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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

AbbVie 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	3,292)	11,543)	12,362)	4,455)	9,247)
Cost of capital²	8.78%	8.59%	8.04%	7.31%	7.47%
Invested capital³	68,204)	82,134)	95,922)	103,725)	62,749)

Economic profit⁴	(2,699)	4,487)	4,648)	(3,122)	4,558)

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
= 3,292 – 8.78% × 68,204 = -2,699

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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.	AbbVie Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

AbbVie 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 earnings attributable to AbbVie Inc.	4,863)	11,836)	11,542)	4,616)	7,882)
Deferred income tax expense (benefit)¹	(2,889)	(1,931)	(898)	(2,325)	122)
Increase (decrease) in restructuring reserve²	(44)	(5)	(189)	337)	41)
Increase (decrease) in equity equivalents³	(2,933)	(1,936)	(1,087)	(1,988)	163)
Interest expense	2,224)	2,230)	2,423)	2,454)	1,784)
Interest expense, operating lease liability⁴	27)	24)	21)	25)	14)
Adjusted interest expense	2,251)	2,254)	2,444)	2,479)	1,798)
Tax benefit of interest expense⁵	(473)	(473)	(513)	(521)	(378)
Adjusted interest expense, after taxes⁶	1,778)	1,781)	1,931)	1,959)	1,420)
(Gain) loss on marketable securities	—)	—)	—)	—)	(2)
Interest income	(540)	(186)	(39)	(174)	(275)
Investment income, before taxes	(540)	(186)	(39)	(174)	(277)
Tax expense (benefit) of investment income⁷	113)	39)	8)	37)	58)
Investment income, after taxes⁸	(427)	(147)	(31)	(137)	(219)
Net income (loss) attributable to noncontrolling interest	10)	9)	7)	6)	—)
Net operating profit after taxes (NOPAT)	3,292)	11,543)	12,362)	4,455)	9,247)

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 restructuring reserve.

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

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 901 × 3.00% = 27

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,251 × 21.00% = 473

⁶ Addition of after taxes interest expense to net earnings attributable to AbbVie Inc..

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 540 × 21.00% = 113

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.	AbbVie Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

AbbVie 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
Income tax expense (benefit)	1,377)	1,632)	1,440)	(1,224)	544)
Less: Deferred income tax expense (benefit)	(2,889)	(1,931)	(898)	(2,325)	122)
Add: Tax savings from interest expense	473)	473)	513)	521)	378)
Less: Tax imposed on investment income	113)	39)	8)	37)	58)
Cash operating taxes	4,625)	3,997)	2,843)	1,585)	741)

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.	AbbVie Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

AbbVie 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	—)	1)	14)	34)	—)
Current portion of long-term debt and finance lease obligations	7,191)	4,135)	12,481)	8,468)	3,753)
Long-term debt and finance lease obligations, excluding current portion	52,194)	59,135)	64,189)	77,554)	62,975)
Operating lease liability¹	901)	920)	891)	1,007)	360)
Total reported debt & leases	60,286)	64,191)	77,575)	87,063)	67,088)
Stockholders’ equity (deficit)	10,360)	17,254)	15,408)	13,076)	(8,172)
Net deferred tax (assets) liabilities²	(3,803)	(830)	735)	1,232)	615)
Restructuring reserve³	239)	283)	288)	477)	140)
Equity equivalents⁴	(3,564)	(547)	1,023)	1,709)	755)
Accumulated other comprehensive (income) loss, net of tax⁵	2,305)	2,199)	2,899)	3,117)	3,596)
Noncontrolling interest	37)	33)	28)	21)	—)
Adjusted stockholders’ equity (deficit)	9,138)	18,939)	19,358)	17,923)	(3,821)
Construction in progress⁶	(1,073)	(856)	(799)	(1,040)	(491)
Available-for-sale investment securities⁷	(147)	(140)	(212)	(221)	(27)
Invested capital	68,204)	82,134)	95,922)	103,725)	62,749)

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 restructuring reserve.

⁴ Addition of equity equivalents to stockholders’ equity (deficit).

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of available-for-sale investment 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.	AbbVie Inc. invested capital decreased from 2021 to 2022 and from 2022 to 2023.

