Boeing Co. (NYSE:BA)

The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) initially exhibited negative values, followed by a substantial improvement in the later years. This trend is coupled with a generally increasing cost of capital and varying levels of invested capital, impacting overall economic profit.

NOPAT Trend

Net operating profit after taxes began at a negative US$2,649 million in 2021, worsened to negative US$2,910 million in 2022, and then experienced a considerable reduction in loss to negative US$77 million in 2023. However, 2024 saw a significant decline, resulting in a loss of US$10,234 million, before a strong recovery to a profit of US$5,245 million in 2025.

Cost of Capital Trend

The cost of capital increased from 13.67% in 2021 to 14.70% in 2022 and 14.86% in 2023. It decreased slightly to 14.74% in 2024, then rose again to 15.57% in 2025. This indicates a generally increasing financing cost over the period.

Invested Capital Trend

Invested capital showed an initial increase from US$49,465 million in 2021 to US$50,866 million in 2022. A decrease was observed in 2023 to US$44,905 million, followed by an increase to US$50,271 million in 2024, and a further increase to US$53,662 million in 2025. These fluctuations suggest changes in the company’s capital structure and investment activities.

Economic Profit Trend

Economic profit consistently remained negative from 2021 to 2024, starting at negative US$9,412 million, declining to negative US$10,388 million, then negative US$6,751 million, and reaching a low of negative US$17,644 million in 2024. While still negative, economic profit improved significantly in 2025 to negative US$3,110 million, indicating a narrowing of the gap between returns and the cost of capital. The substantial negative economic profit in 2024 is likely attributable to the large NOPAT loss combined with a relatively high cost of capital.

The interplay between NOPAT, cost of capital, and invested capital significantly influences economic profit. The substantial improvement in NOPAT in 2025 is the primary driver of the reduced economic loss, despite the concurrent increase in the cost of capital and invested capital.

The financial performance, as indicated by Net Earnings attributable to Boeing shareholders and Net Operating Profit After Taxes (NOPAT), demonstrates significant volatility over the five-year period. Both metrics experienced substantial fluctuations, transitioning from negative values to positive in the final year examined.

Net Operating Profit After Taxes (NOPAT)

NOPAT exhibited a generally negative trend from 2021 to 2023, starting at -US$2,649 million, decreasing to -US$2,910 million, and then reaching -US$77 million. A dramatic decline occurred in 2024, with NOPAT falling to -US$10,234 million. However, a substantial recovery is observed in 2025, with NOPAT reaching a positive US$5,245 million. This represents a significant turnaround from the preceding year’s loss.

The movement in NOPAT closely mirrors the trend in Net Earnings attributable to Boeing shareholders. Both metrics show considerable losses in 2021, 2022, and 2024, followed by a return to profitability in 2025. The magnitude of the loss in 2024 for both metrics is notably larger than in the prior loss-making years.

Relationship between NOPAT and Net Earnings

While both metrics move in the same direction, the absolute values differ. Net Earnings consistently report larger losses than NOPAT in 2021, 2022, and 2024. This suggests that factors outside of core operating performance, such as financing costs or non-operating items, are contributing to the overall net loss. The difference between the two metrics narrows in 2023 and reverses in 2025, indicating a stronger correlation between operating performance and overall profitability in the final year.

The substantial shift to positive NOPAT in 2025 suggests a potential improvement in operational efficiency or a favorable change in the business environment. Further investigation would be required to determine the specific drivers behind this turnaround.

The relationship between income tax expense and cash operating taxes demonstrates notable fluctuations over the five-year period. A significant divergence is apparent between reported income tax expense and the actual cash outflow for taxes.

Income Tax Expense

Income tax expense exhibits considerable volatility. A substantial benefit was recorded in 2021, followed by relatively small expenses in 2022 and 2023. A significant expense was then reported in 2024, before returning to a positive expense in 2025, though not reaching the level of 2023.

Cash Operating Taxes

Cash operating taxes demonstrate a generally increasing trend, despite yearly variations. Values rose from 676 in 2021 to 736 in 2023, experienced a decrease to 508 in 2024, and then increased substantially to 899 in 2025. This suggests a consistent, underlying tax obligation, with fluctuations potentially related to timing differences or tax planning strategies.

Relationship between Income Tax Expense and Cash Taxes

The difference between income tax expense and cash operating taxes is substantial in each year. The 2021 benefit in income tax expense contrasts sharply with the 676 million in cash taxes paid, indicating deferred tax liabilities were likely being reduced. The divergence continues in subsequent years, suggesting ongoing differences between book and tax accounting methods. The largest difference is observed in 2024, where a significant income tax expense is offset by a lower cash tax payment.

The consistent positive values for cash operating taxes, even during periods of reported income tax benefits, suggest the entity consistently remits cash for tax obligations. The fluctuations in income tax expense likely reflect the impact of temporary differences, tax credits, or changes in tax laws, while cash taxes represent the actual cash outflows for tax liabilities.

The invested capital of the company exhibited fluctuations over the five-year period. Total reported debt & leases generally decreased before increasing again, while shareholders’ equity experienced a significant shift from a substantial deficit to a positive value. These movements collectively influenced the overall trend in invested capital.

