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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

Gilead Sciences Inc., 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	5,383)	3,771)	6,897)	633)	4,060)
Cost of capital²	5.75%	5.78%	5.41%	5.30%	5.64%
Invested capital³	45,824)	45,565)	47,782)	50,285)	31,435)

Economic profit⁴	2,751)	1,136)	4,312)	(2,032)	2,287)

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
= 5,383 – 5.75% × 45,824 = 2,751

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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.	Gilead Sciences Inc. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Gilead Sciences Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income attributable to Gilead	5,665)	4,592)	6,225)	123)	5,386)
Deferred income tax expense (benefit)¹	(995)	(1,555)	(112)	(223)	(2,109)
Increase (decrease) in allowances for credit losses²	1)	8)	3)	4)	—)
Increase (decrease) in equity equivalents³	(994)	(1,547)	(109)	(219)	(2,109)
Interest expense	944)	935)	1,001)	984)	995)
Interest expense, operating lease liability⁴	22)	16)	18)	24)	25)
Adjusted interest expense	966)	951)	1,019)	1,008)	1,020)
Tax benefit of interest expense⁵	(203)	(200)	(214)	(212)	(214)
Adjusted interest expense, after taxes⁶	763)	751)	805)	796)	806)
(Gain) loss on marketable securities	2)	1)	—)	(42)	(1)
Investment income, before taxes	2)	1)	—)	(42)	(1)
Tax expense (benefit) of investment income⁷	—)	—)	—)	9)	—)
Investment income, after taxes⁸	2)	1)	—)	(33)	(1)
Net income (loss) attributable to noncontrolling interest	(52)	(26)	(24)	(34)	(22)
Net operating profit after taxes (NOPAT)	5,383)	3,771)	6,897)	633)	4,060)

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 allowances for credit losses.

³ Addition of increase (decrease) in equity equivalents to net income attributable to Gilead.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 671 × 3.22% = 22

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 966 × 21.00% = 203

⁶ Addition of after taxes interest expense to net income attributable to Gilead.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= -2 × 21.00% = 0

⁸ 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.	Gilead Sciences Inc. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Gilead Sciences Inc., 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 (benefit)	1,247)	1,248)	2,077)	1,580)	(204)
Less: Deferred income tax expense (benefit)	(995)	(1,555)	(112)	(223)	(2,109)
Add: Tax savings from interest expense	203)	200)	214)	212)	214)
Less: Tax imposed on investment income	—)	—)	—)	9)	—)
Cash operating taxes	2,445)	3,003)	2,403)	2,006)	2,119)

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.	Gilead Sciences Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Gilead Sciences Inc., 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 and other obligations, net	1,798)	2,273)	1,516)	2,757)	2,499)
Long-term debt, net, excluding current portion	23,189)	22,957)	25,179)	28,645)	22,094)
Operating lease liability¹	671)	578)	590)	715)	725)
Total reported debt & leases	25,658)	25,808)	27,285)	32,117)	25,318)
Total Gilead stockholders’ equity	22,833)	21,240)	21,069)	18,202)	22,525)
Net deferred tax (assets) liabilities²	392)	1,432)	3,017)	2,612)	(1,556)
Allowances for credit losses³	56)	55)	47)	44)	40)
Equity equivalents⁴	448)	1,487)	3,064)	2,656)	(1,516)
Accumulated other comprehensive (income) loss, net of tax⁵	(28)	(2)	(83)	60)	(85)
Noncontrolling interest	(84)	(31)	(5)	19)	125)
Adjusted total Gilead stockholders’ equity	23,169)	22,694)	24,045)	20,937)	21,049)
Construction in progress⁶	(661)	(719)	(1,057)	(856)	(723)
Marketable debt securities⁷	(2,342)	(2,218)	(2,491)	(1,913)	(14,209)
Invested capital	45,824)	45,565)	47,782)	50,285)	31,435)

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 allowance for doubtful accounts receivable.

⁴ Addition of equity equivalents to total Gilead stockholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of marketable debt 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.	Gilead Sciences Inc. invested capital decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Gilead Sciences Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	91,627)	91,627)	÷	116,095)	=	0.79	0.79	×	6.46%	=	5.10%
Debt, net³	23,797)	23,797)	÷	116,095)	=	0.20	0.20	×	3.91% × (1 – 21.00%)	=	0.63%
Operating lease liability⁴	671)	671)	÷	116,095)	=	0.01	0.01	×	3.22% × (1 – 21.00%)	=	0.01%
Total:	116,095)					1.00					5.75%

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

¹ US$ in millions

² Equity. See details »

³ Debt, net. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	104,133)	104,133)	÷	127,673)	=	0.82	0.82	×	6.46%	=	5.27%
Debt, net³	22,962)	22,962)	÷	127,673)	=	0.18	0.18	×	3.55% × (1 – 21.00%)	=	0.50%
Operating lease liability⁴	578)	578)	÷	127,673)	=	0.00	0.00	×	2.80% × (1 – 21.00%)	=	0.01%
Total:	127,673)					1.00					5.78%

