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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

Kellanova, economic profit calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Net operating profit after taxes (NOPAT)¹	1,013)	1,089)	1,799)	1,566)	1,016)
Cost of capital²	6.60%	6.75%	6.45%	6.29%	6.42%
Invested capital³	11,675)	13,188)	13,587)	13,194)	13,101)

Economic profit⁴	242)	198)	922)	736)	175)

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

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
= 1,013 – 6.60% × 11,675 = 242

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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.	Kellanova economic profit decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Kellanova, NOPAT calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Net income attributable to Kellanova	951)	960)	1,488)	1,251)	960)
Deferred income tax expense (benefit)¹	(38)	(46)	125)	68)	(153)
Increase (decrease) in allowance for expected credit losses²	3)	(2)	(4)	9)	—)
Increase (decrease) in exit cost reserves³	—)	(12)	(5)	(10)	(42)
Increase (decrease) in equity equivalents⁴	(35)	(60)	116)	67)	(195)
Interest expense	303)	218)	223)	281)	284)
Interest expense, operating lease liability⁵	24)	18)	17)	17)	16)
Adjusted interest expense	327)	236)	240)	298)	300)
Tax benefit of interest expense⁶	(69)	(49)	(50)	(62)	(63)
Adjusted interest expense, after taxes⁷	258)	186)	189)	235)	237)
(Gain) loss on marketable securities	3)	1)	(2)	—)	(4)
Investment income, before taxes	3)	1)	(2)	—)	(4)
Tax expense (benefit) of investment income⁸	(1)	—)	—)	—)	1)
Investment income, after taxes⁹	2)	1)	(2)	—)	(3)
(Income) loss from discontinued operations, net of tax¹⁰	(176)	—)	—)	—)	—)
Net income (loss) attributable to noncontrolling interest	13)	2)	7)	13)	17)
Net operating profit after taxes (NOPAT)	1,013)	1,089)	1,799)	1,566)	1,016)

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

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 exit cost reserves.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to Kellanova.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 653 × 3.60% = 24

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 327 × 21.00% = 69

⁷ Addition of after taxes interest expense to net income attributable to Kellanova.

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= -3 × 21.00% = -1

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.	Kellanova NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Kellanova, cash operating taxes calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Income taxes	258)	244)	474)	323)	321)
Less: Deferred income tax expense (benefit)	(38)	(46)	125)	68)	(153)
Add: Tax savings from interest expense	69)	49)	50)	62)	63)
Less: Tax imposed on investment income	(1)	—)	—)	—)	1)
Cash operating taxes	365)	340)	399)	317)	536)

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

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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.	Kellanova cash operating taxes decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Kellanova, invested capital calculation (financing approach)

US$ in millions

	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Current maturities of long-term debt	663)	780)	712)	627)	620)
Notes payable	121)	467)	137)	102)	107)
Long-term debt, excluding current maturities	5,089)	5,317)	6,262)	6,746)	7,195)
Operating lease liability¹	653)	607)	618)	637)	547)
Total reported debt & leases	6,526)	7,171)	7,729)	8,112)	8,469)
Total Kellanova equity	3,175)	3,941)	3,720)	3,112)	2,747)
Net deferred tax (assets) liabilities²	314)	570)	507)	308)	364)
Allowance for expected credit losses³	16)	13)	15)	19)	10)
Exit cost reserves⁴	—)	11)	23)	28)	62)
Equity equivalents⁵	330)	594)	545)	355)	436)
Accumulated other comprehensive (income) loss, net of tax⁶	2,041)	1,708)	1,721)	1,732)	1,448)
Noncontrolling interests	194)	434)	495)	524)	567)
Adjusted total Kellanova equity	5,740)	6,677)	6,481)	5,723)	5,198)
Construction in progress⁷	(591)	(660)	(623)	(641)	(566)
Invested capital	11,675)	13,188)	13,587)	13,194)	13,101)

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

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 exit cost reserves.

⁵ Addition of equity equivalents to total Kellanova equity.

⁶ Removal of accumulated other comprehensive income.

⁷ 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.	Kellanova invested capital decreased from 2021 to 2022 and from 2022 to 2023.

