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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

Lockheed Martin Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	6,983)	5,745)	6,442)	7,202)	6,812)
Cost of capital²	8.21%	8.36%	8.28%	8.14%	8.38%
Invested capital³	27,427)	26,603)	28,620)	28,054)	25,676)

Economic profit⁴	4,730)	3,521)	4,073)	4,919)	4,661)

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

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 6,983 – 8.21% × 27,427 = 4,730

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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.	Lockheed Martin Corp. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Lockheed Martin Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net earnings	6,920)	5,732)	6,315)	6,833)	6,230)
Deferred income tax expense (benefit)¹	(498)	(757)	(183)	5)	222)
Increase (decrease) in equity equivalents²	(498)	(757)	(183)	5)	222)
Interest expense	916)	623)	569)	591)	653)
Interest expense, operating lease liability³	34)	29)	28)	31)	35)
Adjusted interest expense	950)	652)	597)	622)	688)
Tax benefit of interest expense⁴	(200)	(137)	(125)	(131)	(145)
Adjusted interest expense, after taxes⁵	751)	515)	472)	492)	544)
(Gain) loss on marketable securities	(240)	323)	(205)	(231)	(233)
Investment income, before taxes	(240)	323)	(205)	(231)	(233)
Tax expense (benefit) of investment income⁶	50)	(68)	43)	49)	49)
Investment income, after taxes⁷	(190)	255)	(162)	(182)	(184)
(Income) loss from discontinued operations, net of tax⁸	—)	—)	—)	55)	—)
Net operating profit after taxes (NOPAT)	6,983)	5,745)	6,442)	7,202)	6,812)

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

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in equity equivalents to net earnings.

³ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,177 × 2.90% = 34

⁴ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 950 × 21.00% = 200

⁵ Addition of after taxes interest expense to net earnings.

⁶ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 240 × 21.00% = 50

⁷ Elimination of after taxes investment income.

⁸ Elimination of discontinued operations.

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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.	Lockheed Martin Corp. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Lockheed Martin Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense	1,178)	948)	1,235)	1,347)	1,011)
Less: Deferred income tax expense (benefit)	(498)	(757)	(183)	5)	222)
Add: Tax savings from interest expense	200)	137)	125)	131)	145)
Less: Tax imposed on investment income	50)	(68)	43)	49)	49)
Cash operating taxes	1,825)	1,910)	1,500)	1,424)	885)

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

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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.	Lockheed Martin Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Lockheed Martin Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of long-term debt	168)	118)	6)	500)	1,250)
Long-term debt, net, excluding current portion	17,291)	15,429)	11,670)	11,669)	11,404)
Operating lease liability¹	1,177)	1,217)	1,400)	1,115)	1,105)
Total reported debt & leases	18,636)	16,764)	13,076)	13,284)	13,759)
Stockholders’ equity	6,835)	9,266)	10,959)	6,015)	3,127)
Net deferred tax (assets) liabilities²	(2,943)	(3,739)	(2,282)	(3,468)	(3,307)
Equity equivalents³	(2,943)	(3,739)	(2,282)	(3,468)	(3,307)
Accumulated other comprehensive (income) loss, net of tax⁴	8,803)	8,023)	11,006)	16,121)	15,554)
Noncontrolling interests in subsidiary	—)	—)	—)	23)	44)
Adjusted stockholders’ equity	12,695)	13,550)	19,683)	18,691)	15,418)
Construction in progress⁵	(2,081)	(2,036)	(1,900)	(1,921)	(1,701)
Marketable securities⁶	(1,823)	(1,675)	(2,239)	(2,000)	(1,800)
Invested capital	27,427)	26,603)	28,620)	28,054)	25,676)

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

¹ Addition of capitalized operating leases.

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

³ Addition of equity equivalents to stockholders’ equity.

⁴ Removal of accumulated other comprehensive income.

⁵ Subtraction of construction in progress.

⁶ Subtraction of marketable securities.

