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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: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 326,174 – 11.50% × 1,607,800 = 141,242
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. | Axon Enterprise Inc. economic profit decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level. |
Net Operating Profit after Taxes (NOPAT)
Based on: 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), 10-K (reporting date: 2018-12-31).
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 accrued warranty expense.
5 Addition of increase (decrease) in equity equivalents to net income (loss).
6 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 43,500 × 5.44% = 2,366
7 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,854 × 21.00% = 599
8 Addition of after taxes interest expense to net income (loss).
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. | Axon Enterprise Inc. NOPAT decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level. |
Cash Operating Taxes
Based on: 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), 10-K (reporting date: 2018-12-31).
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. | Axon Enterprise Inc. cash operating taxes decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level. |
Invested Capital
Based on: 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), 10-K (reporting date: 2018-12-31).
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 accrued warranty expense.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction-in-process.
9 Subtraction of investments.
Item | Description | The company |
---|---|---|
Invested capital | Capital is an approximation of the economic book value of all cash invested in going-concern business activities. | Axon Enterprise Inc. invested capital increased from 2020 to 2021 and from 2021 to 2022. |
Cost of Capital
Axon Enterprise Inc., cost of capital calculations
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 14,595,033) | 14,595,033) | ÷ | 15,325,833) | = | 0.95 | 0.95 | × | 12.03% | = | 11.45% | ||
Convertible notes3 | 687,300) | 687,300) | ÷ | 15,325,833) | = | 0.04 | 0.04 | × | 0.99% × (1 – 21.00%) | = | 0.04% | ||
Operating lease liability4 | 43,500) | 43,500) | ÷ | 15,325,833) | = | 0.00 | 0.00 | × | 5.44% × (1 – 21.00%) | = | 0.01% | ||
Total: | 15,325,833) | 1.00 | 11.50% |
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 9,514,802) | 9,514,802) | ÷ | 9,541,781) | = | 1.00 | 1.00 | × | 12.03% | = | 11.99% | ||
Convertible notes3 | —) | —) | ÷ | 9,541,781) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Operating lease liability4 | 26,979) | 26,979) | ÷ | 9,541,781) | = | 0.00 | 0.00 | × | 2.73% × (1 – 21.00%) | = | 0.01% | ||
Total: | 9,541,781) | 1.00 | 12.00% |
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 10,555,589) | 10,555,589) | ÷ | 10,579,972) | = | 1.00 | 1.00 | × | 12.03% | = | 12.00% | ||
Convertible notes3 | —) | —) | ÷ | 10,579,972) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Operating lease liability4 | 24,383) | 24,383) | ÷ | 10,579,972) | = | 0.00 | 0.00 | × | 3.36% × (1 – 21.00%) | = | 0.01% | ||
Total: | 10,579,972) | 1.00 | 12.01% |
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 4,605,697) | 4,605,697) | ÷ | 4,616,306) | = | 1.00 | 1.00 | × | 12.03% | = | 12.00% | ||
Convertible notes3 | —) | —) | ÷ | 4,616,306) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Operating lease liability4 | 10,609) | 10,609) | ÷ | 4,616,306) | = | 0.00 | 0.00 | × | 3.55% × (1 – 21.00%) | = | 0.01% | ||
Total: | 4,616,306) | 1.00 | 12.01% |
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Capital (fair value)1 | Weights | Cost of capital | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Equity2 | 3,264,443) | 3,264,443) | ÷ | 3,277,220) | = | 1.00 | 1.00 | × | 12.03% | = | 11.98% | ||
Convertible notes3 | —) | —) | ÷ | 3,277,220) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Operating lease liability4 | 12,777) | 12,777) | ÷ | 3,277,220) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
Total: | 3,277,220) | 1.00 | 11.98% |
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible notes. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 141,242) | (113,035) | (35,018) | (42,215) | 2,374) | |
Invested capital2 | 1,607,800) | 1,262,920) | 722,746) | 500,291) | 631,660) | |
Performance Ratio | ||||||
Economic spread ratio3 | 8.78% | -8.95% | -4.85% | -8.44% | 0.38% | |
Benchmarks | ||||||
Economic Spread Ratio, Competitors4 | ||||||
Boeing Co. | -20.10% | -18.74% | -30.28% | -20.26% | — | |
Caterpillar Inc. | 0.82% | 0.77% | -5.35% | 0.99% | — | |
Eaton Corp. plc | -4.80% | -4.58% | -6.69% | -4.00% | — | |
GE Aerospace | -9.04% | -14.02% | -4.11% | -6.66% | — | |
Honeywell International Inc. | -1.05% | 0.00% | -1.43% | 2.84% | — | |
Lockheed Martin Corp. | 13.19% | 14.19% | 17.49% | 18.11% | — | |
RTX Corp. | -3.19% | -2.72% | -8.24% | 0.25% | — |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 141,242 ÷ 1,607,800 = 8.78%
4 Click competitor name to see calculations.
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. | Axon Enterprise Inc. economic spread ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level. |
Economic Profit Margin
Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
---|---|---|---|---|---|---|
Selected Financial Data (US$ in thousands) | ||||||
Economic profit1 | 141,242) | (113,035) | (35,018) | (42,215) | 2,374) | |
Net sales | 1,189,935) | 863,381) | 681,003) | 530,860) | 420,068) | |
Add: Increase (decrease) in deferred revenue | 156,728) | 176,131) | 69,381) | 24,367) | 56,151) | |
Adjusted net sales | 1,346,663) | 1,039,512) | 750,384) | 555,227) | 476,219) | |
Performance Ratio | ||||||
Economic profit margin2 | 10.49% | -10.87% | -4.67% | -7.60% | 0.50% | |
Benchmarks | ||||||
Economic Profit Margin, Competitors3 | ||||||
Boeing Co. | -15.34% | -14.86% | -24.80% | -9.40% | — | |
Caterpillar Inc. | 0.79% | 0.89% | -7.44% | 1.07% | — | |
Eaton Corp. plc | -7.13% | -6.87% | -10.26% | -5.51% | — | |
GE Aerospace | -8.19% | -14.15% | -6.57% | -9.90% | — | |
Honeywell International Inc. | -1.38% | 0.00% | -2.12% | 3.30% | — | |
Lockheed Martin Corp. | 5.32% | 6.06% | 7.50% | 7.77% | — | |
RTX Corp. | -5.39% | -4.84% | -16.84% | 0.34% | — |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 141,242 ÷ 1,346,663 = 10.49%
3 Click competitor name to see calculations.
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. | Axon Enterprise Inc. economic profit margin deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level. |