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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 & Johnson, economic profit calculation

US$ in millions

12 months ended:	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net operating profit after taxes (NOPAT)¹	11,461)	8,905)	16,117)	18,861)	13,736)
Cost of capital²	9.27%	9.35%	9.26%	9.27%	9.21%
Invested capital³	106,513)	99,118)	113,818)	98,066)	98,344)

Economic profit⁴	1,586)	(365)	5,578)	9,767)	4,682)

Based on: 10-K (reporting date: 2024-12-29), 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).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 11,461 – 9.27% × 106,513 = 1,586

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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 & Johnson economic profit decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.

Johnson & Johnson, NOPAT calculation

US$ in millions

12 months ended:	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Net earnings	14,066)	35,153)	17,941)	20,878)	14,714)
Deferred income tax expense (benefit)¹	(2,183)	(4,059)	(1,663)	(2,079)	(1,141)
Increase (decrease) in allowances for doubtful accounts²	1)	(3)	(27)	(63)	67)
Increase (decrease) in equity equivalents³	(2,182)	(4,062)	(1,690)	(2,142)	(1,074)
Interest expense, net of portion capitalized	755)	772)	276)	183)	201)
Interest expense, operating lease liability⁴	42)	35)	44)	28)	31)
Adjusted interest expense, net of portion capitalized	797)	807)	320)	211)	232)
Tax benefit of interest expense, net of portion capitalized⁵	(167)	(169)	(67)	(44)	(49)
Adjusted interest expense, net of portion capitalized, after taxes⁶	629)	637)	253)	166)	184)
Interest income	(1,332)	(1,261)	(490)	(53)	(111)
Investment income, before taxes	(1,332)	(1,261)	(490)	(53)	(111)
Tax expense (benefit) of investment income⁷	280)	265)	103)	11)	23)
Investment income, after taxes⁸	(1,052)	(996)	(387)	(42)	(88)
(Income) loss from discontinued operations, net of tax⁹	—)	(21,827)	—)	—)	—)
Net operating profit after taxes (NOPAT)	11,461)	8,905)	16,117)	18,861)	13,736)

Based on: 10-K (reporting date: 2024-12-29), 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).

¹ Elimination of deferred tax expense. See details »

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

³ Addition of increase (decrease) in equity equivalents to net earnings.

⁴ 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,200 × 3.48% = 42

⁵ 2024 Calculation
Tax benefit of interest expense, net of portion capitalized = Adjusted interest expense, net of portion capitalized × Statutory income tax rate
= 797 × 21.00% = 167

⁶ Addition of after taxes interest expense to net earnings.

⁷ 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1,332 × 21.00% = 280

⁸ Elimination of after taxes investment income.

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.	Johnson & Johnson NOPAT decreased from 2022 to 2023 but then slightly increased from 2023 to 2024.

Johnson & Johnson, cash operating taxes calculation

US$ in millions

12 months ended:	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Provision for taxes on income	2,621)	1,736)	3,784)	1,898)	1,783)
Less: Deferred income tax expense (benefit)	(2,183)	(4,059)	(1,663)	(2,079)	(1,141)
Add: Tax savings from interest expense, net of portion capitalized	167)	169)	67)	44)	49)
Less: Tax imposed on investment income	280)	265)	103)	11)	23)
Cash operating taxes	4,692)	5,700)	5,411)	4,010)	2,949)

Based on: 10-K (reporting date: 2024-12-29), 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).

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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 & Johnson cash operating taxes increased from 2022 to 2023 but then decreased significantly from 2023 to 2024.

Johnson & Johnson, invested capital calculation (financing approach)

US$ in millions

	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Loans and notes payable	5,983)	3,451)	12,771)	3,766)	2,631)
Long-term debt, excluding current portion	30,651)	25,881)	26,888)	29,985)	32,635)
Operating lease liability¹	1,200)	1,100)	1,300)	1,000)	1,100)
Total reported debt & leases	37,834)	30,432)	40,959)	34,751)	36,366)
Shareholders’ equity	71,490)	68,774)	76,804)	74,023)	63,278)
Net deferred tax (assets) liabilities²	(8,013)	(6,086)	(2,749)	(2,736)	(1,319)
Allowances for doubtful accounts³	167)	166)	203)	230)	293)
Equity equivalents⁴	(7,846)	(5,920)	(2,546)	(2,506)	(1,026)
Accumulated other comprehensive (income) loss, net of tax⁵	11,741)	12,527)	12,967)	13,058)	15,242)
Adjusted shareholders’ equity	75,385)	75,381)	87,225)	84,575)	77,494)
Construction in progress⁶	(6,289)	(5,627)	(4,974)	(4,139)	(4,316)
Current marketable securities⁷	(417)	(1,068)	(9,392)	(17,121)	(11,200)
Invested capital	106,513)	99,118)	113,818)	98,066)	98,344)

Based on: 10-K (reporting date: 2024-12-29), 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).

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 equity equivalents to shareholders’ equity.

⁵ Removal of accumulated other comprehensive income.

⁶ Subtraction of construction in progress.

⁷ Subtraction of current marketable securities.

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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 & Johnson invested capital decreased from 2022 to 2023 but then increased from 2023 to 2024 not reaching 2022 level.

Johnson & Johnson, cost of capital calculations

Dec 29, 2024

	Capital (fair value)¹	Weights					Cost of capital
Equity²	378,598)	378,598)	÷	414,432)	=	0.91	0.91	×	9.89%	=	9.03%
Borrowings³	34,634)	34,634)	÷	414,432)	=	0.08	0.08	×	3.48% × (1 – 21.00%)	=	0.23%
Operating lease liability⁴	1,200)	1,200)	÷	414,432)	=	0.00	0.00	×	3.48% × (1 – 21.00%)	=	0.01%
Total:	414,432)					1.00					9.27%

Based on: 10-K (reporting date: 2024-12-29).

