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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

FedEx Corp., economic profit calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Net operating profit after taxes (NOPAT)¹	5,421)	5,014)	7,163)	2,531)	1,216)	5,220)
Cost of capital²	11.41%	10.93%	11.73%	9.98%	10.51%	11.60%
Invested capital³	69,545)	66,462)	64,229)	57,553)	53,043)	53,524)

Economic profit⁴	(2,514)	(2,250)	(370)	(3,214)	(4,359)	(987)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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
= 5,421 – 11.41% × 69,545 = -2,514

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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.	FedEx Corp. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

FedEx Corp., NOPAT calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Net income	3,972)	3,826)	5,231)	1,286)	540)	4,572)
Deferred income tax expense (benefit)¹	446)	322)	802)	348)	(85)	(183)
Increase (decrease) in allowance for credit losses²	132)	(18)	183)	54)	(78)	84)
Increase (decrease) in equity equivalents³	578)	304)	985)	402)	(163)	(99)
Interest expense	694)	689)	793)	672)	588)	558)
Interest expense, operating lease liability⁴	607)	483)	458)	450)	533)	545)
Adjusted interest expense	1,301)	1,172)	1,251)	1,122)	1,121)	1,103)
Tax benefit of interest expense⁵	(273)	(246)	(263)	(236)	(235)	(322)
Adjusted interest expense, after taxes⁶	1,028)	925)	988)	887)	886)	781)
Interest income	(198)	(53)	(52)	(55)	(59)	(48)
Investment income, before taxes	(198)	(53)	(52)	(55)	(59)	(48)
Tax expense (benefit) of investment income⁷	42)	11)	11)	12)	12)	14)
Investment income, after taxes⁸	(156)	(42)	(41)	(43)	(47)	(34)
Net operating profit after taxes (NOPAT)	5,421)	5,014)	7,163)	2,531)	1,216)	5,220)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in equity equivalents to net income.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 17,753 × 3.42% = 607

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,301 × 21.00% = 273

⁶ Addition of after taxes interest expense to net income.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 198 × 21.00% = 42

⁸ Elimination of after taxes investment income.

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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.	FedEx Corp. NOPAT decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

FedEx Corp., cash operating taxes calculation

US$ in millions

12 months ended:	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Provision (benefit) for income taxes	1,391)	1,070)	1,443)	383)	115)	(219)
Less: Deferred income tax expense (benefit)	446)	322)	802)	348)	(85)	(183)
Add: Tax savings from interest expense	273)	246)	263)	236)	235)	322)
Less: Tax imposed on investment income	42)	11)	11)	12)	12)	14)
Cash operating taxes	1,177)	983)	893)	259)	423)	272)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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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.	FedEx Corp. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

FedEx Corp., invested capital calculation (financing approach)

US$ in millions

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Current portion of long-term debt	126)	82)	146)	51)	964)	1,342)
Long-term debt, less current portion	20,453)	20,182)	20,733)	21,952)	16,617)	15,243)
Operating lease liability¹	17,753)	16,930)	15,583)	14,118)	15,238)	15,142)
Total reported debt & leases	38,332)	37,194)	36,462)	36,121)	32,819)	31,727)
Common stockholders’ investment	26,088)	24,939)	24,168)	18,295)	17,757)	19,416)
Net deferred tax (assets) liabilities²	3,326)	2,886)	2,509)	1,815)	1,481)	1,604)
Allowance for credit losses³	472)	340)	358)	175)	121)	199)
Equity equivalents⁴	3,798)	3,226)	2,867)	1,990)	1,602)	1,803)
Accumulated other comprehensive (income) loss, net of tax⁵	1,327)	1,103)	732)	1,147)	865)	578)
Adjusted common stockholders’ investment	31,213)	29,268)	27,767)	21,432)	20,224)	21,797)
Invested capital	69,545)	66,462)	64,229)	57,553)	53,043)	53,524)

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

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 equity equivalents to common stockholders’ investment.

⁵ Removal of accumulated other comprehensive income.

