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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- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
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Economic Profit
GE Aerospace, economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial performance, as measured by economic profit, demonstrates a significant turnaround over the observed period. Initially, the entity experienced substantial economic losses, which diminished and ultimately transitioned into positive economic profit. This shift is attributable to improvements in net operating profit after taxes, coupled with fluctuations in the cost of capital and invested capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a dramatic increase from a loss of US$1,820 million in 2021 to a profit of US$1,827 million in 2022. This positive trend continued, peaking at US$10,514 million in 2023, before decreasing to US$7,561 million in 2024 and recovering slightly to US$9,398 million in 2025. The substantial growth in NOPAT is a primary driver of the overall improvement in economic profit.
- Cost of Capital
- The cost of capital generally increased throughout the period, rising from 16.22% in 2021 to 21.16% in 2025. This increase in the cost of capital presents a headwind to economic profit, requiring higher NOPAT to achieve positive economic profit. The rate of increase was most pronounced between 2022 and 2024.
- Invested Capital
- Invested capital decreased consistently from US$72,026 million in 2021 to US$37,678 million in 2024. A slight increase to US$38,668 million was observed in 2025. The reduction in invested capital, while potentially indicating improved capital efficiency, also influences the economic profit calculation, as it is a component in determining the cost of capital charge.
- Economic Profit
- Economic profit began at a loss of US$13,503 million in 2021 and improved to a loss of US$9,250 million in 2022. A turning point was reached in 2023, with a positive economic profit of US$548 million. Although a slight decrease to a loss of US$278 million occurred in 2024, economic profit recovered to US$1,215 million in 2025. The trend indicates a successful transition towards value creation, despite the rising cost of capital.
In summary, the entity has demonstrably improved its economic profit position. While the cost of capital has increased, the substantial growth in NOPAT, combined with a reduction in invested capital, has enabled the generation of positive economic profit in the later years of the observed period. Continued monitoring of these trends will be crucial for assessing sustained value creation.
Net Operating Profit after Taxes (NOPAT)
GE Aerospace, NOPAT calculation
US$ 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
= × =
7 2025 Calculation
Tax benefit of interest and other financial charges = Adjusted interest and other financial charges × Statutory income tax rate
= × 21.00% =
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$9,398 million in 2025. While the 2024 decrease is notable, the 2025 value remains considerably higher than both 2021 and 2022 figures.
The divergence between the growth rates of Net Income and NOPAT suggests potential influences from non-operating items, such as financing costs or gains/losses on asset sales, impacting the overall net income figure. The substantial increase in NOPAT from 2022 to 2023 indicates a significant improvement in core operational profitability. The leveling off of NOPAT growth in the later years suggests a maturing of operational improvements or the emergence of new challenges affecting operational performance.
Cash Operating Taxes
GE Aerospace, cash operating taxes calculation
US$ 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$1,496 million. The trend suggests a general upward trajectory in cash taxes paid, despite the intermediate decrease in 2023.
The divergence between the provision for income taxes and cash operating taxes suggests potential differences between book and tax accounting treatments. The significant benefit in 2021, coupled with the subsequent increases in both measures, warrants further investigation into the underlying factors driving these changes, such as changes in tax laws, deferred tax asset realization, or shifts in taxable income.
The increase in cash operating taxes from 2021 to 2025, despite the fluctuations in the provision for income taxes, could indicate improved operational profitability or a reduction in tax-saving strategies. The decrease in cash taxes in 2023, however, interrupts this trend and requires additional scrutiny.
Invested Capital
GE Aerospace, invested capital calculation (financing approach)
US$ 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$990 million.
The concurrent declines in both debt and equity suggest a potential shift in capital structure, possibly through debt repayment, share buybacks, or dividend distributions. The stabilization of invested capital in the final year warrants further investigation to determine the underlying causes and potential implications for future performance.
Cost of Capital
GE Aerospace, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Preferred stock | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 Borrowings. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock | ÷ | = | × | = | |||||||||
| Borrowings3 | ÷ | = | × | × (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 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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio demonstrates a significant improvement over the observed period. Initially negative, the ratio transitions to positive territory, indicating a growing ability to generate returns exceeding the cost of capital. This shift is closely linked to changes in economic profit and invested capital.
- Economic Spread Ratio Trend
- The economic spread ratio began at -18.75% in 2021, representing a substantial shortfall in returns relative to invested capital. A gradual improvement followed, reaching -13.84% in 2022. A pivotal change occurred in 2023, with the ratio turning positive at 1.09%. This positive trend was briefly interrupted in 2024, with a ratio of -0.74%, before strengthening considerably to 3.14% in 2025. The movement from negative to positive values suggests increasing efficiency in capital allocation and improved profitability.
The economic spread ratio’s fluctuations correlate with the economic profit figures. The negative ratios in 2021 and 2022 align with the reported economic losses during those years. The positive ratio in 2023 corresponds with the first instance of positive economic profit. The dip in the ratio for 2024 coincides with a return to economic loss, albeit a smaller one than previously observed. The substantial increase in the ratio for 2025 is driven by a return to positive economic profit and relative stability in invested capital.
- Relationship with Invested Capital
- Invested capital decreased consistently from 2021 to 2024, moving from US$72,026 million to US$37,678 million. This reduction in capital employed may have contributed to the improved economic spread ratio, as a lower capital base requires a smaller level of economic profit to achieve a positive spread. The slight increase in invested capital in 2025, to US$38,668 million, did not impede the continued improvement in the economic spread ratio, indicating that the increase in economic profit outweighed the impact of the higher capital base.
Overall, the trend in the economic spread ratio suggests a strengthening financial performance. The company appears to be becoming more effective at generating returns on its invested capital, culminating in a substantial positive spread by the end of the period. Continued monitoring of both economic profit and invested capital will be crucial to sustaining this positive trajectory.
Economic Profit Margin
GE Aerospace, economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Sales of equipment and services | ||||||
| Add: Increase (decrease) in deferred income | ||||||
| Adjusted sales of equipment and services | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited significant fluctuation over the five-year period. Initially negative, it demonstrated improvement before experiencing a decline and subsequent recovery.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at -18.92%. This indicates a substantial economic loss relative to sales. A notable improvement occurred in 2022, with the margin increasing to -12.55%, suggesting a reduction in the magnitude of the economic loss. The year 2023 marked a turning point, as the economic profit margin turned positive, reaching 0.85%. However, this positive momentum was short-lived, with the margin declining to -0.79% in 2024. By 2025, the economic profit margin had recovered to 2.87%, representing the highest value within the observed period and indicating a substantial improvement in economic profitability.
The economic profit margin’s movement appears correlated with the trend in adjusted sales of equipment and services. The decline in sales from 2022 to 2024 coincides with the dip back into negative economic profit margin in 2024. The partial recovery in sales in 2025 is mirrored by a return to positive and increasing economic profit margin.
- Relationship to Sales
- Adjusted sales decreased from US$73,736 million in 2022 to US$35,098 million in 2024. This substantial decrease in sales likely contributed to the negative economic profit margin observed in 2024. The subsequent increase in sales to US$42,332 million in 2025 appears to have supported the recovery of the economic profit margin to a positive value.
The progression from significant economic losses to positive economic profit suggests improving operational efficiency and/or a more favorable cost of capital relative to returns generated. However, the volatility of the economic profit margin indicates sensitivity to changes in sales volume and potentially underlying economic conditions.