Economic Value Added (EVA)
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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.
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Boeing Co. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Boeing Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data over the analyzed periods reveals several significant trends in profitability and capital efficiency metrics.
- Net Operating Profit After Taxes (NOPAT)
-
The NOPAT shows considerable volatility with notably negative values throughout all periods. Initially, the NOPAT was deeply negative, improving considerably in the intermediate years but still remaining negative. Specifically, after a substantial loss of -8306 million US dollars at the start of the period, it improved to -2649 million in the following year and then slightly worsened to -2910 million. In the most recent years, the loss was greatly reduced to -77 million before sharply deteriorating again to -10234 million. This pattern suggests fluctuations in operational performance with a critical decline in the latest period.
- Cost of Capital
-
The cost of capital exhibits a gradual upward trend over the periods, increasing from 13.66% to a peak of 15.48% before a slight decline to 15.34%. This increase indicates that the cost of financing the company's investments has grown, which can exert additional pressure on profitability and value generation unless accompanied by corresponding increases in returns.
- Invested Capital
-
The invested capital shows moderate fluctuations, starting at 47,630 million US dollars, increasing steadily to a peak of 50,833 million, then declining to 44,883 million before rising again to 50,250 million. These changes suggest periodic adjustments in the asset base or investment levels, which could be reflective of strategic investments, asset disposals, or operational scaling.
- Economic Profit
-
The economic profit remains consistently negative throughout the entire period, indicating that the company is not generating sufficient returns to exceed its cost of capital. The deficit decreased from -14,812 million to -9,678 million but then deteriorated progressively, reaching the smallest loss at -7,024 million before sharply declining to -17,941 million in the latest period. This pattern aligns with the NOPAT trend and signals ongoing challenges in creating shareholder value.
Overall, the data reveal ongoing operational and value creation challenges. Despite some interim improvements, the company has not achieved positive NOPAT or economic profit during the periods, with recent data highlighting a significant decline. Rising cost of capital adds to these challenges, emphasizing the need to enhance operational efficiency and profitability to generate returns above financing costs. Additionally, fluctuations in invested capital suggest active management of assets, yet this has not translated into positive economic profit outcomes.
Net Operating Profit after Taxes (NOPAT)
Boeing Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in valuation allowance.
3 Addition of increase (decrease) in product warranties.
4 Addition of increase (decrease) in equity equivalents to net loss attributable to Boeing shareholders.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net loss attributable to Boeing shareholders.
- Net Loss Attributable to Boeing Shareholders
- From 2020 to 2024, the net loss attributable to shareholders exhibits significant volatility. The year 2020 shows the highest loss at -$11,873 million, followed by an improvement in 2021 to -$4,202 million. However, this positive trend does not sustain as losses increase again to -$4,935 million in 2022. The year 2023 marks notable recovery with losses drastically reduced to -$2,222 million, yet this improvement is reversed sharply in 2024 with losses escalating back to near the 2020 level at -$11,817 million.
- Net Operating Profit After Taxes (NOPAT)
- Similarly, NOPAT reflects a challenging operating environment across the indicated periods. The highest negative NOPAT is recorded in 2020 at -$8,306 million. There is consistent improvement in subsequent years, reaching a near-breakeven point in 2023 with a loss of only -$77 million. This suggests operational efficiencies or recovery efforts during that period. However, in 2024, NOPAT deteriorates severely, plummeting to -$10,234 million, indicating a substantial decline in operating profitability after taxes.
Cash Operating Taxes
Boeing Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
The financial data reveals fluctuating trends in both income tax expense (benefit) and cash operating taxes over the five-year period ending December 31, 2024.
- Income Tax Expense (Benefit)
- This item exhibits significant variability throughout the period. In 2020, a substantial tax benefit is seen with a negative value of -2535 million US dollars. The benefit decreases in magnitude in 2021 to -743 million and then transitions to a small positive tax expense of 31 million in 2022. The expense increases further to 237 million in 2023, before again shifting to a tax benefit of -381 million in 2024. This pattern indicates inconsistent tax charges, possibly reflecting changes in profitability, tax regulations, or adjustments in deferred tax assets and liabilities.
- Cash Operating Taxes
- Cash operating taxes also display considerable variation, but with a distinct pattern compared to income tax expense. In 2020, there is a significant tax benefit of -3337 million US dollars. This value reverses direction in subsequent years, with positive cash taxes of 676 million in 2021, then slightly decreasing to 588 million in 2022. The cash tax outflows increase to 736 million in 2023, before declining to 508 million in 2024. The overall trend suggests initial tax credit or refund receipt in 2020, followed by consistent cash tax payments in later years, albeit with some fluctuation.
In summary, the data portrays a volatile tax environment with marked fluctuations between tax benefits and expenses, as well as cash tax payments over the analyzed period. The initial years show net tax benefits, while the subsequent years reflect more traditional tax expense and cash outflows, indicating changes in earnings or tax management strategies.
Invested Capital
Boeing Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
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 product warranties.
5 Addition of equity equivalents to shareholders’ deficit.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of investments, excluding Equity method investments.
The financial data reveals notable trends in debt, shareholders' equity, and invested capital over the five-year period ending in 2024.
