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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

Roper Technologies Inc., economic profit calculation

US$ in thousands

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	1,275,289)	1,343,194)	1,253,044)	1,986,174)	1,152,486)
Cost of capital²	13.91%	13.46%	12.75%	13.78%	13.80%
Invested capital³	26,216,800)	22,504,600)	23,002,900)	17,154,600)	14,785,177)

Economic profit⁴	(2,372,175)	(1,686,762)	(1,679,637)	(378,531)	(888,363)

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
= 1,275,289 – 13.91% × 26,216,800 = -2,372,175

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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.	Roper Technologies Inc. economic profit decreased from 2020 to 2021 and from 2021 to 2022.

Roper Technologies Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net earnings	4,544,700)	1,152,600)	949,700)	1,767,900)	944,400)
Deferred income tax expense (benefit)¹	(173,200)	6,500)	(57,600)	(90,200)	(62,700)
Increase (decrease) in allowance for doubtful accounts and sales allowances²	900)	(8,400)	8,800)	(2,800)	10,400)
Increase (decrease) in deferred revenue³	306,000)	172,600)	172,700)	157,300)	109,500)
Increase (decrease) in equity equivalents⁴	133,700)	170,700)	123,900)	64,300)	57,200)
Interest expense, net	192,400)	234,100)	218,900)	186,600)	182,100)
Interest expense, operating lease liability⁵	5,054)	6,272)	8,245)	8,304)	8,895)
Adjusted interest expense, net	197,454)	240,372)	227,145)	194,904)	190,995)
Tax benefit of interest expense, net⁶	(41,465)	(50,478)	(47,700)	(40,930)	(40,109)
Adjusted interest expense, net, after taxes⁷	155,989)	189,894)	179,444)	153,974)	150,886)
(Income) loss from discontinued operations, net of tax⁸	(3,559,100)	(170,000)	—)	—)	—)
Net operating profit after taxes (NOPAT)	1,275,289)	1,343,194)	1,253,044)	1,986,174)	1,152,486)

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 doubtful accounts and sales allowances.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net earnings.

⁵ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 210,600 × 2.40% = 5,054

⁶ 2022 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 197,454 × 21.00% = 41,465

⁷ Addition of after taxes interest expense to net earnings.

⁸ 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.	Roper Technologies Inc. NOPAT increased from 2020 to 2021 but then slightly decreased from 2021 to 2022 not reaching 2020 level.

Roper Technologies Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Income tax expense	296,400)	288,400)	259,600)	459,500)	254,000)
Less: Deferred income tax expense (benefit)	(173,200)	6,500)	(57,600)	(90,200)	(62,700)
Add: Tax savings from interest expense, net	41,465)	50,478)	47,700)	40,930)	40,109)
Cash operating taxes	511,065)	332,378)	364,900)	590,630)	356,809)

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.	Roper Technologies Inc. cash operating taxes decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Roper Technologies Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Current portion of long-term debt, net	699,200)	799,200)	502,000)	602,200)	1,500)
Long-term debt, net of current portion	5,962,500)	7,122,600)	9,064,500)	4,673,100)	4,940,200)
Operating lease liability¹	210,600)	232,300)	284,300)	276,800)	251,977)
Total reported debt & leases	6,872,300)	8,154,100)	9,850,800)	5,552,100)	5,193,677)
Stockholders’ equity	16,037,800)	11,563,800)	10,479,800)	9,491,900)	7,738,500)
Net deferred tax (assets) liabilities²	1,620,900)	1,378,400)	1,458,500)	1,012,500)	878,900)
Allowance for doubtful accounts and sales allowances³	16,600)	19,700)	29,100)	20,300)	23,100)
Deferred revenue⁴	1,482,200)	1,205,500)	1,037,700)	865,000)	707,700)
Equity equivalents⁵	3,119,700)	2,603,600)	2,525,300)	1,897,800)	1,609,700)
Accumulated other comprehensive (income) loss, net of tax⁶	187,000)	183,100)	147,000)	212,800)	243,300)
Adjusted stockholders’ equity	19,344,500)	14,350,500)	13,152,100)	11,602,500)	9,591,500)
Invested capital	26,216,800)	22,504,600)	23,002,900)	17,154,600)	14,785,177)

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 equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

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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.	Roper Technologies Inc. invested capital decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Roper Technologies Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	45,577,303)	45,577,303)	÷	51,773,203)	=	0.88	0.88	×	15.52%	=	13.66%
Long-term debt, including current portion³	5,985,300)	5,985,300)	÷	51,773,203)	=	0.12	0.12	×	2.63% × (1 – 21.00%)	=	0.24%
Operating lease liability⁴	210,600)	210,600)	÷	51,773,203)	=	0.00	0.00	×	2.40% × (1 – 21.00%)	=	0.01%
Total:	51,773,203)					1.00					13.91%

