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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

Altria Group 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	8,681)	5,753)	2,233)	5,245)	(482)
Cost of capital²	10.64%	10.95%	10.65%	10.15%	10.35%
Invested capital³	28,647)	28,802)	33,524)	41,498)	42,624)

Economic profit⁴	5,634)	2,600)	(1,339)	1,031)	(4,894)

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
= 8,681 – 10.64% × 28,647 = 5,634

The financial trajectory between 2019 and 2023 reflects a significant turnaround in economic value creation, shifting from substantial value destruction to consistent economic profit generation. This transition is characterized by a simultaneous increase in operating profitability and a strategic reduction in the capital base.

Net Operating Profit After Taxes (NOPAT): A volatile but overall upward trajectory is observed. Following a negative result in 2019, NOPAT experienced a sharp recovery in 2020, a temporary decline in 2021, and a subsequent sustained increase, reaching a period high of US$ 8,681 million in 2023.
Invested Capital: A consistent downward trend is evident, with invested capital decreasing from US$ 42,624 million in 2019 to US$ 28,647 million in 2023. This reduction of approximately 33% suggests a strategic optimization of the asset base or a series of divestments that reduced the capital required to generate profits.
Cost of Capital: The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a narrow range between 10.15% and 10.95%. The stability of this metric indicates that the improvements in economic profit were driven by operational efficiency and capital reduction rather than a decrease in the cost of funding.
Economic Profit: Economic profit shifted from a deficit of US$ -4,894 million in 2019 to a surplus of US$ 5,634 million by 2023. While the period between 2020 and 2021 was marked by instability, the subsequent years show an accelerating growth pattern, confirming that the return on invested capital has risen significantly above the cost of capital.

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Altria Group 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 (losses) attributable to Altria	8,130)	5,764)	2,475)	4,467)	(1,293)
Deferred income tax expense (benefit)¹	(230)	(947)	(1,160)	(164)	(95)
Increase (decrease) in LIFO reserve²	—)	100)	—)	—)	(100)
Increase (decrease) in equity equivalents³	(230)	(847)	(1,160)	(164)	(195)
Interest expense	1,149)	1,128)	1,188)	1,223)	1,322)
Adjusted interest expense	1,149)	1,128)	1,188)	1,223)	1,322)
Tax benefit of interest expense⁴	(241)	(237)	(249)	(257)	(278)
Adjusted interest expense, after taxes⁵	908)	891)	939)	966)	1,044)
Interest income	(160)	(70)	(26)	(14)	(42)
Investment income, before taxes	(160)	(70)	(26)	(14)	(42)
Tax expense (benefit) of investment income⁶	34)	15)	5)	3)	9)
Investment income, after taxes⁷	(126)	(55)	(21)	(11)	(33)
Net income (loss) attributable to noncontrolling interest	—)	—)	—)	(13)	(5)
Net operating profit after taxes (NOPAT)	8,681)	5,753)	2,233)	5,245)	(482)

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 LIFO reserve. See details »

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

⁴ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,149 × 21.00% = 241

⁵ Addition of after taxes interest expense to net earnings (losses) attributable to Altria.

⁶ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 160 × 21.00% = 34

⁷ Elimination of after taxes investment income.

Net earnings (losses) attributable to Altria: The net earnings attributable to the company demonstrated significant volatility over the analyzed period. In 2019, the company reported a net loss of $1,293 million. However, a substantial recovery occurred in 2020, with net earnings increasing sharply to $4,467 million. This positive trend continued, albeit with fluctuations, as earnings decreased to $2,475 million in 2021 before rising again to $5,764 million in 2022 and further to $8,130 million in 2023. Overall, the data indicates a strong recovery and growth in earnings after the initial loss in 2019.
Net operating profit after taxes (NOPAT): NOPAT mirrored the pattern observed in net earnings, starting with a negative value of $482 million in 2019. This figure increased significantly to $5,245 million in 2020, reflecting improved operational profitability. After a decline to $2,233 million in 2021, NOPAT rebounded to $5,753 million in 2022 and further increased to $8,681 million in 2023. These trends signify a recovery in operating performance, with NOPAT surpassing net earnings figures consistently from 2020 onward, indicating effective operational management and tax impact considerations.

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Altria Group 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
Provision (benefit) for income taxes	2,798)	1,625)	1,349)	2,436)	2,064)
Less: Deferred income tax expense (benefit)	(230)	(947)	(1,160)	(164)	(95)
Add: Tax savings from interest expense	241)	237)	249)	257)	278)
Less: Tax imposed on investment income	34)	15)	5)	3)	9)
Cash operating taxes	3,236)	2,794)	2,753)	2,854)	2,428)

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).

