Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
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Economic Profit
Ford Motor Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant fluctuations over the period. Starting with a negative value of -428 million USD in 2020, the NOPAT sharply improved to 11,380 million USD in 2021. However, this was followed by a pronounced decline in 2022 to 2,786 million USD. A modest recovery is seen in 2023 with a value of 3,005 million USD, and a more substantial increase occurs in 2024, reaching 6,733 million USD. Overall, the trend indicates considerable volatility but an improving trajectory post-2022.
- Cost of Capital
- The cost of capital rose from 6.46% in 2020 to a peak of 8.4% in 2021, then slightly decreased to 8.02% in 2022 and stabilized around 8.13% in 2023. In 2024, the cost of capital declined further to 6.99%. This suggests an initial increase in capital costs, potentially indicating higher perceived risk or market conditions followed by a gradual reduction, which may indicate improved investor confidence or changing market dynamics.
- Invested Capital
- Invested capital initially decreased from 170,559 million USD in 2020 to 160,105 million USD in 2021. Subsequently, it increased steadily in the following years, reaching 164,218 million USD in 2022, 173,985 million USD in 2023, and 186,730 million USD in 2024. This upward trend after 2021 indicates ongoing capital investments or asset growth over the latter part of the period.
- Economic Profit
- Economic profit remained negative throughout the analyzed period, indicating that returns did not consistently exceed the cost of capital. In 2020, the economic loss was particularly large at -11,449 million USD, improving significantly to -2,075 million USD in 2021. However, there was a reversal to larger negative values in 2022 and 2023, with losses of -10,390 million USD and -11,148 million USD respectively. By 2024, economic loss decreased substantially to -6,326 million USD but did not reach profitability. This pattern highlights ongoing challenges in generating returns above capital costs despite fluctuations in operating profit and capital costs.
Net Operating Profit after Taxes (NOPAT)
Ford Motor Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances for doubtful receivables.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Ford Motor Company.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense on Company debt excluding Ford Credit = Adjusted interest expense on Company debt excluding Ford Credit × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss) attributable to Ford Motor Company.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss) Attributable to Ford Motor Company
- There is significant volatility in the net income figures over the five-year span. The company experienced a substantial loss of $1,279 million at the end of 2020, followed by a remarkable recovery yielding a profit of $17,937 million in 2021. However, this was not sustained as a loss of $1,981 million was recorded again in 2022. The subsequent years show a positive trend with profits of $4,347 million in 2023 and $5,879 million in 2024, indicating improving profitability.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrors the patterns observed in net income but with less pronounced fluctuations. The figure was negative at -$428 million in 2020 but then increased sharply to $11,380 million in 2021. It declined substantially to $2,786 million in 2022 but then remained relatively steady with a slight increase to $3,005 million in 2023. In 2024, NOPAT shows a significant rise to $6,733 million, suggesting improved operational efficiency and profitability.
- Overall Trends and Insights
- The company's financial performance exhibits considerable cyclicality and recovery efforts throughout the reviewed period. After an initial loss in 2020, both profitability metrics surged in 2021 but could not be sustained into 2022. The recovery from 2022 onwards is steady, with both net income and NOPAT demonstrating growth, indicating improving operational results and successful management initiatives to increase profitability. By 2024, the positive momentum appears to strengthen, reflecting a more stable and profitable position.
Cash Operating Taxes
Ford Motor Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
- Provision for (benefit from) income taxes
- The provision for income taxes demonstrates significant volatility across the analyzed periods. In 2020, the provision was positive at 160 million US dollars, indicating tax expenses. This shifted dramatically in 2021 and 2022, where the company recorded negative provisions of -130 million and -864 million US dollars, respectively, suggesting benefits or tax credits during these years. Although still negative in 2023 at -362 million US dollars, the magnitude of the benefit decreased. In 2024, a notable reversal occurred, with the provision turning positive again to 1339 million US dollars, indicating substantial tax expenses compared to prior years.
- Cash operating taxes
- Cash operating taxes also varied markedly over the five-year horizon. The value was positive at 680 million US dollars in 2020, before plunging to a negative figure of -862 million in 2021, implying a cash inflow or tax refunds. In 2022, there was a significant increase to 2693 million US dollars, representing a sharp rise in cash outflows for taxes. This declined in subsequent years to 1245 million in 2023 and further to 918 million US dollars in 2024, indicating a reduction but remaining substantial compared to 2020 levels.
- Overall insight
- The tax-related figures exhibit considerable fluctuations, with periods of tax benefits transitioning into years of considerable tax expenses. The sharp negative provisions and negative cash operating taxes in 2021 suggest one-off tax credits or adjustments which were not sustained. The substantial increase in 2024's provision for income taxes corresponds with a more moderate cash tax payment relative to the peak in 2022. This pattern reflects a volatile tax environment or changing profitability and tax strategy within the company, which may warrant further investigation to understand the underlying causes.
Invested Capital
Ford Motor Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 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).
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 deferred revenue.
5 Addition of equity equivalents to equity attributable to Ford Motor Company.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable securities.
The financial data over the five-year period reveals several notable trends in the company's financial structure, specifically concerning its debt, equity, and invested capital.
