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 13.70% in 2021 to 14.72% in 2022 and 14.89% in 2023. It decreased slightly to 14.76% in 2024, then rose again to 15.60% in 2025. This upward trend suggests increasing financing costs 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 indicate changes in the company’s capital structure and investment activities.

Economic Profit Trend

Economic profit consistently remained negative from 2021 to 2024. The losses were US$9,423 million, US$10,400 million, US$6,762 million, and US$17,656 million respectively. While still negative, the loss narrowed significantly in 2025 to US$3,124 million, aligning with the improvement in NOPAT. The magnitude of the economic profit losses suggests that the company’s returns on invested capital were consistently below its cost of capital for most of the observed period.

The substantial improvement in economic profit in 2025 is directly correlated with the positive NOPAT achieved in that year. However, the continued negative economic profit, even in 2025, indicates that the company still needs to improve its ability to generate returns exceeding its cost of 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 position 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 -19.05% in 2021 and decreased to -20.45% 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 -15.06%. However, 2024 saw a substantial decline to -35.12%, representing the most significant underperformance relative to the cost of capital during the analyzed period. The ratio improved considerably in 2025, reaching -5.82%, suggesting a narrowing of the gap and a move towards more favorable economic returns.

Economic Profit

Economic profit remained negative throughout the five-year period. The largest loss occurred in 2024 at -17,656 US$ millions. Losses were -9,423 US$ millions in 2021, -10,400 US$ millions in 2022, and -6,762 US$ millions in 2023. The final year, 2025, showed a reduction in the loss to -3,124 US$ millions, aligning with the improvement in the economic spread ratio.

Invested Capital

Invested capital increased from 49,465 US$ millions in 2021 to 50,866 US$ millions in 2022. A decrease was then observed in 2023, falling to 44,905 US$ millions. The level of invested capital then rose again in 2024 to 50,271 US$ millions, and continued to increase in 2025, reaching 53,662 US$ millions. This suggests potential capital allocation adjustments during the period.

The interplay between these metrics indicates a period of economic challenges, particularly pronounced in 2024, followed by a degree of recovery in 2025. The improvement in the economic spread ratio and reduction in economic profit loss in the final year suggest positive momentum, though continued monitoring is warranted to assess the sustainability of this 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 is also apparent throughout the period.

Economic Profit Margin Trend

The economic profit margin began at -15.13% in 2021 and decreased to -15.61% in 2022, indicating a worsening of economic profit relative to revenue. A notable improvement occurred in 2023, with the margin increasing to -8.69%. However, this positive trend was reversed in 2024, as the margin plummeted to -26.54%, the lowest point in the observed period. The final year, 2025, saw a substantial recovery, with the margin improving to -3.49%, though remaining negative.

Economic Profit Trend

Economic profit itself was consistently negative across all five years. The largest negative economic profit occurred in 2024 at -17,656 US$ millions. The lowest negative value, comparatively, was recorded in 2025 at -3,124 US$ millions. The values in 2021 and 2022 were relatively close, at -9,423 and -10,400 US$ millions respectively, while 2023 showed a reduction in the negative economic profit to -6,762 US$ millions.

Relationship between Revenue and Economic Profit Margin

Revenues increased from 62,286 US$ millions in 2021 to 89,463 US$ millions in 2025. Despite this overall revenue growth, the economic profit margin remained negative throughout the period, and the substantial decline in margin in 2024 occurred despite a revenue decrease from 2023 to 2024. The improvement in margin in 2025 coincided with the largest revenue figure, suggesting a potential, though not definitive, correlation between revenue increases and margin improvement.

The significant volatility in the economic profit margin, coupled with consistently negative economic profit, suggests potential challenges in generating returns that exceed the cost of capital. The sharp deterioration in 2024 warrants further investigation to understand the underlying drivers of this decline.