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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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Operating Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Danaher Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of economic performance reveals a consistent trend of negative economic profit over the five-year period from 2021 to 2025, indicating that the returns generated from operations have been insufficient to cover the associated cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A significant volatility in operational profitability is observed. NOPAT remained relatively stable between 2021 and 2022, followed by a sharp decline in 2023, where values dropped from 6,866 million to 3,099 million. While a modest recovery trend is evident in 2024 and 2025, the figures remain substantially lower than the 2021-2022 baseline.
- Cost of Capital
- The cost of capital exhibited relative stability, fluctuating within a narrow range between 14.84% and 15.62%. A peak was reached in 2023 at 15.62%, coinciding with the period of lowest operational profitability, before slightly moderating to 15.31% by 2025.
- Invested Capital
- Invested capital showed a gradual increase from 74,633 million in 2021 to a peak of 78,561 million in 2023. A reduction to 73,131 million occurred in 2024, followed by a slight increase to 75,443 million in 2025, suggesting a period of capital realignment or asset optimization.
- Economic Profit
- Economic profit remained negative throughout the entire period, signifying ongoing value destruction. The deficit widened significantly from -4,355 million in 2021 to a trough of -9,175 million in 2023. Although a slight improvement was noted in 2024, the economic profit remained deeply negative at -8,106 million by the end of 2025.
The primary driver of the increased economic deficit in 2023 was the substantial contraction in NOPAT, which occurred simultaneously with a peak in the cost of capital and invested capital. Despite subsequent marginal improvements in operating profit and a reduction in capital investment in 2024, the entity has not regained a positive economic profit position.
Net Operating Profit after Taxes (NOPAT)
Danaher Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in contract liabilities.
4 Addition of increase (decrease) in equity equivalents to net earnings.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net earnings.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
10 Elimination of discontinued operations.
Net operating profit after taxes (NOPAT) exhibited a fluctuating pattern over the five-year period. While initially stable, NOPAT experienced a significant decline in later years. A comparison with net earnings reveals some divergence in performance.
- NOPAT Trend
- In 2021, NOPAT stood at US$6,722 million. It increased modestly to US$6,866 million in 2022, representing a growth of approximately 2.1%. However, 2023 witnessed a substantial decrease, with NOPAT falling to US$3,099 million. This represents a decline of roughly 55.3% from the prior year. A partial recovery was observed in 2024, with NOPAT reaching US$3,391 million, and continued modestly into 2025 at US$3,442 million. The 2024 and 2025 figures, while improved from 2023, remain considerably below the levels recorded in 2021 and 2022.
- Relationship to Net Earnings
- Net earnings followed a different trajectory. While NOPAT peaked in 2022, net earnings peaked earlier in 2021. Net earnings decreased more consistently than NOPAT, falling from US$6,433 million in 2021 to US$3,614 million in 2025. In 2021, NOPAT exceeded net earnings by US$289 million. By 2023, net earnings surpassed NOPAT by US$1,665 million, and this difference persisted in 2024 and 2025. This suggests a growing divergence between operational profitability and overall reported earnings.
The substantial decline in NOPAT in 2023 warrants further investigation to determine the underlying causes. Potential factors could include increased operating expenses, changes in tax rates, or shifts in the company’s operational strategy. The subsequent stabilization of NOPAT in 2024 and 2025, while positive, does not fully restore it to previous levels, indicating ongoing challenges or adjustments within the business.
Cash Operating Taxes
Danaher Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The income tax provision and cash operating taxes exhibited distinct trends between 2021 and 2025. The income tax provision consistently decreased over the five-year period, while cash operating taxes demonstrated a more volatile pattern.
- Income Tax Provision
- The income tax provision decreased from US$1,251 million in 2021 to US$633 million in 2025. This represents a cumulative decline of approximately 49.4%. The decrease was relatively steady year-over-year, suggesting a consistent reduction in reported tax liabilities.
- Cash Operating Taxes
- Cash operating taxes increased from US$1,534 million in 2021 to US$2,032 million in 2023, representing a growth of approximately 32.5%. However, a significant decrease was observed in 2024, falling to US$1,274 million, followed by a further reduction to US$1,134 million in 2025. This indicates a substantial fluctuation in actual cash outflows for taxes, diverging from the trend in the income tax provision.
The divergence between the income tax provision and cash operating taxes suggests potential timing differences related to deferred tax assets or liabilities, tax credits utilized, or changes in tax laws impacting cash payments. The increase in cash operating taxes through 2023, followed by a sharp decline, warrants further investigation to understand the underlying drivers. The decreasing income tax provision may reflect changes in profitability, tax planning strategies, or adjustments to tax rates.
- Relationship between Items
- In 2021, cash operating taxes exceeded the income tax provision by US$283 million. This difference widened in 2022 to US$601 million and further increased to US$1,209 million in 2023. However, the gap narrowed considerably in 2024 to US$527 million and continued to decrease to US$501 million in 2025. This evolving difference highlights the increasing, then decreasing, impact of non-cash tax items on the overall tax expense.
Continued monitoring of both the income tax provision and cash operating taxes is recommended to assess the sustainability of these trends and their implications for future cash flows and economic value added calculations.
