Economic Value Added (EVA)
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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.
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General Motors Co. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2010
- Debt to Equity since 2010
- Price to Book Value (P/BV) since 2010
- Analysis of Revenues
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Economic Profit
General Motors Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals several noteworthy trends across the analyzed periods.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows considerable fluctuation over the five-year span. It increased significantly from 7,866 million USD in 2020 to a peak of 13,885 million USD in 2021, followed by a noticeable decline to 10,217 million USD in 2022. Subsequently, the figure rose again to 11,524 million USD in 2023 before dropping to 10,525 million USD in 2024. This pattern suggests volatility in operating profitability, with the highest performance achieved in 2021 and a general downward movement from 2022 onward, despite a brief recovery in 2023.
- Cost of Capital
- The cost of capital experienced a gradual decline from 8.75% in 2020 to 7.64% in 2023, indicating a reduction in the company's expected rate of return or financing costs over this period. However, in 2024, the cost of capital slightly increased to 7.85%, interrupting the downward trend. This overall decrease until 2023 could have positively influenced investment decisions despite the slight uptick in the final year.
- Invested Capital
- Invested capital has shown consistent growth each year, rising steadily from 152,793 million USD in 2020 to 194,168 million USD in 2024. This increase in invested capital suggests ongoing investments in the business, increasing asset base, or working capital requirements over time. The incremental growth aligns with the company's expansion or reinvestment activities.
- Economic Profit
- Economic profit remains negative throughout the period, indicating that the company has not generated returns above its cost of capital in any year. The economic loss shrank dramatically from -5,507 million USD in 2020 to a low of -628 million USD in 2021, suggesting improved value creation. However, this improvement was not sustained as economic profit worsened to -3,682 million USD in 2022, then slightly recovered to -2,403 million USD in 2023, before deteriorating again to -4,726 million USD in 2024. These fluctuations imply challenges in generating value over and above the capital cost despite growing invested capital and mixed profitability trends.
Net Operating Profit after Taxes (NOPAT)
General Motors Co., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
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 attributable to stockholders.
7 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2024 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 attributable to stockholders.
10 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
11 Elimination of after taxes investment income.
The financial performance over the periods shows varying trends in profitability metrics. Net income attributable to stockholders demonstrated a notable increase from 2020 to 2021, rising from 6,427 million US dollars to 10,019 million US dollars. This peak was followed by a slight decline in 2022 to 9,934 million US dollars, then a minor recovery in 2023 to 10,127 million US dollars. However, in 2024, net income decreased significantly to 6,008 million US dollars, indicating a potentially adverse development or external factors affecting profitability in the most recent period.
Net operating profit after taxes (NOPAT) showed an overall upward trend from 2020 to 2021, increasing from 7,866 million US dollars to 13,885 million US dollars, which represents a substantial improvement. NOPAT then declined to 10,217 million US dollars in 2022, suggesting some operational challenges or increased expenses. Following this, there was a recovery to 11,524 million US dollars in 2023, although it did not return to the peak level observed in 2021. In 2024, NOPAT decreased again to 10,525 million US dollars, showing some volatility but maintaining a higher level than the initial 2020 figure.
- Profitability Trends:
- Both net income and NOPAT peaked in 2021, followed by fluctuations in subsequent years, with net income showing a more pronounced decline by 2024.
- Operational Efficiency:
- NOPAT figures suggest the company improved operating profitability significantly in 2021, experienced some operational setbacks in 2022, partial recovery in 2023, and slight decline in 2024.
- Recent Performance:
- The substantial drop in net income in 2024 compared to prior years warrants attention, as it may signal deteriorating profitability or increased costs not fully reflected in operating profit.
Cash Operating Taxes
General Motors Co., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
- Income Tax Expense
- The income tax expense shows a fluctuating trend over the observed period. It increased significantly from 1,774 million USD in 2020 to 2,771 million USD in 2021. This was followed by a decrease to 1,889 million USD in 2022, then a sharp decline to 563 million USD in 2023. However, in 2024, the expense rose again to 2,556 million USD. This pattern indicates considerable variability in tax liabilities, potentially influenced by changes in taxable income, tax policies, or one-time tax adjustments.
- Cash Operating Taxes
- Cash operating taxes displayed some volatility but less pronounced than income tax expense. Starting at 1,039 million USD in 2020, the amount decreased to 735 million USD in 2021. It then surged to 1,585 million USD in 2022 and remained at a similar level of 1,573 million USD in 2023. In 2024, cash operating taxes declined to 1,174 million USD. The general trend suggests variable cash outflows for taxes, with a peak in 2022 and 2023, possibly reflecting changes in operating earnings, deferred tax adjustments, or cash tax payment timing.
