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:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Analysis of Debt
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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 financial data reveals several notable trends and shifts in key performance indicators over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced significant fluctuation throughout the observed years. In 2020, the company reported a substantial loss of 428 million USD. This turned into a considerable profit in 2021, reaching 11,380 million USD, representing a strong recovery or operational improvement. However, the profit sharply declined in 2022 to 2,786 million USD and remained relatively stable but low in 2023 at 3,005 million USD. In 2024, there was a noticeable increase to 6,733 million USD, indicating a positive growth trend in operational profitability compared to the previous two years.
- Cost of Capital
- The cost of capital fluctuated moderately during the period. It started at 6.37% in 2020, increased to a peak of 8.27% in 2021, then slightly decreased in the following years to 7.91% in 2022 and 8.03% in 2023, before declining more significantly to 6.92% in 2024. This pattern suggests varying market or company risk perceptions, with a potential reduction in risk or improved capital structure costs near the end of the period.
- Invested Capital
- Invested capital has shown a generally increasing trend. It decreased from 170,559 million USD in 2020 to 160,105 million USD in 2021, possibly reflecting divestitures or capital reduction efforts. Thereafter, it steadily rose each year, reaching 164,218 million USD in 2022, 173,985 million USD in 2023, and 186,730 million USD in 2024, indicating ongoing investments or asset growth supporting company operations.
- Economic Profit
- Economic profit remained negative throughout the period, indicating the company failed to generate returns above its cost of capital. The largest loss was in 2020 at -11,297 million USD, which improved markedly by 2021 to -1,854 million USD. However, the economic profit deteriorated again in 2022 and 2023 to -10,200 million and -10,967 million USD, respectively, before improving to -6,183 million USD in 2024. Despite some recovery, the persistent negative values suggest challenges in creating value beyond the capital costs.
Overall, the company showed volatility in profitability metrics, particularly in NOPAT, with a strong rebound in 2021 and a partial recovery in 2024. The cost of capital varied but trended downward toward the end of the period. Invested capital increased after an initial drop, reflecting renewed investment activity. However, the sustained negative economic profit highlights ongoing difficulties in generating returns exceeding the capital cost, suggesting potential inefficiencies or market challenges that require management attention.
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 experienced significant fluctuations during the period under review. It started at -11,297 million USD at the end of 2020 and improved substantially to -1,854 million USD by the end of 2021. However, this was followed by a deterioration to -10,200 million USD in 2022 and a slight further decline to -10,967 million USD in 2023. By the end of 2024, the economic loss decreased again to -6,183 million USD, indicating some recovery though economic profit remained negative throughout the period.
- Invested Capital
- The invested capital showed a general upward trend over the five-year span. Beginning at 170,559 million USD in 2020, it declined slightly in 2021 to 160,105 million USD. Subsequently, invested capital increased steadily each year, reaching 164,218 million USD in 2022, 173,985 million USD in 2023, and 186,730 million USD by the end of 2024. This pattern indicates ongoing investment or asset accumulation despite economic profit challenges.
- Economic Spread Ratio
- The economic spread ratio remained negative throughout the period, suggesting that the return on invested capital was consistently below the cost of capital. Beginning at -6.62% in 2020, it improved significantly to -1.16% in 2021 but declined again to -6.21% in 2022. It remained relatively stable in 2023 at -6.3%, and then improved to -3.31% in 2024. While the improvements in 2021 and 2024 suggest some progress in operational efficiency or profitability, continued negative values highlight ongoing value destruction.
- Summary of Patterns and Insights
- Overall, the data reveals a company facing persistent economic losses despite increases in invested capital. The temporary improvement in economic profit and spread ratio in 2021 was not sustained in the subsequent years, indicating potential challenges in generating returns above the cost of capital. Although invested capital increased steadily after 2021, the economic spread ratio's negative values reinforce that those investments have not yet translated into positive economic profit. Recent improvements towards 2024 imply possible strategic changes or operational improvements that are beginning to mitigate losses.
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.
- Revenue Trends
- Revenues, excluding Ford Credit, demonstrated consistent growth across the periods analyzed. Starting at $116,379 million in 2020, the figure increased annually to reach $173,381 million by 2024. This represents a strong upward trend in core operating income.
- Economic Profit Analysis
- Economic profit values were negative throughout the observed years, signaling consistent economic losses. The loss narrowed significantly in 2021 from -$11,297 million in 2020 to -$1,854 million. However, this improvement was not sustained, as economic profit deteriorated sharply in 2022 and 2023, reaching -$10,200 million and -$10,967 million, respectively. By 2024, losses lessened to -$6,183 million, indicating partial recovery but still substantial negative economic profit.
- Economic Profit Margin
- The economic profit margin followed a pattern similar to economic profit. In 2020, the margin stood at -9.71%, showing significant economic inefficiency. This margin dramatically improved to -1.46% in 2021, reflecting better profitability relative to revenues. The margin then deteriorated in the following two years, moving to -6.83% in 2022 and -6.60% in 2023. By 2024, the margin improved again to -3.57%, aligning with the observed pattern of partial recovery in economic profit.
- Summary of Financial Performance
- Despite the steady increase in company revenues, economic profits remained negative across all years, indicating that the company's costs or capital charges outweighed its income consistently. The considerable fluctuations in both economic profit and economic profit margin suggest volatility in profitability efficiency, with a notable recovery in 2021 and again in 2024. The underlying drivers for these swings could be related to cost management, capital structure, or market conditions, warranting further analysis into operational and financial strategies.