Invested Capital
Danaher Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 contract liabilities.
5 Addition of equity equivalents to total Danaher stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of investments.
The invested capital of the company exhibited an initial increase followed by a subsequent decline and stabilization over the five-year period. Total reported debt & leases and total stockholders’ equity both contribute to the overall invested capital figure, though their individual trends differ.
- Invested Capital Trend
- Invested capital increased from US$74,633 million in 2021 to US$78,342 million in 2022, representing a growth of approximately 4.9%. A further, albeit marginal, increase was observed in 2023, reaching US$78,561 million. However, 2024 saw a decrease to US$73,131 million, a decline of roughly 7.1%. Invested capital then showed a modest recovery in 2025, rising to US$75,443 million.
- Debt & Leases
- Total reported debt & leases demonstrated a consistent downward trend from 2021 to 2024. Beginning at US$23,272 million, it decreased to US$17,146 million by the end of 2024. An increase was noted in 2025, with debt & leases reaching US$19,696 million, potentially indicating renewed borrowing or a change in financing strategy.
- Stockholders’ Equity
- Total Danaher stockholders’ equity generally increased throughout the period. From US$45,167 million in 2021, it rose to US$53,486 million in 2023. A decrease was observed in 2024, falling to US$49,543 million, before recovering somewhat to US$52,534 million in 2025. This suggests fluctuations in retained earnings and/or share issuance/repurchase activity.
The decrease in invested capital in 2024 appears to be driven primarily by the reduction in total reported debt & leases, partially offset by the decrease in stockholders’ equity. The 2025 figures suggest a partial reversal of this trend, with both debt & leases and stockholders’ equity contributing to a slight increase in invested capital.
- Relationship between Components and Invested Capital
- The fluctuations in invested capital closely mirror the combined movements of debt & leases and stockholders’ equity. While stockholders’ equity generally trended upward, the more significant declines in debt & leases in 2024 had a pronounced effect on the overall invested capital figure. The 2025 increase in both components suggests a stabilization of the capital structure.
Cost of Capital
Danaher Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Notes payable and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (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 Notes payable and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (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 Notes payable and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (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 Notes payable and long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (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 Notes payable and long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Danaher Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis of economic value added indicators reveals a persistent period of economic value destruction, characterized by consistently negative economic profit and a negative economic spread ratio from 2021 through 2025.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period, indicating that the returns generated were insufficient to cover the cost of capital. A significant deterioration occurred between 2021 and 2023, with losses widening from -4,355 million US$ to a peak deficit of -9,175 million US$ in 2023. While there was a slight moderation in 2024 to -7,978 million US$, the figure returned to a downward trajectory in 2025, ending at -8,106 million US$.
- Invested Capital Stability
- Invested capital exhibited relative stability, fluctuating within a range of approximately 73 billion to 78 billion US$. Capital peaked in 2023 at 78,561 million US$ before experiencing a contraction in 2024 to 73,131 million US$. A marginal increase followed in 2025, reaching 75,443 million US$. The lack of a strong upward trend in invested capital suggests that the decline in economic profit was driven by operating performance or cost of capital increases rather than aggressive capital expansion.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the weighted average cost of capital, remained negative throughout the analyzed timeframe. The ratio deteriorated from -5.84% in 2021 to a low of -11.68% in 2023, representing a significant widening of the gap between actual returns and required returns. Since 2023, a marginal recovery is observed, with the ratio improving slightly to -10.91% in 2024 and -10.74% in 2025, although it remains deeply negative.
Overall, the synchronization between the peak negative economic profit and the lowest economic spread ratio in 2023 highlights a period of maximum value erosion. The subsequent stability in the spread ratio and invested capital suggests a plateau in economic underperformance rather than a definitive return to value creation.
Economic Profit Margin
Danaher Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Sales | ||||||
| Add: Increase (decrease) in contract liabilities | ||||||
| Adjusted sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial performance over the five-year period is characterized by a consistent failure to achieve positive economic profit, with a marked deterioration in value creation metrics beginning in 2023.
- Economic Profit Trends
- Economic profit remained negative throughout the analyzed timeframe, demonstrating a significant widening of the deficit. The loss increased from -4,355 million US dollars in 2021 to a peak of -9,175 million US dollars in 2023. While there was a slight reduction in the deficit during 2024, the value remained heavily negative, ending at -8,106 million US dollars in 2025.
- Adjusted Sales Trajectory
- Adjusted sales showed an initial growth phase, peaking at 31,528 million US dollars in 2022. This growth was followed by a sharp contraction in 2023, where sales dropped to 23,927 million US dollars. From 2023 through 2025, sales remained relatively stagnant, showing only a marginal recovery to 24,621 million US dollars by the end of the period.
- Economic Profit Margin Analysis
- The economic profit margin reflects a substantial decline in efficiency. Starting at -14.59% in 2021, the margin deteriorated rapidly, reaching a low of -38.34% in 2023. This peak in negativity coincided with the simultaneous decline in adjusted sales and the increase in economic profit losses. A slight recovery trend is observed between 2023 and 2025, with the margin improving to -32.92%, although it remains significantly lower than the levels recorded in 2021 and 2022.