95% in 2020. A steady recovery followed, with the ratio improving to -5.00% in 2021 and ending at -4.38% in 2022, suggesting a gradual narrowing of the gap between the actual return on capital and the required cost of capital.
The correlation between increasing invested capital and consistently negative economic spread ratios suggests that the expansion of the capital base has not yet translated into value creation. However, the trend from 2020 to 2022 indicates a positive trajectory in capital efficiency.
AI Ask an analyst for more
Economic Profit Margin
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 | (1,678) | (1,884) | (2,616) | (1,587) | (1,703) | |
| Revenue | 14,853) | 12,522) | 10,583) | 11,937) | 12,250) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -11.30% | -15.04% | -24.72% | -13.30% | -13.90% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| FedEx Corp. | -4.51% | -2.92% | — | — | — | |
| Uber Technologies Inc. | -37.80% | -21.09% | — | — | — | |
| Union Pacific Corp. | -3.59% | -6.31% | — | — | — | |
| United Airlines Holdings Inc. | -3.07% | -21.67% | — | — | — | |
| United Parcel Service Inc. | 5.20% | 7.98% | — | — | — | |
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 × -1,678 ÷ 14,853 = -11.30%
3 Click competitor name to see calculations.
The financial performance between 2018 and 2022 is characterized by a consistent failure to achieve positive economic profit, indicating that returns did not exceed the cost of capital during this period. Despite the persistent negative values, a recovery trend is observable following a significant contraction in 2020.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period. A marginal improvement occurred in 2019, followed by a sharp deterioration in 2020, where the economic loss peaked at -2,616 million US dollars. From 2021 onward, a recovery trajectory was established, with losses narrowing to -1,884 million US dollars in 2021 and further reducing to -1,678 million US dollars by the end of 2022.
- Revenue Performance
- Revenue exhibited fluctuations that correlate with the economic profit trends. A decline in revenue to 10,583 million US dollars in 2020 coincided with the maximum economic loss recorded. The subsequent expansion of revenue, which reached 14,853 million US dollars in 2022, provided the scale necessary to support the gradual reduction of economic losses.
- Economic Profit Margin Analysis
- The economic profit margin highlights a period of significant volatility followed by steady improvement. The margin reached its lowest point in 2020 at -24.72%, reflecting a severe mismatch between revenue generation and the cost of capital. However, the margin improved to -15.04% in 2021 and reached its strongest level of the period at -11.30% in 2022. This upward trend suggests an increase in the efficiency of value generation relative to total revenue, although the company has yet to achieve a positive economic profit margin.
AI Ask an analyst for more