- Total reported debt & leases
- There is a general decline observed in the total reported debt and leases. Beginning at approximately $64.9 billion in 2020, the amount decreases steadily to about $54.1 billion in 2023, followed by a slight increase to $55.9 billion in 2024. This trend indicates an overall effort to reduce debt obligations over the period, with a minor uptick in the most recent year.
- Shareholders’ deficit
- The shareholders’ deficit shows significant volatility during the timeframe. Starting from a deficit of $18.3 billion in 2020, the figure improves to $15.0 billion in 2021, worsens again to $15.9 billion in 2022, and further deteriorates to $17.2 billion in 2023. However, there is a remarkable improvement in 2024 when the deficit reduces substantially to $3.9 billion. This sharp recovery in 2024 suggests a significant positive development in equity, potentially reflecting operational improvements or revaluation effects.
- Invested capital
- Invested capital increases gradually from $47.6 billion in 2020 to a peak of $50.8 billion in 2022. In 2023, a noticeable decline occurs, bringing invested capital down to $44.9 billion. Subsequently, it rebounds to $50.3 billion in 2024, almost reaching previous highs. This pattern implies fluctuating investment activities or asset base adjustments that may correlate with the trends in debt and equity.
In summary, the period is characterized by a deliberate reduction in debt levels with some recent increase, a highly volatile but ultimately improving shareholders’ deficit mainly in the last year, and a fluctuating invested capital base with recovery in the final reported period. These developments collectively indicate a dynamic financial position with potential strategic changes affecting capital structure and equity standing towards the end of the period.
Cost of Capital
Boeing Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 6.00% Series A Mandatory Convertible Preferred Stock | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations and commercial paper3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations and commercial paper. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 6.00% Series A Mandatory Convertible Preferred Stock | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations and commercial paper3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations and commercial paper. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 6.00% Series A Mandatory Convertible Preferred Stock | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations and commercial paper3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations and commercial paper. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 6.00% Series A Mandatory Convertible Preferred Stock | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations and commercial paper3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations and commercial paper. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 6.00% Series A Mandatory Convertible Preferred Stock | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations and commercial paper3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations and commercial paper. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Boeing Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals notable fluctuations in key performance metrics over the five-year period under review.
- Economic Profit
- The economic profit consistently remained negative from 2020 to 2024, indicating the company was not generating returns above its cost of capital. Despite some improvement in 2021 and 2023, where the losses lessened to -9,678 million and -7,024 million respectively, the economic profit deteriorated sharply again in 2024 to -17,941 million, marking the poorest performance in the timeframe.
- Invested Capital
- Invested capital showed a generally upward trend, increasing from 47,630 million in 2020 to 50,250 million in 2024. A slight dip was observed in 2023, where invested capital decreased to 44,883 million. This suggests periods of both investment and divestment activities, with overall growth in capital employed by the company.
- Economic Spread Ratio
- The economic spread ratio, indicating the difference between the return on invested capital and the cost of capital, was negative throughout the period. It improved in 2021 and 2023 to -19.59% and -15.65%, respectively, suggesting marginally better efficiency or profitability in those years. However, the ratio declined significantly in 2024 to -35.7%, signaling a substantial worsening profitability relative to the capital cost.
Overall, these trends demonstrate persistent challenges in achieving profitable returns on invested capital, with notable volatility especially in the last year. The continued negative economic profit alongside fluctuating invested capital and worsening economic spread in the most recent year indicate areas requiring strategic focus to enhance value creation.
Economic Profit Margin
Boeing Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial analysis reveals notable fluctuations in both economic profit and revenues over the five-year period. Revenues experienced a general upward trend from 2020 to 2023, increasing from 58,158 million US dollars in 2020 to a peak of 77,794 million US dollars in 2023. However, in 2024, revenues declined significantly to 66,517 million US dollars, indicating a reversal of the prior growth trend.
Economic profit has been consistently negative throughout the period, underscoring ongoing challenges in generating excess returns over the cost of capital. The economic profit improved from -14,812 million in 2020 to -7,024 million in 2023, reflecting a reduction in losses and possibly improved operational efficiencies or cost management. Despite this improvement, 2024 saw a steep decline in economic profit to -17,941 million US dollars, the lowest point in the period analyzed, signaling worsening profitability conditions.
The economic profit margin, which measures economic profit as a percentage of revenues, mirrors the trends observed in absolute economic profit. The margin showed a marked improvement from -25.47% in 2020 to -9.03% in 2023, suggesting enhanced economic efficiency. Nevertheless, the margin deteriorated sharply in 2024 to -26.97%, aligning with the substantial decrease in economic profit and revenue, and highlighting increased economic losses relative to revenues in that year.
- Revenues
- Displayed growth from 2020 to 2023, followed by a significant decline in 2024.
- Economic Profit
- Consistently negative with improvement through 2023, then substantially worsening in 2024.
- Economic Profit Margin
- Improved towards a less negative margin until 2023, deteriorating sharply in 2024.
Overall, the company demonstrated resilience and operational improvement through 2023, but faced substantial challenges in the most recent year, impacting both profitability and revenue generation adversely.