Stock Analysis on Net

Linde plc (NASDAQ:LIN)

Economic Value Added (EVA)

Microsoft Excel

EVA is registered trademark of Stern Stewart.

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

Linde plc, economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1 6,814 6,386 3,833 3,800 2,699
Cost of capital2 13.15% 13.26% 13.11% 13.01% 12.68%
Invested capital3 74,884 73,409 72,341 72,560 78,771
 
Economic profit4 (3,032) (3,350) (5,649) (5,643) (7,287)

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
= 6,81413.15% × 74,884 = -3,032

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. Linde plc economic profit increased from 2022 to 2023 and from 2023 to 2024.

Net Operating Profit after Taxes (NOPAT)

Linde plc, NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income, Linde plc 6,565 6,199 4,147 3,826 2,501
Deferred income tax expense (benefit)1 (142) (84) (383) (254) (368)
Increase (decrease) in allowance for expected credit losses2 (36) 52 (66) 165
Increase (decrease) in cost reduction programs3 27 (106) (133) 84 169
Increase (decrease) in equity equivalents4 (151) (138) (516) (236) (34)
Interest expense 484 397 180 117 170
Interest expense, operating lease liability5 33 31 24 24 26
Adjusted interest expense 517 428 204 141 196
Tax benefit of interest expense6 (108) (90) (43) (30) (41)
Adjusted interest expense, after taxes7 408 338 161 112 155
Interest income (228) (197) (117) (40) (55)
Investment income, before taxes (228) (197) (117) (40) (55)
Tax expense (benefit) of investment income8 48 41 25 8 12
Investment income, after taxes9 (180) (156) (92) (32) (43)
(Income) loss from discontinued operations, net of tax10 (5) (4)
Net income (loss) attributable to noncontrolling interest 172 142 134 135 125
Net operating profit after taxes (NOPAT) 6,814 6,386 3,833 3,800 2,699

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 expected credit losses.

3 Addition of increase (decrease) in cost reduction programs.

4 Addition of increase (decrease) in equity equivalents to net income, Linde plc.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 782 × 4.17% = 33

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 517 × 21.00% = 108

7 Addition of after taxes interest expense to net income, Linde plc.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 228 × 21.00% = 48

9 Elimination of after taxes investment income.

10 Elimination of discontinued operations.

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. Linde plc NOPAT increased from 2022 to 2023 and from 2023 to 2024.

Cash Operating Taxes

Linde plc, cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Provision for income taxes 2,002 1,814 1,434 1,262 847
Less: Deferred income tax expense (benefit) (142) (84) (383) (254) (368)
Add: Tax savings from interest expense 108 90 43 30 41
Less: Tax imposed on investment income 48 41 25 8 12
Cash operating taxes 2,205 1,947 1,835 1,537 1,245

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).

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. Linde plc cash operating taxes increased from 2022 to 2023 and from 2023 to 2024.

Invested Capital

Linde plc, invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Short-term debt 4,223 4,713 4,117 1,163 3,251
Current portion of long-term debt 2,057 1,263 1,599 1,709 751
Current finance lease liabilities 54 50 42 47 38
Long-term debt, excluding current portion 15,343 13,397 12,198 11,335 12,152
Long-term finance lease liabilities 150 143 114 129 125
Operating lease liability1 782 749 721 833 906
Total reported debt & leases 22,609 20,315 18,791 15,216 17,223
Total Linde plc shareholders’ equity 38,092 39,720 40,028 44,035 47,317
Net deferred tax (assets) liabilities2 5,231 5,523 5,656 5,997 6,436
Allowance for expected credit losses3 421 457 405 405 471
Cost reduction programs4 241 214 320 453 369
Equity equivalents5 5,893 6,194 6,381 6,855 7,276
Accumulated other comprehensive (income) loss, net of tax6 6,894 5,805 5,782 5,048 4,690
Redeemable noncontrolling interests 13 13 13 13 13
Noncontrolling interests 1,383 1,362 1,346 1,393 2,252
Adjusted total Linde plc shareholders’ equity 52,275 53,094 53,550 57,344 61,548
Invested capital 74,884 73,409 72,341 72,560 78,771

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 cost reduction programs.

