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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Ford Motor Co. pages available for free this week:
- Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Ford Motor Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
Economic profit remained consistently negative throughout the analyzed five-year period, indicating that the returns generated from operations were insufficient to cover the cost of invested capital. While there was a partial recovery in operating performance in 2024, the period concluded with a significant erosion of economic value in 2025.
- Net Operating Profit After Taxes (NOPAT)
- A high degree of volatility is observed in NOPAT. After a peak of 11,380 million in 2021, profits declined sharply in 2022 and 2023. Although a recovery occurred in 2024, reaching 6,721 million, the 2025 fiscal year saw a reversal into a substantial operating loss of 11,439 million.
- Invested Capital and Cost of Capital
- Invested capital showed a steady upward trajectory from 160,105 million in 2021 to a peak of 186,723 million in 2024, before slightly contracting to 179,555 million in 2025. Simultaneously, the cost of capital fluctuated, reaching a minimum of 7.72% in 2024 before rising again to 8.92% in 2025. This growth in the capital base increased the total capital charge required to achieve a positive economic profit.
- Economic Profit Analysis
- The economic profit trend mirrors the instability of NOPAT. The deepest deficits occurred in 2022 and 2023, exceeding 12,000 million. Despite a reduction in the deficit to 7,693 million in 2024—driven by improved NOPAT and a lower cost of capital—the economic profit plummeted to its lowest level of 27,452 million in 2025. This suggests that the cost of maintaining the invested capital base far exceeded the operating returns during the final year of the period.
Net Operating Profit after Taxes (NOPAT)
Ford Motor Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 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 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
The financial performance, as indicated by Net Income and Net Operating Profit After Taxes (NOPAT), exhibits significant fluctuations over the five-year period. While Net Income demonstrates considerable volatility, NOPAT provides a more focused view of operational profitability before considering financing costs and taxes.
- Overall Trend in NOPAT
- NOPAT experienced a substantial decline from 2021 to 2022, followed by a period of relative stability between 2022 and 2024. However, a dramatic decrease is observed in 2025, resulting in a negative value. This suggests a significant deterioration in core operational profitability in the most recent year.
- NOPAT – 2021 to 2022
- A marked reduction in NOPAT is evident, decreasing from US$11,380 million in 2021 to US$2,786 million in 2022. This represents a decrease of approximately 75.6%. This decline suggests a weakening of the company’s ability to generate profit from its core operations during this period.
- NOPAT – 2022 to 2024
- From 2022 to 2024, NOPAT shows a modest recovery. It increased from US$2,786 million to US$6,721 million. While this indicates improvement, the level in 2024 remains below the 2021 peak. The increase from 2023 to 2024 is particularly notable, representing a growth of over 123.8%.
- NOPAT – 2024 to 2025
- The positive trend reverses sharply in 2025, with NOPAT plummeting to a loss of US$-11,439 million. This represents a substantial downturn and a significant deviation from the preceding year’s performance. The magnitude of this decline is considerably larger than the initial decrease observed between 2021 and 2022.
- Relationship between Net Income and NOPAT
- While both metrics fluctuate, the trends are not always aligned. For example, Net Income shows a loss in 2022, while NOPAT remains positive, albeit significantly reduced. Conversely, Net Income is positive in 2023 and 2024, aligning with the increasing NOPAT. However, the substantial negative Net Income and NOPAT in 2025 indicate a widespread operational and financial challenge.
The considerable volatility in both Net Income and NOPAT suggests the company’s profitability is sensitive to external factors or internal operational changes. The dramatic decline in NOPAT in 2025 warrants further investigation to determine the underlying causes and potential implications for future performance.
Cash Operating Taxes
Ford Motor Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The provision for income taxes and cash operating taxes exhibited significant fluctuations between 2021 and 2025. A notable divergence between these two figures is apparent throughout the period, suggesting substantial non-cash tax effects are influencing the reported provision.
- Provision for Income Taxes
- The provision for income taxes began at negative US$130 million in 2021, indicating a benefit. This benefit increased substantially to negative US$864 million in 2022. In 2023, the provision shifted to a negative US$362 million, a reduction in the benefit compared to the prior year. A significant reversal occurred in 2024, with a positive provision of US$1,339 million. This trend continued with a substantial negative provision of negative US$3,668 million in 2025.
- Cash Operating Taxes
- Cash operating taxes were negative US$862 million in 2021, representing a net tax recovery. A dramatic increase to positive US$2,693 million was observed in 2022, indicating a substantial cash outflow for taxes. The cash taxes decreased to US$1,245 million in 2023 and further to US$918 million in 2024. A slight decrease to US$772 million occurred in 2025.