- Comparative Insights
- Throughout the timeline, income tax expense and cash operating taxes do not consistently move in tandem, indicating differences between accounting tax expense recognition and actual cash paid taxes. Notably, the income tax expense experienced more pronounced fluctuations, especially the sharp drop in 2023, which was not as evident in cash operating taxes. This disparity might imply significant deferred tax impacts or adjustments in non-cash tax provisions during these years.
Invested Capital
General Motors Co., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 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.
The financial data reveals several notable trends in the company's capital structure and financing over the five-year period from 2020 to 2024.
- Total Reported Debt & Leases
- This metric shows a steady increase each year, rising from $111,072 million in 2020 to $130,947 million in 2024. The upward trajectory suggests a growing reliance on debt and lease obligations for financing or expansion purposes. The increment from 2023 to 2024 is approximately $8 billion, marking a consistent pattern of debt accumulation.
- Stockholders’ Equity
- Equity levels increased significantly from 2020 to 2022, growing from $45,030 million to a peak of $67,792 million. However, after this peak, equity declined over the next two years, reaching $63,072 million by 2024. This decline may indicate factors such as dividend payouts, share repurchases, or changes in retained earnings impacting the overall equity base.
- Invested Capital
- Invested capital rose steadily year over year, increasing from $152,793 million in 2020 to $194,168 million in 2024. This continuous increase mirrors the company's expanding asset base or operational investments. The growth in invested capital, despite the fluctuations in equity, suggests that the company is leveraging both debt and equity to finance its growth initiatives.
Overall, the data exhibits a pattern of increasing financial leverage accompanied by growth in invested capital. The rise in total reported debt alongside a fluctuating but generally strong equity position indicates a balanced approach toward financing growth, though the recent decrease in equity may warrant further examination to understand its drivers and implications on financial stability.
Cost of Capital
General Motors Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 (reporting date: 2023-12-31).
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 (reporting date: 2022-12-31).
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 (reporting date: 2021-12-31).
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 (reporting date: 2020-12-31).
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, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Ford Motor Co. | ||||||
| Tesla Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit showed significant fluctuations during the analyzed period. Starting at a substantial negative value of -5507 million US dollars in 2020, it improved sharply in 2021 to -628 million US dollars. However, this improvement was not sustained, as economic profit declined again to -3682 million US dollars in 2022. The trend indicates some recovery in 2023, with economic profit improving to -2403 million US dollars, followed by a notable decline to -4726 million US dollars in 2024. Overall, the economic profit remained negative throughout the period, indicating persistent challenges in generating returns above the cost of capital.
- Invested Capital
- Invested capital displayed a consistent upward trend, increasing steadily each year. It rose from 152,793 million US dollars at the end of 2020 to 167,086 million in 2021, then to 172,128 million in 2022. The upward trajectory continued through 2023 and 2024, reaching 182,260 million and 194,168 million US dollars respectively. This growth indicates ongoing investment and expansion of the capital base over the period analyzed.
- Economic Spread Ratio
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, was negative for all years in the period. It improved markedly from -3.6% in 2020 to -0.38% in 2021, reflecting a closer alignment between returns and costs. However, after 2021, the ratio worsened, moving back to negative territory with -2.14% in 2022 and a slight improvement to -1.32% in 2023 before declining again to -2.43% in 2024. The persistent negative spread signifies that the returns generated were generally insufficient to cover the cost of capital during these years.
Economic Profit Margin
General Motors Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Ford Motor Co. | ||||||
| Tesla Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted automotive net sales and revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuation over the observed periods. It improved markedly from a deep negative of -5507 million USD in 2020 to a much smaller loss of -628 million USD in 2021. However, the metric deteriorated again in 2022 to -3682 million USD before improving somewhat to -2403 million USD in 2023, followed by another decline to -4726 million USD in 2024. This pattern indicates volatility in economic profit, with periodic recoveries failing to sustain over the longer term.
- Adjusted Automotive Net Sales and Revenue
- Adjusted automotive net sales and revenue demonstrated consistent and strong growth throughout the period under review. Starting at 108,324 million USD in 2020, sales rose steadily each year, reaching 173,096 million USD in 2024, reflecting expansion and increased revenue generation capabilities.
- Economic Profit Margin
- The economic profit margin followed a general trend of negative values, with a significant improvement from -5.08% in 2020 to -0.55% in 2021. Subsequently, the margin worsened to -2.55% in 2022 but showed improvement again to -1.51% in 2023. Despite this improvement, the margin declined once more to -2.73% in 2024. The fluctuations in profit margin align with the trends observed in economic profit, underscoring challenges in translating revenue growth into positive economic returns.