Provision (benefit) for income taxes: The provision for income taxes experienced fluctuations over the five-year period. Starting at 2,064 million USD in 2019, it rose substantially to 2,436 million USD in 2020. A marked decline occurred in 2021, with the provision dropping to 1,349 million USD, followed by a moderate increase to 1,625 million USD in 2022. In 2023, the provision escalated sharply to 2,798 million USD, reaching its highest level in the observed period.
Cash operating taxes: Cash operating taxes showed a consistent upward trend across the years. The amount increased from 2,428 million USD in 2019 to 2,854 million USD in 2020. Although there was a minor decrease in 2021 to 2,753 million USD, the overall trajectory remained positive, with values climbing to 2,794 million USD in 2022 and further rising to 3,236 million USD in 2023. This indicates a steady growth in cash outflows related to operating taxes over the period.
Comparative Insights: While cash operating taxes demonstrated a relatively stable and progressive increase, the provision for income taxes displayed more volatility, with notable decreases and increases. The divergence between provision and cash taxes in some years, particularly in 2021 and 2023, could suggest variations in deferred tax accounting or changing tax planning strategies. The significant rise in both provisions and cash taxes in 2023 warrants careful examination to understand underlying drivers such as changes in taxable income or tax rates.

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Altria Group Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of long-term debt	1,121)	1,556)	1,105)	1,500)	1,000)
Long-term debt, excluding current portion	25,112)	25,124)	26,939)	27,971)	27,042)
Total reported debt & leases	26,233)	26,680)	28,044)	29,471)	28,042)
Stockholders’ equity (deficit) attributable to Altria	(3,540)	(3,973)	(1,606)	2,839)	6,222)
Net deferred tax (assets) liabilities¹	2,771)	2,822)	3,665)	4,433)	5,023)
LIFO reserve²	700)	700)	600)	600)	600)
Equity equivalents³	3,471)	3,522)	4,265)	5,033)	5,623)
Accumulated other comprehensive (income) loss, net of tax⁴	2,673)	2,771)	3,056)	4,341)	2,864)
Redeemable noncontrolling interest	—)	—)	—)	40)	38)
Noncontrolling interests	50)	50)	—)	86)	97)
Adjusted stockholders’ equity (deficit) attributable to Altria	2,654)	2,370)	5,715)	12,339)	14,844)
Construction in progress⁵	(240)	(248)	(235)	(312)	(262)
Invested capital	28,647)	28,802)	33,524)	41,498)	42,624)

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 taxes from assets and liabilities. See details »

² Addition of LIFO reserve. See details »

³ Addition of equity equivalents to stockholders’ equity (deficit) attributable to Altria.

⁴ Removal of accumulated other comprehensive income.

⁵ Subtraction of construction in progress.

Total reported debt & leases: The total reported debt and leases show a relatively stable yet slightly declining trend over the five-year period. Starting at $28,042 million in 2019, the figure increased moderately to $29,471 million in 2020, signaling a short-term rise in liabilities. However, from 2021 onwards, the debt levels consistently decreased each year, falling to $28,044 million in 2021, $26,680 million in 2022, and further down to $26,233 million in 2023. This pattern suggests an effort to reduce overall debt and lease obligations after a peak in 2020.
Stockholders’ equity (deficit) attributable to Altria: The stockholders' equity attributable to the company experienced a marked and continuous decline throughout the period. Beginning at $6,222 million in 2019, equity reduced sharply to $2,839 million in 2020. In 2021, equity became negative, registering at -$1,606 million, indicating that liabilities exceeded assets. The negative trend intensified in subsequent years, reaching -$3,973 million in 2022 and slightly improving to -$3,540 million in 2023. This deterioration reflects possible sustained losses, share repurchases, or other factors diminishing equity value over time.
Invested capital: Invested capital demonstrated a clear downward trend from 2019 through 2023. It started relatively high at $42,624 million in 2019, followed by a moderate decline to $41,498 million in 2020. The reduction accelerated thereafter, with invested capital dropping to $33,524 million in 2021, and further to $28,802 million in 2022 and $28,647 million in 2023. The consistent decrease in invested capital suggests contraction in assets employed in the business or disposition of investments over the analyzed timeframe.

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Altria Group Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	72,126)	72,126)	÷	96,499)	=	0.75	0.75	×	13.10%	=	9.79%
Long-term debt, including current portion³	24,373)	24,373)	÷	96,499)	=	0.25	0.25	×	4.25% × (1 – 21.00%)	=	0.85%
Total:	96,499)					1.00					10.64%

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

¹ US$ in millions

² Equity. See details »