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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

Delta Air Lines Inc., 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: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

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
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–

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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.	Delta Air Lines Inc.’s economic profit decreased from 2016 to 2017 and from 2017 to 2018.

Delta Air Lines Inc., NOPAT calculation

US$ in millions

	12 months ended	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for uncollectible accounts²
	Increase (decrease) in loyalty program deferred revenue³
	Increase (decrease) in restructuring liability⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense, net
	Interest expense, operating lease liability⁶
	Adjusted interest expense, net
	Tax benefit of interest expense, net⁷
	Adjusted interest expense, net, after taxes⁸
	(Gain) loss on marketable securities
	Investment income, before taxes
	Tax expense (benefit) of investment income⁹
	Investment income, after taxes¹⁰
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

¹ Elimination of deferred tax expense. See details »

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

³ Addition of increase (decrease) in loyalty program deferred revenue.

⁴ Addition of increase (decrease) in restructuring liability.

⁵ Addition of increase (decrease) in equity equivalents to net income.

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, net = Adjusted interest expense, net × Statutory income tax rate
= hidden × 21.00% = hidden

⁸ Addition of after taxes interest expense to net income.

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.	Delta Air Lines Inc.’s NOPAT decreased from 2016 to 2017 and from 2017 to 2018.

Delta Air Lines Inc., 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
	Income tax provision
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, net
	Less: Tax imposed on investment income
	Cash operating taxes

Based on: 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

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.	Delta Air Lines Inc.’s cash operating taxes decreased from 2016 to 2017 and from 2017 to 2018.

Delta Air Lines Inc., invested capital calculation (financing approach)

US$ in millions

		Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014
	Current maturities of long-term debt and finance leases
	Long-term debt and finance leases, excluding current maturities
	Operating lease liability¹
	Total reported debt & leases
	Stockholders’ equity
	Net deferred tax (assets) liabilities²
	Allowance for uncollectible accounts³
	Loyalty program deferred revenue⁴
	Restructuring liability⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Adjusted stockholders’ equity
	Investments⁸
	Invested capital

Based on: 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

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 loyalty program deferred revenue.

⁵ Addition of restructuring liability.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ 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.	Delta Air Lines Inc.’s invested capital increased from 2016 to 2017 but then slightly decreased from 2017 to 2018.

Delta Air Lines Inc., cost of capital calculations


Equity²	÷	=	×		=
Debt and capital leases³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

Based on: 10-K (filing date: 2019-02-15).

¹ US$ in millions

² Equity. See details »

³ Debt and capital leases. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt and capital leases³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2018-02-23).

¹ US$ in millions

² Equity. See details »

³ Debt and capital leases. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt and capital leases³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2017-02-13).

¹ US$ in millions

² Equity. See details »

³ Debt and capital leases. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt and capital leases³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2016-02-05).

¹ US$ in millions

² Equity. See details »

³ Debt and capital leases. See details »

⁴ Operating lease liability. See details »


Equity²	÷	=	×		=
Debt and capital leases³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

Based on: 10-K (filing date: 2015-02-11).

¹ US$ in millions

² Equity. See details »

³ Debt and capital leases. See details »

⁴ Operating lease liability. See details »

Delta Air Lines Inc., 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: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

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.	Delta Air Lines Inc.’s economic spread ratio deteriorated from 2016 to 2017 and from 2017 to 2018.

Delta Air Lines Inc., 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
	Operating revenue
	Add: Increase (decrease) in loyalty program deferred revenue
	Adjusted operating revenue
	Performance Ratio
	Economic profit margin²

Based on: 10-K (filing date: 2019-02-15), 10-K (filing date: 2018-02-23), 10-K (filing date: 2017-02-13), 10-K (filing date: 2016-02-05), 10-K (filing date: 2015-02-11).

¹ Economic profit. See details »

² 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted operating revenue
= 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.	Delta Air Lines Inc.’s economic profit margin deteriorated from 2016 to 2017 and from 2017 to 2018.

	Delta Air Lines Inc.	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

Delta Air Lines Inc. (DAL)

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