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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.

Boeing Co., economic profit calculation

US$ in millions

	12 months ended	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =

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.	Boeing Co.’s economic profit increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Boeing Co., NOPAT calculation

US$ in millions

	12 months ended	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Net earnings (loss) related to parent
	Deferred income tax expense (benefit)¹
	Increase (decrease) in valuation allowance²
	Increase (decrease) in product warranties³
	Increase (decrease) in equity equivalents⁴
	Interest and debt expense
	Interest expense, operating lease liability⁵
	Adjusted interest and debt expense
	Tax benefit of interest and debt expense⁶
	Adjusted interest and debt expense, after taxes⁷
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

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 earnings (loss) related to parent.

⁵ 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

⁶ 2019 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 earnings (loss) related to parent.

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.	Boeing Co.’s NOPAT increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Boeing Co., cash operating taxes calculation

US$ in millions

	12 months ended	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Income tax expense (benefit)
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest and debt expense
	Cash operating taxes

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.	Boeing Co.’s cash operating taxes increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Boeing Co., invested capital calculation (financing approach)

US$ in millions

		Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
	Short-term debt and current portion of long-term debt
	Long-term debt, excluding current portion
	Operating lease liability¹
	Total reported debt & leases
	Shareholders’ equity
	Net deferred tax (assets) liabilities²
	Valuation allowance³
	Product warranties⁴
	Equity equivalents⁵
	Accumulated other comprehensive (income) loss, net of tax⁶
	Noncontrolling interests
	Adjusted shareholders’ equity
	Construction in progress⁷
	Investments, excluding Equity method investments⁸
	Invested capital

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’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of investments, excluding Equity method investments.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Boeing Co.’s invested capital increased from 2017 to 2018 and from 2018 to 2019.

Boeing Co., cost of capital calculations


Equity²	÷	=	×		=
Debt, including finance lease obligations and commercial paper³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

¹ US$ in millions