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
GE Aerospace, 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
= 9,398 – 21.07% × 38,668 = 1,253
The financial trajectory between 2021 and 2025 indicates a significant transition from substantial economic value destruction to a state of positive economic profit. The company shifted from a deep deficit in 2021 to creating economic value by 2025, despite a consistently rising cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A strong recovery is observed in NOPAT, which moved from a loss of 1,820 million USD in 2021 to a peak of 10,514 million USD in 2023. While a decline occurred in 2024, the figure rebounded to 9,398 million USD by 2025, demonstrating a sustained improvement in operational profitability compared to the start of the period.
- Cost of Capital
- The cost of capital exhibits a steady and uninterrupted upward trend, rising from 16.15% in 2021 to 21.07% in 2025. This increase indicates a higher hurdle rate for investments and an increase in the cost of funding the capital base over the five-year duration.
- Invested Capital
- A significant downward trend in invested capital is evident, decreasing from 72,026 million USD in 2021 to a low of 37,678 million USD in 2024, before a slight increase to 38,668 million USD in 2025. This reduction represents a substantial contraction of the capital base, which effectively lowered the total capital charge required to achieve economic profit.
- Economic Profit
- Economic profit transitioned from a severe deficit of 13,452 million USD in 2021 to a positive 1,253 million USD in 2025. The most critical pivot occurred in 2023, when the company first achieved a positive economic profit of 593 million USD. The results suggest that the combined effect of increasing NOPAT and a leaner invested capital base was sufficient to overcome the headwinds of a rising cost of capital.
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Net Operating Profit after Taxes (NOPAT)
GE Aerospace, 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 allowance for credit losses.
3 Addition of increase (decrease) in deferred income.
4 Addition of increase (decrease) in liability for product warranties.
5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to the Company.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,063 × 4.70% = 50
7 2025 Calculation
Tax benefit of interest and other financial charges = Adjusted interest and other financial charges × Statutory income tax rate
= 893 × 21.00% = 188
8 Addition of after taxes interest expense to net income (loss) attributable to the Company.
9 Elimination of discontinued operations.
The financial performance, as indicated by Net Income and Net Operating Profit After Taxes (NOPAT), demonstrates a significant recovery and subsequent stabilization over the observed period. A substantial shift from net loss to profitability is evident, with NOPAT exhibiting a particularly strong upward trajectory before leveling off.
- Net Income
- Net income attributable to the Company experienced a dramatic turnaround. A considerable loss of US$6,520 million in 2021 was followed by a profit of US$225 million in 2022. This positive trend continued with substantial increases in 2023 and 2024, reaching US$9,481 million and US$6,556 million respectively. A slight decrease to US$8,704 million is observed in 2025, though remaining significantly above prior year levels.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrored the improvement in net income, though with differing magnitudes. A loss of US$1,820 million in 2021 transitioned to a profit of US$1,827 million in 2022. The most substantial growth occurred between 2022 and 2023, with NOPAT increasing to US$10,514 million. A decrease to US$7,561 million occurred in 2024, followed by a recovery to US$9,398 million in 2025. While the 2024 decrease is notable, the 2025 value remains considerably higher than both 2021 and 2022 figures.
The divergence between the growth rates of Net Income and NOPAT suggests potential influences from non-operating items, such as financing costs or gains/losses on asset sales, impacting the overall net income figure. The substantial increase in NOPAT from 2022 to 2023 indicates a significant improvement in core operational profitability. The leveling off of NOPAT growth in the later years suggests a maturing of operational improvements or the emergence of new challenges affecting operational performance.
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Cash Operating Taxes
GE Aerospace, cash operating taxes calculation
US$ 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 distinct patterns over the five-year period. The provision for income taxes fluctuated significantly, while cash operating taxes generally increased, though with some variability.
- Provision for Income Taxes
- In 2021, a benefit for income taxes of US$286 million was recorded. This was followed by a provision of US$476 million in 2022, representing a substantial shift from the prior year. The provision continued to increase significantly in 2023, reaching US$1,162 million. A slight decrease was observed in 2024, with a provision of US$962 million, before rising again to US$1,405 million in 2025. This indicates considerable volatility in the reported income tax expense.
- Cash Operating Taxes
- Cash operating taxes began at US$141 million in 2021. A marked increase occurred in 2022, with cash taxes reaching US$1,464 million. In 2023, cash operating taxes decreased to US$793 million, a substantial decline from the previous year. A subsequent increase to US$999 million was noted in 2024, and further growth was observed in 2025, with cash taxes reaching US$1,496 million. The trend suggests a general upward trajectory in cash taxes paid, despite the intermediate decrease in 2023.
The divergence between the provision for income taxes and cash operating taxes suggests potential differences between book and tax accounting treatments. The significant benefit in 2021, coupled with the subsequent increases in both measures, warrants further investigation into the underlying factors driving these changes, such as changes in tax laws, deferred tax asset realization, or shifts in taxable income.