5 Addition of equity equivalents to total Linde plc shareholders’ equity.

6 Removal of accumulated other comprehensive income.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Linde plc invested capital increased from 2022 to 2023 and from 2023 to 2024.

Cost of Capital

Linde plc, cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 218,272 218,272 ÷ 239,715 = 0.91 0.91 × 14.23% = 12.96%
Debt and finance lease liabilities3 20,661 20,661 ÷ 239,715 = 0.09 0.09 × 2.62% × (1 – 21.00%) = 0.18%
Operating lease liability4 782 782 ÷ 239,715 = 0.00 0.00 × 4.17% × (1 – 21.00%) = 0.01%
Total: 239,715 1.00 13.15%

Based on: 10-K (reporting date: 2024-12-31).

1 US$ in millions

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 217,287 217,287 ÷ 236,279 = 0.92 0.92 × 14.23% = 13.09%
Debt and finance lease liabilities3 18,243 18,243 ÷ 236,279 = 0.08 0.08 × 2.67% × (1 – 21.00%) = 0.16%
Operating lease liability4 749 749 ÷ 236,279 = 0.00 0.00 × 4.19% × (1 – 21.00%) = 0.01%
Total: 236,279 1.00 13.26%

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

1 US$ in millions

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 171,454 171,454 ÷ 188,442 = 0.91 0.91 × 14.23% = 12.95%
Debt and finance lease liabilities3 16,267 16,267 ÷ 188,442 = 0.09 0.09 × 2.18% × (1 – 21.00%) = 0.15%
Operating lease liability4 721 721 ÷ 188,442 = 0.00 0.00 × 3.26% × (1 – 21.00%) = 0.01%
Total: 188,442 1.00 13.11%

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

1 US$ in millions

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 148,891 148,891 ÷ 164,282 = 0.91 0.91 × 14.23% = 12.90%
Debt and finance lease liabilities3 14,558 14,558 ÷ 164,282 = 0.09 0.09 × 1.48% × (1 – 21.00%) = 0.10%
Operating lease liability4 833 833 ÷ 164,282 = 0.01 0.01 × 2.91% × (1 – 21.00%) = 0.01%
Total: 164,282 1.00 13.01%

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

1 US$ in millions

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 131,488 131,488 ÷ 149,419 = 0.88 0.88 × 14.23% = 12.52%
Debt and finance lease liabilities3 17,025 17,025 ÷ 149,419 = 0.11 0.11 × 1.55% × (1 – 21.00%) = 0.14%
Operating lease liability4 906 906 ÷ 149,419 = 0.01 0.01 × 2.83% × (1 – 21.00%) = 0.01%
Total: 149,419 1.00 12.68%

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

1 US$ in millions

2 Equity. See details »

3 Debt and finance lease liabilities. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Linde plc, economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (3,032) (3,350) (5,649) (5,643) (7,287)
Invested capital2 74,884 73,409 72,341 72,560 78,771
Performance Ratio
Economic spread ratio3 -4.05% -4.56% -7.81% -7.78% -9.25%
Benchmarks
Economic Spread Ratio, Competitors4
Sherwin-Williams Co. 2.26% -0.02% -0.42% 0.08% -0.73%

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 × -3,032 ÷ 74,884 = -4.05%

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. Linde plc economic spread ratio improved from 2022 to 2023 and from 2023 to 2024.

Economic Profit Margin

Linde plc, economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 (3,032) (3,350) (5,649) (5,643) (7,287)
Sales 33,005 32,854 33,364 30,793 27,243
Performance Ratio
Economic profit margin2 -9.19% -10.20% -16.93% -18.33% -26.75%
Benchmarks
Economic Profit Margin, Competitors3
Sherwin-Williams Co. 1.64% -0.01% -0.33% 0.06% -0.61%

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 ÷ Sales
= 100 × -3,032 ÷ 33,005 = -9.19%

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. Linde plc economic profit margin improved from 2022 to 2023 and from 2023 to 2024.