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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

Johnson Controls International plc, economic profit calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Net operating profit after taxes (NOPAT)¹	1,892)	1,860)	2,084)	448)	2,126)	2,175)
Cost of capital²	13.36%	13.69%	13.90%	12.87%	13.22%	12.32%
Invested capital³	29,464)	29,496)	29,338)	29,283)	31,274)	35,173)

Economic profit⁴	(2,044)	(2,177)	(1,995)	(3,322)	(2,008)	(2,160)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

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
= 1,892 – 13.36% × 29,464 = -2,044

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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.	Johnson Controls International plc economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

Johnson Controls International plc, NOPAT calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Net income attributable to Johnson Controls	1,849)	1,532)	1,637)	631)	5,674)	2,162)
Deferred income tax expense (benefit)¹	(676)	(141)	36)	(537)	612)	(636)
Increase (decrease) in allowance for expected credit losses²	24)	(48)	(63)	—)	4)	(5)
Increase (decrease) in deferred revenue³	192)	131)	202)	28)	81)	47)
Increase (decrease) in restructuring reserve⁴	23)	(20)	(42)	(51)	(132)	(4)
Increase (decrease) in equity equivalents⁵	(437)	(78)	133)	(560)	565)	(598)
Interest expense, net of capitalized interest costs	307)	225)	219)	240)	335)	437)
Interest expense, operating lease liability⁶	49)	27)	25)	27)	37)	38)
Adjusted interest expense, net of capitalized interest costs	356)	252)	244)	267)	372)	475)
Tax benefit of interest expense, net of capitalized interest costs⁷	(45)	(31)	(30)	(33)	(46)	(59)
Adjusted interest expense, net of capitalized interest costs, after taxes⁸	312)	220)	213)	233)	325)	415)
Interest income	(18)	(6)	(9)	(23)	(61)	(29)
Investment income, before taxes	(18)	(6)	(9)	(23)	(61)	(29)
Tax expense (benefit) of investment income⁹	2)	1)	1)	3)	8)	4)
Investment income, after taxes¹⁰	(16)	(5)	(8)	(20)	(53)	(25)
(Income) loss from discontinued operations, net of tax¹¹	—)	—)	(124)	—)	(4,598)	—)
Net income (loss) attributable to noncontrolling interest	184)	191)	233)	164)	213)	221)
Net operating profit after taxes (NOPAT)	1,892)	1,860)	2,084)	448)	2,126)	2,175)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for expected credit losses.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in restructuring reserve.

⁵ Addition of increase (decrease) in equity equivalents to net income attributable to Johnson Controls.

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,404 × 3.50% = 49

⁷ 2023 Calculation
Tax benefit of interest expense, net of capitalized interest costs = Adjusted interest expense, net of capitalized interest costs × Statutory income tax rate
= 356 × 12.50% = 45

⁸ Addition of after taxes interest expense to net income attributable to Johnson Controls.

⁹ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 18 × 12.50% = 2

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.	Johnson Controls International plc NOPAT decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Johnson Controls International plc, cash operating taxes calculation

US$ in millions

12 months ended:	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Income tax provision (benefit)	(323)	(13)	868)	108)	(233)	518)
Less: Deferred income tax expense (benefit)	(676)	(141)	36)	(537)	612)	(636)
Add: Tax savings from interest expense, net of capitalized interest costs	45)	31)	30)	33)	46)	59)
Less: Tax imposed on investment income	2)	1)	1)	3)	8)	4)
Cash operating taxes	395)	159)	861)	675)	(806)	1,210)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

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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.	Johnson Controls International plc cash operating taxes decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Johnson Controls International plc, invested capital calculation (financing approach)

