Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
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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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 period under review demonstrates a consistently negative economic profit for the entity. Net operating profit after taxes (NOPAT) fluctuated significantly, beginning with a substantial loss in 2020, improving through 2021 and 2022, showing a marked improvement in 2023, and then declining sharply in 2024. The cost of capital exhibited an increasing trend from 2020 to 2022, peaking in 2022, before decreasing slightly in 2023 and remaining relatively stable in 2024. Invested capital generally increased from 2020 to 2022, decreased in 2023, and then increased again in 2024, mirroring some of the NOPAT fluctuations. Consequently, economic profit remained negative throughout the entire period, with the largest loss occurring in 2024.
- NOPAT Trend
- NOPAT experienced considerable volatility. The largest loss was recorded in 2020, followed by improvements in 2021 and 2022. A significant positive shift occurred in 2023, reducing the loss substantially, but this was reversed in 2024 with a return to a large negative value, exceeding the 2020 loss.
- Cost of Capital Trend
- The cost of capital generally increased from 13.88% in 2020 to 15.57% in 2022. This increase suggests a rising cost of funding for the entity. A slight decrease to 15.74% in 2023 was followed by a minor reduction to 15.59% in 2024, indicating a stabilization, though remaining at a relatively high level.
- Invested Capital Trend
- Invested capital showed an upward trend from 2020 to 2022, increasing from US$47,630 million to US$50,833 million. A decrease was observed in 2023 to US$44,883 million, potentially indicating divestitures or reduced investment. The level then rose again in 2024 to US$50,250 million, approaching the 2022 peak.
- Economic Profit Analysis
- Economic profit consistently remained negative throughout the period, indicating that the entity’s returns did not exceed its cost of capital. The magnitude of the negative economic profit generally followed the fluctuations in NOPAT, with the largest negative value occurring in 2024 at US$18,069 million. This suggests that the entity is destroying value for its investors, and the situation worsened considerably in the final year of the observed period.
The combined effect of these trends suggests that while the entity attempted to improve profitability in 2021-2023, it was ultimately unable to generate returns sufficient to cover its cost of capital. The substantial decline in NOPAT in 2024, coupled with a relatively stable cost of capital and increased invested capital, resulted in a significantly larger economic loss.
Net Operating Profit after Taxes (NOPAT)
Boeing Co., NOPAT calculation
US$ 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 economic spread ratio exhibited considerable fluctuation between 2020 and 2024. Initially negative, the ratio demonstrated improvement before declining significantly in the most recent period. This analysis details the observed trends in economic spread ratio, economic profit, and invested capital.
- Economic Spread Ratio
- The economic spread ratio began at -31.32% in 2020 and improved to -19.82% in 2021, indicating a lessening of the gap between the cost of capital and returns generated from invested capital. A slight deterioration occurred in 2022, with the ratio reaching -21.29%. Further improvement was noted in 2023, with the ratio moving to -15.91%. However, 2024 saw a substantial decline, with the economic spread ratio falling to -35.96%, representing the largest negative spread observed during the analyzed period.
- Economic Profit
- Economic profit remained negative throughout the five-year period. The magnitude of the loss decreased from US$14,919 million in 2020 to US$9,794 million in 2021. Losses remained relatively stable in 2022 at US$10,823 million, before decreasing to US$7,142 million in 2023. A significant increase in the economic loss was observed in 2024, reaching US$18,069 million, the largest loss recorded within the timeframe.
- Invested Capital
- Invested capital generally increased from US$47,630 million in 2020 to US$50,833 million in 2022. A decrease was observed in 2023, with invested capital falling to US$44,883 million. The level of invested capital rebounded in 2024, reaching US$50,250 million, nearly matching the 2022 value.
The worsening economic spread ratio in 2024, coupled with the increased economic loss, suggests a widening disparity between the returns generated and the cost of capital employed. While invested capital increased in 2024, it did not translate into improved profitability relative to the capital invested. The fluctuations in economic profit appear to be influenced by both changes in invested capital and the economic spread ratio.
Economic Profit Margin
Boeing Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 economic profit margin exhibited considerable fluctuation between 2020 and 2024. Initially negative, the margin improved through 2021 and 2023 before declining significantly in 2024. This pattern is closely linked to the movement of economic profit and revenues over the same period.
- Economic Profit Margin Trend
- The economic profit margin began at -25.65% in 2020. A notable improvement was observed in 2021, with the margin increasing to -15.72%. This positive trend continued, albeit at a slower pace, reaching -9.18% in 2023. However, 2024 witnessed a substantial deterioration, with the margin falling to -27.16%, representing the lowest value within the observed timeframe.
- Relationship to Revenues
- Revenues generally increased from 2020 to 2023, moving from US$58,158 million to US$77,794 million. This revenue growth likely contributed to the improvement in the economic profit margin observed during those years. However, despite a decrease in revenues to US$66,517 million in 2024, the economic profit margin experienced a more pronounced decline, suggesting that factors beyond revenue played a significant role in the 2024 result.
- Economic Profit Impact
- Economic profit remained negative throughout the period, ranging from -US$14,919 million to -US$7,142 million. The largest negative economic profit occurred in 2020 and again in 2024, coinciding with the most unfavorable economic profit margin values. The increase in negative economic profit in 2024, despite a decrease in revenues, indicates a potential widening gap between the cost of capital and the returns generated.
The substantial decline in the economic profit margin in 2024 warrants further investigation to determine the underlying causes. A comprehensive analysis of the factors contributing to economic profit, including cost of capital, operating expenses, and asset utilization, is recommended.