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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

Paramount Global, economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	1,431)	5,241)	3,726)	3,590)	2,342)
Cost of capital²	11.19%	11.18%	12.81%	10.15%	12.99%
Invested capital³	44,287)	45,938)	41,069)	37,244)	15,419)

Economic profit⁴	(3,525)	105)	(1,534)	(189)	340)

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
= 1,431 – 11.19% × 44,287 = -3,525

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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.	Paramount Global economic profit increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Paramount Global, NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net earnings attributable to Paramount	1,104)	4,543)	2,422)	3,308)	1,960)
Deferred income tax expense (benefit)¹	(106)	90)	122)	(769)	44)
Increase (decrease) in allowance for credit losses²	31)	(5)	5)	—)	(8)
Increase (decrease) in deferred revenues³	(140)	80)	212)	165)	(10)
Increase (decrease) in restructuring liability⁴	112)	(182)	(24)	114)	6)
Increase (decrease) in equity equivalents⁵	(103)	(17)	315)	(490)	32)
Interest expense	931)	986)	1,031)	962)	467)
Interest expense, operating lease liability⁶	62)	65)	76)	90)	33)
Adjusted interest expense	993)	1,051)	1,107)	1,052)	500)
Tax benefit of interest expense⁷	(209)	(221)	(232)	(221)	(105)
Adjusted interest expense, after taxes⁸	784)	831)	874)	831)	395)
Interest income	(108)	(53)	(60)	(66)	(57)
Investment income, before taxes	(108)	(53)	(60)	(66)	(57)
Tax expense (benefit) of investment income⁹	23)	11)	13)	14)	12)
Investment income, after taxes¹⁰	(85)	(42)	(47)	(52)	(45)
(Income) loss from discontinued operations, net of tax¹¹	(379)	(162)	(117)	(38)	—)
Net income (loss) attributable to noncontrolling interest	110)	88)	279)	31)	—)
Net operating profit after taxes (NOPAT)	1,431)	5,241)	3,726)	3,590)	2,342)

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 for credit losses.

³ Addition of increase (decrease) in deferred revenues.

⁴ Addition of increase (decrease) in restructuring liability.

⁵ Addition of increase (decrease) in equity equivalents to net earnings attributable to Paramount.

⁶ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,720 × 3.60% = 62

⁷ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 993 × 21.00% = 209

⁸ Addition of after taxes interest expense to net earnings attributable to Paramount.

⁹ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 108 × 21.00% = 23

¹⁰ Elimination of after taxes investment income.

¹¹ 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.	Paramount Global NOPAT increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Paramount Global, cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Provision (benefit) for income taxes	227)	646)	535)	(9)	273)
Less: Deferred income tax expense (benefit)	(106)	90)	122)	(769)	44)
Add: Tax savings from interest expense	209)	221)	232)	221)	105)
Less: Tax imposed on investment income	23)	11)	13)	14)	12)
Cash operating taxes	519)	766)	633)	967)	322)

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).

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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.	Paramount Global cash operating taxes increased from 2020 to 2021 but then decreased significantly from 2021 to 2022.

Paramount Global, invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current debt	239)	11)	16)	717)	687)
Long-term debt, net of current portion	15,607)	17,698)	19,717)	18,002)	9,465)
Operating lease liability¹	1,720)	1,923)	1,889)	2,201)	931)
Total reported debt & leases	17,566)	19,632)	21,622)	20,920)	11,083)
Total Paramount stockholders’ equity	23,036)	22,402)	15,371)	13,207)	2,804)
Net deferred tax (assets) liabilities²	(165)	(143)	(215)	(439)	370)
Allowance for credit losses³	111)	80)	85)	86)	41)
Deferred revenues⁴	1,060)	1,200)	1,120)	910)	274)
Restructuring liability⁵	302)	190)	372)	400)	72)
Equity equivalents⁶	1,308)	1,327)	1,362)	957)	757)
Accumulated other comprehensive (income) loss, net of tax⁷	1,807)	1,902)	1,832)	1,970)	775)
Redeemable noncontrolling interest	—)	107)	197)	254)	—)
Noncontrolling interests	570)	568)	685)	82)	—)
Adjusted total Paramount stockholders’ equity	26,721)	26,306)	19,447)	16,470)	4,336)
Marketable securities⁸	—)	—)	—)	(146)	—)
Invested capital	44,287)	45,938)	41,069)	37,244)	15,419)

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 revenues.

⁵ Addition of restructuring liability.

⁶ Addition of equity equivalents to total Paramount stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ 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.	Paramount Global invested capital increased from 2020 to 2021 but then slightly decreased from 2021 to 2022.