US$ in millions

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Short-term debt	385)	669)	8)	31)	10)	1,315)
Current portion of long-term debt	645)	865)	226)	262)	501)	26)
Long-term debt, less current portion	7,818)	7,426)	7,506)	7,526)	6,708)	9,654)
Operating lease liability¹	1,404)	1,267)	1,374)	1,207)	1,085)	1,096)
Total reported debt & leases	10,252)	10,227)	9,114)	9,026)	8,304)	12,091)
Shareholders’ equity attributable to Johnson Controls	16,545)	16,268)	17,562)	17,447)	19,766)	21,164)
Net deferred tax (assets) liabilities²	(1,088)	(444)	(312)	(477)	36)	(828)
Allowance for expected credit losses³	90)	62)	110)	173)	173)	177)
Deferred revenue⁴	1,996)	1,768)	1,637)	1,435)	1,407)	1,326)
Restructuring reserve⁵	105)	82)	102)	144)	195)	327)
Equity equivalents⁶	1,103)	1,468)	1,537)	1,275)	1,811)	1,002)
Accumulated other comprehensive (income) loss, net of tax⁷	955)	911)	434)	776)	795)	946)
Noncontrolling interests	1,149)	1,134)	1,191)	1,086)	1,063)	1,294)
Adjusted shareholders’ equity attributable to Johnson Controls	19,752)	19,781)	20,724)	20,584)	23,435)	24,406)
Construction in progress⁸	(540)	(512)	(500)	(327)	(465)	(1,324)
Invested capital	29,464)	29,496)	29,338)	29,283)	31,274)	35,173)

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

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 restructuring reserve.

⁶ Addition of equity equivalents to shareholders’ equity attributable to Johnson Controls.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of construction in progress.

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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.	Johnson Controls International plc invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Johnson Controls International plc, cost of capital calculations

Sep 30, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	36,824)	36,824)	÷	46,113)	=	0.80	0.80	×	15.96%	=	12.74%
Debt³	7,885)	7,885)	÷	46,113)	=	0.17	0.17	×	3.49% × (1 – 12.50%)	=	0.52%
Operating lease liability⁴	1,404)	1,404)	÷	46,113)	=	0.03	0.03	×	3.50% × (1 – 12.50%)	=	0.09%
Total:	46,113)					1.00					13.36%

Based on: 10-K (reporting date: 2023-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	45,597)	45,597)	÷	54,833)	=	0.83	0.83	×	15.96%	=	13.27%
Debt³	7,969)	7,969)	÷	54,833)	=	0.15	0.15	×	2.94% × (1 – 12.50%)	=	0.37%
Operating lease liability⁴	1,267)	1,267)	÷	54,833)	=	0.02	0.02	×	2.10% × (1 – 12.50%)	=	0.04%
Total:	54,833)					1.00					13.69%

Based on: 10-K (reporting date: 2022-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,170)	55,170)	÷	65,052)	=	0.85	0.85	×	15.96%	=	13.53%
Debt³	8,508)	8,508)	÷	65,052)	=	0.13	0.13	×	2.94% × (1 – 12.50%)	=	0.34%
Operating lease liability⁴	1,374)	1,374)	÷	65,052)	=	0.02	0.02	×	1.80% × (1 – 12.50%)	=	0.03%
Total:	65,052)					1.00					13.90%

Based on: 10-K (reporting date: 2021-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	32,836)	32,836)	÷	42,674)	=	0.77	0.77	×	15.96%	=	12.28%
Debt³	8,631)	8,631)	÷	42,674)	=	0.20	0.20	×	3.05% × (1 – 12.50%)	=	0.54%
Operating lease liability⁴	1,207)	1,207)	÷	42,674)	=	0.03	0.03	×	2.20% × (1 – 12.50%)	=	0.05%
Total:	42,674)					1.00					12.87%

Based on: 10-K (reporting date: 2020-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	32,577)	32,577)	÷	41,272)	=	0.79	0.79	×	15.96%	=	12.60%
Debt³	7,610)	7,610)	÷	41,272)	=	0.18	0.18	×	3.37% × (1 – 12.50%)	=	0.54%
Operating lease liability⁴	1,085)	1,085)	÷	41,272)	=	0.03	0.03	×	3.37% × (1 – 12.50%)	=	0.08%
Total:	41,272)					1.00					13.22%

