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 – 20.94% × 38,668 = 1,302
The financial trajectory from 2021 to 2025 indicates a structural pivot toward value creation. The organization transitioned from a period of significant economic value destruction to a position of positive economic profit, driven primarily by a substantial increase in operating efficiency and a strategic reduction in the invested capital base.
- Net Operating Profit After Taxes (NOPAT)
- A strong recovery trend is evident, with NOPAT moving from a deficit of US$ 1,820 million in 2021 to a peak of US$ 10,514 million in 2023. Despite a moderate decline in 2024, profitability rebounded to US$ 9,398 million by 2025, demonstrating a marked improvement in core operational earning power.
- Invested Capital
- A consistent downward trend in invested capital occurred between 2021 and 2024, falling from US$ 72,026 million to US$ 37,678 million. This represents a reduction of approximately 47.6% in the capital employed, suggesting a leaner balance sheet or the divestiture of non-core assets, followed by a slight increase to US$ 38,668 million in 2025.
- Cost of Capital
- The cost of capital exhibited a steady increase throughout the period, rising from 16.06% in 2021 to 20.94% in 2025. This upward trajectory indicates a higher hurdle rate for investments, which increases the operational requirement to generate higher returns to sustain value creation.
- Economic Profit
- The convergence of increasing NOPAT and decreasing invested capital resulted in a significant reversal of economic profit. Substantial losses of US$ 13,386 million in 2021 and US$ 9,140 million in 2022 were corrected by 2023. While a marginal dip into negative territory occurred in 2024 at US$ -195 million, the period concluded with a positive economic profit of US$ 1,302 million in 2025, signaling that the company is now generating returns in excess of its 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$990 million.
The concurrent declines in both debt and equity suggest a potential shift in capital structure, possibly through debt repayment, share buybacks, or dividend distributions. The stabilization of invested capital in the final year warrants further investigation to determine the underlying causes and potential implications for future performance.
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Cost of Capital
GE Aerospace, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 313,448) | 313,448) | ÷ | 335,069) | = | 0.94 | 0.94 | × | 22.16% | = | 20.73% | ||
| Preferred stock | —) | —) | ÷ | 335,069) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Borrowings3 | 20,558) | 20,558) | ÷ | 335,069) | = | 0.06 | 0.06 | × | 4.03% × (1 – 21.00%) | = | 0.20% | ||
| Operating lease liability4 | 1,063) | 1,063) | ÷ | 335,069) | = | 0.00 | 0.00 | × | 4.70% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 335,069) | 1.00 | 20.94% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 22.16% | = | 20.32% | ||
| 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 | 20.59% | ||||||||||
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 | × | 22.16% | = | 19.23% | ||
| 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 | 19.65% | ||||||||||
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 | × | 22.16% | = | 15.31% | ||
| 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 | 16.41% | ||||||||||
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 | × | 22.16% | = | 15.08% | ||
| 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 | 16.06% | ||||||||||
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 | 1,302) | (195) | 652) | (9,140) | (13,386) | |
| Invested capital2 | 38,668) | 37,678) | 50,194) | 66,842) | 72,026) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 3.37% | -0.52% | 1.30% | -13.67% | -18.58% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | -5.78% | -35.08% | -15.01% | -20.40% | -19.01% | |
| Caterpillar Inc. | -6.76% | -2.20% | -2.26% | -6.19% | -5.60% | |
| Eaton Corp. plc | -5.03% | -6.21% | -7.78% | -9.69% | -9.30% | |
| Honeywell International Inc. | -4.97% | -4.00% | -2.14% | -3.12% | -2.03% | |
| Lockheed Martin Corp. | 12.56% | 11.55% | 17.99% | 14.01% | 14.99% | |
| RTX Corp. | -1.00% | -3.11% | -4.84% | -4.90% | -4.36% | |
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 × 1,302 ÷ 38,668 = 3.37%
4 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 reflects a significant transition from value destruction toward consistent value creation. The period is characterized by a substantial reduction in the capital base coinciding with a recovery in economic profitability.
- Economic Profit
- A strong recovery trend is evident, moving from a deficit of US$ 13,386 million in 2021 to a surplus of US$ 1,302 million by 2025. Although a minor contraction occurred in 2024, resulting in a loss of US$ 195 million, the overall progression indicates a systemic shift toward generating returns that exceed the cost of capital.
- Invested Capital
- A consistent downward trend in invested capital was observed between 2021 and 2024, with the balance decreasing from US$ 72,026 million to US$ 37,678 million. This represents a significant contraction of the capital employed, followed by a slight increase to US$ 38,668 million in 2025.
- Economic Spread Ratio
- The spread ratio demonstrates a corresponding recovery, ascending from a low of -18.58% in 2021 to a peak of 3.37% in 2025. The transition into positive territory in 2023 signifies the threshold where the return on invested capital began to surpass the cost of capital.
The correlation between the sharp decline in invested capital and the improvement in the economic spread ratio suggests a strategic optimization of the balance sheet. The reduction of the capital base appears to have played a critical role in elevating the spread ratio, thereby enhancing the overall efficiency of value generation.
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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 | 1,302) | (195) | 652) | (9,140) | (13,386) | |
| 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 | 3.07% | -0.56% | 1.01% | -12.40% | -18.76% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | -3.46% | -26.51% | -8.67% | -15.58% | -15.10% | |
| Caterpillar Inc. | -6.83% | -2.06% | -1.97% | -5.99% | -6.46% | |
| Eaton Corp. plc | -6.33% | -7.97% | -10.54% | -14.37% | -13.96% | |
| Honeywell International Inc. | -8.06% | -6.26% | -2.83% | -4.12% | -2.84% | |
| Lockheed Martin Corp. | 5.08% | 4.68% | 7.30% | 5.65% | 6.40% | |
| RTX Corp. | -1.23% | -4.14% | -7.61% | -8.04% | -7.58% | |
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 × 1,302 ÷ 42,332 = 3.07%
3 Click competitor name to see calculations.
The financial trajectory reflects a transition from significant economic value destruction toward sustainable value creation. Despite substantial volatility in sales volume, there is a clear trend of improvement in both absolute economic profit and the associated profit margin over the five-year period.
- Economic Profit
- A significant recovery is observed in economic profit, which moved from a deficit of 13,386 million USD in 2021 to a surplus of 1,302 million USD by 2025. While a brief retraction occurred in 2024, resulting in a loss of 195 million USD, the overall trend indicates a successful pivot toward positive economic value added.
- Adjusted Sales of Equipment and Services
- Sales exhibited relative stability between 2021 and 2022, peaking at 73,736 million USD. A sharp contraction followed, with values falling to 35,098 million USD in 2024. A moderate recovery was noted in 2025, with sales increasing to 42,332 million USD.
- Economic Profit Margin
- The economic profit margin demonstrates a steady upward trend, improving from -18.76% in 2021 to 3.07% in 2025. The margin entered positive territory in 2023 at 1.01%, experienced a minor dip to -0.56% in 2024, and subsequently reached its period peak in 2025. This suggests that the company improved its ability to generate returns above its cost of capital despite the reduction in total sales volume.
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