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

¹ US$ in millions

² Equity. See details »

³ Debt, net. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	76,926)	76,926)	÷	107,416)	=	0.72	0.72	×	6.46%	=	4.63%
Debt, net³	29,900)	29,900)	÷	107,416)	=	0.28	0.28	×	3.51% × (1 – 21.00%)	=	0.77%
Operating lease liability⁴	590)	590)	÷	107,416)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.01%
Total:	107,416)					1.00					5.41%

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

¹ US$ in millions

² Equity. See details »

³ Debt, net. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	78,901)	78,901)	÷	115,316)	=	0.68	0.68	×	6.46%	=	4.42%
Debt, net³	35,700)	35,700)	÷	115,316)	=	0.31	0.31	×	3.53% × (1 – 21.00%)	=	0.86%
Operating lease liability⁴	715)	715)	÷	115,316)	=	0.01	0.01	×	3.32% × (1 – 21.00%)	=	0.02%
Total:	115,316)					1.00					5.30%

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

¹ US$ in millions

² Equity. See details »

³ Debt, net. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	88,581)	88,581)	÷	116,606)	=	0.76	0.76	×	6.46%	=	4.91%
Debt, net³	27,300)	27,300)	÷	116,606)	=	0.23	0.23	×	3.88% × (1 – 21.00%)	=	0.72%
Operating lease liability⁴	725)	725)	÷	116,606)	=	0.01	0.01	×	3.47% × (1 – 21.00%)	=	0.02%
Total:	116,606)					1.00					5.64%

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

¹ US$ in millions

² Equity. See details »

³ Debt, net. See details »

⁴ Operating lease liability. See details »

Gilead Sciences Inc., 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	2,751)	1,136)	4,312)	(2,032)	2,287)
Invested capital²	45,824)	45,565)	47,782)	50,285)	31,435)
Performance Ratio
Economic spread ratio³	6.00%	2.49%	9.02%	-4.04%	7.27%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-4.02%	5.41%	4.79%	-3.05%	7.22%
Amgen Inc.	2.73%	7.40%	7.38%	11.71%	13.91%
Bristol-Myers Squibb Co.	2.02%	-0.68%	1.57%	-14.00%	-3.67%
Danaher Corp.	-7.76%	-2.81%	-2.15%	-3.54%	-6.94%
Eli Lilly & Co.	3.28%	10.61%	12.30%	18.96%	15.79%
Johnson & Johnson	-0.01%	5.22%	10.28%	5.06%	3.97%
Merck & Co. Inc.	-8.49%	11.70%	11.83%	4.67%	11.25%
Moderna Inc.	-122.48%	29.65%	117.96%	53.81%	-145.84%
Pfizer Inc.	-8.95%	18.62%	11.78%	-2.93%	5.68%
Regeneron Pharmaceuticals Inc.	21.20%	24.31%	67.31%	39.18%	28.44%
Thermo Fisher Scientific Inc.	-4.66%	-2.88%	-1.05%	-0.05%	-3.94%

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 × 2,751 ÷ 45,824 = 6.00%

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.	Gilead Sciences Inc. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Gilead Sciences Inc., 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	2,751)	1,136)	4,312)	(2,032)	2,287)
Product sales	26,934)	26,982)	27,008)	24,355)	22,119)
Performance Ratio
Economic profit margin²	10.21%	4.21%	15.96%	-8.34%	10.34%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-5.04%	7.65%	8.18%	-6.92%	13.62%
Amgen Inc.	7.11%	11.85%	12.23%	18.72%	23.42%
Bristol-Myers Squibb Co.	3.03%	-1.06%	2.72%	-29.68%	-14.08%
Danaher Corp.	-25.47%	-6.97%	-5.37%	-10.39%	-22.52%
Eli Lilly & Co.	2.82%	9.03%	11.36%	18.98%	15.21%
Johnson & Johnson	-0.01%	6.26%	10.77%	6.03%	4.69%
Merck & Co. Inc.	-9.88%	14.59%	17.18%	5.56%	12.89%
Moderna Inc.	-139.80%	14.80%	61.53%	55.69%	—
Pfizer Inc.	-23.69%	20.56%	12.70%	-7.26%	13.28%
Regeneron Pharmaceuticals Inc.	19.33%	24.48%	45.52%	38.18%	23.61%
Thermo Fisher Scientific Inc.	-9.30%	-5.31%	-2.14%	-0.10%	-8.11%

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 ÷ Product sales
= 100 × 2,751 ÷ 26,934 = 10.21%

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.	Gilead Sciences Inc. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Gilead Sciences Inc. (NASDAQ:GILD)

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