Based on: 10-K (reporting date: 2019-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Sep 30, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,808)	30,808)	÷	42,819)	=	0.72	0.72	×	15.96%	=	11.48%
Debt³	10,915)	10,915)	÷	42,819)	=	0.25	0.25	×	3.43% × (1 – 12.50%)	=	0.77%
Operating lease liability⁴	1,096)	1,096)	÷	42,819)	=	0.03	0.03	×	3.43% × (1 – 12.50%)	=	0.08%
Total:	42,819)					1.00					12.32%

Based on: 10-K (reporting date: 2018-09-30).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Johnson Controls International plc, economic spread ratio calculation, comparison to benchmarks

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,044)	(2,177)	(1,995)	(3,322)	(2,008)	(2,160)
Invested capital²	29,464)	29,496)	29,338)	29,283)	31,274)	35,173)
Performance Ratio
Economic spread ratio³	-6.94%	-7.38%	-6.80%	-11.34%	-6.42%	-6.14%
Benchmarks
Economic Spread Ratio, Competitors⁴
Boeing Co.	-14.70%	-20.10%	-18.74%	-30.28%	-20.26%	—
Caterpillar Inc.	4.45%	0.82%	0.77%	-5.35%	0.99%	—
Eaton Corp. plc	-2.72%	-4.80%	-4.58%	-6.69%	-4.00%	—
GE Aerospace	7.12%	-9.04%	-14.02%	-4.11%	-6.66%	—
Honeywell International Inc.	-0.10%	-1.05%	0.00%	-1.43%	2.84%	—
Lockheed Martin Corp.	17.20%	13.19%	14.19%	17.49%	18.11%	—
RTX Corp.	-3.32%	-3.19%	-2.72%	-8.24%	0.25%	—

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,044 ÷ 29,464 = -6.94%

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.	Johnson Controls International plc economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 not reaching 2021 level.

Johnson Controls International plc, economic profit margin calculation, comparison to benchmarks

	Sep 30, 2023	Sep 30, 2022	Sep 30, 2021	Sep 30, 2020	Sep 30, 2019	Sep 30, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(2,044)	(2,177)	(1,995)	(3,322)	(2,008)	(2,160)

Net sales	26,793)	25,299)	23,668)	22,317)	23,968)	31,400)
Add: Increase (decrease) in deferred revenue	192)	131)	202)	28)	81)	47)
Adjusted net sales	26,985)	25,430)	23,870)	22,345)	24,049)	31,447)
Performance Ratio
Economic profit margin²	-7.58%	-8.56%	-8.36%	-14.87%	-8.35%	-6.87%
Benchmarks
Economic Profit Margin, Competitors³
Boeing Co.	-8.48%	-15.34%	-14.86%	-24.80%	-9.40%	—
Caterpillar Inc.	4.01%	0.79%	0.89%	-7.44%	1.07%	—
Eaton Corp. plc	-3.68%	-7.13%	-6.87%	-10.26%	-5.51%	—
GE Aerospace	5.54%	-8.19%	-14.15%	-6.57%	-9.90%	—
Honeywell International Inc.	-0.13%	-1.38%	0.00%	-2.12%	3.30%	—
Lockheed Martin Corp.	6.98%	5.32%	6.06%	7.50%	7.77%	—
RTX Corp.	-5.39%	-5.39%	-4.84%	-16.84%	0.34%	—

Based on: 10-K (reporting date: 2023-09-30), 10-K (reporting date: 2022-09-30), 10-K (reporting date: 2021-09-30), 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × -2,044 ÷ 26,985 = -7.58%

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.	Johnson Controls International plc economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Johnson Controls International plc (NYSE:JCI)

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