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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

DuPont de Nemours Inc., economic profit calculation

US$ in millions

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	(572)	4,932)	2,498)	3,846)	8,206)
Cost of capital²	24.80%	18.50%	21.99%	19.10%	17.19%
Invested capital³	62,770)	153,164)	149,192)	50,610)	46,288)

Economic profit⁴	(16,139)	(23,399)	(30,303)	(5,818)	250)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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
= -572 – 24.80% × 62,770 = -16,139

An analysis of the economic profit from 2015 to 2019 reveals a transition from marginal value creation to significant value destruction. While the period began with a positive economic profit, a sustained downward trend emerged, characterized by a substantial increase in invested capital and a volatile, generally declining net operating profit after taxes (NOPAT).

Net Operating Profit After Taxes (NOPAT): A significant deterioration in operating profitability is observed over the five-year period. NOPAT decreased from 8,206 million USD in 2015 to a deficit of 572 million USD by 2019. Although a temporary recovery occurred in 2018, the overall trajectory indicates a diminished capacity to generate operating returns.
Invested Capital Dynamics: The capital base experienced extreme volatility. Invested capital rose from 46,288 million USD in 2015 to a peak of 153,164 million USD in 2018, representing a more than threefold increase. This expansion was followed by a sharp contraction to 62,770 million USD in 2019, suggesting a period of massive capital deployment followed by significant divestitures or write-downs.
Cost of Capital Trends: The cost of capital exhibited an upward trend, rising from 17.19% in 2015 to 24.80% in 2019. The increase in the hurdle rate, particularly the peak in 2019, heightened the financial burden on the company, requiring higher operating returns to achieve a positive economic profit.
Economic Profit and Value Creation: Economic profit shifted from a positive 250 million USD in 2015 to deep negative territory, reaching a nadir of -30,303 million USD in 2017. This decline correlates directly with the surge in invested capital and the simultaneous drop in NOPAT. Although the economic loss narrowed to -16,139 million USD by 2019, the result remained heavily negative, indicating that the returns generated were insufficient to cover the cost of the capital employed.

The convergence of rising capital costs, a massive expansion of the asset base without commensurate operating gains, and a final collapse in NOPAT resulted in a prolonged period of economic value destruction. The reduction in invested capital in 2019 appears to be a corrective measure to mitigate the scale of economic losses.

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DuPont de Nemours Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net income attributable to DuPont	498)	3,844)	1,460)	4,318)	7,685)
Deferred income tax expense (benefit)¹	(478)	(434)	(2,166)	(1,259)	305)
Increase (decrease) in allowance for doubtful receivables²	(1)	64)	17)	16)	(16)
Increase (decrease) in LIFO reserve³	—)	118)	(269)	45)	(561)
Increase (decrease) in deferred revenue⁴	—)	(41)	2,332)	—)	—)
Increase (decrease) in restructuring reserve⁵	20)	96)	307)	128)	108)
Increase (decrease) in equity equivalents⁶	(459)	(197)	221)	(1,070)	(164)
Interest expense	668)	1,504)	1,082)	858)	946)
Interest expense, operating lease liability⁷	23)	121)	110)	92)	110)
Adjusted interest expense	691)	1,625)	1,192)	950)	1,056)
Tax benefit of interest expense⁸	(145)	(341)	(417)	(333)	(370)
Adjusted interest expense, after taxes⁹	546)	1,283)	775)	618)	687)
(Gain) loss on marketable securities	(1)	9)	(110)	(56)	(82)
Interest income	(55)	(210)	(147)	(107)	(71)
Investment income, before taxes	(56)	(201)	(257)	(163)	(153)
Tax expense (benefit) of investment income¹⁰	12)	42)	90)	57)	54)
Investment income, after taxes¹¹	(44)	(159)	(167)	(106)	(99)
(Income) loss from discontinued operations, net of tax¹²	(1,214)	5)	77)	—)	—)
Net income (loss) attributable to noncontrolling interest	102)	155)	132)	86)	98)
Net operating profit after taxes (NOPAT)	(572)	4,932)	2,498)	3,846)	8,206)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Elimination of deferred tax expense. See details »

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

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

⁴ Addition of increase (decrease) in deferred revenue.

⁵ Addition of increase (decrease) in restructuring reserve.

⁶ Addition of increase (decrease) in equity equivalents to net income attributable to DuPont.

⁷ 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 554 × 4.07% = 23

⁸ 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 691 × 21.00% = 145

⁹ Addition of after taxes interest expense to net income attributable to DuPont.

¹⁰ 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 56 × 21.00% = 12

¹¹ Elimination of after taxes investment income.

¹² Elimination of discontinued operations.

