Delta Air Lines Inc. (DAL)

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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
Economic Profit Margin

Delta Air Lines Inc., economic profit calculation

USD $ in millions

12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Net operating profit after taxes (NOPAT)¹
Cost of capital²	%	%	%	%	%
Invested capital³

Economic profit⁴

Source: Based on data from Delta Air Lines Inc. Annual Reports

2017 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden % × hidden = hidden

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 declined from 2015 to 2016 and from 2016 to 2017.

Delta Air Lines Inc., NOPAT calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Net income
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for uncollectible accounts²
	Increase (decrease) in frequent flyer deferred revenue³
	Increase (decrease) in restructuring liability⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense, net
	Interest expense, operating lease obligations⁶
	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)

Source: Based on data from Delta Air Lines Inc. Annual Reports

2017 Calculations

¹ Elimination of deferred tax expense. See Details »

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

³ Addition of increase (decrease) in frequent flyer deferred revenue.

⁴ Addition of increase (decrease) in restructuring liability.

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

⁶ Addition of interest expense on capitalized operating leases. See Details »

⁷ Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= hidden × 35% = hidden

⁸ Addition of after taxes interest expense to net income.

⁹ Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 35% = 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 declined from 2015 to 2016 and from 2016 to 2017.

Delta Air Lines Inc., cash operating taxes calculation

USD $ in millions

	12 months ended	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Income tax provision (benefit)
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, net
	Less: Tax imposed on investment income
	Cash operating taxes

Source: Based on data from Delta Air Lines Inc. Annual Reports

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 declined from 2015 to 2016 and from 2016 to 2017.

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

USD $ in millions

		Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
	Current maturities of long-term debt and capital leases
	Long-term debt and capital leases, excluding current maturities
	PV of operating lease payments¹
	Total reported debt & leases
	Stockholders' equity
	Net deferred tax (assets) liabilities²
	Allowance for uncollectible accounts³
	Frequent flyer deferred revenue⁴
	Restructuring liability⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Adjusted stockholders' equity
	Investments⁸
	Invested capital

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ Addition of capitalized operating leases. See Details »

² Elimination of deferred taxes from assets and liabilities. See Details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of frequent flyer 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 2015 to 2016 and from 2016 to 2017.

Delta Air Lines Inc., cost of capital calculations


Equity²	÷	=	×	%	=	%
Debt and capital leases³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ USD $ in millions

² Equity. See Details »

³ Debt and capital leases. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Debt and capital leases³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ USD $ in millions

² Equity. See Details »

³ Debt and capital leases. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Debt and capital leases³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ USD $ in millions

² Equity. See Details »

³ Debt and capital leases. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Debt and capital leases³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ USD $ in millions

² Equity. See Details »

³ Debt and capital leases. See Details »

⁴ PV of operating lease payments. See Details »


Equity²	÷	=	×	%	=	%
Debt and capital leases³	÷	=	×	% × (1 – 35%)	=	%
PV of operating lease payments⁴	÷	=	×	% × (1 – 35%)	=	%
Total:						%

Source: Based on data from Delta Air Lines Inc. Annual Reports

¹ USD $ in millions

² Equity. See Details »

³ Debt and capital leases. See Details »

⁴ PV of operating lease payments. See Details »

Delta Air Lines Inc., economic spread calculation

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Selected Financial Data (USD $ in millions)
Economic profit¹
Invested capital²
Ratio
Economic spread³	%	%	%	%	%

Source: Based on data from Delta Air Lines Inc. Annual Reports

2017 Calculations

¹ Economic profit. See Details »

² Invested capital. See Details »

³ Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden %

Ratio	Description	The company
Economic spread	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 deteriorated from 2015 to 2016 and from 2016 to 2017.

Delta Air Lines Inc., economic profit margin calculation

	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015	Dec 31, 2014	Dec 31, 2013
Selected Financial Data (USD $ in millions)
Economic profit¹
Operating revenue
Increase (decrease) in frequent flyer deferred revenue
Ratio
Economic profit margin²	%	%	%	%	%

Source: Based on data from Delta Air Lines Inc. Annual Reports

2017 Calculations

¹ Economic profit. See Details »

² Economic profit margin = 100 × Economic profit ÷ (Operating revenue + Change in frequent flyer deferred revenue)
= 100 × hidden ÷ ( hidden + hidden ) = hidden %

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 2015 to 2016 and from 2016 to 2017.

	Delta Air Lines Inc.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

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

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Dec 31, 2017

Dec 31, 2016

Dec 31, 2015

Dec 31, 2014

Dec 31, 2013

Economic Spread

Economic Profit Margin