Kellanova, cost of capital calculations

Dec 30, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	19,122)	19,122)	÷	25,559)	=	0.75	0.75	×	8.00%	=	5.98%
Notes payable and long-term debt³	5,784)	5,784)	÷	25,559)	=	0.23	0.23	×	3.06% × (1 – 21.00%)	=	0.55%
Operating lease liability⁴	653)	653)	÷	25,559)	=	0.03	0.03	×	3.60% × (1 – 21.00%)	=	0.07%
Total:	25,559)					1.00					6.60%

Based on: 10-K (reporting date: 2023-12-30).

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	23,556)	23,556)	÷	30,510)	=	0.77	0.77	×	8.00%	=	6.18%
Notes payable and long-term debt³	6,347)	6,347)	÷	30,510)	=	0.21	0.21	×	3.23% × (1 – 21.00%)	=	0.53%
Operating lease liability⁴	607)	607)	÷	30,510)	=	0.02	0.02	×	2.90% × (1 – 21.00%)	=	0.05%
Total:	30,510)					1.00					6.75%

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	22,592)	22,592)	÷	30,959)	=	0.73	0.73	×	8.00%	=	5.84%
Notes payable and long-term debt³	7,749)	7,749)	÷	30,959)	=	0.25	0.25	×	2.90% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	618)	618)	÷	30,959)	=	0.02	0.02	×	2.70% × (1 – 21.00%)	=	0.04%
Total:	30,959)					1.00					6.45%

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	20,382)	20,382)	÷	29,448)	=	0.69	0.69	×	8.00%	=	5.54%
Notes payable and long-term debt³	8,429)	8,429)	÷	29,448)	=	0.29	0.29	×	3.13% × (1 – 21.00%)	=	0.71%
Operating lease liability⁴	637)	637)	÷	29,448)	=	0.02	0.02	×	2.60% × (1 – 21.00%)	=	0.04%
Total:	29,448)					1.00					6.29%

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 28, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,063)	22,063)	÷	31,137)	=	0.71	0.71	×	8.00%	=	5.67%
Notes payable and long-term debt³	8,527)	8,527)	÷	31,137)	=	0.27	0.27	×	3.27% × (1 – 21.00%)	=	0.71%
Operating lease liability⁴	547)	547)	÷	31,137)	=	0.02	0.02	×	2.90% × (1 – 21.00%)	=	0.04%
Total:	31,137)					1.00					6.42%

Based on: 10-K (reporting date: 2019-12-28).

¹ US$ in millions

² Equity. See details »

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

⁴ Operating lease liability. See details »

Kellanova, economic spread ratio calculation, comparison to benchmarks

	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	242)	198)	922)	736)	175)
Invested capital²	11,675)	13,188)	13,587)	13,194)	13,101)
Performance Ratio
Economic spread ratio³	2.08%	1.50%	6.79%	5.58%	1.34%
Benchmarks
Economic Spread Ratio, Competitors⁴
Altria Group Inc.	21.66%	11.11%	-1.99%	4.35%	-9.57%
Coca-Cola Co.	4.16%	3.85%	5.38%	3.16%	3.46%
PepsiCo Inc.	5.14%	5.13%	5.66%	4.28%	6.07%
Philip Morris International Inc.	8.72%	11.66%	25.83%	19.52%	17.98%

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 242 ÷ 11,675 = 2.08%

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.	Kellanova economic spread ratio deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Kellanova, economic profit margin calculation, comparison to benchmarks

	Dec 30, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	242)	198)	922)	736)	175)
Net sales	13,122)	15,315)	14,181)	13,770)	13,578)
Performance Ratio
Economic profit margin²	1.85%	1.30%	6.50%	5.35%	1.29%
Benchmarks
Economic Profit Margin, Competitors³
Altria Group Inc.	25.34%	12.75%	-2.56%	6.90%	-16.24%
Coca-Cola Co.	7.59%	7.16%	11.18%	7.25%	6.85%
PepsiCo Inc.	4.21%	4.13%	4.97%	4.26%	5.37%
Philip Morris International Inc.	12.75%	17.43%	24.07%	21.74%	18.87%

Based on: 10-K (reporting date: 2023-12-30), 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: 2019-12-28).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 242 ÷ 13,122 = 1.85%

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.	Kellanova economic profit margin deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

Kellanova (NYSE:K)

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