Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
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
RTX Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,351 – 9.57% × 109,085 = -1,091
Economic profit remained consistently negative throughout the analyzed period from 2021 to 2025, indicating that the company did not generate returns sufficient to cover its cost of capital. However, a clear trajectory toward value creation is observed, as the economic deficit narrowed from a peak loss of US$ 5,392 million in 2022 to US$ 1,091 million by the end of 2025.
- Net Operating Profit After Taxes (NOPAT)
- A U-shaped trend is evident in operational profitability. NOPAT declined from US$ 5,054 million in 2021 to a minimum of US$ 4,118 million in 2023. This was followed by a period of significant expansion, with profit increasing to US$ 6,483 million in 2024 and reaching US$ 9,351 million in 2025. This sharp acceleration in earnings serves as the primary driver in reducing the economic profit deficit.
- Cost of Capital
- The cost of capital exhibited fluctuations, ranging from a low of 8.64% in 2023 to a peak of 9.57% in 2025. An upward trend in the cost of capital is noted during the final two years, which created a marginal headwind against the improving operational results.
- Invested Capital
- A gradual contraction of the capital base occurred between 2021 and 2024, with invested capital decreasing from US$ 111,815 million to US$ 107,593 million. A slight reversal occurred in 2025, with capital increasing to US$ 109,085 million. The overall reduction in invested capital through 2024 helped lower the total capital charge during that period.
- Economic Profit Synthesis
- The narrowing gap in economic profit is the result of substantial NOPAT growth outweighing the modest increase in the cost of capital and the relative stability of the invested capital base. While the company continued to experience value destruction through 2025, the rate of improvement suggests a convergence toward a positive economic profit threshold.
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Net Operating Profit after Taxes (NOPAT)
RTX Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 equity equivalents to net income attributable to common shareowners.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,052 × 4.30% = 88
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,923 × 21.00% = 404
6 Addition of after taxes interest expense to net income attributable to common shareowners.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 98 × 21.00% = 21
8 Elimination of after taxes investment income.
9 Elimination of discontinued operations.
Net income attributable to common shareowners and net operating profit after taxes (NOPAT) exhibited distinct performance patterns over the five-year period. While net income demonstrated volatility, NOPAT showed a generally positive trajectory, particularly in the later years.
- Net Income Trend
- Net income attributable to common shareowners increased from US$3,864 million in 2021 to US$5,197 million in 2022, representing a substantial gain. However, this was followed by a decrease to US$3,195 million in 2023. A recovery was observed in 2024, with net income reaching US$4,774 million, and continued growth into 2025, reaching US$6,732 million. This indicates fluctuating profitability for shareowners.
- NOPAT Trend
- NOPAT began at US$5,054 million in 2021, then decreased to US$4,663 million in 2022 and further to US$4,118 million in 2023. A significant increase occurred in 2024, with NOPAT rising to US$6,483 million. This upward trend continued strongly into 2025, reaching US$9,351 million. This suggests improving operational efficiency and profitability, independent of capital structure and taxes.
- Relationship between Net Income and NOPAT
- While both metrics moved in the same general direction (increasing in 2022 and 2025), the magnitude of change differed. The decline in 2023 was more pronounced for net income than for NOPAT. Furthermore, the substantial increase in NOPAT in 2024 and 2025 was greater than the corresponding increase in net income, suggesting potential changes in financing costs or tax rates impacting the bottom line.
- Overall Assessment
- The observed trends suggest a strengthening of core operational profitability, as evidenced by the NOPAT figures. Despite fluctuations in net income, the consistent growth in NOPAT over the latter part of the period indicates improved underlying business performance. Further investigation into the factors driving the divergence between net income and NOPAT would be beneficial.
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Cash Operating Taxes
RTX Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
The reported income tax expense demonstrates volatility over the five-year period. Initial values decreased significantly between 2021 and 2023, followed by substantial increases in 2024 and 2025. Conversely, cash operating taxes exhibited a different pattern, with a large increase in 2022, followed by a decrease in 2023, and then a moderate increase through 2024 before declining slightly in 2025.
- Income Tax Expense Trend
- Income tax expense began at US$786 million in 2021, decreasing to US$700 million in 2022, and then falling considerably to US$456 million in 2023. A significant rise occurred in 2024, reaching US$1,181 million, and continued upward to US$1,664 million in 2025. This indicates increasing tax obligations in the latter part of the period.
- Cash Operating Taxes Trend
- Cash operating taxes started at US$1,158 million in 2021, then increased substantially to US$2,635 million in 2022. This was followed by a decrease to US$1,197 million in 2023. Values then rose to US$1,638 million in 2024, before decreasing slightly to US$1,258 million in 2025. The 2022 peak suggests a potentially large, temporary tax payment or a change in tax regulations impacting cash flow.
- Relationship Between Income Tax Expense and Cash Operating Taxes
- A divergence is apparent between income tax expense and cash operating taxes. While income tax expense decreased from 2021 to 2023, cash operating taxes initially increased and then decreased. This suggests timing differences between when taxes are recognized for accounting purposes (income tax expense) and when cash is actually paid (cash operating taxes). The increasing income tax expense in 2024 and 2025 does not directly correlate with the cash operating taxes, which plateaued and then slightly decreased, indicating a potential build-up of deferred tax liabilities or assets.
The fluctuations in both metrics warrant further investigation to understand the underlying drivers, including changes in tax laws, profitability, and the utilization of tax credits or loss carryforwards. The difference between the two figures suggests a significant impact from non-cash tax items.
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Invested Capital
RTX Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
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 shareowners’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of assets under construction.
7 Subtraction of marketable securities held in trusts.
The composition of invested capital at RTX Corp. exhibits fluctuations over the five-year period. Total reported debt & leases and shareowners’ equity are the components used to derive invested capital, and their individual trends contribute to the observed patterns.
- Invested Capital Trend
- Invested capital decreased from US$111,815 million in 2021 to US$109,971 million in 2022, representing a decline of approximately 1.7%. A further decrease was noted in 2023, falling to US$108,443 million. 2024 saw a slight reduction to US$107,593 million. However, 2025 witnessed a modest increase, with invested capital rising to US$109,085 million. Overall, the trend suggests relative stability with a slight downward trajectory, followed by a minor recovery in the most recent year.
- Debt & Leases
- Total reported debt & leases increased from US$33,553 million in 2021 to US$33,856 million in 2022, a minor increase. A substantial rise occurred in 2023, reaching US$45,587 million. This was followed by a decrease in 2024 to US$43,260 million, and a further reduction in 2025 to US$39,956 million. The significant increase in 2023, followed by subsequent declines, suggests potential shifts in financing strategies or capital structure adjustments.
- Shareowners’ Equity
- Shareowners’ equity experienced a slight decrease from US$73,068 million in 2021 to US$72,632 million in 2022. A more pronounced decline was observed in 2023, falling to US$59,798 million. A small increase occurred in 2024, reaching US$60,156 million, and a further increase was seen in 2025, with equity rising to US$65,245 million. The decrease in shareowners’ equity, particularly in 2023, may be attributable to factors such as share repurchases, dividend payments, or retained earnings performance.
The interplay between debt & leases and shareowners’ equity shapes the overall invested capital figure. The decrease in invested capital between 2021 and 2024 appears to be driven by a combination of decreasing equity and fluctuating debt levels. The slight increase in invested capital in 2025 is likely due to the combined effect of increased equity and decreased debt.
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Cost of Capital
RTX Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 266,659) | 266,659) | ÷ | 304,721) | = | 0.88 | 0.88 | × | 10.43% | = | 9.13% | ||
| Debt3 | 36,010) | 36,010) | ÷ | 304,721) | = | 0.12 | 0.12 | × | 4.50% × (1 – 21.00%) | = | 0.42% | ||
| Operating lease liability4 | 2,052) | 2,052) | ÷ | 304,721) | = | 0.01 | 0.01 | × | 4.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 304,721) | 1.00 | 9.57% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 173,069) | 173,069) | ÷ | 213,294) | = | 0.81 | 0.81 | × | 10.43% | = | 8.46% | ||
| Debt3 | 38,226) | 38,226) | ÷ | 213,294) | = | 0.18 | 0.18 | × | 4.50% × (1 – 21.00%) | = | 0.64% | ||
| Operating lease liability4 | 1,999) | 1,999) | ÷ | 213,294) | = | 0.01 | 0.01 | × | 4.30% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 213,294) | 1.00 | 9.13% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 122,387) | 122,387) | ÷ | 166,026) | = | 0.74 | 0.74 | × | 10.43% | = | 7.69% | ||
| Debt3 | 41,879) | 41,879) | ÷ | 166,026) | = | 0.25 | 0.25 | × | 4.60% × (1 – 21.00%) | = | 0.92% | ||
| Operating lease liability4 | 1,760) | 1,760) | ÷ | 166,026) | = | 0.01 | 0.01 | × | 3.50% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 166,026) | 1.00 | 8.64% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 143,375) | 143,375) | ÷ | 174,079) | = | 0.82 | 0.82 | × | 10.43% | = | 8.59% | ||
| Debt3 | 28,762) | 28,762) | ÷ | 174,079) | = | 0.17 | 0.17 | × | 4.00% × (1 – 21.00%) | = | 0.52% | ||
| Operating lease liability4 | 1,942) | 1,942) | ÷ | 174,079) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 174,079) | 1.00 | 9.14% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 142,174) | 142,174) | ÷ | 180,305) | = | 0.79 | 0.79 | × | 10.43% | = | 8.23% | ||
| Debt3 | 36,063) | 36,063) | ÷ | 180,305) | = | 0.20 | 0.20 | × | 4.00% × (1 – 21.00%) | = | 0.63% | ||
| Operating lease liability4 | 2,068) | 2,068) | ÷ | 180,305) | = | 0.01 | 0.01 | × | 2.80% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 180,305) | 1.00 | 8.88% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
RTX Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (1,091) | (3,345) | (5,248) | (5,392) | (4,879) | |
| Invested capital2 | 109,085) | 107,593) | 108,443) | 109,971) | 111,815) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.00% | -3.11% | -4.84% | -4.90% | -4.36% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Boeing Co. | -5.78% | -35.08% | -15.01% | -20.40% | -19.01% | |
| Caterpillar Inc. | -6.76% | -2.20% | -2.26% | -6.19% | -5.60% | |
| Eaton Corp. plc | -5.03% | -6.21% | -7.78% | -9.69% | -9.30% | |
| GE Aerospace | 3.37% | -0.52% | 1.30% | -13.67% | -18.58% | |
| Honeywell International Inc. | -4.97% | -4.00% | -2.14% | -3.12% | -2.03% | |
| Lockheed Martin Corp. | 12.56% | 11.55% | 17.99% | 14.01% | 14.99% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,091 ÷ 109,085 = -1.00%
4 Click competitor name to see calculations.
An analysis of the economic value metrics reveals a consistent trajectory toward recovery between 2021 and 2025. Although the organization operated with negative economic profit throughout the period, there is a marked improvement in the ability to cover the cost of capital, particularly from 2023 onwards.
- Economic Profit
- Economic profit remained negative for the entire five-year duration, indicating that returns did not exceed the cost of capital. A peak deficit occurred in 2022 at -5,392 million USD. Subsequently, a strong upward trend is observed, with the deficit narrowing to -5,248 million USD in 2023, -3,345 million USD in 2024, and reaching -1,091 million USD by 2025.
- Invested Capital
- The capital base remained relatively stable, exhibiting a slight contraction from 111,815 million USD in 2021 to a low of 107,593 million USD in 2024. A marginal increase to 109,085 million USD was noted in 2025. This stability suggests that the improvements in economic profit are driven by operational performance or cost of capital adjustments rather than significant changes in the capital structure.
- Economic Spread Ratio
- The economic spread ratio mirrors the trend of economic profit, starting at -4.36% in 2021 and deteriorating to -4.90% in 2022. From that point, a steady recovery is evident, with the ratio improving to -4.84% in 2023, -3.11% in 2024, and approaching a break-even point at -1.00% by 2025. This indicates a narrowing gap between the return on invested capital and the weighted average cost of capital.
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Economic Profit Margin
RTX Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (1,091) | (3,345) | (5,248) | (5,392) | (4,879) | |
| Net sales | 88,603) | 80,738) | 68,920) | 67,074) | 64,388) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -1.23% | -4.14% | -7.61% | -8.04% | -7.58% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Boeing Co. | -3.46% | -26.51% | -8.67% | -15.58% | -15.10% | |
| Caterpillar Inc. | -6.83% | -2.06% | -1.97% | -5.99% | -6.46% | |
| Eaton Corp. plc | -6.33% | -7.97% | -10.54% | -14.37% | -13.96% | |
| GE Aerospace | 3.07% | -0.56% | 1.01% | -12.40% | -18.76% | |
| Honeywell International Inc. | -8.06% | -6.26% | -2.83% | -4.12% | -2.84% | |
| Lockheed Martin Corp. | 5.08% | 4.68% | 7.30% | 5.65% | 6.40% | |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × -1,091 ÷ 88,603 = -1.23%
3 Click competitor name to see calculations.
The financial performance over the five-year period from 2021 to 2025 indicates a consistent trajectory toward the recovery of economic value. While the company maintained a negative economic profit throughout the analyzed duration, a significant trend of improvement is observable, particularly starting in 2024, suggesting a narrowing gap between the return on invested capital and the cost of capital.
- Net Sales Growth
- A steady and accelerating increase in net sales is observed, rising from 64,388 million US dollars in 2021 to 88,603 million US dollars by 2025. This growth indicates a robust expansion in top-line revenue, with a particularly sharp increase occurring between 2023 and 2024.
- Economic Profit Trajectory
- Economic profit reached its lowest point in 2022 at -5,392 million US dollars. Following this trough, a consistent recovery trend emerged, with the deficit reducing to -5,248 million US dollars in 2023, -3,345 million US dollars in 2024, and reaching -1,091 million US dollars by the end of 2025. This represents a substantial reduction in value destruction over the period.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the trend of absolute economic profit, reflecting a gradual improvement in capital efficiency. After peaking at a deficit of -8.04% in 2022, the margin improved to -7.61% in 2023, followed by a significant contraction of the negative margin to -4.14% in 2024 and -1.23% in 2025. The narrowing of this margin suggests that the growth in net sales is effectively contributing to a reduction in the relative cost of capital burdens.
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