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.
Paying user area
Try for free
Danaher Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Aggregate Accruals
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Danaher Corp. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Danaher Corp., economic profit calculation
US$ 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 analysis of the annual financial metrics reveals distinctive trends in operating performance, capital efficiency, and economic value creation over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited an ascending trajectory from 2020 through 2022, increasing from 4,986 million USD to a peak of 6,866 million USD. However, a pronounced decline followed in 2023 to 3,099 million USD, with a slight recovery to 3,391 million USD in 2024. This pattern suggests that while operational profitability improved initially, recent years have seen a significant contraction in net operating earnings.
- Cost of Capital
- The cost of capital steadily increased from 11.59% in 2020 to a highest point of 12.37% in 2023, before a minor dip to 12.32% in 2024. This incremental rise indicates a gradual increase in the company's required return rate on invested funds, reflecting potentially higher risk or market rate environments.
- Invested Capital
- Invested capital grew from 67,123 million USD in 2020 to a peak of 78,561 million USD in 2023, followed by a reduction to 73,131 million USD in 2024. The initial increase may indicate expansions or acquisitions, whereas the subsequent decrease could imply asset disposals or efficiency improvements in capital deployment.
- Economic Profit
- Economic profit remained negative throughout the period, highlighting that the company failed to generate returns exceeding its cost of capital. Although the negative economic profit improved between 2020 and 2021, moving from -2,797 million USD to -2,076 million USD, it deteriorated again in the ensuing years, reaching the lowest point of -6,622 million USD in 2023. A partial improvement to -5,615 million USD was observed in 2024, but the figures still suggest a significant value destruction relative to invested capital costs.
Overall, despite initial improvements in profitability and invested capital, the company faced challenges in the latter part of the period, reflected by decreased operating profit, increased cost of capital, and worsening economic profitability. The persistent negative economic profit highlights ongoing difficulties in achieving returns above capital costs, underscoring potential strategic or operational concerns that may warrant further analysis.
Net Operating Profit after Taxes (NOPAT)
Danaher Corp., 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 allowance for doubtful accounts.
3 Addition of increase (decrease) in contract liabilities.
4 Addition of increase (decrease) in equity equivalents to net earnings.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 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 2024 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 Earnings
-
The net earnings demonstrate a significant upward trend from 2020 to 2022, increasing from 3,646 million US dollars in 2020 to a peak of 7,209 million US dollars in 2022. This represents nearly a doubling over the two-year period, indicating strong profitability growth.
However, there is a notable decline starting in 2023, with net earnings decreasing to 4,764 million US dollars, followed by a further decline to 3,899 million US dollars in 2024. This reversal suggests challenges impacting profitability or potential one-time events reducing net income in the latter periods.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT exhibits an increasing trend from 2020 through 2022, rising from 4,986 million US dollars in 2020 to 6,866 million US dollars in 2022. This indicates improving operating performance and effective tax management in this period.
Contrary to net earnings, there is a sharp decline in NOPAT in 2023 to 3,099 million US dollars, reflecting a substantial decrease in operating profitability. However, in 2024, NOPAT slightly recovers to 3,391 million US dollars, suggesting a partial operational improvement compared to the previous year.
- Overall Trends and Insights
-
Both net earnings and NOPAT show robust growth from 2020 to 2022, indicating a period of strong financial performance. The decline starting in 2023 is pronounced for both metrics, although net earnings remain relatively higher than NOPAT in both 2023 and 2024. This divergence may point toward increased non-operating income or variations in tax expense or extraordinary items impacting net earnings differently.
The partial rebound in NOPAT in 2024, combined with the continuing decline in net earnings, suggests operational improvements are underway, but other factors are continuing to suppress overall profitability. Overall, the data reflects a challenging environment in the most recent years following a period of solid growth.
Cash Operating Taxes
Danaher Corp., 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 reflects the tax-related expenses of the company over a five-year period. There are two primary tax metrics provided: Income tax provision and Cash operating taxes, both measured in millions of US dollars.
- Income Tax Provision
- This metric experienced a notable increase from 849 million USD in 2020 to a peak of 1,251 million USD in 2021. After this peak, the provision declined to 1,083 million USD in 2022 and continued to decrease steadily through 2023 and 2024, reaching 747 million USD. This pattern suggests a reduction in tax liabilities or changes in taxable income and accounting estimates after 2021.
- Cash Operating Taxes
- Cash operating taxes started at 380 million USD in 2020, then surged significantly to 1,534 million USD in 2021 and further increased to reach 1,684 million USD in 2022. The upward trend continued in 2023, peaking at 2,032 million USD. However, in 2024, there was a substantial decline to 1,274 million USD. This indicates an initial escalation in cash tax payments over the 2021-2023 period, followed by a marked reduction in the most recent year.
Comparing both tax measures reveals a divergence in their trends, especially after 2021. While the income tax provision decreased steadily from 2021 onwards, cash operating taxes rose sharply for three years before declining in the final year. This divergence could point to timing differences in tax payments versus accrued tax expenses, changes in deferred tax assets or liabilities, or adjustments in tax planning strategies. The significant fluctuations in cash operating taxes imply periods of higher actual tax cash outflows, which may have liquidity implications.
Overall, the data suggests the company experienced fluctuating tax obligations, with peak tax provisions in 2021 and peak cash taxes in 2023, followed by declines in both in 2024. The contrasting movements between provision and cash taxes highlight the complexity of the company's tax situation over these years, warranting further examination of underlying causes such as tax policy changes, profitability shifts, or one-time tax events.
Invested Capital
Danaher Corp., 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 contract liabilities.
5 Addition of equity equivalents to total Danaher stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of investments.
- Total reported debt & leases
-
There is a consistent downward trend in total reported debt and leases over the five-year period. The debt decreased from US$22,178 million in 2020 to US$17,146 million in 2024, reflecting a reduction of approximately 22.6%. This suggests a progressive deleveraging strategy or improved debt management, potentially reducing financial risk and interest expenses.
- Total Danaher stockholders’ equity
-
Stockholders’ equity shows an overall upward trend from US$39,766 million in 2020 to a peak of US$53,486 million in 2023. However, a decline is observed in 2024, dropping to US$49,543 million. The initial continuous growth may indicate profitable operations, retained earnings accumulation, or equity issuance. The decrease in 2024 could be due to dividends, share buybacks, or losses, warranting further investigation.
- Invested capital
-
Invested capital steadily increased from US$67,123 million in 2020 to US$78,561 million in 2023, suggesting ongoing investment in assets or operations. In 2024, it declined to US$73,131 million. The upward movement aligns with growth or expansion strategies, while the recent decrease could signal asset disposals, reduced investment activity, or operational optimization.
- Summary
-
The financial data indicates that the company has been actively managing its capital structure by decreasing debt levels while increasing equity and invested capital in the initial years. The modest reduction in equity and invested capital in the final year could imply a strategic shift or response to market conditions. Overall, the trends suggest enhanced financial stability with cautious reinvestment, although the 2024 changes merit additional scrutiny to understand underlying causes.
Cost of Capital
Danaher Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| 4.75% Mandatory Convertible Preferred Stock, Series A | ÷ | = | × | = | |||||||||
| 5.00% Mandatory Convertible Preferred Stock, Series B | ÷ | = | × | = | |||||||||
| Notes payable and long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 »
| 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: 2020-12-31).
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, 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 | ||||||
| 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: 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.
- Economic Profit
- The economic profit demonstrates a consistent trend of negative values throughout the analyzed period, indicating persistent economic losses. While there was an improvement from -2,797 million US$ in 2020 to -2,076 million US$ in 2021, this was followed by a deterioration in 2022, with losses increasing to -2,717 million US$. The subsequent years show a marked decline in economic profit, reaching -6,622 million US$ in 2023 and slightly improving to -5,615 million US$ in 2024, although still significantly negative compared to earlier years.
- Invested Capital
- The invested capital exhibits an overall upward trend from 67,123 million US$ in 2020 to a peak of 78,561 million US$ in 2023. However, in 2024, there is a notable reduction to 73,131 million US$, indicating a possible divestment or reduction in asset base during the latest period analyzed. The general increase in invested capital over the years until 2023 suggests ongoing investment and asset accumulation.
- Economic Spread Ratio
- The economic spread ratio remains negative across all reported years, underscoring the company's inability to generate returns exceeding its cost of capital. Initially, the negative spread improved from -4.17% in 2020 to -2.78% in 2021, but then regressed to -3.47% in 2022. The following two years exhibit a significant deterioration in economic spread, declining sharply to -8.43% in 2023 and slightly improving to -7.68% in 2024. This trend highlights growing inefficiencies in capital utilization or increased costs impacting profitability.
- Summary Insights
- The combined analysis of economic profit, invested capital, and economic spread ratio reveals a challenging financial environment characterized by sustained negative economic profits and negative economic spreads throughout the period. Despite increases in invested capital, the company has struggled to generate sufficient returns, leading to widening losses, particularly noticeable in the last two years. The slight reduction in invested capital in 2024 may reflect strategic shifts aimed at addressing these profitability challenges. Overall, the data suggests that the company needs to enhance operational efficiency or reconsider its capital allocation strategies to improve economic value creation.
Economic Profit Margin
Danaher Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| 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: 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 ÷ Adjusted sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates a consistently negative trend across the periods analyzed, with losses increasing substantially from 2020 to 2023. The economic profit, starting at -2797 million USD in 2020, improved slightly in 2021 but deteriorated again in 2022. A significant decline is observed in 2023, reaching -6622 million USD, before showing some recovery in 2024 to -5615 million USD. Despite the negative values throughout, the 2023 figure represents the peak level of economic loss within the timeframe, signaling worsening profitability conditions before partial improvement.
- Adjusted Sales
- Adjusted sales increased sharply from 22,895 million USD in 2020 to a peak of 31,528 million USD in 2022, reflecting growth over the first three years. However, this upward trend reversed in 2023, with sales dropping significantly to 23,927 million USD and remaining relatively stable in 2024 at 23,692 million USD. This notable decline post-2022 suggests potential challenges in maintaining sales volume or pricing power after a period of expansion.
- Economic Profit Margin
- The economic profit margin follows a trend similar to economic profit, remaining negative throughout the period. The margin improved from -12.21% in 2020 to -6.95% in 2021 but then deteriorated to -8.62% in 2022. In 2023, the margin worsened sharply to -27.68%, indicating a severe decline in profitability relative to sales. A slight recovery is observed in 2024 with the margin improving to -23.7%, though still significantly negative. This sharp margin deterioration in 2023 aligns with the steep economic profit loss and decrease in adjusted sales observed during the same period.
- Overall Analysis
- The data indicates a period of growth in adjusted sales through 2022 followed by a marked contraction in 2023 and 2024. Concurrently, economic profit and profit margins deteriorated, particularly in 2023 where the economic losses and negative margins reached their worst levels. While there was some improvement in 2024, the values remain significantly below earlier levels, implying continued challenges in achieving profitable operations. The negative economic profit despite initially increasing sales suggests that costs or capital charges may have increased disproportionately, adversely affecting overall financial performance.