The increase in cash operating taxes from 2021 to 2025, despite the fluctuations in the provision for income taxes, could indicate improved operational profitability or a reduction in tax-saving strategies. The decrease in cash taxes in 2023, however, interrupts this trend and requires additional scrutiny.
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Invested Capital
GE Aerospace, invested capital calculation (financing approach)
US$ 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 income.
5 Addition of liability for product warranties.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of leasehold costs and manufacturing plant under construction.
A consistent decline in invested capital is observed over the five-year period. This reduction is driven by decreases in both total reported debt & leases and shareholders’ equity. The rate of decline appears to moderate in the final year of the observed period.
- Total Reported Debt & Leases
- Total reported debt & leases decreased from US$38,033 million in 2021 to US$21,557 million in 2025. The most significant reduction occurred between 2021 and 2023, with a decrease of US$15,096 million. The decline slowed considerably between 2023 and 2025, with an increase of US$179 million.
- Shareholders’ Equity
- Shareholders’ equity experienced a similar downward trend, falling from US$40,310 million in 2021 to US$18,677 million in 2025. The largest decrease in shareholders’ equity was noted between 2022 and 2024, amounting to US$17,024 million. The rate of decline also lessened between 2024 and 2025, with a decrease of US$665 million.
- Invested Capital
- Invested capital, calculated as the sum of total reported debt & leases and shareholders’ equity, decreased from US$72,026 million in 2021 to US$38,668 million in 2025. The most substantial decrease in invested capital occurred between 2021 and 2023, with a reduction of US$21,832 million. While still decreasing, the decline in invested capital lessened between 2024 and 2025, with an increase of US$990 million.
The concurrent declines in both debt and equity suggest a potential shift in capital structure, possibly through debt repayment, share buybacks, or dividend distributions. The stabilization of invested capital in the final year warrants further investigation to determine the underlying causes and potential implications for future performance.
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Cost of Capital
GE Aerospace, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 313,448) | 313,448) | ÷ | 335,069) | = | 0.94 | 0.94 | × | 22.30% | = | 20.86% | ||
| Preferred stock | —) | —) | ÷ | 335,069) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Borrowings3 | 20,558) | 20,558) | ÷ | 335,069) | = | 0.06 | 0.06 | × | 4.03% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 1,063) | 1,063) | ÷ | 335,069) | = | 0.00 | 0.00 | × | 4.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 335,069) | 1.00 | 21.07% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 219,069) | 219,069) | ÷ | 238,979) | = | 0.92 | 0.92 | × | 22.30% | = | 20.44% | ||
| Preferred stock | —) | —) | ÷ | 238,979) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Borrowings3 | 18,805) | 18,805) | ÷ | 238,979) | = | 0.08 | 0.08 | × | 4.06% × (1 – 21.00%) | = | 0.25% | ||
| Operating lease liability4 | 1,105) | 1,105) | ÷ | 238,979) | = | 0.00 | 0.00 | × | 4.60% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 238,979) | 1.00 | 20.71% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 148,601) | 148,601) | ÷ | 171,263) | = | 0.87 | 0.87 | × | 22.30% | = | 19.35% | ||
| Preferred stock | —) | —) | ÷ | 171,263) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Borrowings3 | 20,689) | 20,689) | ÷ | 171,263) | = | 0.12 | 0.12 | × | 3.95% × (1 – 21.00%) | = | 0.38% | ||
| Operating lease liability4 | 1,973) | 1,973) | ÷ | 171,263) | = | 0.01 | 0.01 | × | 4.40% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 171,263) | 1.00 | 19.76% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 88,548) | 88,548) | ÷ | 128,146) | = | 0.69 | 0.69 | × | 22.30% | = | 15.41% | ||
| Preferred stock | 5,795) | 5,795) | ÷ | 128,146) | = | 0.05 | 0.05 | × | 5.00% | = | 0.23% | ||
| Borrowings3 | 31,410) | 31,410) | ÷ | 128,146) | = | 0.25 | 0.25 | × | 4.19% × (1 – 21.00%) | = | 0.81% | ||
| Operating lease liability4 | 2,393) | 2,393) | ÷ | 128,146) | = | 0.02 | 0.02 | × | 3.80% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 128,146) | 1.00 | 16.50% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 106,447) | 106,447) | ÷ | 156,437) | = | 0.68 | 0.68 | × | 22.30% | = | 15.17% | ||
| Preferred stock | 5,935) | 5,935) | ÷ | 156,437) | = | 0.04 | 0.04 | × | 5.00% | = | 0.19% | ||
| Borrowings3 | 41,207) | 41,207) | ÷ | 156,437) | = | 0.26 | 0.26 | × | 3.51% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 2,848) | 2,848) | ÷ | 156,437) | = | 0.02 | 0.02 | × | 4.00% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 156,437) | 1.00 | 16.15% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Borrowings. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
GE Aerospace, 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 | 1,253) | (242) | 593) | (9,202) | (13,452) | |
| Invested capital2 | 38,668) | 37,678) | 50,194) | 66,842) | 72,026) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 3.24% | -0.64% | 1.18% | -13.77% | -18.68% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | -5.82% | -35.12% | -15.06% | -20.44% | -19.05% | |
| Caterpillar Inc. | -6.93% | -2.36% | -2.42% | -6.34% | -5.74% | |
| Eaton Corp. plc | -5.09% | -6.26% | -7.84% | -9.74% | -9.35% | |
| Honeywell International Inc. | -4.94% | -3.97% | -2.12% | -3.10% | -2.01% | |
| Lockheed Martin Corp. | 12.79% | 11.78% | 18.22% | 14.24% | 15.22% | |
| RTX Corp. | -0.82% | -2.94% | -4.69% | -4.74% | -4.20% | |
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 × 1,253 ÷ 38,668 = 3.24%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 demonstrates a transition from substantial value destruction toward consistent value creation. This shift is characterized by a significant reduction in the capital base and a corresponding recovery in economic profitability.