AbbVie Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	310,458)	310,458)	÷	367,703)	=	0.84	0.84	×	9.88%	=	8.35%
Debt and finance lease obligations³	56,344)	56,344)	÷	367,703)	=	0.15	0.15	×	3.57% × (1 – 21.00%)	=	0.43%
Operating lease liability⁴	901)	901)	÷	367,703)	=	0.00	0.00	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	367,703)					1.00					8.78%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	267,728)	267,728)	÷	326,497)	=	0.82	0.82	×	9.88%	=	8.11%
Debt and finance lease obligations³	57,849)	57,849)	÷	326,497)	=	0.18	0.18	×	3.42% × (1 – 21.00%)	=	0.48%
Operating lease liability⁴	920)	920)	÷	326,497)	=	0.00	0.00	×	2.60% × (1 – 21.00%)	=	0.01%
Total:	326,497)					1.00					8.59%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	254,754)	254,754)	÷	339,401)	=	0.75	0.75	×	9.88%	=	7.42%
Debt and finance lease obligations³	83,756)	83,756)	÷	339,401)	=	0.25	0.25	×	3.17% × (1 – 21.00%)	=	0.62%
Operating lease liability⁴	891)	891)	÷	339,401)	=	0.00	0.00	×	2.40% × (1 – 21.00%)	=	0.00%
Total:	339,401)					1.00					8.04%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	185,435)	185,435)	÷	283,057)	=	0.66	0.66	×	9.88%	=	6.48%
Debt and finance lease obligations³	96,615)	96,615)	÷	283,057)	=	0.34	0.34	×	3.05% × (1 – 21.00%)	=	0.82%
Operating lease liability⁴	1,007)	1,007)	÷	283,057)	=	0.00	0.00	×	2.50% × (1 – 21.00%)	=	0.01%
Total:	283,057)					1.00					7.31%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	140,461)	140,461)	÷	211,184)	=	0.67	0.67	×	9.88%	=	6.57%
Debt and finance lease obligations³	70,363)	70,363)	÷	211,184)	=	0.33	0.33	×	3.39% × (1 – 21.00%)	=	0.89%
Operating lease liability⁴	360)	360)	÷	211,184)	=	0.00	0.00	×	3.90% × (1 – 21.00%)	=	0.01%
Total:	211,184)					1.00					7.47%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations. See details »

⁴ Operating lease liability. See details »

AbbVie 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	(2,699)	4,487)	4,648)	(3,122)	4,558)
Invested capital²	68,204)	82,134)	95,922)	103,725)	62,749)
Performance Ratio
Economic spread ratio³	-3.96%	5.46%	4.85%	-3.01%	7.26%
Benchmarks
Economic Spread Ratio, Competitors⁴
Amgen Inc.	2.79%	7.47%	7.45%	11.77%	13.97%
Bristol-Myers Squibb Co.	2.01%	-0.69%	1.57%	-14.01%	-3.68%
Eli Lilly & Co.	3.24%	10.57%	12.26%	18.93%	15.76%
Gilead Sciences Inc.	5.94%	2.43%	8.96%	-4.10%	7.21%
Johnson & Johnson	0.04%	5.26%	10.33%	5.10%	4.01%
Merck & Co. Inc.	-8.50%	11.68%	11.81%	4.65%	11.23%
Pfizer Inc.	-8.89%	18.70%	11.85%	-2.86%	5.75%
Regeneron Pharmaceuticals Inc.	21.08%	24.20%	67.20%	39.07%	28.32%
Thermo Fisher Scientific Inc.	-4.52%	-2.75%	-0.92%	0.09%	-3.80%
Zoetis Inc.	9.00%	3.76%	6.54%	3.29%	4.26%

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 × -2,699 ÷ 68,204 = -3.96%

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

AbbVie 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	(2,699)	4,487)	4,648)	(3,122)	4,558)
Net revenues	54,318)	58,054)	56,197)	45,804)	33,266)
Performance Ratio
Economic profit margin²	-4.97%	7.73%	8.27%	-6.82%	13.70%
Benchmarks
Economic Profit Margin, Competitors³
Amgen Inc.	7.26%	11.96%	12.33%	18.83%	23.53%
Bristol-Myers Squibb Co.	3.02%	-1.07%	2.71%	-29.69%	-14.11%
Eli Lilly & Co.	2.79%	9.00%	11.32%	18.94%	15.17%
Gilead Sciences Inc.	10.10%	4.10%	15.86%	-8.46%	10.25%
Johnson & Johnson	0.04%	6.31%	10.82%	6.09%	4.74%
Merck & Co. Inc.	-9.90%	14.57%	17.16%	5.54%	12.87%
Pfizer Inc.	-23.53%	20.64%	12.78%	-7.10%	13.43%
Regeneron Pharmaceuticals Inc.	19.23%	24.36%	45.44%	38.07%	23.51%
Thermo Fisher Scientific Inc.	-9.03%	-5.06%	-1.87%	0.16%	-7.84%
Zoetis Inc.	12.16%	5.84%	9.77%	5.70%	6.70%

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 ÷ Net revenues
= 100 × -2,699 ÷ 54,318 = -4.97%

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.	AbbVie Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

AbbVie Inc. (NYSE:ABBV)

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