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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread
Economic Profit Margin

General Mills Inc., economic profit calculation

USD $ in thousands

	12 months ended	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014	May 26, 2013
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

Based on: 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03), 10-K (filing date: 2013-07-03).

2018 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden × hidden = hidden

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	General Mills Inc.’s economic profit increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

General Mills Inc., NOPAT calculation

USD $ in thousands

	12 months ended	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014	May 26, 2013
	Net earnings attributable to General Mills
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowance for doubtful accounts²
	Increase (decrease) in LIFO reserve³
	Increase (decrease) in restructuring and other exit costs reserve⁴
	Increase (decrease) in equity equivalents⁵
	Interest expense, net of capitalized interest
	Interest expense, operating lease obligations⁶
	Adjusted interest expense, net of capitalized interest
	Tax benefit of interest expense, net of capitalized interest⁷
	Adjusted interest expense, net of capitalized interest, after taxes⁸
	(Gain) loss on marketable securities
	Interest income
	Investment income, before taxes
	Tax expense (benefit) of investment income⁹
	Investment income, after taxes¹⁰
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03), 10-K (filing date: 2013-07-03).

2018 Calculations

¹ Elimination of deferred tax expense. See Details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in LIFO reserve. See Details »

⁴ Addition of increase (decrease) in restructuring and other exit costs reserve.

⁵ Addition of increase (decrease) in equity equivalents to net earnings attributable to General Mills.

⁶ Addition of interest expense on capitalized operating leases. See Details »

⁷ Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= hidden × 29.40% = hidden

⁸ Addition of after taxes interest expense to net earnings attributable to General Mills.

⁹ Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= hidden × 29.40% = hidden

¹⁰ Elimination of after taxes investment income.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	General Mills Inc.’s NOPAT increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

General Mills Inc., cash operating taxes calculation

USD $ in thousands

	12 months ended	May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014	May 26, 2013
	Income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense, net of capitalized interest
	Less: Tax imposed on investment income
	Cash operating taxes

Based on: 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03), 10-K (filing date: 2013-07-03).

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	General Mills Inc.’s cash operating taxes declined from 2016 to 2017 but then increased from 2017 to 2018 not reaching 2016 level.

General Mills Inc., invested capital calculation (financing approach)

USD $ in thousands

		May 27, 2018	May 28, 2017	May 29, 2016	May 31, 2015	May 25, 2014	May 26, 2013
	Current portion of long-term debt
	Notes payable
	Long-term debt, excluding current portion
	PV of operating lease payments¹
	Total reported debt & leases
	Stockholders’ equity
	Net deferred tax (assets) liabilities²
	Allowance for doubtful accounts³
	Excess of FIFO over LIFO cost⁴
	Restructuring and other exit costs reserve⁵
	Equity equivalents⁶
	Accumulated other comprehensive (income) loss, net of tax⁷
	Redeemable interest
	Noncontrolling interests
	Adjusted stockholders’ equity
	Construction in progress⁸
	Marketable securities⁹
	Invested capital

Based on: 10-K (filing date: 2018-06-29), 10-K (filing date: 2017-06-29), 10-K (filing date: 2016-06-30), 10-K (filing date: 2015-07-06), 10-K (filing date: 2014-07-03), 10-K (filing date: 2013-07-03).

¹ Addition of capitalized operating leases. See Details »

² Elimination of deferred taxes from assets and liabilities. See Details »

³ Addition of allowance for doubtful accounts receivable.

⁴ Addition of LIFO reserve. See Details »

⁵ Addition of restructuring and other exit costs reserve.

⁶ Addition of equity equivalents to stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

⁹ Subtraction of marketable securities.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	General Mills Inc.’s invested capital increased from 2016 to 2017 and from 2017 to 2018.

General Mills Inc., cost of capital calculations


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 29.40%)	=
PV of operating lease payments⁴	÷	=	×	× (1 – 29.40%)	=
Total:

Based on: 10-K (filing date: 2018-06-29).

¹ USD $ in thousands

² Equity. See Details »

³ Debt. See Details »