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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

Danaher Corp., 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	3,099)	6,866)	6,722)	4,986)	2,083)
Cost of capital²	11.70%	11.57%	11.15%	10.97%	10.52%
Invested capital³	78,561)	78,342)	74,633)	67,123)	58,294)

Economic profit⁴	(6,093)	(2,198)	(1,604)	(2,379)	(4,048)

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
= 3,099 – 11.70% × 78,561 = -6,093

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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.	Danaher Corp. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Danaher Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net earnings	4,764)	7,209)	6,433)	3,646)	3,008)
Deferred income tax expense (benefit)¹	(1,204)	(559)	(229)	518)	(415)
Increase (decrease) in allowance for doubtful accounts²	28)	2)	(8)	28)	1)
Increase (decrease) in contract liabilities³	37)	57)	409)	611)	69)
Increase (decrease) in equity equivalents⁴	(1,139)	(500)	172)	1,157)	(345)
Interest expense	286)	211)	238)	275)	109)
Interest expense, operating lease liability⁵	39)	29)	30)	27)	25)
Adjusted interest expense	325)	240)	268)	302)	133)
Tax benefit of interest expense⁶	(68)	(50)	(56)	(63)	(28)
Adjusted interest expense, after taxes⁷	256)	189)	211)	239)	105)
Interest income	(303)	(41)	(11)	(71)	(139)
Investment income, before taxes	(303)	(41)	(11)	(71)	(139)
Tax expense (benefit) of investment income⁸	64)	9)	2)	15)	29)
Investment income, after taxes⁹	(239)	(32)	(9)	(56)	(110)
(Income) loss from discontinued operations, net of tax¹⁰	(543)	—)	(86)	—)	(576)
Net operating profit after taxes (NOPAT)	3,099)	6,866)	6,722)	4,986)	2,083)

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 allowance for doubtful accounts.

³ Addition of increase (decrease) in contract liabilities.

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

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,134 × 3.40% = 39

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 325 × 21.00% = 68

⁷ Addition of after taxes interest expense to net earnings.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 303 × 21.00% = 64

⁹ Elimination of after taxes investment income.

¹⁰ 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.	Danaher Corp. NOPAT increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Danaher Corp., 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 provision	823)	1,083)	1,251)	849)	873)
Less: Deferred income tax expense (benefit)	(1,204)	(559)	(229)	518)	(415)
Add: Tax savings from interest expense	68)	50)	56)	63)	28)
Less: Tax imposed on investment income	64)	9)	2)	15)	29)
Cash operating taxes	2,032)	1,684)	1,534)	380)	1,287)

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).

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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.	Danaher Corp. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Danaher Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Notes payable and current portion of long-term debt	1,695)	591)	8)	11)	212)
Long-term debt, excluding current portion	16,707)	19,086)	22,168)	21,193)	21,517)
Operating lease liability¹	1,134)	1,062)	1,096)	974)	797)
Total reported debt & leases	19,536)	20,739)	23,272)	22,178)	22,526)
Total Danaher stockholders’ equity	53,486)	50,082)	45,167)	39,766)	30,271)
Net deferred tax (assets) liabilities²	2,192)	2,958)	3,563)	3,454)	1,652)
Allowance for doubtful accounts³	120)	126)	124)	132)	104)
Contract liabilities⁴	1,714)	1,883)	1,826)	1,417)	806)
Equity equivalents⁵	4,026)	4,967)	5,513)	5,003)	2,562)
Accumulated other comprehensive (income) loss, net of tax⁶	1,748)	2,872)	1,027)	368)	3,068)
Noncontrolling interests	4)	8)	10)	11)	11)
Adjusted total Danaher stockholders’ equity	59,264)	57,929)	51,717)	45,148)	35,912)
Investments⁷	(239)	(326)	(356)	(203)	(145)
Invested capital	78,561)	78,342)	74,633)	67,123)	58,294)

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 contract liabilities.

⁵ Addition of equity equivalents to total Danaher stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of investments.

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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.	Danaher Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Danaher Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	185,406)	185,406)	÷	202,627)	=	0.92	0.92	×	12.64%	=	11.56%
4.75% Mandatory Convertible Preferred Stock, Series A	—)	—)	÷	202,627)	=	0.00	0.00	×	0.00%	=	0.00%
5.00% Mandatory Convertible Preferred Stock, Series B	—)	—)	÷	202,627)	=	0.00	0.00	×	0.00%	=	0.00%
Notes payable and long-term debt³	16,087)	16,087)	÷	202,627)	=	0.08	0.08	×	1.95% × (1 – 21.00%)	=	0.12%
Operating lease liability⁴	1,134)	1,134)	÷	202,627)	=	0.01	0.01	×	3.40% × (1 – 21.00%)	=	0.02%
Total:	202,627)					1.00					11.70%

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

¹ US$ in millions

² Equity. See details »

³ Notes payable and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	182,224)	182,224)	÷	202,282)	=	0.90	0.90	×	12.64%	=	11.38%
4.75% Mandatory Convertible Preferred Stock, Series A	—)	—)	÷	202,282)	=	0.00	0.00	×	0.00%	=	0.00%
5.00% Mandatory Convertible Preferred Stock, Series B	2,333)	2,333)	÷	202,282)	=	0.01	0.01	×	5.00%	=	0.06%
Notes payable and long-term debt³	16,663)	16,663)	÷	202,282)	=	0.08	0.08	×	1.79% × (1 – 21.00%)	=	0.12%
Operating lease liability⁴	1,062)	1,062)	÷	202,282)	=	0.01	0.01	×	2.70% × (1 – 21.00%)	=	0.01%
Total:	202,282)					1.00					11.57%

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

¹ US$ in millions

² Equity. See details »

³ Notes payable and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	187,701)	187,701)	÷	218,211)	=	0.86	0.86	×	12.64%	=	10.87%
4.75% Mandatory Convertible Preferred Stock, Series A	3,620)	3,620)	÷	218,211)	=	0.02	0.02	×	4.75%	=	0.08%
5.00% Mandatory Convertible Preferred Stock, Series B	2,990)	2,990)	÷	218,211)	=	0.01	0.01	×	5.00%	=	0.07%
Notes payable and long-term debt³	22,804)	22,804)	÷	218,211)	=	0.10	0.10	×	1.53% × (1 – 21.00%)	=	0.13%
Operating lease liability⁴	1,096)	1,096)	÷	218,211)	=	0.01	0.01	×	2.70% × (1 – 21.00%)	=	0.01%
Total:	218,211)					1.00					11.15%

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

¹ US$ in millions

² Equity. See details »

³ Notes payable and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	156,158)	156,158)	÷	184,889)	=	0.84	0.84	×	12.64%	=	10.67%
4.75% Mandatory Convertible Preferred Stock, Series A	2,504)	2,504)	÷	184,889)	=	0.01	0.01	×	4.75%	=	0.06%
5.00% Mandatory Convertible Preferred Stock, Series B	2,238)	2,238)	÷	184,889)	=	0.01	0.01	×	5.00%	=	0.06%
Notes payable and long-term debt³	23,015)	23,015)	÷	184,889)	=	0.12	0.12	×	1.65% × (1 – 21.00%)	=	0.16%
Operating lease liability⁴	974)	974)	÷	184,889)	=	0.01	0.01	×	2.80% × (1 – 21.00%)	=	0.01%
Total:	184,889)					1.00					10.97%

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

¹ US$ in millions

² Equity. See details »

³ Notes payable and long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	112,707)	112,707)	÷	137,558)	=	0.82	0.82	×	12.64%	=	10.35%
4.75% Mandatory Convertible Preferred Stock, Series A	1,945)	1,945)	÷	137,558)	=	0.01	0.01	×	0.00%	=	0.00%
5.00% Mandatory Convertible Preferred Stock, Series B	—)	—)	÷	137,558)	=	0.00	0.00	×	0.00%	=	0.00%
Notes payable and long-term debt³	22,109)	22,109)	÷	137,558)	=	0.16	0.16	×	1.18% × (1 – 21.00%)	=	0.15%
Operating lease liability⁴	797)	797)	÷	137,558)	=	0.01	0.01	×	3.10% × (1 – 21.00%)	=	0.01%
Total:	137,558)					1.00					10.52%

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

¹ US$ in millions

² Equity. See details »

³ Notes payable and long-term debt. See details »

⁴ Operating lease liability. See details »

Danaher Corp., 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	(6,093)	(2,198)	(1,604)	(2,379)	(4,048)
Invested capital²	78,561)	78,342)	74,633)	67,123)	58,294)
Performance Ratio
Economic spread ratio³	-7.76%	-2.81%	-2.15%	-3.54%	-6.94%
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%
Eli Lilly & Co.	3.28%	10.61%	12.30%	18.96%	15.79%
Gilead Sciences Inc.	6.00%	2.49%	9.02%	-4.04%	7.27%
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 × -6,093 ÷ 78,561 = -7.76%

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.	Danaher Corp. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Danaher Corp., 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	(6,093)	(2,198)	(1,604)	(2,379)	(4,048)

Sales	23,890)	31,471)	29,453)	22,284)	17,911)
Add: Increase (decrease) in contract liabilities	37)	57)	409)	611)	69)
Adjusted sales	23,927)	31,528)	29,862)	22,895)	17,980)
Performance Ratio
Economic profit margin²	-25.47%	-6.97%	-5.37%	-10.39%	-22.52%
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%
Eli Lilly & Co.	2.82%	9.03%	11.36%	18.98%	15.21%
Gilead Sciences Inc.	10.21%	4.21%	15.96%	-8.34%	10.34%
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 ÷ Adjusted sales
= 100 × -6,093 ÷ 23,927 = -25.47%

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.	Danaher Corp. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Danaher Corp. (NYSE:DHR)

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