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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

Hewlett Packard Enterprise Co., economic profit calculation

US$ in millions

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Net operating profit after taxes (NOPAT)¹	2,752)	818)	3,529)	77)	2,514)	2,346)
Cost of capital²	11.28%	10.83%	10.02%	8.84%	9.91%	10.32%
Invested capital³	43,254)	41,543)	42,837)	42,440)	43,287)	44,277)

Economic profit⁴	(2,128)	(3,682)	(762)	(3,673)	(1,774)	(2,225)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

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
= 2,752 – 11.28% × 43,254 = -2,128

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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.	Hewlett Packard Enterprise Co. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Hewlett Packard Enterprise Co., NOPAT calculation

US$ in millions

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Net earnings (loss) attributable to HPE	2,025)	868)	3,427)	(322)	1,049)	1,908)
Deferred income tax expense (benefit)¹	(67)	(249)	(167)	(294)	1,079)	(38)
Increase (decrease) in allowance for doubtful accounts²	12)	2)	(23)	15)	(8)	(3)
Increase (decrease) in deferred revenue³	533)	26)	165)	230)	162)	208)
Increase (decrease) in product warranty liability⁴	(42)	33)	(58)	(15)	(30)	(45)
Increase (decrease) in accrued restructuring⁵	(12)	(98)	(76)	171)	(99)	(151)
Increase (decrease) in equity equivalents⁶	424)	(286)	(159)	107)	1,104)	(29)
Interest expense	326)	260)	289)	332)	311)	353)
Interest expense, operating lease liability⁷	44)	33)	31)	28)	129)	135)
Adjusted interest expense	370)	293)	320)	360)	440)	488)
Tax benefit of interest expense⁸	(78)	(61)	(67)	(76)	(92)	(114)
Adjusted interest expense, after taxes⁹	292)	231)	252)	285)	347)	374)
(Gain) loss on marketable securities	—)	—)	—)	(4)	(3)	(9)
Investment income, before taxes	—)	—)	—)	(4)	(3)	(9)
Tax expense (benefit) of investment income¹⁰	—)	—)	—)	1)	1)	2)
Investment income, after taxes¹¹	—)	—)	—)	(3)	(2)	(7)
(Income) loss from discontinued operations, net of tax¹²	—)	—)	—)	—)	—)	104)
Net income (loss) attributable to noncontrolling interest	11)	5)	9)	11)	16)	(4)
Net operating profit after taxes (NOPAT)	2,752)	818)	3,529)	77)	2,514)	2,346)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in product warranty liability.

⁵ Addition of increase (decrease) in accrued restructuring.

⁶ Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to HPE.

⁷ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,160 × 3.80% = 44

⁸ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 370 × 21.00% = 78

⁹ Addition of after taxes interest expense to net earnings (loss) attributable to HPE.

¹⁰ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0

¹¹ Elimination of after taxes investment income.

¹² 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.	Hewlett Packard Enterprise Co. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Hewlett Packard Enterprise Co., cash operating taxes calculation

US$ in millions

12 months ended:	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Provision (benefit) for taxes	205)	8)	160)	(120)	504)	(1,744)
Less: Deferred income tax expense (benefit)	(67)	(249)	(167)	(294)	1,079)	(38)
Add: Tax savings from interest expense	78)	61)	67)	76)	92)	114)
Less: Tax imposed on investment income	—)	—)	—)	1)	1)	2)
Cash operating taxes	350)	318)	394)	249)	(483)	(1,594)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

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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.	Hewlett Packard Enterprise Co. cash operating taxes decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Hewlett Packard Enterprise Co., invested capital calculation (financing approach)

US$ in millions

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Notes payable and short-term borrowings	4,868)	4,612)	3,552)	3,755)	4,425)	2,005)
Long-term debt	7,487)	7,853)	9,896)	12,186)	9,395)	10,136)
Operating lease liability¹	1,160)	1,019)	1,130)	1,086)	3,349)	3,389)
Total reported debt & leases	13,515)	13,484)	14,578)	17,027)	17,169)	15,530)
Total HPE stockholders’ equity	21,182)	19,864)	19,971)	16,049)	17,098)	21,239)
Net deferred tax (assets) liabilities²	(1,938)	(1,807)	(1,529)	(1,488)	(1,204)	(2,175)
Allowance for doubtful accounts³	37)	25)	23)	46)	31)	39)
Deferred revenue⁴	6,939)	6,406)	6,380)	6,215)	5,985)	5,823)
Product warranty liability⁵	318)	360)	327)	385)	400)	430)
Accrued restructuring⁶	180)	192)	290)	366)	195)	294)
Equity equivalents⁷	5,536)	5,176)	5,491)	5,524)	5,407)	4,411)
Accumulated other comprehensive (income) loss, net of tax⁸	3,084)	3,098)	2,915)	3,939)	3,727)	3,218)
Non-controlling interests	56)	45)	46)	47)	51)	35)
Adjusted total HPE stockholders’ equity	29,858)	28,183)	28,423)	25,559)	26,283)	28,903)
Available-for-sale investments⁹	(119)	(124)	(164)	(146)	(165)	(156)
Invested capital	43,254)	41,543)	42,837)	42,440)	43,287)	44,277)

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

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 product warranty liability.

⁶ Addition of accrued restructuring.

⁷ Addition of equity equivalents to total HPE stockholders’ equity.

⁸ Removal of accumulated other comprehensive income.

