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Microsoft Excel LibreOffice Calc

General Motors Co. (GM)


Economic Value Added (EVA)

Advanced level

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

General Motors Co., economic profit calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =

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 Motors Co.’s economic profit decreased from 2017 to 2018 and from 2018 to 2019.

Net Operating Profit after Taxes (NOPAT)

General Motors Co., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income (loss) attributable to stockholders
Deferred income tax expense (benefit)1
Increase (decrease) in allowance for doubtful accounts and notes receivable2
Increase (decrease) in deferred revenue3
Increase (decrease) in product warranty and related liabilities4
Increase (decrease) in reserves related to restructuring and other initiatives5
Increase (decrease) in equity equivalents6
Automotive interest expense
Interest expense, operating lease liability7
Adjusted automotive interest expense
Tax benefit of automotive interest expense8
Adjusted automotive interest expense, after taxes9
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income10
Investment income, after taxes11
(Income) loss from discontinued operations, net of tax12
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

1 Elimination of deferred tax expense. See details »

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

3 Addition of increase (decrease) in deferred revenue.

4 Addition of increase (decrease) in product warranty and related liabilities.

5 Addition of increase (decrease) in reserves related to restructuring and other initiatives.

6 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to stockholders.

7 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

8 2019 Calculation
Tax benefit of automotive interest expense = Adjusted automotive interest expense × Statutory income tax rate
= × 21.00% =

9 Addition of after taxes interest expense to net income (loss) attributable to stockholders.

10 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

11 Elimination of after taxes investment income.

12 Elimination of discontinued operations.

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 Motors Co.’s NOPAT decreased from 2017 to 2018 and from 2018 to 2019.

Cash Operating Taxes

General Motors Co., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Income tax expense (benefit)
Less: Deferred income tax expense (benefit)
Add: Tax savings from automotive interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

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 Motors Co.’s cash operating taxes decreased from 2017 to 2018 but then increased from 2018 to 2019 exceeding 2017 level.

Invested Capital

General Motors Co., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Short-term debt and current portion of long-term debt
Long-term debt, excluding current portion
Operating lease liability1
Total reported debt & leases
Stockholders’ equity
Net deferred tax (assets) liabilities2
Allowance for doubtful accounts and notes receivable3
Deferred revenue4
Product warranty and related liabilities5
Reserves related to restructuring and other initiatives6
Equity equivalents7
Accumulated other comprehensive (income) loss, net of tax8
Noncontrolling interests
Adjusted stockholders’ equity
Construction in progress9
Available-for-sale debt securities, marketable securities10
Invested capital

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

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 revenue.

5 Addition of product warranty and related liabilities.

6 Addition of reserves related to restructuring and other initiatives.

7 Addition of equity equivalents to stockholders’ equity.

8 Removal of accumulated other comprehensive income.

9 Subtraction of construction in progress.

10 Subtraction of available-for-sale debt securities, 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 Motors Co.’s invested capital increased from 2017 to 2018 and from 2018 to 2019.

Cost of Capital

General Motors Co., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2020-02-05).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (filing date: 2019-02-06).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2018-02-06).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2017-02-07).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »

Capital (fair value)1 Weights Cost of capital
Equity2 ÷ = × =
Debt3 ÷ = × × (1 – 35.00%) =
Operating lease liability4 ÷ = × × (1 – 35.00%) =
Total:

Based on: 10-K (filing date: 2016-02-03).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

General Motors Co., economic spread ratio calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. General Motors Co.’s economic spread ratio deteriorated from 2017 to 2018 and from 2018 to 2019.

Economic Profit Margin

General Motors Co., economic profit margin calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1
Automotive net sales and revenue
Add: Increase (decrease) in deferred revenue
Adjusted automotive net sales and revenue
Performance Ratio
Economic profit margin2

Based on: 10-K (filing date: 2020-02-05), 10-K (filing date: 2019-02-06), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-07), 10-K (filing date: 2016-02-03).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted automotive net sales and revenue
= 100 × ÷ =

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. General Motors Co.’s economic profit margin deteriorated from 2017 to 2018 and from 2018 to 2019.