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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 Ratio
Economic Profit Margin

Kimberly-Clark Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Net operating profit after taxes (NOPAT)¹	2,602)	2,321)	1,883)	2,464)	2,399)
Cost of capital²	8.08%	8.35%	8.19%	8.12%	8.27%
Invested capital³	12,877)	11,405)	11,239)	11,929)	11,778)

Economic profit⁴	1,561)	1,369)	962)	1,496)	1,424)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2020 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,602 – 8.08% × 12,877 = 1,561

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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.	Kimberly-Clark Corp. economic profit increased from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Net income attributable to Kimberly-Clark Corporation	2,352)	2,157)	1,410)	2,278)	2,166)
Deferred income tax expense (benefit)¹	45)	29)	2)	(69)	(15)
Increase (decrease) in allowance for doubtful accounts²	2)	(4)	(2)	(12)	—)
Increase (decrease) in LIFO reserve³	(10)	(36)	15)	13)	(20)
Increase (decrease) in restructuring liabilities⁴	(39)	(78)	210)	—)	—)
Increase (decrease) in equity equivalents⁵	(2)	(89)	225)	(68)	(35)
Interest expense	252)	261)	263)	318)	319)
Interest expense, operating lease liability⁶	20)	20)	16)	20)	22)
Adjusted interest expense	272)	281)	279)	338)	341)
Tax benefit of interest expense⁷	(57)	(59)	(59)	(118)	(119)
Adjusted interest expense, after taxes⁸	215)	222)	220)	220)	222)
Interest income	(8)	(11)	(10)	(10)	(11)
Investment income, before taxes	(8)	(11)	(10)	(10)	(11)
Tax expense (benefit) of investment income⁹	2)	2)	2)	4)	4)
Investment income, after taxes¹⁰	(6)	(9)	(8)	(7)	(7)
Net income (loss) attributable to noncontrolling interest	44)	40)	35)	41)	53)
Net operating profit after taxes (NOPAT)	2,602)	2,321)	1,883)	2,464)	2,399)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

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 liabilities.

⁵ Addition of increase (decrease) in equity equivalents to net income attributable to Kimberly-Clark Corporation.

⁶ 2020 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 556 × 3.55% = 20

⁷ 2020 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 272 × 21.00% = 57

⁸ Addition of after taxes interest expense to net income attributable to Kimberly-Clark Corporation.

⁹ 2020 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 8 × 21.00% = 2

¹⁰ Elimination of after taxes investment income.

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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.	Kimberly-Clark Corp. NOPAT increased from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Provision for income taxes	676)	576)	471)	776)	922)
Less: Deferred income tax expense (benefit)	45)	29)	2)	(69)	(15)
Add: Tax savings from interest expense	57)	59)	59)	118)	119)
Less: Tax imposed on investment income	2)	2)	2)	4)	4)
Cash operating taxes	686)	604)	526)	960)	1,053)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

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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.	Kimberly-Clark Corp. cash operating taxes increased from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Debt payable within one year	486)	1,534)	1,208)	953)	1,133)
Long-term debt, excluding payable within one year	7,878)	6,213)	6,247)	6,472)	6,439)
Operating lease liability¹	556)	404)	491)	548)	534)
Total reported debt & leases	8,920)	8,151)	7,946)	7,973)	8,106)
Total Kimberly-Clark Corporation stockholders’ equity	626)	(33)	(287)	629)	(102)
Net deferred tax (assets) liabilities²	461)	269)	238)	180)	298)
Allowance for doubtful accounts³	34)	32)	36)	38)	50)
Excess of FIFO or weighted-average cost over LIFO cost⁴	145)	155)	191)	176)	163)
Restructuring liabilities⁵	93)	132)	210)	—)	—)
Equity equivalents⁶	733)	588)	675)	394)	511)
Accumulated other comprehensive (income) loss, net of tax⁷	3,172)	3,294)	3,299)	2,919)	3,474)
Redeemable preferred securities of subsidiaries	28)	29)	64)	61)	58)
Noncontrolling interests	243)	227)	241)	253)	219)
Adjusted total Kimberly-Clark Corporation stockholders’ equity	4,802)	4,105)	3,992)	4,256)	4,160)
Construction in progress⁸	(845)	(851)	(699)	(300)	(488)
Invested capital	12,877)	11,405)	11,239)	11,929)	11,778)

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

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 LIFO reserve. See details »

⁵ Addition of restructuring liabilities.