⁹ Subtraction of available-for-sale 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.	Hewlett Packard Enterprise Co. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Hewlett Packard Enterprise Co., cost of capital calculations

Oct 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,217)	22,217)	÷	35,577)	=	0.62	0.62	×	15.86%	=	9.90%
Short-term and long-term debt³	12,200)	12,200)	÷	35,577)	=	0.34	0.34	×	4.73% × (1 – 21.00%)	=	1.28%
Operating lease liability⁴	1,160)	1,160)	÷	35,577)	=	0.03	0.03	×	3.80% × (1 – 21.00%)	=	0.10%
Total:	35,577)					1.00					11.28%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,881)	20,881)	÷	34,100)	=	0.61	0.61	×	15.86%	=	9.71%
Short-term and long-term debt³	12,200)	12,200)	÷	34,100)	=	0.36	0.36	×	3.70% × (1 – 21.00%)	=	1.05%
Operating lease liability⁴	1,019)	1,019)	÷	34,100)	=	0.03	0.03	×	3.20% × (1 – 21.00%)	=	0.08%
Total:	34,100)					1.00					10.83%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	19,673)	19,673)	÷	35,403)	=	0.56	0.56	×	15.86%	=	8.81%
Short-term and long-term debt³	14,600)	14,600)	÷	35,403)	=	0.41	0.41	×	3.49% × (1 – 21.00%)	=	1.14%
Operating lease liability⁴	1,130)	1,130)	÷	35,403)	=	0.03	0.03	×	2.70% × (1 – 21.00%)	=	0.07%
Total:	35,403)					1.00					10.02%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	15,677)	15,677)	÷	33,863)	=	0.46	0.46	×	15.86%	=	7.34%
Short-term and long-term debt³	17,100)	17,100)	÷	33,863)	=	0.50	0.50	×	3.58% × (1 – 21.00%)	=	1.43%
Operating lease liability⁴	1,086)	1,086)	÷	33,863)	=	0.03	0.03	×	2.60% × (1 – 21.00%)	=	0.07%
Total:	33,863)					1.00					8.84%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,726)	20,726)	÷	38,674)	=	0.54	0.54	×	15.86%	=	8.50%
Short-term and long-term debt³	14,600)	14,600)	÷	38,674)	=	0.38	0.38	×	3.84% × (1 – 21.00%)	=	1.15%
Operating lease liability⁴	3,349)	3,349)	÷	38,674)	=	0.09	0.09	×	3.84% × (1 – 21.00%)	=	0.26%
Total:	38,674)					1.00					9.91%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Oct 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	20,477)	20,477)	÷	36,066)	=	0.57	0.57	×	15.86%	=	9.00%
Short-term and long-term debt³	12,200)	12,200)	÷	36,066)	=	0.34	0.34	×	3.98% × (1 – 23.30%)	=	1.03%
Operating lease liability⁴	3,389)	3,389)	÷	36,066)	=	0.09	0.09	×	3.98% × (1 – 23.30%)	=	0.29%
Total:	36,066)					1.00					10.32%

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

¹ US$ in millions

² Equity. See details »

³ Short-term and long-term debt. See details »

⁴ Operating lease liability. See details »

Hewlett Packard Enterprise Co., economic spread ratio calculation, comparison to benchmarks

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,128)	(3,682)	(762)	(3,673)	(1,774)	(2,225)
Invested capital²	43,254)	41,543)	42,837)	42,440)	43,287)	44,277)
Performance Ratio
Economic spread ratio³	-4.92%	-8.86%	-1.78%	-8.65%	-4.10%	-5.02%
Benchmarks
Economic Spread Ratio, Competitors⁴
Apple Inc.	140.60%	202.09%	198.42%	146.36%	90.42%	80.98%
Arista Networks Inc.	28.14%	23.60%	38.59%	20.94%	26.44%	—
Cisco Systems Inc.	9.07%	8.94%	8.19%	12.39%	6.59%	—
Super Micro Computer Inc.	9.76%	0.15%	-7.34%	-10.13%	-5.04%	-2.60%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,128 ÷ 43,254 = -4.92%

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.	Hewlett Packard Enterprise Co. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Hewlett Packard Enterprise Co., economic profit margin calculation, comparison to benchmarks

	Oct 31, 2023	Oct 31, 2022	Oct 31, 2021	Oct 31, 2020	Oct 31, 2019	Oct 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,128)	(3,682)	(762)	(3,673)	(1,774)	(2,225)

Net revenue	29,135)	28,496)	27,784)	26,982)	29,135)	30,852)
Add: Increase (decrease) in deferred revenue	533)	26)	165)	230)	162)	208)
Adjusted net revenue	29,668)	28,522)	27,949)	27,212)	29,297)	31,060)
Performance Ratio
Economic profit margin²	-7.17%	-12.91%	-2.73%	-13.50%	-6.06%	-7.16%
Benchmarks
Economic Profit Margin, Competitors³
Apple Inc.	22.12%	23.88%	23.05%	19.18%	17.65%	8.04%
Arista Networks Inc.	21.29%	16.29%	22.67%	16.37%	19.45%	—
Cisco Systems Inc.	9.02%	10.03%	9.13%	12.93%	6.95%	—
Super Micro Computer Inc.	3.31%	0.07%	-2.64%	-3.76%	-1.63%	-0.84%

Based on: 10-K (reporting date: 2023-10-31), 10-K (reporting date: 2022-10-31), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-31), 10-K (reporting date: 2019-10-31), 10-K (reporting date: 2018-10-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenue
= 100 × -2,128 ÷ 29,668 = -7.17%

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.	Hewlett Packard Enterprise Co. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Hewlett Packard Enterprise Co. (NYSE:HPE)

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