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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

Eli Lilly & Co., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	3,092,517)	4,318,809)	5,040,358)	6,357,340)	4,928,702)
Cost of capital²	7.31%	7.23%	7.05%	6.99%	7.20%
Invested capital³	29,387,300)	24,302,500)	26,139,800)	24,557,100)	21,491,000)

Economic profit⁴	942,968)	2,561,098)	3,198,797)	4,640,884)	3,380,862)

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

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,092,517 – 7.31% × 29,387,300 = 942,968

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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.	Eli Lilly & Co. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Eli Lilly & Co., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income	5,240,400)	6,244,800)	5,581,700)	6,193,700)	8,318,400)
Deferred income tax expense (benefit)¹	(2,341,000)	(2,185,200)	(802,300)	(134,500)	62,400)
Increase (decrease) in allowances²	(1,200)	(6,500)	(3,400)	3,500)	(1,700)
Increase (decrease) in LIFO reserve³	(93,500)	25,300)	600)	16,400)	(14,800)
Increase (decrease) in equity equivalents⁴	(2,435,700)	(2,166,400)	(805,100)	(114,600)	45,900)
Interest expense	485,900)	331,600)	339,800)	359,600)	400,600)
Interest expense, operating lease liability⁵	48,726)	26,215)	20,571)	21,902)	21,902)
Adjusted interest expense	534,626)	357,815)	360,371)	381,502)	422,502)
Tax benefit of interest expense⁶	(112,271)	(75,141)	(75,678)	(80,115)	(88,726)
Adjusted interest expense, after taxes⁷	422,354)	282,674)	284,693)	301,387)	333,777)
(Gain) loss on marketable securities	3,300)	9,300)	(1,100)	3,700)	(32,100)
Interest income	(173,600)	(62,800)	(25,400)	(33,000)	(80,400)
Investment income, before taxes	(170,300)	(53,500)	(26,500)	(29,300)	(112,500)
Tax expense (benefit) of investment income⁸	35,763)	11,235)	5,565)	6,153)	23,625)
Investment income, after taxes⁹	(134,537)	(42,265)	(20,935)	(23,147)	(88,875)
(Income) loss from discontinued operations, net of tax¹⁰	—)	—)	—)	—)	(3,680,500)
Net operating profit after taxes (NOPAT)	3,092,517)	4,318,809)	5,040,358)	6,357,340)	4,928,702)

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

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances.

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

⁴ Addition of increase (decrease) in equity equivalents to net income.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,107,400 × 4.40% = 48,726

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 534,626 × 21.00% = 112,271

⁷ Addition of after taxes interest expense to net income.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 170,300 × 21.00% = 35,763

⁹ Elimination of after taxes investment income.

¹⁰ Elimination of discontinued operations.

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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.	Eli Lilly & Co. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Eli Lilly & Co., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income taxes	1,314,200)	561,600)	573,800)	1,036,200)	628,000)
Less: Deferred income tax expense (benefit)	(2,341,000)	(2,185,200)	(802,300)	(134,500)	62,400)
Add: Tax savings from interest expense	112,271)	75,141)	75,678)	80,115)	88,726)
Less: Tax imposed on investment income	35,763)	11,235)	5,565)	6,153)	23,625)
Cash operating taxes	3,731,708)	2,810,706)	1,446,213)	1,244,662)	630,701)

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

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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.	Eli Lilly & Co. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Eli Lilly & Co., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term borrowings and current maturities of long-term debt	6,904,500)	1,501,100)	1,538,300)	8,700)	1,499,300)
Long-term debt, excluding current maturities	18,320,800)	14,737,500)	15,346,400)	16,586,600)	13,817,900)
Operating lease liability¹	1,107,400)	728,200)	685,700)	663,700)	608,400)
Total reported debt & leases	26,332,700)	16,966,800)	17,570,400)	17,259,000)	15,925,600)
Total Eli Lilly and Company shareholders’ equity	10,771,900)	10,649,800)	8,979,200)	5,641,600)	2,606,900)
Net deferred tax (assets) liabilities²	(5,373,400)	(2,705,700)	(755,900)	(730,500)	(385,100)
Allowances³	14,800)	16,000)	22,500)	25,900)	22,400)
LIFO reserve⁴	(102,400)	(8,900)	(34,200)	(34,800)	(51,200)
Equity equivalents⁵	(5,461,000)	(2,698,600)	(767,600)	(739,400)	(413,900)
Accumulated other comprehensive (income) loss, net of tax⁶	4,327,000)	3,844,600)	4,343,100)	6,496,400)	6,523,600)
Noncontrolling interests	91,800)	125,600)	175,600)	183,600)	92,200)
Adjusted total Eli Lilly and Company shareholders’ equity	9,729,700)	11,921,400)	12,730,300)	11,582,200)	8,808,800)
Construction in progress⁷	(5,084,100)	(2,798,600)	(2,177,800)	(2,138,800)	(1,884,400)
Investments⁸	(1,591,000)	(1,787,100)	(1,983,100)	(2,145,300)	(1,359,000)
Invested capital	29,387,300)	24,302,500)	26,139,800)	24,557,100)	21,491,000)

