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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

Warner Bros. Discovery Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net operating profit after taxes (NOPAT)¹	1,066)	1,788)	2,393)	1,195)	(121)
Cost of capital²	8.87%	10.70%	8.60%	9.20%	7.69%
Invested capital³	30,724)	30,674)	30,994)	31,259)	21,151)

Economic profit⁴	(1,659)	(1,495)	(273)	(1,680)	(1,747)

Based on: 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), 10-K (reporting date: 2017-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,066 – 8.87% × 30,724 = -1,659

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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.	Warner Bros. Discovery Inc. economic profit decreased from 2019 to 2020 and from 2020 to 2021.

Warner Bros. Discovery Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss) available to Discovery, Inc.	1,006)	1,219)	2,069)	594)	(337)
Deferred income tax expense (benefit)¹	(511)	(186)	(504)	(131)	(199)
Increase (decrease) in allowance for credit losses²	(5)	5)	8)	(9)	8)
Increase (decrease) in deferred revenues³	(76)	52)	228)	5)	79)
Increase (decrease) in restructuring and other liabilities⁴	(39)	40)	(90)	65)	4)
Increase (decrease) in equity equivalents⁵	(631)	(89)	(358)	(70)	(108)
Interest expense, net	633)	648)	677)	729)	475)
Interest expense, operating lease liability⁶	18)	22)	27)	26)	8)
Adjusted interest expense, net	651)	670)	704)	755)	483)
Tax benefit of interest expense, net⁷	(137)	(141)	(148)	(158)	(169)
Adjusted interest expense, net, after taxes⁸	515)	530)	556)	596)	314)
Interest income	(18)	(10)	(22)	(15)	(21)
Investment income, before taxes	(18)	(10)	(22)	(15)	(21)
Tax expense (benefit) of investment income⁹	4)	2)	5)	3)	7)
Investment income, after taxes¹⁰	(14)	(8)	(17)	(12)	(14)
Net income (loss) attributable to noncontrolling interest	191)	136)	144)	87)	24)
Net operating profit after taxes (NOPAT)	1,066)	1,788)	2,393)	1,195)	(121)

Based on: 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), 10-K (reporting date: 2017-12-31).

¹ Elimination of deferred tax expense. See details »

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

³ Addition of increase (decrease) in deferred revenues.

⁴ Addition of increase (decrease) in restructuring and other liabilities.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss) available to Discovery, Inc..

⁶ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 629 × 2.94% = 18

⁷ 2021 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 651 × 21.00% = 137

⁸ Addition of after taxes interest expense to net income (loss) available to Discovery, Inc..

⁹ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 18 × 21.00% = 4

¹⁰ 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.	Warner Bros. Discovery Inc. NOPAT decreased from 2019 to 2020 and from 2020 to 2021.

Warner Bros. Discovery Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Provision for income taxes	236)	373)	81)	341)	176)
Less: Deferred income tax expense (benefit)	(511)	(186)	(504)	(131)	(199)
Add: Tax savings from interest expense, net	137)	141)	148)	158)	169)
Less: Tax imposed on investment income	4)	2)	5)	3)	7)
Cash operating taxes	880)	698)	728)	627)	537)

Based on: 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), 10-K (reporting date: 2017-12-31).

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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.	Warner Bros. Discovery Inc. cash operating taxes decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Warner Bros. Discovery Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Finance lease liabilities, current	58)	57)	47)	—)	—)
Current portion of debt	339)	335)	609)	1,860)	30)
Noncurrent portion of debt	14,420)	15,069)	14,810)	15,185)	14,755)
Finance lease liabilities, noncurrent	197)	184)	203)	—)	—)
Operating lease liability¹	629)	663)	703)	736)	205)
Total reported debt & leases	15,643)	16,308)	16,372)	17,781)	14,990)
Total Discovery, Inc. stockholders’ equity	11,599)	10,464)	9,891)	8,386)	4,610)
Net deferred tax (assets) liabilities²	470)	937)	1,216)	1,730)	255)
Allowance for credit losses³	54)	59)	54)	46)	55)
Deferred revenues⁴	573)	649)	597)	369)	364)
Restructuring and other liabilities⁵	19)	58)	18)	108)	43)
Equity equivalents⁶	1,116)	1,703)	1,885)	2,253)	717)
Accumulated other comprehensive (income) loss, net of tax⁷	830)	651)	822)	785)	585)
Redeemable noncontrolling interests	363)	383)	442)	415)	413)
Noncontrolling interests	1,434)	1,536)	1,633)	1,716)	—)
Adjusted total Discovery, Inc. stockholders’ equity	15,342)	14,737)	14,673)	13,555)	6,325)
Assets under construction⁸	(141)	(285)	—)	—)	—)
Equity investments with readily determinable fair values⁹	(120)	(86)	(51)	(77)	(164)
Invested capital	30,724)	30,674)	30,994)	31,259)	21,151)

Based on: 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), 10-K (reporting date: 2017-12-31).

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 deferred revenues.

⁵ Addition of restructuring and other liabilities.

⁶ Addition of equity equivalents to total Discovery, Inc. stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of assets under construction.

⁹ Subtraction of equity investments with readily determinable fair values.

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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.	Warner Bros. Discovery Inc. invested capital decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Warner Bros. Discovery Inc., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	14,038)	14,038)	÷	32,122)	=	0.44	0.44	×	16.13%	=	7.05%
Total debt and finance lease liabilities³	17,455)	17,455)	÷	32,122)	=	0.54	0.54	×	4.13% × (1 – 21.00%)	=	1.77%
Operating lease liability⁴	629)	629)	÷	32,122)	=	0.02	0.02	×	2.94% × (1 – 21.00%)	=	0.05%
Total:	32,122)					1.00					8.87%

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

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	26,945)	26,945)	÷	46,549)	=	0.58	0.58	×	16.13%	=	9.34%
Total debt and finance lease liabilities³	18,941)	18,941)	÷	46,549)	=	0.41	0.41	×	4.12% × (1 – 21.00%)	=	1.32%
Operating lease liability⁴	663)	663)	÷	46,549)	=	0.01	0.01	×	3.37% × (1 – 21.00%)	=	0.04%
Total:	46,549)					1.00					10.70%

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

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	12,851)	12,851)	÷	30,914)	=	0.42	0.42	×	16.13%	=	6.71%
Total debt and finance lease liabilities³	17,360)	17,360)	÷	30,914)	=	0.56	0.56	×	4.12% × (1 – 21.00%)	=	1.83%
Operating lease liability⁴	703)	703)	÷	30,914)	=	0.02	0.02	×	3.77% × (1 – 21.00%)	=	0.07%
Total:	30,914)					1.00					8.60%

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

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	15,237)	15,237)	÷	32,772)	=	0.46	0.46	×	16.13%	=	7.50%
Total debt and finance lease liabilities³	16,799)	16,799)	÷	32,772)	=	0.51	0.51	×	4.04% × (1 – 21.00%)	=	1.64%
Operating lease liability⁴	736)	736)	÷	32,772)	=	0.02	0.02	×	3.48% × (1 – 21.00%)	=	0.06%
Total:	32,772)					1.00					9.20%

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

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,288)	9,288)	÷	24,943)	=	0.37	0.37	×	16.13%	=	6.01%
Total debt and finance lease liabilities³	15,450)	15,450)	÷	24,943)	=	0.62	0.62	×	4.12% × (1 – 35.00%)	=	1.66%
Operating lease liability⁴	205)	205)	÷	24,943)	=	0.01	0.01	×	3.89% × (1 – 35.00%)	=	0.02%
Total:	24,943)					1.00					7.69%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Total debt and finance lease liabilities. See details »

⁴ Operating lease liability. See details »

Warner Bros. Discovery Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(1,659)	(1,495)	(273)	(1,680)	(1,747)
Invested capital²	30,724)	30,674)	30,994)	31,259)	21,151)
Performance Ratio
Economic spread ratio³	-5.40%	-4.87%	-0.88%	-5.38%	-8.26%
Benchmarks
Economic Spread Ratio, Competitors⁴
Alphabet Inc.	38.49%	19.73%	18.78%	—	—
Comcast Corp.	-1.62%	-3.28%	-1.23%	—	—
Meta Platforms Inc.	28.72%	19.94%	13.04%	—	—
Netflix Inc.	3.50%	-1.88%	-3.71%	—	—
Walt Disney Co.	-11.86%	-14.15%	-3.94%	1.19%	—

Based on: 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), 10-K (reporting date: 2017-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,659 ÷ 30,724 = -5.40%

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.	Warner Bros. Discovery Inc. economic spread ratio deteriorated from 2019 to 2020 and from 2020 to 2021.

Warner Bros. Discovery Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Economic profit¹	(1,659)	(1,495)	(273)	(1,680)	(1,747)

Revenues	12,191)	10,671)	11,144)	10,553)	6,873)
Add: Increase (decrease) in deferred revenues	(76)	52)	228)	5)	79)
Adjusted revenues	12,115)	10,723)	11,372)	10,558)	6,952)
Performance Ratio
Economic profit margin²	-13.69%	-13.94%	-2.40%	-15.91%	-25.12%
Benchmarks
Economic Profit Margin, Competitors³
Alphabet Inc.	22.08%	13.21%	11.66%	—	—
Comcast Corp.	-3.19%	-7.08%	-2.45%	—	—
Meta Platforms Inc.	22.56%	18.75%	12.07%	—	—
Netflix Inc.	4.09%	-2.22%	-4.41%	—	—
Walt Disney Co.	-30.23%	-38.05%	-9.43%	1.60%	—

Based on: 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), 10-K (reporting date: 2017-12-31).

¹ Economic profit. See details »

² 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -1,659 ÷ 12,115 = -13.69%

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.	Warner Bros. Discovery Inc. economic profit margin deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Warner Bros. Discovery Inc. (NASDAQ:WBD)

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