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

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	46,381,821)	46,381,821)	÷	54,735,421)	=	0.85	0.85	×	15.52%	=	13.15%
Long-term debt, including current portion³	8,121,300)	8,121,300)	÷	54,735,421)	=	0.15	0.15	×	2.57% × (1 – 21.00%)	=	0.30%
Operating lease liability⁴	232,300)	232,300)	÷	54,735,421)	=	0.00	0.00	×	2.70% × (1 – 21.00%)	=	0.01%
Total:	54,735,421)					1.00					13.46%

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

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	40,288,410)	40,288,410)	÷	50,733,910)	=	0.79	0.79	×	15.52%	=	12.33%
Long-term debt, including current portion³	10,161,200)	10,161,200)	÷	50,733,910)	=	0.20	0.20	×	2.59% × (1 – 21.00%)	=	0.41%
Operating lease liability⁴	284,300)	284,300)	÷	50,733,910)	=	0.01	0.01	×	2.90% × (1 – 21.00%)	=	0.01%
Total:	50,733,910)					1.00					12.75%

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

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	37,318,769)	37,318,769)	÷	43,134,269)	=	0.87	0.87	×	15.52%	=	13.43%
Long-term debt, including current portion³	5,538,700)	5,538,700)	÷	43,134,269)	=	0.13	0.13	×	3.35% × (1 – 21.00%)	=	0.34%
Operating lease liability⁴	276,800)	276,800)	÷	43,134,269)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.02%
Total:	43,134,269)					1.00					13.78%

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

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	33,087,145)	33,087,145)	÷	38,251,122)	=	0.86	0.86	×	15.52%	=	13.43%
Long-term debt, including current portion³	4,912,000)	4,912,000)	÷	38,251,122)	=	0.13	0.13	×	3.53% × (1 – 21.00%)	=	0.36%
Operating lease liability⁴	251,977)	251,977)	÷	38,251,122)	=	0.01	0.01	×	3.53% × (1 – 21.00%)	=	0.02%
Total:	38,251,122)					1.00					13.80%

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

¹ US$ in thousands

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Roper Technologies Inc., 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 thousands)
Economic profit¹	(2,372,175)	(1,686,762)	(1,679,637)	(378,531)	(888,363)
Invested capital²	26,216,800)	22,504,600)	23,002,900)	17,154,600)	14,785,177)
Performance Ratio
Economic spread ratio³	-9.05%	-7.50%	-7.30%	-2.21%	-6.01%
Benchmarks
Economic Spread Ratio, Competitors⁴
Apple Inc.	200.98%	197.33%	145.27%	89.38%	—
Arista Networks Inc.	22.93%	37.97%	20.38%	—	—
Cisco Systems Inc.	7.94%	7.19%	11.43%	5.65%	—
Dell Technologies Inc.	4.94%	0.35%	-0.83%	—	—
Super Micro Computer Inc.	-2.33%	-10.07%	-12.94%	-7.85%	—

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 × -2,372,175 ÷ 26,216,800 = -9.05%

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.	Roper Technologies Inc. economic spread ratio deteriorated from 2020 to 2021 and from 2021 to 2022.

Roper Technologies Inc., 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 thousands)
Economic profit¹	(2,372,175)	(1,686,762)	(1,679,637)	(378,531)	(888,363)

Net revenues	5,371,800)	5,777,800)	5,527,100)	5,366,800)	5,191,200)
Add: Increase (decrease) in deferred revenue	306,000)	172,600)	172,700)	157,300)	109,500)
Adjusted net revenues	5,677,800)	5,950,400)	5,699,800)	5,524,100)	5,300,700)
Performance Ratio
Economic profit margin²	-41.78%	-28.35%	-29.47%	-6.85%	-16.76%
Benchmarks
Economic Profit Margin, Competitors³
Apple Inc.	23.75%	22.93%	19.04%	17.45%	—
Arista Networks Inc.	15.80%	22.24%	15.90%	—	—
Cisco Systems Inc.	8.91%	8.02%	11.92%	5.96%	—
Dell Technologies Inc.	2.59%	0.30%	-0.70%	—	—
Super Micro Computer Inc.	-0.99%	-3.63%	-4.80%	-2.54%	—

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 revenues
= 100 × -2,372,175 ÷ 5,677,800 = -41.78%

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.	Roper Technologies Inc. economic profit margin improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Roper Technologies Inc. (NASDAQ:ROP)

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