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.
Economic Profit
Ford Motor Co., economic profit 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 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
= -11,439 – 9.00% × 179,555 = -27,598
Economic profit remained consistently negative throughout the period from 2021 to 2025, indicating that the entity failed to generate returns sufficient to cover its cost of capital. The most severe erosion of value occurred in 2025, with economic profit reaching a deficit of 27,598 million US dollars.
- Net Operating Profit After Taxes (NOPAT) Trends
- A high degree of volatility is observed in NOPAT. After a peak of 11,380 million US dollars in 2021, operating profits declined sharply in 2022 and 2023. Although a recovery trend emerged in 2024, reaching 6,721 million US dollars, this was followed by a substantial collapse in 2025, resulting in a negative NOPAT of 11,439 million US dollars.
- Invested Capital and Cost of Capital Dynamics
- Invested capital showed a steady upward trajectory from 2021 to 2024, increasing from 160,105 million US dollars to 186,723 million US dollars, before experiencing a slight contraction to 179,555 million US dollars in 2025. The cost of capital remained relatively stable over the five-year horizon, fluctuating between a high of 9.82% in 2021 and a low of 7.78% in 2024, eventually settling at 9.00% in 2025.
- Economic Profit Interpretation
- The sustained negative economic profit highlights a persistent inability to create shareholder value above the required rate of return. While the economic loss narrowed in 2024 to 7,806 million US dollars—driven by an increase in NOPAT and a decrease in the cost of capital—the 2025 performance represents a critical downturn. In 2025, the combination of a significant operating loss and the continued cost of maintaining a large capital base led to the largest economic deficit in the recorded period.
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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
= 2,402 × 4.70% = 113
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
= 1,367 × 21.00% = 287
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
= 1,836 × 21.00% = 386
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.
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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$772 million occurred in 2025.
The difference between the provision for income taxes and cash operating taxes was most pronounced in 2022 and 2025. In 2022, cash taxes were significantly higher than the reported provision, while in 2025, the provision was substantially lower than the cash taxes paid. These discrepancies likely stem from deferred tax assets/liabilities, tax credits, or changes in tax laws impacting the timing of tax recognition. The volatility in both measures suggests a complex tax position and potential sensitivity to changes in tax regulations or business performance.
The trend in cash operating taxes indicates a generally decreasing outflow from 2022 to 2025, despite the fluctuations in the provision for income taxes. This suggests that while the accounting provision is highly variable, the actual cash paid for taxes is becoming more moderate.
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Invested Capital
Ford Motor Co., invested capital calculation (financing approach)
US$ 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$35,952 million. This decline in equity, particularly in 2025, may be attributable to factors such as dividend payouts, share repurchases, or net losses impacting retained earnings.
The interplay between debt and equity in funding invested capital is noteworthy. While debt consistently increased, equity fluctuated and ultimately decreased, suggesting a growing reliance on debt to finance the company’s invested capital base, especially in the later years of the period. The decrease in invested capital in 2025, despite continued debt growth, is likely due to the significant reduction in equity.
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Cost of Capital
Ford Motor Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 55,254) | 55,254) | ÷ | 223,509) | = | 0.25 | 0.25 | × | 25.29% | = | 6.25% | ||
| Debt3 | 165,853) | 165,853) | ÷ | 223,509) | = | 0.74 | 0.74 | × | 4.62% × (1 – 21.00%) | = | 2.71% | ||
| Operating lease liability4 | 2,402) | 2,402) | ÷ | 223,509) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 223,509) | 1.00 | 9.00% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 36,702) | 36,702) | ÷ | 199,266) | = | 0.18 | 0.18 | × | 25.29% | = | 4.66% | ||
| Debt3 | 160,224) | 160,224) | ÷ | 199,266) | = | 0.80 | 0.80 | × | 4.85% × (1 – 21.00%) | = | 3.08% | ||
| Operating lease liability4 | 2,340) | 2,340) | ÷ | 199,266) | = | 0.01 | 0.01 | × | 4.50% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 199,266) | 1.00 | 7.78% | ||||||||||
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 | 50,863) | 50,863) | ÷ | 203,047) | = | 0.25 | 0.25 | × | 25.29% | = | 6.33% | ||
| Debt3 | 150,308) | 150,308) | ÷ | 203,047) | = | 0.74 | 0.74 | × | 4.85% × (1 – 21.00%) | = | 2.84% | ||
| Operating lease liability4 | 1,876) | 1,876) | ÷ | 203,047) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 203,047) | 1.00 | 9.20% | ||||||||||
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 | 52,737) | 52,737) | ÷ | 190,013) | = | 0.28 | 0.28 | × | 25.29% | = | 7.02% | ||
| Debt3 | 135,771) | 135,771) | ÷ | 190,013) | = | 0.71 | 0.71 | × | 3.84% × (1 – 21.00%) | = | 2.17% | ||
| Operating lease liability4 | 1,505) | 1,505) | ÷ | 190,013) | = | 0.01 | 0.01 | × | 3.70% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 190,013) | 1.00 | 9.21% | ||||||||||
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 | 71,916) | 71,916) | ÷ | 217,557) | = | 0.33 | 0.33 | × | 25.29% | = | 8.36% | ||
| Debt3 | 144,248) | 144,248) | ÷ | 217,557) | = | 0.66 | 0.66 | × | 2.75% × (1 – 21.00%) | = | 1.44% | ||
| Operating lease liability4 | 1,393) | 1,393) | ÷ | 217,557) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 217,557) | 1.00 | 9.82% | ||||||||||
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 | (27,598) | (7,806) | (13,010) | (12,337) | (4,336) | |
| Invested capital2 | 179,555) | 186,723) | 173,985) | 164,218) | 160,105) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -15.37% | -4.18% | -7.48% | -7.51% | -2.71% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| General Motors Co. | -5.90% | -3.32% | -2.17% | -3.20% | -1.67% | |
| Tesla Inc. | -19.72% | -14.69% | -8.62% | 2.22% | -9.82% | |
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 × -27,598 ÷ 179,555 = -15.37%