- Total Reported Debt & Leases
- This metric decreased significantly from 162,998 million USD in 2020 to 139,485 million USD in 2021, indicating a notable reduction in debt and lease obligations. However, from 2021 onward, the debt level began rising again, reaching 160,862 million USD in 2024. This upward trend suggests increased borrowing or lease commitments over the last three years after the initial reduction.
- Equity Attributable to Ford Motor Company
- Equity experienced strong growth from 30,690 million USD in 2020 to 48,519 million USD in 2021, reflecting an improvement in the company's net asset base. However, equity declined slightly in the subsequent years, dropping to 43,242 million USD in 2022 and further to 42,773 million USD in 2023, before a modest recovery to 44,835 million USD in 2024. This fluctuation could indicate variable profitability, retained earnings impact, or other equity adjustments during the period.
- Invested Capital
- The invested capital showed a downward movement from 170,559 million USD in 2020 to 160,105 million USD in 2021, followed by a steady increase in subsequent years to reach 186,730 million USD in 2024. This rising trend from 2021 onward suggests continued investment in the company's operations, assets, or growth initiatives that may contribute to future revenue generation.
Overall, the data depicts a company that initially reduced its debt and invested capital while increasing equity in 2021 but then transitioned into a phase of expanding debt and invested capital with relatively stable but fluctuating equity levels through 2024. The increase in invested capital alongside rising debt could imply strategic investments financed partly by debt. The equity trends warrant further investigation to understand the factors affecting net asset value changes.
Cost of Capital
Ford Motor Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Ford Motor Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic profit of the company exhibits considerable fluctuations over the analyzed period. Starting at a substantial negative value of -11,449 million US dollars at the end of 2020, the figure improves significantly in 2021 to -2,075 million US dollars, indicating a reduction in losses. However, in 2022 and 2023, economic profit deteriorates again to around -10,390 million and -11,148 million US dollars respectively, before showing some recovery in 2024 to -6,326 million US dollars. Despite the improvement in 2024, the company consistently reports negative economic profit throughout this five-year span, suggesting ongoing challenges in generating value beyond its cost of capital.
The invested capital demonstrates a generally upward trend, increasing from 170,559 million US dollars at the end of 2020 to 186,730 million US dollars by the end of 2024. There is a slight dip in 2021 to 160,105 million US dollars, but this is followed by steady growth in subsequent years. This upward movement indicates continued investment in the company's operational assets or business expansion.
The economic spread ratio, which reflects the difference between return on invested capital and the cost of capital, remains negative throughout the period. It starts at -6.71% in 2020, improves markedly to -1.3% in 2021, then deteriorates again in the next two years, with values around -6.33% and -6.41% in 2022 and 2023 respectively. In 2024, the ratio improves to -3.39%, signaling partial recovery though still below zero. This persistent negative spread implies the company's returns on capital employed have consistently been insufficient to cover its cost of capital, adversely impacting profitability.
Overall, the data suggest that despite increasing invested capital and some short-term improvements, the company has struggled to generate positive economic profit and maintain an economic spread above zero. The recurring negative economic spread and economic profit highlight ongoing efficiency or profitability challenges that need to be addressed to enhance shareholder value.
Economic Profit Margin
Ford Motor Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Company revenues excluding Ford Credit | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted company revenues excluding Ford Credit | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| General Motors Co. | ||||||
| Tesla Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 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).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted company revenues excluding Ford Credit
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits significant fluctuations over the analyzed period. Notably, the company experienced a large negative economic profit of -11,449 million USD at the end of 2020, which improved substantially in 2021 to a lower loss of -2,075 million USD. However, this improvement was not sustained, as economic profit deteriorated again in 2022 and 2023, returning to values near the initial large losses (-10,390 million USD and -11,148 million USD respectively). By 2024, a notable recovery is observed, with economic profit improving to -6,326 million USD, although still negative.
- Adjusted Company Revenues Excluding Ford Credit
- Revenues show a consistent upward trend throughout the entire period. Starting at 116,379 million USD in 2020, the revenues increased steadily each year, reaching 173,381 million USD in 2024. This represents a considerable growth over the five years, indicating a sustained increase in core business sales excluding Ford Credit operations.
- Economic Profit Margin
- The economic profit margin follows a pattern analogous to the economic profit values. It starts at a deeply negative -9.84% in 2020, improves sharply to -1.64% in 2021, then declines again in 2022 and 2023 to -6.96% and -6.71% respectively, showing worsening profitability relative to revenue. By 2024, although still negative, there is an improvement to -3.65%, indicative of a partial turnaround in profitability efficiency against the company's revenues.
- Summary Insights
- Despite continuous growth in adjusted revenues over the period, the company consistently reports negative economic profit and economic profit margins, signifying that costs or capital charges have outweighed generated revenues. The fluctuations in economic profit and margin indicate volatility in underlying profitability, with a clear temporary improvement in 2021 that was not maintained. The partial recoveries in 2024 suggest some progress towards enhanced profitability, though losses remain substantial. Overall, the data reflects a challenging environment for profit generation, highlighting the need for cost management or operational efficiencies to convert revenue growth into positive economic profit.