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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
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
= 2,962,399 – 15.28% × 16,707,900 = 409,378
Net Operating Profit after Taxes (NOPAT)
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 for current expected credit losses.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrual for product warranty claims.
5 Addition of increase (decrease) in restructuring Plan.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,024,900 × 4.20% = 85,046
8 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 500,746 × 21.00% = 105,157
9 Addition of after taxes interest expense to net income.
10 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 11,000 × 21.00% = 2,310
11 Elimination of after taxes investment income.
Cash Operating Taxes
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).
Invested Capital
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 LIFO reserve. See details »
5 Addition of accrual for product warranty claims.
6 Addition of restructuring Plan.
7 Addition of equity equivalents to shareholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
Cost of Capital
Sherwin-Williams Co., cost of capital calculations
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 87,982,475) | 87,982,475) | ÷ | 99,032,075) | = | 0.89 | 0.89 | × | 16.82% | = | 14.94% | ||
Debt and finance lease liabilities3 | 9,024,700) | 9,024,700) | ÷ | 99,032,075) | = | 0.09 | 0.09 | × | 3.76% × (1 – 21.00%) | = | 0.27% | ||
Operating lease liability4 | 2,024,900) | 2,024,900) | ÷ | 99,032,075) | = | 0.02 | 0.02 | × | 4.20% × (1 – 21.00%) | = | 0.07% | ||
Total: | 99,032,075) | 1.00 | 15.28% |
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 79,204,627) | 79,204,627) | ÷ | 90,153,527) | = | 0.88 | 0.88 | × | 16.82% | = | 14.78% | ||
Debt and finance lease liabilities3 | 8,990,100) | 8,990,100) | ÷ | 90,153,527) | = | 0.10 | 0.10 | × | 3.63% × (1 – 21.00%) | = | 0.29% | ||
Operating lease liability4 | 1,958,800) | 1,958,800) | ÷ | 90,153,527) | = | 0.02 | 0.02 | × | 3.80% × (1 – 21.00%) | = | 0.07% | ||
Total: | 90,153,527) | 1.00 | 15.13% |
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 57,537,005) | 57,537,005) | ÷ | 68,837,105) | = | 0.84 | 0.84 | × | 16.82% | = | 14.06% | ||
Debt and finance lease liabilities3 | 9,361,900) | 9,361,900) | ÷ | 68,837,105) | = | 0.14 | 0.14 | × | 3.71% × (1 – 21.00%) | = | 0.40% | ||
Operating lease liability4 | 1,938,200) | 1,938,200) | ÷ | 68,837,105) | = | 0.03 | 0.03 | × | 3.30% × (1 – 21.00%) | = | 0.07% | ||
Total: | 68,837,105) | 1.00 | 14.53% |
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 69,577,080) | 69,577,080) | ÷ | 82,000,280) | = | 0.85 | 0.85 | × | 16.82% | = | 14.27% | ||
Debt and finance lease liabilities3 | 10,542,800) | 10,542,800) | ÷ | 82,000,280) | = | 0.13 | 0.13 | × | 3.29% × (1 – 21.00%) | = | 0.33% | ||
Operating lease liability4 | 1,880,400) | 1,880,400) | ÷ | 82,000,280) | = | 0.02 | 0.02 | × | 3.00% × (1 – 21.00%) | = | 0.05% | ||
Total: | 82,000,280) | 1.00 | 14.66% |
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 64,236,476) | 64,236,476) | ÷ | 75,791,476) | = | 0.85 | 0.85 | × | 16.82% | = | 14.25% | ||
Debt and finance lease liabilities3 | 9,733,600) | 9,733,600) | ÷ | 75,791,476) | = | 0.13 | 0.13 | × | 3.67% × (1 – 21.00%) | = | 0.37% | ||
Operating lease liability4 | 1,821,400) | 1,821,400) | ÷ | 75,791,476) | = | 0.02 | 0.02 | × | 3.40% × (1 – 21.00%) | = | 0.06% | ||
Total: | 75,791,476) | 1.00 | 14.69% |
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 409,378) | 26,647) | (41,985) | 40,127) | (85,187) | |
Invested capital2 | 16,707,900) | 16,412,900) | 17,346,300) | 15,808,100) | 15,489,500) | |
Performance Ratio | ||||||
Economic spread ratio3 | 2.45% | 0.16% | -0.24% | 0.25% | -0.55% | |
Benchmarks | ||||||
Economic Spread Ratio, Competitors4 | ||||||
Linde plc | -3.96% | -4.47% | -7.72% | -7.69% | -9.17% |
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 × 409,378 ÷ 16,707,900 = 2.45%
4 Click competitor name to see calculations.
Economic Profit Margin
Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 409,378) | 26,647) | (41,985) | 40,127) | (85,187) | |
Net sales | 23,098,500) | 23,051,900) | 22,148,900) | 19,944,600) | 18,361,700) | |
Performance Ratio | ||||||
Economic profit margin2 | 1.77% | 0.12% | -0.19% | 0.20% | -0.46% | |
Benchmarks | ||||||
Economic Profit Margin, Competitors3 | ||||||
Linde plc | -8.99% | -10.00% | -16.74% | -18.12% | -26.50% |
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 ÷ Net sales
= 100 × 409,378 ÷ 23,098,500 = 1.77%
3 Click competitor name to see calculations.