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.

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, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

<>⁴ 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= hidden

–

×

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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.’s economic profit decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Bristol-Myers Squibb Co., NOPAT calculation

US$ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net earnings attributable to BMS
	Deferred income tax expense (benefit)¹
	Increase (decrease) in bad debt allowances²
	Increase (decrease) in deferred income³
	Increase (decrease) in restructuring liability⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense
	Interest expense, operating lease liability⁶
	Adjusted interest expense
	Tax benefit of interest expense⁷
	Adjusted interest expense, after taxes⁸
	(Gain) loss on marketable securities
	Investment income, before taxes
	Tax expense (benefit) of investment income⁹
	Investment income, after taxes¹⁰
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in bad debt allowances.

³ Addition of increase (decrease) in deferred income.

⁴ Addition of increase (decrease) in restructuring liability.

⁵ Addition of increase (decrease) in equity equivalents to net earnings attributable to BMS.

⁶ 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= hidden × hidden = hidden

⁷ 2018 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 21.00% = hidden

⁸ Addition of after taxes interest expense to net earnings attributable to BMS.

⁹ 2018 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 21.00% = hidden

¹⁰ Elimination of after taxes investment income.

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.’s NOPAT decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Bristol-Myers Squibb Co., cash operating taxes calculation

US$ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Provision for income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense
	Less: Tax imposed on investment income
	Cash operating taxes

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

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.’s cash operating taxes increased from 2016 to 2017 but then decreased significantly from 2017 to 2018.

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

US$ in millions

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Short-term debt obligations
	Long-term debt, excluding current portion
	Operating lease liability¹
	Total reported debt & leases
	Total Bristol-Myers Squibb Company shareholders’ equity
	Net deferred tax (assets) liabilities²
	Bad debt allowances³
	Deferred income⁴
	Restructuring liability⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Noncontrolling interest
	Adjusted total Bristol-Myers Squibb Company shareholders’ equity
	Construction in progress⁸
	Available-for-sale securities⁹
	Invested capital

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

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 deferred income.

⁵ Addition of restructuring liability.

⁶ Addition of equity equivalents to total Bristol-Myers Squibb Company shareholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of available-for-sale securities.

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.’s invested capital decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level.

Bristol-Myers Squibb Co., cost of capital calculations


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

Based on: 10-K (filing date: 2019-02-25).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2018-02-13).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2017-02-21).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2016-02-12).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2015-02-13).

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

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Economic profit¹
	Invested capital²
	Performance Ratio
	Economic spread ratio³

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

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.’s economic spread ratio deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

Bristol-Myers Squibb Co., economic profit margin calculation

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Selected Financial Data (US$ in millions)
	Economic profit¹
	Revenues
	Add: Increase (decrease) in deferred income
	Adjusted revenues
	Performance Ratio
	Economic profit margin²

Based on: 10-K (filing date: 2019-02-25), 10-K (filing date: 2018-02-13), 10-K (filing date: 2017-02-21), 10-K (filing date: 2016-02-12), 10-K (filing date: 2015-02-13).

¹ Economic profit. See details »

² 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × hidden ÷ hidden = hidden

Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company’s 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.’s economic profit margin deteriorated from 2016 to 2017 but then improved from 2017 to 2018 exceeding 2016 level.

	Bristol-Myers Squibb Co.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

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Financial Statements
Common-Size Financial Statements
Analysis of Financial Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis of Components of Financial Statements
Financial Reporting Quality

Bristol-Myers Squibb Co. (BMY)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Dec 31, 2018

Dec 31, 2017

Dec 31, 2016

Dec 31, 2015

Dec 31, 2014

Economic Spread Ratio

Economic Profit Margin