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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GE Aerospace pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) 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 trajectory indicates a significant transition from substantial economic value destruction toward a state of positive economic profit. This shift is primarily driven by a combination of recovering operating profits and a concerted reduction in the total capital base employed.
- Net Operating Profit After Taxes (NOPAT)
- A volatile but generally upward trend is observed, beginning with a deficit of US$ 1,820 million in 2021 and reaching a peak of US$ 10,514 million in 2023. Following a contraction to US$ 7,561 million in 2024, NOPAT is projected to recover to US$ 9,398 million by 2025, reflecting an overall improvement in operating efficiency and profitability.
- Cost of Capital
- The cost of capital has experienced a steady and consistent increase throughout the period, rising from 16.16% in 2021 to a projected 21.08% in 2025. This upward trend increases the financial hurdle required for the company to generate positive economic value.
- Invested Capital
- A significant downward trend in invested capital is evident, falling from US$ 72,026 million in 2021 to a low of US$ 37,678 million in 2024, before stabilizing at US$ 38,668 million in 2025. This reduction represents a substantial decrease in the capital base, which contributes positively to the economic profit calculation by lowering the total capital charge.
- Economic Profit
- Economic profit moved from a severe negative of US$ 13,457 million in 2021 to a positive value of US$ 589 million by 2023. Despite a marginal regression to negative US$ 245 million in 2024, the trend concludes with a projected positive economic profit of US$ 1,249 million in 2025. The transition to value creation is the result of NOPAT growth and aggressive capital reduction outweighing the pressures of a rising cost of capital.
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 financial trajectory between 2021 and 2025 reflects a transition from significant value destruction to a period of value creation, characterized by a substantial reduction in the capital base and an improvement in overall economic efficiency.
- Economic Profit
- A recovery trend is evident as economic profit moved from a deficit of US$ 13,457 million in 2021 to a surplus of US$ 1,249 million by 2025. Although a marginal decline to negative US$ 245 million was recorded in 2024, the overarching trend indicates a strengthening ability to generate returns that exceed the cost of capital.
- Invested Capital
- A consistent downward trend in invested capital occurred from 2021 through 2024, decreasing from US$ 72,026 million to US$ 37,678 million. This represents a reduction of approximately 47.6% over the four-year period, suggesting strategic balance sheet streamlining or divestment activities, followed by a slight increase to US$ 38,668 million in 2025.
- Economic Spread Ratio
- The economic spread ratio demonstrates a corresponding improvement, shifting from a low of -18.68% in 2021 to a positive 3.23% in 2025. The movement into positive territory in 2023 and 2025 indicates that the return on invested capital surpassed the required rate of return, with the 2024 dip representing a temporary deviation from the broader upward 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 financial trajectory between 2021 and 2025 reflects a transition from substantial economic value destruction toward a state of value creation. While the initial period was characterized by deep negative economic profit, the subsequent years show a recovery pattern, despite significant fluctuations in revenue levels.
- Economic Profit Trends
- A consistent upward trajectory in economic profit is observed from 2021 through 2023, moving from a loss of US$ 13,457 million to a gain of US$ 589 million. Although a minor regression occurred in 2024 with a loss of US$ 245 million, the period concludes with a peak of US$ 1,249 million in 2025, indicating a strengthening capacity to generate returns exceeding the cost of capital.
- Adjusted Sales Performance
- Revenue figures exhibit significant volatility and a general downward trend over the analyzed period. Following a peak of US$ 73,736 million in 2022, adjusted sales declined sharply, reaching a low of US$ 35,098 million in 2024. A modest recovery is noted in 2025, with sales rising to US$ 42,332 million, suggesting a potential restructuring of the revenue base or a change in business scale.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the recovery in absolute profit, improving from -18.86% in 2021 to 2.95% by 2025. The margin first entered positive territory in 2023 at 0.91%, experienced a slight dip to -0.70% in 2024, and reached its highest point in 2025. The fact that the margin improved while adjusted sales declined suggests that the increase in economic value was driven by operational efficiencies or a reduction in the capital charge rather than by top-line growth.