Microsoft Excel LibreOffice Calc

Danaher Corp. (NYSE:DHR)

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Economic Value Added (EVA)

Advanced level


Economic Profit

Danaher Corp., economic profit calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
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

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 NOPAT. See details »

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. Danaher Corp.’s economic profit increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Net Operating Profit after Taxes (NOPAT)

Danaher Corp., NOPAT calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net earnings
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for doubtful accounts2
Increase (decrease) in LIFO reserve3
Increase (decrease) in deferred revenue4
Increase (decrease) in accrued warranty liability5
Increase (decrease) in equity equivalents6
Interest expense
Interest expense, operating lease liability7
Adjusted interest expense
Tax benefit of interest expense8
Adjusted interest expense, after taxes9
(Gain) loss on marketable securities
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income10
Investment income, after taxes11
(Income) loss from discontinued operations, net of tax12
Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

3 Addition of increase (decrease) in LIFO reserve. See details »

4 Addition of increase (decrease) in deferred revenue.

5 Addition of increase (decrease) in accrued warranty liability.

6 Addition of increase (decrease) in equity equivalents to net earnings.

7 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

8 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

9 Addition of after taxes interest expense to net earnings.

10 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

11 Elimination of after taxes investment income.

12 Elimination of discontinued operations.

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. Danaher Corp.’s NOPAT increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Cash Operating Taxes

Danaher Corp., cash operating taxes calculation

US$ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Income tax provision
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: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

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. Danaher Corp.’s cash operating taxes decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Invested Capital

Danaher Corp., invested capital calculation (financing approach)

US$ in thousands

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Notes payable and current portion of long-term debt
Long-term debt, excluding current portion
Operating lease liability1
Total reported debt & leases
Total Danaher stockholders’ equity
Net deferred tax (assets) liabilities2
Allowance for doubtful accounts3
LIFO reserve4
Deferred revenue5
Accrued warranty liability6
Equity equivalents7
Accumulated other comprehensive (income) loss, net of tax8
Noncontrolling interests
Adjusted total Danaher stockholders’ equity
Investments9
Invested capital

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

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 LIFO reserve. See details »

5 Addition of deferred revenue.

6 Addition of accrued warranty liability.

7 Addition of equity equivalents to total Danaher stockholders’ equity.

8 Removal of accumulated other comprehensive income.

9 Subtraction of 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. Danaher Corp.’s invested capital increased from 2017 to 2018 and from 2018 to 2019.

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 ÷ = × =
Notes payable and long-term debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2020-02-21).

1 US$ in thousands

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 ÷ = × =
Notes payable and long-term debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2019-02-21).

1 US$ in thousands

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 ÷ = × =
Notes payable and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2018-02-21).

1 US$ in thousands

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 ÷ = × =
Notes payable and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2017-02-22).

1 US$ in thousands

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 ÷ = × =
Notes payable and long-term debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2016-02-24).

1 US$ in thousands

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

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Becton, Dickinson & Co.
Boston Scientific Corp.
Intuitive Surgical Inc.
Medtronic PLC
Stryker Corp.
Thermo Fisher Scientific Inc.
UnitedHealth Group Inc.

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.

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. Danaher Corp.’s economic spread ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Economic Profit Margin

Danaher Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in thousands)
Economic profit1
 
Sales
Add: Increase (decrease) in deferred revenue
Adjusted sales
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Becton, Dickinson & Co.
Boston Scientific Corp.
Intuitive Surgical Inc.
Medtronic PLC
Stryker Corp.
Thermo Fisher Scientific Inc.
UnitedHealth Group Inc.

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted sales
= 100 × ÷ =

3 Click competitor name to see calculations.

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. Danaher Corp.’s economic profit margin improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.