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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.	Lockheed Martin Corp. invested capital decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Lockheed Martin Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	106,243)	106,243)	÷	125,920)	=	0.84	0.84	×	9.05%	=	7.63%
Outstanding debt³	18,500)	18,500)	÷	125,920)	=	0.15	0.15	×	4.80% × (1 – 21.00%)	=	0.56%
Operating lease liability⁴	1,177)	1,177)	÷	125,920)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.02%
Total:	125,920)					1.00					8.21%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Outstanding debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	117,388)	117,388)	÷	134,605)	=	0.87	0.87	×	9.05%	=	7.89%
Outstanding debt³	16,000)	16,000)	÷	134,605)	=	0.12	0.12	×	4.83% × (1 – 21.00%)	=	0.45%
Operating lease liability⁴	1,217)	1,217)	÷	134,605)	=	0.01	0.01	×	2.40% × (1 – 21.00%)	=	0.02%
Total:	134,605)					1.00					8.36%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Outstanding debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	105,437)	105,437)	÷	122,237)	=	0.86	0.86	×	9.05%	=	7.80%
Outstanding debt³	15,400)	15,400)	÷	122,237)	=	0.13	0.13	×	4.57% × (1 – 21.00%)	=	0.45%
Operating lease liability⁴	1,400)	1,400)	÷	122,237)	=	0.01	0.01	×	2.00% × (1 – 21.00%)	=	0.02%
Total:	122,237)					1.00					8.28%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Outstanding debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	91,854)	91,854)	÷	109,869)	=	0.84	0.84	×	9.05%	=	7.56%
Outstanding debt³	16,900)	16,900)	÷	109,869)	=	0.15	0.15	×	4.53% × (1 – 21.00%)	=	0.55%
Operating lease liability⁴	1,115)	1,115)	÷	109,869)	=	0.01	0.01	×	2.80% × (1 – 21.00%)	=	0.02%
Total:	109,869)					1.00					8.14%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Outstanding debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	123,818)	123,818)	÷	140,823)	=	0.88	0.88	×	9.05%	=	7.96%
Outstanding debt³	15,900)	15,900)	÷	140,823)	=	0.11	0.11	×	4.48% × (1 – 21.00%)	=	0.40%
Operating lease liability⁴	1,105)	1,105)	÷	140,823)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	140,823)					1.00					8.38%

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

¹ US$ in millions

² Equity. See details »

³ Outstanding debt. See details »

⁴ Operating lease liability. See details »

Lockheed Martin Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	4,730)	3,521)	4,073)	4,919)	4,661)
Invested capital²	27,427)	26,603)	28,620)	28,054)	25,676)
Performance Ratio
Economic spread ratio³	17.25%	13.24%	14.23%	17.53%	18.15%
Benchmarks
Economic Spread Ratio, Competitors⁴
Boeing Co.	-14.39%	-19.79%	-18.46%	-30.02%	-19.89%
Caterpillar Inc.	4.68%	1.04%	0.97%	-5.15%	1.17%
Cummins Inc.	-7.07%	-1.31%	2.63%	-0.70%	4.69%
Eaton Corp. plc	-2.49%	-4.59%	-4.37%	-6.48%	-3.80%
General Electric Co.	7.38%	-8.83%	-13.82%	-3.96%	-6.51%
Honeywell International Inc.	0.11%	-0.84%	0.21%	-1.22%	3.05%
RTX Corp.	-3.31%	-3.18%	-2.71%	-8.23%	0.27%

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

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 4,730 ÷ 27,427 = 17.25%

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.	Lockheed Martin Corp. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Lockheed Martin Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	4,730)	3,521)	4,073)	4,919)	4,661)
Net sales	67,571)	65,984)	67,044)	65,398)	59,812)
Performance Ratio
Economic profit margin²	7.00%	5.34%	6.07%	7.52%	7.79%
Benchmarks
Economic Profit Margin, Competitors³
Boeing Co.	-8.30%	-15.11%	-14.64%	-24.59%	-9.23%
Caterpillar Inc.	4.21%	1.01%	1.12%	-7.15%	1.27%
Cummins Inc.	-4.27%	-1.05%	1.90%	-0.61%	3.00%
Eaton Corp. plc	-3.37%	-6.80%	-6.56%	-9.95%	-5.24%
General Electric Co.	5.74%	-8.01%	-13.95%	-6.33%	-9.68%
Honeywell International Inc.	0.15%	-1.10%	0.30%	-1.81%	3.55%
RTX Corp.	-5.37%	-5.37%	-4.82%	-16.81%	0.36%

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

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 4,730 ÷ 67,571 = 7.00%

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.	Lockheed Martin Corp. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Lockheed Martin Corp. (NYSE:LMT)

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