4 Click competitor name to see calculations.
The analysis of economic value added indicators from 2021 to 2025 reveals a persistent inability to generate returns exceeding the cost of capital. Economic profit remained negative throughout the entire five-year period, indicating a continuous destruction of shareholder value, with a particularly severe deterioration observed in the final year.
- Economic Profit Trends
- A significant downward trajectory in economic profit is observed between 2021 and 2023, with losses expanding from -4,336 million to -13,010 million. Although a partial recovery occurred in 2024, as losses narrowed to -7,806 million, this improvement was short-lived. In 2025, economic profit declined sharply to -27,598 million, representing the most substantial loss in the analyzed period.
- Invested Capital Evolution
- Invested capital showed a consistent upward trend from 2021 to 2024, increasing from 160,105 million to a peak of 186,723 million. This expansion of the capital base occurred despite the negative economic profit. A slight contraction in invested capital to 179,555 million was recorded in 2025, although this reduction in capital did not mitigate the decline in economic profitability.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative across all periods, confirming that the return on invested capital consistently failed to meet the weighted average cost of capital. The ratio deteriorated from -2.71% in 2021 to -7.51% in 2022 and remained relatively stable in 2023 at -7.48%. A moderate improvement to -4.18% was achieved in 2024, but the ratio collapsed to -15.37% in 2025. The widening of this negative spread in 2025 indicates a critical misalignment between the capital deployed and the returns generated.
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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 | (27,598) | (7,806) | (13,010) | (12,337) | (4,336) | |
| Company revenues excluding Ford Credit | 173,996) | 172,706) | 165,901) | 149,079) | 126,268) | |
| Add: Increase (decrease) in deferred revenue | 1,608) | 675) | 279) | 255) | 312) | |
| Adjusted company revenues excluding Ford Credit | 175,604) | 173,381) | 166,180) | 149,334) | 126,580) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -15.72% | -4.50% | -7.83% | -8.26% | -3.43% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| General Motors Co. | -6.81% | -3.72% | -2.48% | -3.81% | -2.46% | |
| Tesla Inc. | -14.42% | -10.12% | -5.21% | 1.33% | -7.24% | |
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 × -27,598 ÷ 175,604 = -15.72%
3 Click competitor name to see calculations.
The analysis of economic value added reveals a consistent failure to achieve positive economic profit over the observed five-year period, despite a steady increase in adjusted company revenues. While top-line growth was maintained throughout the timeframe, the returns generated were insufficient to cover the company's cost of capital, resulting in persistent value destruction.
- Revenue Trajectory
- Adjusted revenues excluding Ford Credit exhibited a consistent upward trend, growing from US$ 126,580 million in 2021 to US$ 175,604 million in 2025. This represents a sustained expansion in operational scale over the five-year duration.
- Economic Profit Volatility
- Economic profit remained negative for the entirety of the period, characterized by significant volatility. A sharp deterioration occurred between 2021 and 2023, with losses deepening from -US$ 4,336 million to -US$ 13,010 million. A moderate recovery was observed in 2024, as losses narrowed to -US$ 7,806 million, before a severe decline in 2025, where economic profit reached a period low of -US$ 27,598 million.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the instability of the absolute economic profit. The margin widened from -3.43% in 2021 to -8.26% in 2022, showing a trend of diminishing value efficiency. While the margin improved to -4.50% in 2024, it collapsed to -15.72% in 2025. This final decline indicates that the marginal increase in revenue was heavily outweighed by an increase in the cost of capital or a significant drop in operating performance during the final year.
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