- Economic Profit Trends
- A volatile but upward trend is observed in economic profit. The period began with significant losses, peaking at a deficit of 13,452 million US$ in 2021. While a recovery began in 2022, the first positive economic profit of 593 million US$ was achieved in 2023. Despite a minor retraction to -242 million US$ in 2024, the metric reached its highest point in 2025 at 1,253 million US$, indicating that the entity is now generating returns in excess of its cost of capital.
- Invested Capital Dynamics
- A consistent downward trend in invested capital occurred between 2021 and 2024, decreasing from 72,026 million US$ to 37,678 million US$. This represents a reduction of approximately 47.6% over four years, suggesting a strategic contraction of the asset base or significant divestments. This trend stabilized in 2025 with a slight increase to 38,668 million US$.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the recovery of economic profit, shifting from deeply negative territory to positive yields. The ratio improved from -18.68% in 2021 to -13.77% in 2022, eventually crossing into positive territory in 2023 at 1.18%. Following a brief dip to -0.64% in 2024, the ratio peaked at 3.24% in 2025. This progression indicates a marked improvement in capital efficiency, as the spread between the return on invested capital and the cost of capital has widened in favor of the entity.
The overall correlation between the shrinking invested capital base and the rising economic spread ratio suggests that the improvement in value creation is driven not only by operational recovery but also by a more streamlined and efficient allocation of capital.
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Economic Profit Margin
GE Aerospace, 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 | 1,253) | (242) | 593) | (9,202) | (13,452) | |
| Sales of equipment and services | 42,322) | 35,121) | 64,565) | 73,602) | 71,090) | |
| Add: Increase (decrease) in deferred income | 10) | (23) | (61) | 134) | 266) | |
| Adjusted sales of equipment and services | 42,332) | 35,098) | 64,504) | 73,736) | 71,356) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.96% | -0.69% | 0.92% | -12.48% | -18.85% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | -3.49% | -26.54% | -8.69% | -15.61% | -15.13% | |
| Caterpillar Inc. | -7.00% | -2.21% | -2.10% | -6.14% | -6.62% | |
| Eaton Corp. plc | -6.40% | -8.04% | -10.62% | -14.45% | -14.04% | |
| Honeywell International Inc. | -8.03% | -6.23% | -2.80% | -4.09% | -2.80% | |
| Lockheed Martin Corp. | 5.17% | 4.77% | 7.40% | 5.74% | 6.50% | |
| RTX Corp. | -1.01% | -3.92% | -7.38% | -7.77% | -7.30% | |
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 sales of equipment and services
= 100 × 1,253 ÷ 42,332 = 2.96%
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 indicates a significant transition from economic value destruction toward consistent value creation. While the initial period was characterized by substantial economic losses, the latter years demonstrate a recovery in both absolute economic profit and the associated margin.
- Economic Profit Performance
- A recovery trend is evident in absolute economic profit. The period began with a substantial deficit of US$ 13,452 million in 2021, which improved to a loss of US$ 9,202 million in 2022. A pivotal shift occurred in 2023, as the figure turned positive to US$ 593 million. Despite a minor retraction to a loss of US$ 242 million in 2024, the trend concluded with a peak of US$ 1,253 million in 2025, signaling an increased capacity to generate returns above the cost of capital.
- Adjusted Sales Volatility
- Sales of equipment and services experienced significant fluctuations. Revenue remained relatively stable between 2021 and 2022, peaking at US$ 73,736 million. However, a marked decline followed, culminating in a sharp contraction to US$ 35,098 million by 2024. A partial recovery is observed in 2025, with sales increasing to US$ 42,332 million.
- Economic Profit Margin Analysis
- The economic profit margin reflects a steady improvement in operational efficiency and capital utilization. The margin rose from a low of -18.85% in 2021 to -12.48% in 2022, eventually reaching a positive 0.92% in 2023. Although a slight dip to -0.69% occurred in 2024, the margin reached its highest point of 2.96% in 2025. This indicates that economic value is being generated more effectively relative to the scale of operations, despite the reduction in overall sales volume compared to 2021 levels.
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