¹ US$ in millions

² Equity. See details »

³ Borrowings. See details »

⁴ Operating lease liability. See details »

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	377,093)	377,093)	÷	406,525)	=	0.93	0.93	×	9.89%	=	9.17%
Borrowings³	28,332)	28,332)	÷	406,525)	=	0.07	0.07	×	3.14% × (1 – 21.00%)	=	0.17%
Operating lease liability⁴	1,100)	1,100)	÷	406,525)	=	0.00	0.00	×	3.14% × (1 – 21.00%)	=	0.01%
Total:	406,525)					1.00					9.35%

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	412,102)	412,102)	÷	451,461)	=	0.91	0.91	×	9.89%	=	9.03%
Borrowings³	38,059)	38,059)	÷	451,461)	=	0.08	0.08	×	3.38% × (1 – 21.00%)	=	0.23%
Operating lease liability⁴	1,300)	1,300)	÷	451,461)	=	0.00	0.00	×	3.38% × (1 – 21.00%)	=	0.01%
Total:	451,461)					1.00					9.26%

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	436,958)	436,958)	÷	474,909)	=	0.92	0.92	×	9.89%	=	9.10%
Borrowings³	36,951)	36,951)	÷	474,909)	=	0.08	0.08	×	2.76% × (1 – 21.00%)	=	0.17%
Operating lease liability⁴	1,000)	1,000)	÷	474,909)	=	0.00	0.00	×	2.76% × (1 – 21.00%)	=	0.00%
Total:	474,909)					1.00					9.27%

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	425,504)	425,504)	÷	467,270)	=	0.91	0.91	×	9.89%	=	9.00%
Borrowings³	40,666)	40,666)	÷	467,270)	=	0.09	0.09	×	2.85% × (1 – 21.00%)	=	0.20%
Operating lease liability⁴	1,100)	1,100)	÷	467,270)	=	0.00	0.00	×	2.85% × (1 – 21.00%)	=	0.01%
Total:	467,270)					1.00					9.21%

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 »

Johnson & Johnson, economic spread ratio calculation, comparison to benchmarks

	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit¹	1,586)	(365)	5,578)	9,767)	4,682)
Invested capital²	106,513)	99,118)	113,818)	98,066)	98,344)
Performance Ratio
Economic spread ratio³	1.49%	-0.37%	4.90%	9.96%	4.76%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-2.95%	-4.67%	4.77%	4.21%	-3.56%
Amgen Inc.	-0.06%	2.75%	7.32%	7.30%	11.63%
Bristol-Myers Squibb Co.	-22.34%	1.22%	-1.58%	0.74%	-14.77%
Danaher Corp.	-7.80%	-8.55%	-3.59%	-2.89%	-4.28%
Eli Lilly & Co.	15.09%	1.95%	9.31%	11.04%	17.72%
Gilead Sciences Inc.	-7.75%	5.38%	2.34%	9.05%	-4.02%
Merck & Co. Inc.	13.36%	-8.94%	11.24%	11.41%	4.25%
Pfizer Inc.	-3.48%	-9.57%	17.86%	11.03%	-3.63%
Regeneron Pharmaceuticals Inc.	21.18%	18.02%	23.37%	67.07%	38.56%
Thermo Fisher Scientific Inc.	-4.60%	-5.10%	-3.32%	-1.45%	-0.50%
Vertex Pharmaceuticals Inc.	-22.67%	11.28%	14.03%	15.24%	28.52%

Based on: 10-K (reporting date: 2024-12-29), 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).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,586 ÷ 106,513 = 1.49%

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 & Johnson economic spread ratio deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Johnson & Johnson, economic profit margin calculation, comparison to benchmarks

	Dec 29, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit¹	1,586)	(365)	5,578)	9,767)	4,682)
Sales to customers	88,821)	85,159)	94,943)	93,775)	82,584)
Performance Ratio
Economic profit margin²	1.79%	-0.43%	5.88%	10.42%	5.67%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-3.63%	-5.86%	6.75%	7.19%	-8.07%
Amgen Inc.	-0.11%	7.15%	11.73%	12.10%	18.60%
Bristol-Myers Squibb Co.	-28.98%	1.83%	-2.46%	1.29%	-31.32%
Danaher Corp.	-24.07%	-28.07%	-8.91%	-7.23%	-12.54%
Eli Lilly & Co.	12.00%	1.68%	7.92%	10.19%	17.73%
Gilead Sciences Inc.	-12.01%	9.15%	3.95%	16.00%	-8.30%
Merck & Co. Inc.	16.53%	-10.41%	14.01%	16.56%	5.06%
Pfizer Inc.	-7.42%	-24.88%	19.55%	11.78%	-8.83%
Regeneron Pharmaceuticals Inc.	18.58%	16.44%	23.53%	45.35%	37.57%
Thermo Fisher Scientific Inc.	-8.80%	-10.18%	-6.13%	-2.95%	-0.94%
Vertex Pharmaceuticals Inc.	-18.61%	15.14%	20.71%	18.89%	37.42%

Based on: 10-K (reporting date: 2024-12-29), 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).

¹ Economic profit. See details »

² 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales to customers
= 100 × 1,586 ÷ 88,821 = 1.79%

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 & Johnson economic profit margin deteriorated from 2022 to 2023 but then slightly improved from 2023 to 2024.

Johnson & Johnson (NYSE:JNJ)

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