Paramount Global, cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	15,287)	15,287)	÷	31,220)	=	0.49	0.49	×	18.72%	=	9.16%
5.75% Series A Mandatory Convertible Preferred Stock	248)	248)	÷	31,220)	=	0.01	0.01	×	5.75%	=	0.05%
Debt³	13,965)	13,965)	÷	31,220)	=	0.45	0.45	×	5.16% × (1 – 21.00%)	=	1.82%
Operating lease liability⁴	1,720)	1,720)	÷	31,220)	=	0.06	0.06	×	3.60% × (1 – 21.00%)	=	0.16%
Total:	31,220)					1.00					11.19%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	23,343)	23,343)	÷	47,319)	=	0.49	0.49	×	18.72%	=	9.23%
5.75% Series A Mandatory Convertible Preferred Stock	502)	502)	÷	47,319)	=	0.01	0.01	×	5.75%	=	0.06%
Debt³	21,551)	21,551)	÷	47,319)	=	0.46	0.46	×	4.94% × (1 – 21.00%)	=	1.78%
Operating lease liability⁴	1,923)	1,923)	÷	47,319)	=	0.04	0.04	×	3.40% × (1 – 21.00%)	=	0.11%
Total:	47,319)					1.00					11.18%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	40,646)	40,646)	÷	67,156)	=	0.61	0.61	×	18.72%	=	11.33%
5.75% Series A Mandatory Convertible Preferred Stock	—)	—)	÷	67,156)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	24,621)	24,621)	÷	67,156)	=	0.37	0.37	×	4.80% × (1 – 21.00%)	=	1.39%
Operating lease liability⁴	1,889)	1,889)	÷	67,156)	=	0.03	0.03	×	4.00% × (1 – 21.00%)	=	0.09%
Total:	67,156)					1.00					12.81%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,976)	17,976)	÷	41,520)	=	0.43	0.43	×	18.72%	=	8.10%
5.75% Series A Mandatory Convertible Preferred Stock	—)	—)	÷	41,520)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	21,343)	21,343)	÷	41,520)	=	0.51	0.51	×	4.61% × (1 – 21.00%)	=	1.87%
Operating lease liability⁴	2,201)	2,201)	÷	41,520)	=	0.05	0.05	×	4.10% × (1 – 21.00%)	=	0.17%
Total:	41,520)					1.00					10.15%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,887)	18,887)	÷	30,016)	=	0.63	0.63	×	18.72%	=	11.78%
5.75% Series A Mandatory Convertible Preferred Stock	—)	—)	÷	30,016)	=	0.00	0.00	×	0.00%	=	0.00%
Debt³	10,197)	10,197)	÷	30,016)	=	0.34	0.34	×	4.18% × (1 – 21.00%)	=	1.12%
Operating lease liability⁴	931)	931)	÷	30,016)	=	0.03	0.03	×	3.59% × (1 – 21.00%)	=	0.09%
Total:	30,016)					1.00					12.99%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Paramount Global, economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(3,525)	105)	(1,534)	(189)	340)
Invested capital²	44,287)	45,938)	41,069)	37,244)	15,419)
Performance Ratio
Economic spread ratio³	-7.96%	0.23%	-3.73%	-0.51%	2.20%
Benchmarks
Economic Spread Ratio, Competitors⁴
Alphabet Inc.	15.81%	38.10%	19.34%	18.39%	—
Comcast Corp.	-6.89%	-1.87%	-3.52%	-1.47%	—
Meta Platforms Inc.	5.86%	28.31%	19.52%	12.62%	—
Netflix Inc.	-1.22%	3.10%	-2.29%	-4.11%	—
Walt Disney Co.	-9.82%	-12.61%	-14.89%	-4.71%	—

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 × -3,525 ÷ 44,287 = -7.96%

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.	Paramount Global economic spread ratio improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Paramount Global, economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(3,525)	105)	(1,534)	(189)	340)

Revenues	30,154)	28,586)	25,285)	27,812)	14,514)
Add: Increase (decrease) in deferred revenues	(140)	80)	212)	165)	(10)
Adjusted revenues	30,014)	28,666)	25,497)	27,977)	14,504)
Performance Ratio
Economic profit margin²	-11.74%	0.37%	-6.02%	-0.68%	2.34%
Benchmarks
Economic Profit Margin, Competitors³
Alphabet Inc.	9.74%	21.85%	12.95%	11.42%	—
Comcast Corp.	-12.18%	-3.67%	-7.60%	-2.91%	—
Meta Platforms Inc.	5.12%	22.23%	18.36%	11.68%	—
Netflix Inc.	-1.46%	3.62%	-2.71%	-4.88%	—
Walt Disney Co.	-20.20%	-32.14%	-40.04%	-11.28%	—

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 revenues
= 100 × -3,525 ÷ 30,014 = -11.74%

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.	Paramount Global economic profit margin improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Paramount Global (NASDAQ:PARA)

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