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

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 equity equivalents to total Eli Lilly and Company shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Eli Lilly & Co. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Eli Lilly & Co., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	708,737,166)	708,737,166)	÷	733,232,666)	=	0.97	0.97	×	7.47%	=	7.22%
Debt³	23,388,100)	23,388,100)	÷	733,232,666)	=	0.03	0.03	×	3.58% × (1 – 21.00%)	=	0.09%
Operating lease liability⁴	1,107,400)	1,107,400)	÷	733,232,666)	=	0.00	0.00	×	4.40% × (1 – 21.00%)	=	0.01%
Total:	733,232,666)					1.00					7.31%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	312,713,944)	312,713,944)	÷	327,263,444)	=	0.96	0.96	×	7.47%	=	7.14%
Debt³	13,821,300)	13,821,300)	÷	327,263,444)	=	0.04	0.04	×	2.69% × (1 – 21.00%)	=	0.09%
Operating lease liability⁴	728,200)	728,200)	÷	327,263,444)	=	0.00	0.00	×	3.60% × (1 – 21.00%)	=	0.01%
Total:	327,263,444)					1.00					7.23%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	226,953,844)	226,953,844)	÷	245,797,244)	=	0.92	0.92	×	7.47%	=	6.90%
Debt³	18,157,700)	18,157,700)	÷	245,797,244)	=	0.07	0.07	×	2.44% × (1 – 21.00%)	=	0.14%
Operating lease liability⁴	685,700)	685,700)	÷	245,797,244)	=	0.00	0.00	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	245,797,244)					1.00					7.05%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	197,876,569)	197,876,569)	÷	217,579,169)	=	0.91	0.91	×	7.47%	=	6.79%
Debt³	19,038,900)	19,038,900)	÷	217,579,169)	=	0.09	0.09	×	2.74% × (1 – 21.00%)	=	0.19%
Operating lease liability⁴	663,700)	663,700)	÷	217,579,169)	=	0.00	0.00	×	3.30% × (1 – 21.00%)	=	0.01%
Total:	217,579,169)					1.00					6.99%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	134,687,306)	134,687,306)	÷	151,937,306)	=	0.89	0.89	×	7.47%	=	6.62%
Debt³	16,641,600)	16,641,600)	÷	151,937,306)	=	0.11	0.11	×	6.59% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	608,400)	608,400)	÷	151,937,306)	=	0.00	0.00	×	3.60% × (1 – 21.00%)	=	0.01%
Total:	151,937,306)					1.00					7.20%

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

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Eli Lilly & Co., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	942,968)	2,561,098)	3,198,797)	4,640,884)	3,380,862)
Invested capital²	29,387,300)	24,302,500)	26,139,800)	24,557,100)	21,491,000)
Performance Ratio
Economic spread ratio³	3.21%	10.54%	12.24%	18.90%	15.73%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-3.97%	5.45%	4.84%	-3.02%	7.26%
Amgen Inc.	2.79%	7.46%	7.44%	11.76%	13.97%
Bristol-Myers Squibb Co.	1.99%	-0.71%	1.55%	-14.02%	-3.70%
Danaher Corp.	-7.58%	-2.63%	-1.98%	-3.38%	-6.79%
Gilead Sciences Inc.	5.91%	2.40%	8.94%	-4.12%	7.18%
Johnson & Johnson	0.02%	5.25%	10.32%	5.09%	4.00%
Merck & Co. Inc.	-8.53%	11.66%	11.79%	4.63%	11.21%
Pfizer Inc.	-8.89%	18.69%	11.84%	-2.87%	5.74%
Regeneron Pharmaceuticals Inc.	21.04%	24.16%	67.16%	39.03%	28.28%
Thermo Fisher Scientific Inc.	-4.52%	-2.74%	-0.91%	0.09%	-3.80%
Zoetis Inc.	9.00%	3.77%	6.55%	3.30%	4.27%

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

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 942,968 ÷ 29,387,300 = 3.21%

⁴ Click competitor name to see calculations.

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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.	Eli Lilly & Co. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Eli Lilly & Co., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in thousands)
Economic profit¹	942,968)	2,561,098)	3,198,797)	4,640,884)	3,380,862)
Revenue	34,124,100)	28,541,400)	28,318,400)	24,539,800)	22,319,500)
Performance Ratio
Economic profit margin²	2.76%	8.97%	11.30%	18.91%	15.15%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-4.98%	7.72%	8.26%	-6.83%	13.69%
Amgen Inc.	7.25%	11.95%	12.32%	18.82%	23.52%
Bristol-Myers Squibb Co.	2.99%	-1.10%	2.68%	-29.73%	-14.18%
Danaher Corp.	-24.89%	-6.54%	-4.96%	-9.92%	-22.00%
Gilead Sciences Inc.	10.05%	4.05%	15.81%	-8.51%	10.21%
Johnson & Johnson	0.03%	6.30%	10.80%	6.07%	4.72%
Merck & Co. Inc.	-9.92%	14.54%	17.13%	5.52%	12.85%
Pfizer Inc.	-23.55%	20.63%	12.77%	-7.11%	13.42%
Regeneron Pharmaceuticals Inc.	19.19%	24.32%	45.41%	38.03%	23.48%
Thermo Fisher Scientific Inc.	-9.03%	-5.06%	-1.86%	0.17%	-7.83%
Zoetis Inc.	12.17%	5.85%	9.78%	5.71%	6.71%

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

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 942,968 ÷ 34,124,100 = 2.76%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company 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.	Eli Lilly & Co. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Eli Lilly & Co. (NYSE:LLY)

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