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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Bristol-Myers Squibb Co., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	5,869)	4,571)	6,656)	(6,822)	3,071)
Cost of capital²	6.65%	7.04%	6.70%	6.42%	6.72%
Invested capital³	67,562)	71,720)	80,284)	90,149)	100,285)

Economic profit⁴	1,373)	(478)	1,274)	(12,608)	(3,669)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 5,869 – 6.65% × 67,562 = 1,373

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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.	Bristol-Myers Squibb Co. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Bristol-Myers Squibb Co., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net earnings (loss) attributable to BMS	8,025)	6,327)	6,994)	(9,015)	3,439)
Deferred income tax expense (benefit)¹	(3,288)	(2,738)	(1,393)	983)	(924)
Increase (decrease) in allowance for expected credit loss²	1)	1)	3)	(3)	(12)
Increase (decrease) in restructuring liability³	141)	(54)	(47)	48)	1)
Increase (decrease) in equity equivalents⁴	(3,146)	(2,791)	(1,437)	1,028)	(935)
Interest expense	1,166)	1,232)	1,334)	1,420)	656)
Interest expense, operating lease liability⁵	68)	56)	31)	30)	32)
Adjusted interest expense	1,234)	1,288)	1,365)	1,450)	688)
Tax benefit of interest expense⁶	(259)	(270)	(287)	(304)	(145)
Adjusted interest expense, after taxes⁷	975)	1,017)	1,079)	1,145)	544)
(Gain) loss on marketable securities	—)	—)	—)	(1)	3)
Investment income, before taxes	—)	—)	—)	(1)	3)
Tax expense (benefit) of investment income⁸	—)	—)	—)	—)	(1)
Investment income, after taxes⁹	—)	—)	—)	(1)	2)
Net income (loss) attributable to noncontrolling interest	15)	18)	20)	20)	21)
Net operating profit after taxes (NOPAT)	5,869)	4,571)	6,656)	(6,822)	3,071)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for expected credit loss.

³ Addition of increase (decrease) in restructuring liability.

⁴ Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to BMS.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,692 × 4.00% = 68

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,234 × 21.00% = 259

⁷ Addition of after taxes interest expense to net earnings (loss) attributable to BMS.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0

⁹ Elimination of after taxes investment income.

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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.	Bristol-Myers Squibb Co. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Bristol-Myers Squibb Co., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision for income taxes	400)	1,368)	1,084)	2,124)	1,515)
Less: Deferred income tax expense (benefit)	(3,288)	(2,738)	(1,393)	983)	(924)
Add: Tax savings from interest expense	259)	270)	287)	304)	145)
Less: Tax imposed on investment income	—)	—)	—)	—)	(1)
Cash operating taxes	3,947)	4,376)	2,764)	1,445)	2,584)

Based on: 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), 10-K (reporting date: 2019-12-31).

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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.	Bristol-Myers Squibb Co. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Bristol-Myers Squibb Co., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term debt obligations	3,119)	4,264)	4,948)	2,340)	3,346)
Long-term debt, excluding current portion	36,653)	35,056)	39,605)	48,336)	43,387)
Operating lease liability¹	1,692)	1,397)	1,043)	997)	805)
Total reported debt & leases	41,464)	40,717)	45,596)	51,673)	47,538)
Total BMS shareholders’ equity	29,430)	31,061)	35,946)	37,822)	51,598)
Net deferred tax (assets) liabilities²	(2,430)	822)	3,062)	4,246)	5,944)
Allowance for expected credit loss³	23)	22)	21)	18)	21)
Restructuring liability⁴	188)	47)	101)	148)	100)
Equity equivalents⁵	(2,219)	891)	3,184)	4,412)	6,065)
Accumulated other comprehensive (income) loss, net of tax⁶	1,546)	1,281)	1,268)	1,839)	1,520)
Noncontrolling interest	55)	57)	60)	60)	100)
Adjusted total BMS shareholders’ equity	28,812)	33,290)	40,458)	44,133)	59,283)
Construction in progress⁷	(1,075)	(1,053)	(764)	(487)	(527)
Marketable debt securities and equity investments⁸	(1,639)	(1,234)	(5,006)	(5,170)	(6,009)
Invested capital	67,562)	71,720)	80,284)	90,149)	100,285)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 restructuring liability.

⁵ Addition of equity equivalents to total BMS shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of marketable debt securities and equity investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Bristol-Myers Squibb Co. invested capital decreased from 2021 to 2022 and from 2022 to 2023.