Total Reported Debt & Leases

Total reported debt & leases decreased from US$59,641 million in 2021 to US$54,121 million in 2023, representing a reduction of approximately 9.3%. However, it then increased to US$55,958 million in 2024 and further to US$56,365 million in 2025. This suggests a period of debt reduction followed by renewed borrowing or lease obligations.

Shareholders’ Equity (Deficit)

Shareholders’ equity began as a significant deficit of US$-14,999 million in 2021 and continued to worsen, reaching a deficit of US$-17,233 million in 2023. A dramatic turnaround occurred in 2024, with the deficit substantially reduced to US$-3,908 million. By 2025, shareholders’ equity had become positive, reaching US$5,454 million. This indicates a significant improvement in the company’s net asset position.

Invested Capital

Invested capital initially increased from US$49,465 million in 2021 to US$50,866 million in 2022, a rise of approximately 2.8%. It then decreased to US$44,905 million in 2023, coinciding with the continued negative shareholders’ equity. Invested capital rebounded in 2024 to US$50,271 million and continued to rise to US$53,662 million in 2025, driven by the improvement in shareholders’ equity and the stabilization of debt levels. The overall trend suggests a period of capital contraction followed by a recovery and expansion.

The substantial shift in shareholders’ equity is a key driver of the changes observed in invested capital. The company’s ability to move from a significant deficit to a positive equity position represents a notable financial achievement and supports the increase in invested capital observed in the later years of the period.

The economic spread ratio exhibited considerable fluctuation between 2021 and 2025. Initially negative, the ratio worsened significantly before showing signs of improvement. Economic profit demonstrated a similar pattern of volatility, moving from substantial losses to a reduced loss by the end of the period. Invested capital experienced a moderate increase overall, though with a notable decrease in 2023.

Economic Spread Ratio

The economic spread ratio began at -19.03% in 2021 and decreased to -20.42% in 2022, indicating a widening gap between the company’s return on invested capital and its cost of capital. A slight improvement was observed in 2023, with the ratio increasing to -15.03%. However, 2024 saw a dramatic decline to -35.10%, representing the most significant underperformance relative to the cost of capital during the analyzed period. The ratio improved substantially in 2025, reaching -5.80%, suggesting a considerable, though still negative, shift towards improved profitability relative to invested capital.

Economic Profit

Economic profit remained negative throughout the five-year period. Losses increased from US$9,412 million in 2021 to US$10,388 million in 2022. A reduction in the loss was noted in 2023, with economic profit reported at -US$6,751 million. The loss then expanded considerably in 2024 to -US$17,644 million, before decreasing again to -US$3,110 million in 2025. The trend suggests periods of worsening and improving financial performance, but consistent overall losses.

Invested Capital

Invested capital increased from US$49,465 million in 2021 to US$50,866 million in 2022. A decrease was observed in 2023, with invested capital falling to US$44,905 million. The level of invested capital then rose to US$50,271 million in 2024 and continued to increase to US$53,662 million in 2025. This indicates a period of capital reduction followed by reinvestment.

The interplay between these metrics suggests that while the company has been actively managing its invested capital, its ability to generate returns exceeding its cost of capital has been inconsistent. The substantial improvement in the economic spread ratio and reduction in economic profit loss in 2025 warrants further investigation to determine the sustainability of this positive trend.

The economic profit margin exhibited significant fluctuation over the five-year period. Initially negative, the margin demonstrated improvement before declining sharply and then recovering somewhat. A consistent pattern of negative economic profit was present throughout the observed timeframe, indicating that the company’s returns did not exceed its cost of capital in any of the years analyzed.

Economic Profit Margin Trend

The economic profit margin began at -15.11% in 2021 and decreased to -15.60% in 2022, suggesting a worsening of economic profitability despite revenue growth. A notable improvement occurred in 2023, with the margin increasing to -8.68%, indicating enhanced economic performance. However, this positive trend was reversed in 2024, as the margin plummeted to -26.53%, the lowest point in the period. The final year, 2025, saw a substantial recovery to -3.48%, representing the highest margin value observed, though still negative.

Relationship to Revenues

Revenues generally increased over the period, moving from US$62,286 million in 2021 to US$89,463 million in 2025. However, revenue increases did not consistently translate into improved economic profit margins. The largest revenue increase occurred between 2022 and 2023 (US$11,186 million), coinciding with a significant improvement in the economic profit margin. Conversely, a decrease in revenues from 2023 to 2024 (US$11,277 million) was accompanied by a dramatic decline in the economic profit margin.

Economic Profit

Economic profit itself followed a volatile path. While the absolute value of economic loss decreased from 2021 to 2023, it increased substantially in 2024 before decreasing again in 2025. This suggests that the scale of underperformance relative to the cost of capital varied considerably year-to-year, and was not simply a function of revenue levels.

The substantial fluctuations in the economic profit margin, coupled with consistently negative economic profit, suggest underlying issues related to cost of capital, operational efficiency, or a combination of both. The recovery observed in 2025, while positive, requires further investigation to determine its sustainability and the factors driving it.