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DuPont de Nemours Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Provision for (benefit from) income taxes on continuing operations	140)	1,489)	(476)	9)	2,147)
Less: Deferred income tax expense (benefit)	(478)	(434)	(2,166)	(1,259)	305)
Add: Tax savings from interest expense	145)	341)	417)	333)	370)
Less: Tax imposed on investment income	12)	42)	90)	57)	54)
Cash operating taxes	751)	2,222)	2,017)	1,544)	2,158)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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DuPont de Nemours Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Short-term borrowings and finance lease obligations	3,830)	2,802)	4,015)	907)	995)
Long-term debt, excluding debt within one year	13,617)	37,662)	30,056)	20,456)	16,215)
Operating lease liability¹	554)	2,777)	2,836)	1,967)	2,040)
Total reported debt & leases	18,001)	43,241)	36,907)	23,330)	19,250)
Total DuPont stockholders’ equity	40,987)	94,571)	100,330)	25,987)	25,374)
Net deferred tax (assets) liabilities²	3,278)	3,711)	4,397)	(2,156)	(1,846)
Allowance for doubtful receivables³	9)	191)	127)	110)	94)
LIFO reserve⁴	—)	(98)	(216)	53)	8)
Deferred revenue⁵	—)	2,565)	2,606)	—)	—)
Restructuring reserve⁶	162)	684)	588)	281)	153)
Equity equivalents⁷	3,449)	7,053)	7,502)	(1,712)	(1,591)
Accumulated other comprehensive (income) loss, net of tax⁸	1,416)	12,394)	8,972)	9,822)	8,667)
Non-redeemable noncontrolling interests	569)	1,608)	1,597)	1,242)	809)
Adjusted total DuPont stockholders’ equity	46,421)	115,626)	118,401)	35,339)	33,259)
Construction in progress⁹	(1,652)	(3,870)	(4,600)	(6,100)	(4,355)
Marketable securities¹⁰	—)	(1,833)	(1,516)	(1,959)	(1,866)
Invested capital	62,770)	153,164)	149,192)	50,610)	46,288)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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 LIFO reserve. See details »

⁵ Addition of deferred revenue.

⁶ Addition of restructuring reserve.

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

⁸ Removal of accumulated other comprehensive income.

⁹ Subtraction of construction in progress.

¹⁰ Subtraction of marketable securities.

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DuPont de Nemours Inc., cost of capital calculations

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,262)	39,262)	÷	58,866)	=	0.67	0.67	×	35.58%	=	23.73%
Preferred stock, series A, $1.00 par (book value)	—)	—)	÷	58,866)	=	0.00	0.00	×	0.00%	=	0.00%
Short-term borrowings and long-term debt³	19,050)	19,050)	÷	58,866)	=	0.32	0.32	×	4.07% × (1 – 21.00%)	=	1.04%
Operating lease liability⁴	554)	554)	÷	58,866)	=	0.01	0.01	×	4.07% × (1 – 21.00%)	=	0.03%
Total:	58,866)					1.00					24.80%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term borrowings and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,083)	39,083)	÷	83,391)	=	0.47	0.47	×	35.58%	=	16.67%
Preferred stock, series A, $1.00 par (book value)	—)	—)	÷	83,391)	=	0.00	0.00	×	0.00%	=	0.00%
Short-term borrowings and long-term debt³	41,531)	41,531)	÷	83,391)	=	0.50	0.50	×	4.34% × (1 – 21.00%)	=	1.71%
Operating lease liability⁴	2,777)	2,777)	÷	83,391)	=	0.03	0.03	×	4.34% × (1 – 21.00%)	=	0.11%
Total:	83,391)					1.00					18.50%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term borrowings and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,780)	55,780)	÷	94,739)	=	0.59	0.59	×	35.58%	=	20.95%
Preferred stock, series A, $1.00 par (book value)	—)	—)	÷	94,739)	=	0.00	0.00	×	0.00%	=	0.00%
Short-term borrowings and long-term debt³	36,123)	36,123)	÷	94,739)	=	0.38	0.38	×	3.88% × (1 – 35.00%)	=	0.96%
Operating lease liability⁴	2,836)	2,836)	÷	94,739)	=	0.03	0.03	×	3.88% × (1 – 35.00%)	=	0.08%
Total:	94,739)					1.00					21.99%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term borrowings and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2016

	Capital (fair value)¹	Weights					Cost of capital
Equity²	24,371)	24,371)	÷	49,418)	=	0.49	0.49	×	35.58%	=	17.55%
Preferred stock, series A, $1.00 par (book value)	—)	—)	÷	49,418)	=	0.00	0.00	×	8.50%	=	0.00%
Short-term borrowings and long-term debt³	23,079)	23,079)	÷	49,418)	=	0.47	0.47	×	4.70% × (1 – 35.00%)	=	1.43%
Operating lease liability⁴	1,967)	1,967)	÷	49,418)	=	0.04	0.04	×	4.70% × (1 – 35.00%)	=	0.12%
Total:	49,418)					1.00					19.10%

Based on: 10-K (reporting date: 2016-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term borrowings and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2015

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,133)	17,133)	÷	41,627)	=	0.41	0.41	×	35.58%	=	14.64%
Preferred stock, series A, $1.00 par (book value)	4,000)	4,000)	÷	41,627)	=	0.10	0.10	×	8.50%	=	0.82%
Short-term borrowings and long-term debt³	18,454)	18,454)	÷	41,627)	=	0.44	0.44	×	5.40% × (1 – 35.00%)	=	1.56%
Operating lease liability⁴	2,040)	2,040)	÷	41,627)	=	0.05	0.05	×	5.40% × (1 – 35.00%)	=	0.17%
Total:	41,627)					1.00					17.19%

Based on: 10-K (reporting date: 2015-12-31).