⁶ Addition of equity equivalents to total Kimberly-Clark Corporation stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Kimberly-Clark Corp. invested capital increased from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp., cost of capital calculations

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	44,694)	44,694)	÷	55,100)	=	0.81	0.81	×	9.36%	=	7.59%
Debt³	9,850)	9,850)	÷	55,100)	=	0.18	0.18	×	3.27% × (1 – 21.00%)	=	0.46%
Operating lease liability⁴	556)	556)	÷	55,100)	=	0.01	0.01	×	3.55% × (1 – 21.00%)	=	0.03%
Total:	55,100)					1.00					8.08%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,472)	49,472)	÷	58,528)	=	0.85	0.85	×	9.36%	=	7.91%
Debt³	8,652)	8,652)	÷	58,528)	=	0.15	0.15	×	3.47% × (1 – 21.00%)	=	0.41%
Operating lease liability⁴	404)	404)	÷	58,528)	=	0.01	0.01	×	5.00% × (1 – 21.00%)	=	0.03%
Total:	58,528)					1.00					8.35%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,045)	39,045)	÷	47,223)	=	0.83	0.83	×	9.36%	=	7.74%
Debt³	7,687)	7,687)	÷	47,223)	=	0.16	0.16	×	3.28% × (1 – 21.00%)	=	0.42%
Operating lease liability⁴	491)	491)	÷	47,223)	=	0.01	0.01	×	3.28% × (1 – 21.00%)	=	0.03%
Total:	47,223)					1.00					8.19%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	39,170)	39,170)	÷	47,663)	=	0.82	0.82	×	9.36%	=	7.69%
Debt³	7,945)	7,945)	÷	47,663)	=	0.17	0.17	×	3.64% × (1 – 35.00%)	=	0.39%
Operating lease liability⁴	548)	548)	÷	47,663)	=	0.01	0.01	×	3.64% × (1 – 35.00%)	=	0.03%
Total:	47,663)					1.00					8.12%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2016

	Capital (fair value)¹	Weights					Cost of capital
Equity²	43,797)	43,797)	÷	52,387)	=	0.84	0.84	×	9.36%	=	7.83%
Debt³	8,056)	8,056)	÷	52,387)	=	0.15	0.15	×	4.16% × (1 – 35.00%)	=	0.42%
Operating lease liability⁴	534)	534)	÷	52,387)	=	0.01	0.01	×	4.16% × (1 – 35.00%)	=	0.03%
Total:	52,387)					1.00					8.27%

Based on: 10-K (reporting date: 2016-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Kimberly-Clark Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in millions)
Economic profit¹	1,561)	1,369)	962)	1,496)	1,424)
Invested capital²	12,877)	11,405)	11,239)	11,929)	11,778)
Performance Ratio
Economic spread ratio³	12.12%	12.01%	8.56%	12.54%	12.09%
Benchmarks
Economic Spread Ratio, Competitors⁴
Procter & Gamble Co.	4.90%	-3.56%	1.68%	—	—

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2020 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,561 ÷ 12,877 = 12.12%

⁴ Click competitor name to see calculations.

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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.	Kimberly-Clark Corp. economic spread ratio improved from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016
Selected Financial Data (US$ in millions)
Economic profit¹	1,561)	1,369)	962)	1,496)	1,424)
Net sales	19,140)	18,450)	18,486)	18,259)	18,202)
Performance Ratio
Economic profit margin²	8.16%	7.42%	5.20%	8.19%	7.83%
Benchmarks
Economic Profit Margin, Competitors³
Procter & Gamble Co.	6.98%	-4.73%	2.31%	—	—

Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).

¹ Economic profit. See details »

² 2020 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 1,561 ÷ 19,140 = 8.16%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company 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.	Kimberly-Clark Corp. economic profit margin improved from 2018 to 2019 and from 2019 to 2020.

Kimberly-Clark Corp. (NYSE:KMB)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin