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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

GE Aerospace, 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	10,514)	1,827)	(1,820)	6,132)	3,084)
Cost of capital²	13.83%	11.78%	11.50%	9.33%	9.03%
Invested capital³	50,194)	66,842)	72,026)	117,528)	130,228)

Economic profit⁴	3,572)	(6,044)	(10,101)	(4,838)	(8,675)

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
= 10,514 – 13.83% × 50,194 = 3,572

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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.	GE Aerospace economic profit increased from 2021 to 2022 and from 2022 to 2023.

GE Aerospace, 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 (loss) attributable to the Company	9,481)	225)	(6,520)	5,704)	(4,979)
Deferred income tax expense (benefit)¹	622)	(631)	(9)	(2,926)	(1,104)
Increase (decrease) in allowance for credit losses²	(121)	(215)	(90)	290)	204)
Increase (decrease) in deferred income³	(61)	134)	266)	516)	126)
Increase (decrease) in liability for product warranties⁴	93)	262)	(163)	(111)	(27)
Increase (decrease) in equity equivalents⁵	533)	(450)	4)	(2,231)	(801)
Interest and other financial charges	1,118)	1,607)	1,876)	3,273)	4,227)
Interest expense, operating lease liability⁶	87)	91)	114)	134)	155)
Adjusted interest and other financial charges	1,205)	1,698)	1,990)	3,407)	4,382)
Tax benefit of interest and other financial charges⁷	(253)	(357)	(418)	(715)	(920)
Adjusted interest and other financial charges, after taxes⁸	952)	1,341)	1,572)	2,691)	3,462)
(Income) loss from discontinued operations, net of tax⁹	(414)	644)	3,195)	126)	5,335)
Net income (loss) attributable to noncontrolling interest	(38)	67)	(71)	(158)	67)
Net operating profit after taxes (NOPAT)	10,514)	1,827)	(1,820)	6,132)	3,084)

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 credit losses.

³ Addition of increase (decrease) in deferred income.

⁴ Addition of increase (decrease) in liability for product warranties.

⁵ Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to the Company.

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,973 × 4.40% = 87

⁷ 2023 Calculation
Tax benefit of interest and other financial charges = Adjusted interest and other financial charges × Statutory income tax rate
= 1,205 × 21.00% = 253

⁸ Addition of after taxes interest expense to net earnings (loss) attributable to the Company.

⁹ 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.	GE Aerospace NOPAT increased from 2021 to 2022 and from 2022 to 2023.

GE Aerospace, 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
Provision (benefit) for income taxes	1,162)	476)	(286)	(474)	726)
Less: Deferred income tax expense (benefit)	622)	(631)	(9)	(2,926)	(1,104)
Add: Tax savings from interest and other financial charges	253)	357)	418)	715)	920)
Cash operating taxes	793)	1,464)	141)	3,167)	2,750)

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.	GE Aerospace cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

GE Aerospace, invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term borrowings	1,253)	3,757)	4,361)	4,778)	23,727)
Long-term borrowings	19,711)	28,593)	30,824)	70,288)	67,155)
Operating lease liability¹	1,973)	2,393)	2,848)	2,973)	3,162)
Total reported debt & leases	22,937)	34,743)	38,033)	78,039)	94,044)
Total GE shareholders’ equity	27,378)	36,366)	40,310)	35,552)	28,316)
Net deferred tax (assets) liabilities²	(10,575)	(11,705)	(10,855)	(12,081)	(9,889)
Allowance for credit losses³	647)	859)	1,074)	1,164)	874)
Deferred income⁴	1,910)	3,958)	3,824)	3,558)	3,606)
Liability for product warranties⁵	2,053)	2,153)	1,891)	2,054)	2,165)
Equity equivalents⁶	(5,965)	(4,735)	(4,066)	(5,305)	(3,244)
Accumulated other comprehensive (income) loss, net of tax⁷	6,150)	1,311)	(1,582)	9,749)	11,732)
Noncontrolling interests	1,201)	1,216)	1,302)	1,521)	1,545)
Adjusted total GE shareholders’ equity	28,764)	34,158)	35,964)	41,517)	38,349)
Leasehold costs and manufacturing plant under construction⁸	(1,507)	(2,059)	(1,971)	(2,028)	(2,165)
Invested capital	50,194)	66,842)	72,026)	117,528)	130,228)

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 deferred income.

⁵ Addition of liability for product warranties.

⁶ Addition of equity equivalents to total GE shareholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of leasehold costs and manufacturing plant under construction.

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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.	GE Aerospace invested capital decreased from 2021 to 2022 and from 2022 to 2023.

GE Aerospace, cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	148,601)	148,601)	÷	171,263)	=	0.87	0.87	×	15.46%	=	13.41%
Preferred stock	—)	—)	÷	171,263)	=	0.00	0.00	×	0.00%	=	0.00%
Borrowings³	20,689)	20,689)	÷	171,263)	=	0.12	0.12	×	3.95% × (1 – 21.00%)	=	0.38%
Operating lease liability⁴	1,973)	1,973)	÷	171,263)	=	0.01	0.01	×	4.40% × (1 – 21.00%)	=	0.04%
Total:	171,263)					1.00					13.83%

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

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	88,548)	88,548)	÷	128,146)	=	0.69	0.69	×	15.46%	=	10.68%
Preferred stock	5,795)	5,795)	÷	128,146)	=	0.05	0.05	×	5.00%	=	0.23%
Borrowings³	31,410)	31,410)	÷	128,146)	=	0.25	0.25	×	4.19% × (1 – 21.00%)	=	0.81%
Operating lease liability⁴	2,393)	2,393)	÷	128,146)	=	0.02	0.02	×	3.80% × (1 – 21.00%)	=	0.06%
Total:	128,146)					1.00					11.78%

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

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	106,447)	106,447)	÷	156,437)	=	0.68	0.68	×	15.46%	=	10.52%
Preferred stock	5,935)	5,935)	÷	156,437)	=	0.04	0.04	×	5.00%	=	0.19%
Borrowings³	41,207)	41,207)	÷	156,437)	=	0.26	0.26	×	3.51% × (1 – 21.00%)	=	0.73%
Operating lease liability⁴	2,848)	2,848)	÷	156,437)	=	0.02	0.02	×	4.00% × (1 – 21.00%)	=	0.06%
Total:	156,437)					1.00					11.50%

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

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	102,848)	102,848)	÷	197,910)	=	0.52	0.52	×	15.46%	=	8.03%
Preferred stock	5,918)	5,918)	÷	197,910)	=	0.03	0.03	×	5.00%	=	0.15%
Borrowings³	86,171)	86,171)	÷	197,910)	=	0.44	0.44	×	3.19% × (1 – 21.00%)	=	1.10%
Operating lease liability⁴	2,973)	2,973)	÷	197,910)	=	0.02	0.02	×	4.50% × (1 – 21.00%)	=	0.05%
Total:	197,910)					1.00					9.33%

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

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	103,659)	103,659)	÷	210,313)	=	0.49	0.49	×	15.46%	=	7.62%
Preferred stock	5,738)	5,738)	÷	210,313)	=	0.03	0.03	×	5.00%	=	0.14%
Borrowings³	97,754)	97,754)	÷	210,313)	=	0.46	0.46	×	3.31% × (1 – 21.00%)	=	1.22%
Operating lease liability⁴	3,162)	3,162)	÷	210,313)	=	0.02	0.02	×	4.90% × (1 – 21.00%)	=	0.06%
Total:	210,313)					1.00					9.03%

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

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

GE Aerospace, 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	3,572)	(6,044)	(10,101)	(4,838)	(8,675)
Invested capital²	50,194)	66,842)	72,026)	117,528)	130,228)
Performance Ratio
Economic spread ratio³	7.12%	-9.04%	-14.02%	-4.12%	-6.66%
Benchmarks
Economic Spread Ratio, Competitors⁴
Boeing Co.	-14.71%	-20.11%	-18.74%	-30.29%	-20.27%
Caterpillar Inc.	4.45%	0.82%	0.77%	-5.36%	0.99%
Eaton Corp. plc	-2.72%	-4.81%	-4.58%	-6.69%	-4.00%
Honeywell International Inc.	-0.10%	-1.05%	0.00%	-1.43%	2.83%
Lockheed Martin Corp.	17.21%	13.20%	14.19%	17.50%	18.12%
RTX Corp.	-3.31%	-3.18%	-2.71%	-8.23%	0.26%

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 × 3,572 ÷ 50,194 = 7.12%

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.	GE Aerospace economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

GE Aerospace, 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	3,572)	(6,044)	(10,101)	(4,838)	(8,675)

Sales of equipment and services	64,565)	73,602)	71,090)	73,022)	87,487)
Add: Increase (decrease) in deferred income	(61)	134)	266)	516)	126)
Adjusted sales of equipment and services	64,504)	73,736)	71,356)	73,538)	87,613)
Performance Ratio
Economic profit margin²	5.54%	-8.20%	-14.16%	-6.58%	-9.90%
Benchmarks
Economic Profit Margin, Competitors³
Boeing Co.	-8.49%	-15.34%	-14.87%	-24.81%	-9.41%
Caterpillar Inc.	4.00%	0.79%	0.88%	-7.44%	1.07%
Eaton Corp. plc	-3.68%	-7.13%	-6.88%	-10.27%	-5.51%
Honeywell International Inc.	-0.13%	-1.38%	0.00%	-2.12%	3.30%
Lockheed Martin Corp.	6.99%	5.32%	6.06%	7.51%	7.78%
RTX Corp.	-5.38%	-5.38%	-4.82%	-16.82%	0.35%

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 of equipment and services
= 100 × 3,572 ÷ 64,504 = 5.54%

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.	GE Aerospace economic profit margin improved from 2021 to 2022 and from 2022 to 2023.

GE Aerospace (NYSE:GE)

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