¹ US$ in millions

² Equity. See details »

³ Short-term borrowings and long-term debt. See details »

⁴ Operating lease liability. See details »

DuPont de Nemours Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit¹	(16,139)	(23,399)	(30,303)	(5,818)	250)
Invested capital²	62,770)	153,164)	149,192)	50,610)	46,288)
Performance Ratio
Economic spread ratio³	-25.71%	-15.28%	-20.31%	-11.50%	0.54%
Benchmarks
Economic Spread Ratio, Competitors⁴
Linde plc	—	—	—	—	—
Sherwin-Williams Co.	—	—	—	—	—

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -16,139 ÷ 62,770 = -25.71%

⁴ Click competitor name to see calculations.

The financial performance from 2015 to 2019 is characterized by a transition from positive economic value creation to a sustained period of economic value destruction. A significant volatility in invested capital and a consistent decline in the economic spread ratio indicate systemic challenges in generating returns that exceed the cost of capital.

Economic Profit Trends: Economic profit shifted from a positive 250 million USD in 2015 to substantial losses over the subsequent four years. The most severe contraction occurred in 2017, with economic profit dropping to -30,303 million USD. Although a recovery trend emerged between 2017 and 2019, with losses narrowing to -16,139 million USD, the values remained significantly negative throughout the remainder of the period.
Invested Capital Fluctuations: Invested capital exhibited extreme volatility during the analyzed period. Following a period of relative stability between 2015 and 2016, capital surged in 2017 and peaked at 153,164 million USD in 2018. This peak was followed by a sharp reduction to 62,770 million USD by the end of 2019, suggesting a substantial restructuring or divestiture of assets.
Economic Spread Ratio Analysis: The economic spread ratio, which measures the return on invested capital relative to its cost, transitioned from a positive 0.54% in 2015 to negative territory in 2016. While the ratio showed a marginal improvement in 2018, it reached its lowest point of -25.71% in 2019. The divergence between the narrowing economic losses and the widening negative spread in 2019 indicates that the reduction in the invested capital base occurred more rapidly than the improvement in economic profit, resulting in a further decline in value creation efficiency.

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DuPont de Nemours Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit¹	(16,139)	(23,399)	(30,303)	(5,818)	250)

Net sales	21,512)	85,977)	62,484)	48,158)	48,778)
Add: Increase (decrease) in deferred revenue	—)	(41)	2,332)	—)	—)
Adjusted net sales	21,512)	85,936)	64,816)	48,158)	48,778)
Performance Ratio
Economic profit margin²	-75.03%	-27.23%	-46.75%	-12.08%	0.51%
Benchmarks
Economic Profit Margin, Competitors³
Linde plc	—	—	—	—	—
Sherwin-Williams Co.	—	—	—	—	—

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Economic profit. See details »

² 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -16,139 ÷ 21,512 = -75.03%

³ Click competitor name to see calculations.

The period between 2015 and 2019 is characterized by a transition from marginal value creation to significant economic value destruction. While 2015 showed a slight positive economic profit, the subsequent four years were marked by substantial negative figures, indicating that the company's returns failed to cover its cost of capital.

Economic Profit Trajectory: A sharp decline in economic profit occurred starting in 2016, with losses accelerating to a peak of negative 30,303 million USD in 2017. Although absolute losses narrowed in 2018 and 2019, the figures remained deeply negative, reflecting a sustained inability to generate economic value above the required threshold.
Revenue Volatility and Structural Shifts: Adjusted net sales exhibited extreme volatility, rising from 48,778 million USD in 2015 to a peak of 85,936 million USD in 2018, before declining sharply to 21,512 million USD in 2019. This pattern indicates significant corporate restructuring, likely involving major acquisitions followed by large-scale divestitures.
Economic Profit Margin Analysis: The economic profit margin shifted from a positive 0.51% in 2015 to increasingly negative territory. Despite the reduction in absolute economic losses during 2019, the margin deteriorated to its lowest point of -75.03%. This divergence is primarily attributed to the drastic reduction in adjusted net sales, which amplified the impact of the remaining economic losses relative to the reduced size of the revenue base.

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DuPont de Nemours Inc. (NYSE:DD)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin