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:
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Net Profit Margin since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) 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, 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
= – × =
The analysis of the financial data reveals notable fluctuations and trends in key performance measures over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows significant volatility. Initially, there was a large negative value in 2020, followed by a sharp increase to a positive peak in 2021. After 2021, NOPAT declined dramatically in 2022 but then gradually increased again in 2023 and 2024. Although the 2024 value improves considerably compared to 2023, it remains below the peak observed in 2021.
- Cost of Capital
- The cost of capital exhibits moderate fluctuations within a narrow band. Starting at 6.4% in 2020, it peaked at 8.31% in 2021, then gradually declined in subsequent years, reaching 6.94% in 2024. This indicates some variability in the overall capital expense, with the highest rate coinciding with the year of peak NOPAT.
- Invested Capital
- Invested capital shows a general upward trend over the period. Despite a decrease from 2020 to 2021, the invested capital consistently increased from 2021 through to 2024, indicating ongoing investment or asset growth in recent years. The overall growth suggests an expansion in the company’s asset base or capital employed.
- Economic Profit
- Economic profit remains negative throughout all periods, indicating the company consistently operated below its cost of capital. Although the economic loss improved substantially from 2020 to 2021, it deteriorated again sharply in 2022 and 2023, before improving somewhat in 2024. Despite the improvement in later years, the economic profit figures highlight persistent challenges in generating returns above the cost of capital.
Overall, the data suggests a company experiencing considerable fluctuations in profitability and value creation. While operating profit shows recovery trends after initial losses, and invested capital growth points to increased resources, the continuous negative economic profit underscores difficulties in generating returns exceeding capital costs. The variation in cost of capital adds complexity to this scenario, impacting the assessment of value generation over time.
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 analysis of the financial metrics over the five-year period reveals distinct trends in economic profit, invested capital, and economic spread ratio.
- Economic Profit
- The economic profit shows a fluctuating negative trend. Beginning from a significant loss of -11,348 million US dollars in 2020, the loss reduced sharply to -1,928 million in 2021, indicating an improvement. However, the economic profit worsened again in the following years, with losses of -10,263 million in 2022 and -11,027 million in 2023. In 2024, there is a noticeable improvement as the loss decreases considerably to -6,230 million, though it remains negative.
- Invested Capital
- Invested capital demonstrates a consistent upward trend over the period. Starting at 170,559 million US dollars in 2020, it slightly decreased to 160,105 million in 2021 but then increased steadily each year thereafter, reaching 186,730 million in 2024. This increase suggests ongoing investment in assets or capital expenditures despite the fluctuating economic profit.
- Economic Spread Ratio
- The economic spread ratio remains negative throughout the period, reflecting that the returns on invested capital are below the cost of capital. It starts at -6.65% in 2020, improves significantly to -1.20% in 2021, but this improvement is not sustained. The ratio worsens again to -6.25% in 2022 and -6.34% in 2023, indicating declining value creation or efficiency. By 2024, it improves to -3.34%, suggesting some recovery but still indicating losses relative to the cost of capital.
Overall, the data suggests that the company has been facing challenges in generating positive economic profit and achieving returns above its cost of capital. Despite these challenges, the firm has continued to increase its invested capital, which might point to strategic investments aimed at future growth or operational improvements. The partial recoveries in economic profit and economic spread ratio in 2024 indicate some progress, yet the persistent negative values highlight ongoing financial performance concerns.
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.
- Adjusted Company Revenues Excluding Ford Credit
- The adjusted company revenues show a consistent upward trend over the five-year period. Beginning at $116,379 million in 2020, revenues increased annually, reaching $173,381 million in 2024. This represents a steady growth trajectory, indicating an expansion in core business activities excluding financial services.
- Economic Profit
- The economic profit exhibits significant volatility and remains negative throughout the period, indicating that the company did not generate value above its cost of capital in these years. In 2020, the economic profit stood at -$11,348 million, improving sharply to -$1,928 million in 2021, suggesting a temporary reduction in losses. However, economic profit deteriorated again in 2022 and 2023 with values close to those of 2020 (-$10,263 million and -$11,027 million respectively), before showing improvement in 2024 to -$6,230 million. Despite these improvements towards 2024, economic profit remains unfavorable and indicates ongoing challenges in value creation relative to capital costs.
- Economic Profit Margin
- The economic profit margin mirrors the trends seen in absolute economic profit, remaining negative in all years observed. The margin improved markedly from -9.75% in 2020 to -1.52% in 2021, reflecting the temporary improvement in profitability relative to revenues. However, the margin declined again in 2022 and 2023 to -6.87% and -6.64%, respectively, before improving to -3.59% in 2024. Despite fluctuations, the trend suggests some recovery in the efficiency of profit generation relative to revenue, but economic profit margin continues to be negative, emphasising ongoing challenges in operational or capital efficiency.