Bristol-Myers Squibb Co., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	98,501)	98,501)	÷	137,139)	=	0.72	0.72	×	8.11%	=	5.82%
Debt³	36,946)	36,946)	÷	137,139)	=	0.27	0.27	×	3.73% × (1 – 21.00%)	=	0.79%
Operating lease liability⁴	1,692)	1,692)	÷	137,139)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.04%
Total:	137,139)					1.00					6.65%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	151,637)	151,637)	÷	188,301)	=	0.81	0.81	×	8.11%	=	6.53%
Debt³	35,267)	35,267)	÷	188,301)	=	0.19	0.19	×	3.31% × (1 – 21.00%)	=	0.49%
Operating lease liability⁴	1,397)	1,397)	÷	188,301)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.02%
Total:	188,301)					1.00					7.04%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	146,346)	146,346)	÷	196,673)	=	0.74	0.74	×	8.11%	=	6.03%
Debt³	49,284)	49,284)	÷	196,673)	=	0.25	0.25	×	3.33% × (1 – 21.00%)	=	0.66%
Operating lease liability⁴	1,043)	1,043)	÷	196,673)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	196,673)					1.00					6.70%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	134,429)	134,429)	÷	194,266)	=	0.69	0.69	×	8.11%	=	5.61%
Debt³	58,840)	58,840)	÷	194,266)	=	0.30	0.30	×	3.33% × (1 – 21.00%)	=	0.80%
Operating lease liability⁴	997)	997)	÷	194,266)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	194,266)					1.00					6.42%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	144,413)	144,413)	÷	196,501)	=	0.73	0.73	×	8.11%	=	5.96%
Debt³	51,283)	51,283)	÷	196,501)	=	0.26	0.26	×	3.64% × (1 – 21.00%)	=	0.75%
Operating lease liability⁴	805)	805)	÷	196,501)	=	0.00	0.00	×	4.00% × (1 – 21.00%)	=	0.01%
Total:	196,501)					1.00					6.72%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Bristol-Myers Squibb Co., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	1,373)	(478)	1,274)	(12,608)	(3,669)
Invested capital²	67,562)	71,720)	80,284)	90,149)	100,285)
Performance Ratio
Economic spread ratio³	2.03%	-0.67%	1.59%	-13.99%	-3.66%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-3.93%	5.49%	4.87%	-2.99%	7.29%
Amgen Inc.	2.82%	7.50%	7.48%	11.80%	14.00%
Eli Lilly & Co.	3.26%	10.59%	12.29%	18.95%	15.78%
Gilead Sciences Inc.	5.95%	2.44%	8.98%	-4.08%	7.23%
Johnson & Johnson	0.07%	5.29%	10.36%	5.13%	4.04%
Merck & Co. Inc.	-8.48%	11.70%	11.84%	4.68%	11.26%
Pfizer Inc.	-8.86%	18.73%	11.88%	-2.83%	5.78%
Regeneron Pharmaceuticals Inc.	21.10%	24.22%	67.22%	39.09%	28.34%
Thermo Fisher Scientific Inc.	-4.48%	-2.70%	-0.88%	0.13%	-3.76%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,373 ÷ 67,562 = 2.03%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Bristol-Myers Squibb Co. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Bristol-Myers Squibb Co., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	1,373)	(478)	1,274)	(12,608)	(3,669)
Revenues	45,006)	46,159)	46,385)	42,518)	26,145)
Performance Ratio
Economic profit margin²	3.05%	-1.04%	2.75%	-29.65%	-14.03%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-4.93%	7.77%	8.32%	-6.76%	13.75%
Amgen Inc.	7.34%	12.01%	12.38%	18.88%	23.58%
Eli Lilly & Co.	2.81%	9.02%	11.34%	18.96%	15.19%
Gilead Sciences Inc.	10.13%	4.13%	15.88%	-8.43%	10.27%
Johnson & Johnson	0.08%	6.35%	10.85%	6.12%	4.78%
Merck & Co. Inc.	-9.87%	14.60%	17.19%	5.57%	12.90%
Pfizer Inc.	-23.46%	20.68%	12.82%	-7.02%	13.50%
Regeneron Pharmaceuticals Inc.	19.24%	24.38%	45.45%	38.08%	23.52%
Thermo Fisher Scientific Inc.	-8.95%	-4.99%	-1.79%	0.24%	-7.75%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × 1,373 ÷ 45,006 = 3.05%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Bristol-Myers Squibb Co. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Bristol-Myers Squibb Co. (NYSE:BMY)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin