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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

Motorola Solutions Inc., 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	1,871)	1,222)	1,409)	1,129)	984)
Cost of capital²	11.91%	11.79%	11.51%	11.33%	11.44%
Invested capital³	8,921)	8,350)	7,857)	6,976)	6,887)

Economic profit⁴	809)	237)	505)	338)	196)

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
= 1,871 – 11.91% × 8,921 = 809

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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.	Motorola Solutions Inc. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Motorola Solutions Inc., 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 attributable to Motorola Solutions, Inc.	1,709)	1,363)	1,245)	949)	868)
Deferred income tax expense (benefit)¹	(32)	(334)	34)	(25)	(84)
Increase (decrease) in allowance for credit losses²	8)	(9)	(5)	12)	12)
Increase (decrease) in reorganization of businesses accruals³	(8)	2)	(45)	1)	(6)
Increase (decrease) in equity equivalents⁴	(32)	(341)	(16)	(12)	(78)
Interest expense	249)	240)	215)	233)	237)
Interest expense, operating lease liability⁵	23)	22)	14)	17)	22)
Adjusted interest expense	272)	262)	229)	250)	259)
Tax benefit of interest expense⁶	(57)	(55)	(48)	(53)	(54)
Adjusted interest expense, after taxes⁷	215)	207)	181)	198)	205)
Interest income	(33)	(14)	(7)	(13)	(17)
Investment income, before taxes	(33)	(14)	(7)	(13)	(17)
Tax expense (benefit) of investment income⁸	7)	3)	1)	3)	4)
Investment income, after taxes⁹	(26)	(11)	(6)	(10)	(13)
Net income (loss) attributable to noncontrolling interest	5)	4)	5)	4)	3)
Net operating profit after taxes (NOPAT)	1,871)	1,222)	1,409)	1,129)	984)

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 reorganization of businesses accruals.

⁴ Addition of increase (decrease) in equity equivalents to net earnings attributable to Motorola Solutions, Inc..

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 532 × 4.34% = 23

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 272 × 21.00% = 57

⁷ Addition of after taxes interest expense to net earnings attributable to Motorola Solutions, Inc..

⁸ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 33 × 21.00% = 7

⁹ Elimination of after taxes investment income.

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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.	Motorola Solutions Inc. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

Motorola Solutions Inc., 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
Income tax expense	432)	148)	302)	221)	130)
Less: Deferred income tax expense (benefit)	(32)	(334)	34)	(25)	(84)
Add: Tax savings from interest expense	57)	55)	48)	53)	54)
Less: Tax imposed on investment income	7)	3)	1)	3)	4)
Cash operating taxes	514)	534)	315)	296)	265)

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.	Motorola Solutions Inc. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Motorola Solutions Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of long-term debt	1,313)	1)	5)	12)	16)
Long-term debt, excluding current portion	4,705)	6,013)	5,688)	5,163)	5,113)
Operating lease liability¹	532)	537)	437)	528)	619)
Total reported debt & leases	6,550)	6,551)	6,130)	5,703)	5,748)
Total Motorola Solutions, Inc. stockholders’ equity (deficit)	724)	116)	(40)	(558)	(700)
Net deferred tax (assets) liabilities²	(1,005)	(964)	(733)	(786)	(759)
Allowance for credit losses³	69)	61)	70)	75)	63)
Reorganization of businesses accruals⁴	28)	36)	34)	79)	78)
Equity equivalents⁵	(908)	(867)	(629)	(632)	(618)
Accumulated other comprehensive (income) loss, net of tax⁶	2,540)	2,535)	2,379)	2,446)	2,440)
Noncontrolling interests	15)	15)	17)	17)	17)
Adjusted total Motorola Solutions, Inc. stockholders’ equity (deficit)	2,371)	1,799)	1,727)	1,273)	1,139)
Invested capital	8,921)	8,350)	7,857)	6,976)	6,887)

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 reorganization of businesses accruals.

⁵ Addition of equity equivalents to total Motorola Solutions, Inc. stockholders’ equity (deficit).

⁶ Removal of accumulated other comprehensive income.

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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.	Motorola Solutions Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Motorola Solutions Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	53,810)	53,810)	÷	60,742)	=	0.89	0.89	×	13.04%	=	11.55%
Long-term debt³	6,400)	6,400)	÷	60,742)	=	0.11	0.11	×	3.94% × (1 – 21.00%)	=	0.33%
Operating lease liability⁴	532)	532)	÷	60,742)	=	0.01	0.01	×	4.34% × (1 – 21.00%)	=	0.03%
Total:	60,742)					1.00					11.91%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	44,716)	44,716)	÷	51,153)	=	0.87	0.87	×	13.04%	=	11.40%
Long-term debt³	5,900)	5,900)	÷	51,153)	=	0.12	0.12	×	3.94% × (1 – 21.00%)	=	0.36%
Operating lease liability⁴	537)	537)	÷	51,153)	=	0.01	0.01	×	4.07% × (1 – 21.00%)	=	0.03%
Total:	51,153)					1.00					11.79%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	37,174)	37,174)	÷	43,811)	=	0.85	0.85	×	13.04%	=	11.06%
Long-term debt³	6,200)	6,200)	÷	43,811)	=	0.14	0.14	×	3.77% × (1 – 21.00%)	=	0.42%
Operating lease liability⁴	437)	437)	÷	43,811)	=	0.01	0.01	×	3.11% × (1 – 21.00%)	=	0.02%
Total:	43,811)					1.00					11.51%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,606)	30,606)	÷	36,934)	=	0.83	0.83	×	13.04%	=	10.80%
Long-term debt³	5,800)	5,800)	÷	36,934)	=	0.16	0.16	×	3.92% × (1 – 21.00%)	=	0.49%
Operating lease liability⁴	528)	528)	÷	36,934)	=	0.01	0.01	×	3.30% × (1 – 21.00%)	=	0.04%
Total:	36,934)					1.00					11.33%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	31,456)	31,456)	÷	37,575)	=	0.84	0.84	×	13.04%	=	10.92%
Long-term debt³	5,500)	5,500)	÷	37,575)	=	0.15	0.15	×	4.17% × (1 – 21.00%)	=	0.48%
Operating lease liability⁴	619)	619)	÷	37,575)	=	0.02	0.02	×	3.61% × (1 – 21.00%)	=	0.05%
Total:	37,575)					1.00					11.44%

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

¹ US$ in millions

² Equity. See details »

³ Long-term debt. See details »

⁴ Operating lease liability. See details »

Motorola Solutions Inc., 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	809)	237)	505)	338)	196)
Invested capital²	8,921)	8,350)	7,857)	6,976)	6,887)
Performance Ratio
Economic spread ratio³	9.06%	2.84%	6.42%	4.85%	2.85%
Benchmarks
Economic Spread Ratio, Competitors⁴
Apple Inc.	140.72%	202.21%	198.55%	146.48%	90.53%
Arista Networks Inc.	28.24%	23.70%	38.69%	21.03%	26.53%
Cisco Systems Inc.	9.09%	8.97%	8.21%	12.41%	6.61%
Super Micro Computer Inc.	9.90%	0.27%	-7.20%	-9.99%	-4.90%

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 × 809 ÷ 8,921 = 9.06%

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.	Motorola Solutions Inc. economic spread ratio deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Motorola Solutions Inc., 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	809)	237)	505)	338)	196)
Net sales	9,978)	9,112)	8,171)	7,414)	7,887)
Performance Ratio
Economic profit margin²	8.10%	2.60%	6.18%	4.56%	2.49%
Benchmarks
Economic Profit Margin, Competitors³
Apple Inc.	22.14%	23.90%	23.07%	19.20%	17.67%
Arista Networks Inc.	21.36%	16.36%	22.72%	16.44%	19.51%
Cisco Systems Inc.	9.04%	10.06%	9.16%	12.95%	6.97%
Super Micro Computer Inc.	3.35%	0.12%	-2.60%	-3.71%	-1.59%

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 ÷ Net sales
= 100 × 809 ÷ 9,978 = 8.10%

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.	Motorola Solutions Inc. economic profit margin deteriorated from 2021 to 2022 but then improved from 2022 to 2023 exceeding 2021 level.

Motorola Solutions Inc. (NYSE:MSI)

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