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: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2010
- Total Asset Turnover 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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows an initial strong increase from 7,866 million US dollars in 2020 to a peak of 13,885 million in 2021. Following this peak, there is a decline to 10,217 million in 2022. A moderate recovery appears in 2023, with NOPAT rising to 11,524 million, before slightly decreasing again to 10,525 million in 2024. Overall, while the profit generally remains above the 2020 level after 2021, it exhibits some volatility with a downward trend after the 2021 peak.
- Cost of Capital
- The cost of capital experiences a gradual decline over the five-year period, decreasing from 8.77% in 2020 to 7.87% in 2024. The most notable drop occurs between 2021 and 2023, where the rate decreases from 8.7% to 7.65%, suggesting improving financing conditions or reduced risk perception during these years.
- Invested Capital
- Invested capital shows a consistent and steady growth trend throughout the period. Starting at 152,793 million US dollars in 2020, the invested capital increases each year, reaching 194,168 million by the end of 2024. This upward trend indicates ongoing investments or asset base expansion over the timeframe analyzed.
- Economic Profit
- Economic profit remains negative across all years, indicating the company did not generate returns above its cost of capital during the period. Although the negative economic profit improves significantly from -5,532 million in 2020 to only -655 million in 2021, it deteriorates again in subsequent years, reaching -4,747 million in 2024. Such fluctuations reflect challenges in achieving value creation despite the operational profits reported.
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 Trends
- The economic profit exhibited volatile behavior over the analyzed period, starting with a significant negative value of -5532 million US dollars in 2020. It improved notably in 2021 to -655 million, indicating a reduction in economic loss. However, this improvement was not sustained as the figure worsened again in 2022 to -3704 million and remained negative through 2023 (-2423 million) and 2024 (-4747 million). The fluctuations suggest challenges in consistently generating economic profit.
- Invested Capital Development
- The invested capital showed a steady upward trajectory across all reported years. Beginning at 152,793 million US dollars in 2020, it increased annually to reach 194,168 million by 2024. This trend reflects continuous capital investment or accumulation over the period.
- Economic Spread Ratio Analysis
- The economic spread ratio remained negative throughout the period, indicating that the return on invested capital was below the cost of capital. Despite a strong improvement from -3.62% in 2020 to -0.39% in 2021, the ratio reverted to more negative levels afterward: -2.15% in 2022, -1.33% in 2023, and -2.44% in 2024. This pattern highlights persistent difficulties in achieving positive economic spreads despite temporary relief in 2021.
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.
- Adjusted Automotive Net Sales and Revenue
- The revenue shows a consistent upward trend from 2020 to 2024. It increased from 108,324 million US dollars in 2020 to 173,096 million US dollars in 2024, indicating growth in sales and market presence over the period.
- Economic Profit
- Despite the growth in revenue, economic profit remained negative throughout all years, signaling ongoing challenges in generating surplus returns beyond the cost of capital. The loss was largest in 2020 at -5,532 million US dollars, greatly improved to -655 million in 2021, but then displayed volatility with increased losses of -3,704 million in 2022, a reduction to -2,423 million in 2023, and a rise again to -4,747 million in 2024.
- Economic Profit Margin
- The economic profit margin, which measures economic profit as a percentage of revenue, mirrors the economic profit trend. It shows significant improvement in 2021 to almost breakeven at -0.58%. However, the margin deteriorated in subsequent years to -2.56% in 2022 before improving slightly in 2023 to -1.52%, and then worsening again to -2.74% in 2024. This pattern indicates fluctuating efficiency in converting revenues into economic profit.
- Overall Analysis
- The data reflects a scenario where revenue growth is not translating into positive economic profit, suggesting increasing costs, competitive pressures, or capital charge issues affecting profitability. The volatility in economic profit and its margin after the initial improvement in 2021 points to inconsistent operational performance or external factors impacting the financial outcome across the years.