The difference between the provision for income taxes and cash operating taxes was most pronounced in 2022 and 2025. In 2022, cash taxes were significantly higher than the reported provision, while in 2025, the provision was substantially lower than the cash taxes paid. These discrepancies likely stem from deferred tax assets/liabilities, tax credits, or changes in tax laws impacting the timing of tax recognition. The volatility in both measures suggests a complex tax position and potential sensitivity to changes in tax regulations or business performance.
The trend in cash operating taxes indicates a generally decreasing outflow from 2022 to 2025, despite the fluctuations in the provision for income taxes. This suggests that while the accounting provision is highly variable, the actual cash paid for taxes is becoming more moderate.
Invested Capital
Ford Motor Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 reported invested capital demonstrates an overall increasing trend from 2021 to 2024, followed by a decrease in 2025. A closer examination of the components contributing to invested capital reveals further insights into these movements.
- Total Invested Capital
- Invested capital increased from US$160,105 million in 2021 to US$186,723 million in 2024, representing a cumulative growth of approximately 16.6%. However, a decline of approximately 3.8% was observed in 2025, with invested capital decreasing to US$179,555 million. This suggests a potential shift in capital allocation strategy or operational needs towards the end of the analyzed period.
- Debt & Leases
- Total reported debt and leases exhibited a consistent upward trend throughout the period, increasing from US$139,485 million in 2021 to US$165,738 million in 2025. The rate of increase was relatively stable, with annual increments ranging from approximately US$3.2 billion to US$9.7 billion. This indicates a reliance on debt financing to support operations and growth initiatives.
- Equity
- Equity attributable to Ford Motor Company experienced a decrease from US$48,519 million in 2021 to US$42,773 million in 2022, followed by a slight recovery to US$44,835 million in 2024. However, a more substantial decrease was noted in 2025, with equity falling to US$35,952 million. This decline in equity, particularly in 2025, may be attributable to factors such as dividend payouts, share repurchases, or net losses impacting retained earnings.
The interplay between debt and equity in funding invested capital is noteworthy. While debt consistently increased, equity fluctuated and ultimately decreased, suggesting a growing reliance on debt to finance the company’s invested capital base, especially in the later years of the period. The decrease in invested capital in 2025, despite continued debt growth, is likely due to the significant reduction in equity.
Cost of Capital
Ford Motor Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Ford Motor Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analyzed period is characterized by a consistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the cost of capital. This resulted in a persistent destruction of economic value throughout the five-year duration.
- Economic Profit Trends
- Economic profit remained negative across all reported years. A significant decline occurred between 2021 and 2023, with losses expanding from -4,162 million to -12,867 million. While 2024 showed a partial recovery with losses narrowing to -7,693 million, 2025 experienced a severe deterioration, reaching a period low of -27,452 million.
- Invested Capital Dynamics
- Invested capital followed a general upward trajectory from 2021 through 2024, increasing from 160,105 million to 186,723 million. This growth indicates an expansion of the capital base despite the lack of economic profit. A slight contraction occurred in 2025, with invested capital decreasing to 179,555 million.
- Economic Spread Ratio Performance
- The economic spread ratio remained consistently negative, reflecting a failure to achieve a positive spread over the required rate of return. The ratio shifted from -2.60% in 2021 to -7.42% in 2022, remaining relatively stable through 2023. A moderate improvement was observed in 2024 at -4.12%, before a sharp collapse to -15.29% in 2025, marking the highest level of value destruction relative to the invested capital base in the observed period.
Economic Profit Margin
Ford Motor Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted company revenues excluding Ford Credit
= 100 × ÷ =
3 Click competitor name to see calculations.
Analysis of the financial performance between 2021 and 2025 reveals a significant divergence between top-line revenue growth and economic value creation. While adjusted revenues expanded consistently throughout the period, the company failed to generate positive economic profit, indicating that the returns on invested capital remained below the cost of capital.
- Economic Profit Trends
- Economic profit remained negative throughout the five-year period, signaling continuous economic value destruction. Losses widened from 4,162 million USD in 2021 to 12,867 million USD by 2023. Although a partial recovery was observed in 2024, with losses narrowing to 7,693 million USD, the 2025 fiscal year saw a sharp deterioration, with economic profit falling to 27,452 million USD.
- Adjusted Revenue Growth
- A consistent upward trend is observed in adjusted company revenues excluding Ford Credit. Revenues increased annually, rising from 126,580 million USD in 2021 to 175,604 million USD in 2025. This growth demonstrates a steady increase in scale, yet it was insufficient to offset the factors driving negative economic profit.
- Economic Profit Margin Dynamics
- The economic profit margin reflects the volatility and inefficiency of value creation relative to revenue. The margin dropped from -3.29% in 2021 to -8.16% in 2022, followed by a period of relative stability in 2023 (-7.74%) and a notable improvement in 2024 (-4.44%). However, this trend reversed aggressively in 2025, with the margin reaching its lowest point at -15.63%, indicating that economic losses grew at a rate far exceeding revenue growth during the final year of the analysis.