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:
- Statement of Comprehensive Income
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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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 showed significant volatility over the observed period. In 2020, the figure was negative at -428 million US dollars, indicating a loss. However, in 2021, there was a marked recovery with NOPAT reaching 11,380 million US dollars. This was followed by a sharp decline to 2,786 million in 2022. The profit improved modestly in 2023 to 3,005 million and further increased notably in 2024 to 6,733 million. Overall, the trend reflects a recovery phase with fluctuations, ending on a positive trajectory.
- Cost of capital
- The cost of capital displayed variability but remained within a relatively narrow range. Starting at 6.47% in 2020, it increased to its peak of 8.41% in 2021, followed by a slight decline to 8.03% in 2022 and a minor rise to 8.14% in 2023. In 2024, the cost of capital decreased to 7.0%. This suggests some fluctuations in the company’s risk profile or capital market conditions, but no extreme volatility.
- Invested capital
- The invested capital showed a generally increasing trend over the period. It started at 170,559 million US dollars in 2020, decreased somewhat in 2021 to 160,105 million, and then gradually increased each subsequent year, reaching the highest level of 186,730 million US dollars in 2024. This indicates ongoing capital investment or asset growth despite some short-term decline.
- Economic profit
- Economic profit remained negative throughout the entire period, highlighting an ongoing challenge in generating returns above the cost of capital. The loss was deepest in 2020 at -11,461 million US dollars, followed by an improvement to -2,092 million in 2021. However, the figure worsened again in 2022 and 2023, with losses rising to -10,405 million and -11,163 million, respectively. In 2024, the economic loss reduced to -6,337 million, showing some progress but still indicating that returns are not fully covering the cost of capital.
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.
- Economic Profit
- The economic profit exhibits significant fluctuations over the observed period. Starting at a substantial negative value of -11,461 million USD in 2020, it improves markedly in 2021 to -2,092 million USD. However, this improvement is short-lived as economic profit declines again in 2022 to -10,405 million USD and remains largely negative at -11,163 million USD in 2023. By 2024, there is a partial recovery to -6,337 million USD, indicating persistent but reduced losses compared to earlier years.
- Invested Capital
- Invested capital shows a generally increasing trend throughout the period. Beginning at 170,559 million USD in 2020, it decreases somewhat to 160,105 million USD in 2021. Following this dip, there is a steady increase year over year, reaching 164,218 million USD in 2022, 173,985 million USD in 2023, and ultimately 186,730 million USD in 2024. This suggests ongoing investment and expansion of the capital base.
- Economic Spread Ratio
- The economic spread ratio remains negative during the entire period, indicating that returns are consistently below the cost of capital. The ratio starts at -6.72% in 2020 and improves significantly to -1.31% in 2021, mirroring the pattern observed in economic profit. However, the ratio worsens again in subsequent years, registering -6.34% in 2022 and -6.42% in 2023, before improving to -3.39% in 2024. Despite the improvement in the final year, the negative values highlight ongoing challenges in generating sufficient returns on invested capital.
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 shows significant fluctuations over the analyzed period. Starting at a large negative value of -11,461 million USD at the end of 2020, it improved substantially in 2021 to -2,092 million USD. However, the figure deteriorated again in 2022 to -10,405 million USD and remained relatively low in 2023 at -11,163 million USD. In 2024, there is a notable improvement as the loss reduces to -6,337 million USD, indicating a partial recovery but still reflecting negative economic profit.
- Adjusted Company Revenues Excluding Ford Credit
- Revenues have shown a consistent upward trend throughout the period. Starting at 116,379 million USD in 2020, revenues increased steadily each year reaching 126,580 million USD in 2021, then experienced a more pronounced rise to 149,334 million USD in 2022. The growth continued in 2023 to 166,180 million USD and further to 173,381 million USD in 2024. This reflects sustained revenue expansion over the five years.
- Economic Profit Margin
- The economic profit margin followed a pattern similar to economic profit, remaining negative across all years but with some fluctuations. It began at -9.85% in 2020 and improved significantly in 2021 to -1.65%. Subsequently, the margin declined again in 2022 to -6.97% and slightly improved to -6.72% in 2023. By 2024, there is a further improvement to -3.66%, suggesting progress in managing profitability but still reflecting negative margins.
- Overall Analysis
- Despite a consistent increase in revenues, the company has faced ongoing challenges in generating positive economic profit and achieving positive economic profit margins. The negative economic profit points to costs or capital charges exceeding the returns generated. The notable improvement in 2021 followed by a setback indicates volatility in underlying profitability. The gradual improvement towards 2024, in both economic profit and margin, hints at potential operational or strategic adjustments contributing to better financial performance, though the company remains in a loss position economically.