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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.	FedEx Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

FedEx Corp., cost of capital calculations

May 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	63,985)	63,985)	÷	100,038)	=	0.64	0.64	×	16.30%	=	10.43%
Long-term debt, including current maturities³	18,300)	18,300)	÷	100,038)	=	0.18	0.18	×	3.50% × (1 – 21.00%)	=	0.51%
Operating lease liability⁴	17,753)	17,753)	÷	100,038)	=	0.18	0.18	×	3.42% × (1 – 21.00%)	=	0.48%
Total:	100,038)					1.00					11.41%

Based on: 10-K (reporting date: 2023-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

May 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	56,641)	56,641)	÷	92,839)	=	0.61	0.61	×	16.30%	=	9.94%
Long-term debt, including current maturities³	19,268)	19,268)	÷	92,839)	=	0.21	0.21	×	3.50% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	16,930)	16,930)	÷	92,839)	=	0.18	0.18	×	2.85% × (1 – 21.00%)	=	0.41%
Total:	92,839)					1.00					10.93%

Based on: 10-K (reporting date: 2022-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

May 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	78,820)	78,820)	÷	118,028)	=	0.67	0.67	×	16.30%	=	10.88%
Long-term debt, including current maturities³	23,625)	23,625)	÷	118,028)	=	0.20	0.20	×	3.40% × (1 – 21.00%)	=	0.54%
Operating lease liability⁴	15,583)	15,583)	÷	118,028)	=	0.13	0.13	×	2.94% × (1 – 21.00%)	=	0.31%
Total:	118,028)					1.00					11.73%

Based on: 10-K (reporting date: 2021-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

May 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	42,995)	42,995)	÷	80,398)	=	0.53	0.53	×	16.30%	=	8.72%
Long-term debt, including current maturities³	23,285)	23,285)	÷	80,398)	=	0.29	0.29	×	3.60% × (1 – 21.00%)	=	0.82%
Operating lease liability⁴	14,118)	14,118)	÷	80,398)	=	0.18	0.18	×	3.19% × (1 – 21.00%)	=	0.44%
Total:	80,398)					1.00					9.98%

Based on: 10-K (reporting date: 2020-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

May 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	44,283)	44,283)	÷	77,382)	=	0.57	0.57	×	16.30%	=	9.33%
Long-term debt, including current maturities³	17,862)	17,862)	÷	77,382)	=	0.23	0.23	×	3.50% × (1 – 21.00%)	=	0.64%
Operating lease liability⁴	15,238)	15,238)	÷	77,382)	=	0.20	0.20	×	3.50% × (1 – 21.00%)	=	0.54%
Total:	77,382)					1.00					10.51%

Based on: 10-K (reporting date: 2019-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

May 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	61,211)	61,211)	÷	93,023)	=	0.66	0.66	×	16.30%	=	10.73%
Long-term debt, including current maturities³	16,671)	16,671)	÷	93,023)	=	0.18	0.18	×	3.60% × (1 – 29.20%)	=	0.46%
Operating lease liability⁴	15,142)	15,142)	÷	93,023)	=	0.16	0.16	×	3.60% × (1 – 29.20%)	=	0.41%
Total:	93,023)					1.00					11.60%

Based on: 10-K (reporting date: 2018-05-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

FedEx Corp., economic spread ratio calculation, comparison to benchmarks

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,514)	(2,250)	(370)	(3,214)	(4,359)	(987)
Invested capital²	69,545)	66,462)	64,229)	57,553)	53,043)	53,524)
Performance Ratio
Economic spread ratio³	-3.61%	-3.39%	-0.58%	-5.58%	-8.22%	-1.84%
Benchmarks
Economic Spread Ratio, Competitors⁴
Uber Technologies Inc.	-0.37%	-70.60%	-19.78%	-46.89%	-55.41%	—
Union Pacific Corp.	-0.57%	1.25%	0.42%	-1.17%	0.23%	—
United Parcel Service Inc.	4.63%	15.83%	21.60%	-8.51%	2.92%	—

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,514 ÷ 69,545 = -3.61%

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.	FedEx Corp. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

FedEx Corp., economic profit margin calculation, comparison to benchmarks

	May 31, 2023	May 31, 2022	May 31, 2021	May 31, 2020	May 31, 2019	May 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,514)	(2,250)	(370)	(3,214)	(4,359)	(987)
Revenue	90,155)	93,512)	83,959)	69,217)	69,693)	65,450)
Performance Ratio
Economic profit margin²	-2.79%	-2.41%	-0.44%	-4.64%	-6.25%	-1.51%
Benchmarks
Economic Profit Margin, Competitors³
Uber Technologies Inc.	-0.15%	-36.19%	-18.22%	-88.56%	-80.17%	—
Union Pacific Corp.	-1.46%	3.01%	1.11%	-3.50%	0.60%	—
United Parcel Service Inc.	2.32%	7.06%	9.86%	-3.34%	1.43%	—

Based on: 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31), 10-K (reporting date: 2020-05-31), 10-K (reporting date: 2019-05-31), 10-K (reporting date: 2018-05-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -2,514 ÷ 90,155 = -2.79%

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.	FedEx Corp. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

FedEx Corp. (NYSE:FDX)

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