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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

Thermo Fisher Scientific 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	5,117)	6,425)	7,465)	6,545)	3,523)
Cost of capital²	10.64%	10.64%	10.37%	10.75%	10.63%
Invested capital³	85,596)	82,839)	80,074)	61,179)	52,638)

Economic profit⁴	(3,987)	(2,386)	(840)	(31)	(2,073)

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
= 5,117 – 10.64% × 85,596 = -3,987

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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.	Thermo Fisher Scientific Inc. economic profit decreased from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific 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 income attributable to Thermo Fisher Scientific Inc.	5,995)	6,950)	7,725)	6,375)	3,696)
Deferred income tax expense (benefit)¹	(1,300)	(997)	(645)	(269)	(499)
Increase (decrease) in allowances²	4)	39)	15)	33)	(15)
Increase (decrease) in LIFO reserve³	—)	—)	(49)	10)	5)
Increase (decrease) in accrued restructuring costs⁴	19)	24)	(4)	(13)	(46)
Increase (decrease) in equity equivalents⁵	(1,277)	(934)	(683)	(239)	(555)
Interest expense	1,375)	726)	536)	553)	676)
Interest expense, operating lease liability⁶	60)	51)	38)	28)	30)
Adjusted interest expense	1,435)	777)	574)	581)	706)
Tax benefit of interest expense⁷	(301)	(163)	(121)	(122)	(148)
Adjusted interest expense, after taxes⁸	1,134)	614)	454)	459)	557)
Interest income	(879)	(272)	(43)	(65)	(224)
Investment income, before taxes	(879)	(272)	(43)	(65)	(224)
Tax expense (benefit) of investment income⁹	185)	57)	9)	14)	47)
Investment income, after taxes¹⁰	(694)	(215)	(34)	(51)	(177)
Net income (loss) attributable to noncontrolling interest	(40)	10)	3)	2)	2)
Net operating profit after taxes (NOPAT)	5,117)	6,425)	7,465)	6,545)	3,523)

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 allowances.

³ Addition of increase (decrease) in LIFO reserve. See details »

⁴ Addition of increase (decrease) in accrued restructuring costs.

⁵ Addition of increase (decrease) in equity equivalents to net income attributable to Thermo Fisher Scientific Inc..

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,507 × 4.00% = 60

⁷ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,435 × 21.00% = 301

⁸ Addition of after taxes interest expense to net income attributable to Thermo Fisher Scientific Inc..

⁹ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 879 × 21.00% = 185

¹⁰ 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.	Thermo Fisher Scientific Inc. NOPAT decreased from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific 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
Provision for income taxes	284)	703)	1,109)	850)	374)
Less: Deferred income tax expense (benefit)	(1,300)	(997)	(645)	(269)	(499)
Add: Tax savings from interest expense	301)	163)	121)	122)	148)
Less: Tax imposed on investment income	185)	57)	9)	14)	47)
Cash operating taxes	1,701)	1,806)	1,866)	1,227)	974)

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.	Thermo Fisher Scientific Inc. cash operating taxes decreased from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term obligations and current maturities of long-term obligations	3,609)	5,579)	2,537)	2,628)	676)
Long-term obligations, excluding current maturities	31,308)	28,909)	32,333)	19,107)	17,076)
Operating lease liability¹	1,507)	1,585)	1,469)	810)	738)
Total reported debt & leases	36,424)	36,073)	36,339)	22,545)	18,490)
Total Thermo Fisher Scientific Inc. shareholders’ equity	46,735)	43,978)	40,793)	34,507)	29,675)
Net deferred tax (assets) liabilities²	1,091)	1,984)	2,829)	1,105)	1,619)
Allowances³	193)	189)	150)	135)	102)
LIFO reserve⁴	—)	—)	—)	49)	39)
Accrued restructuring costs⁵	60)	41)	17)	21)	34)
Equity equivalents⁶	1,344)	2,214)	2,996)	1,310)	1,794)
Accumulated other comprehensive (income) loss, net of tax⁷	3,224)	3,099)	2,329)	2,807)	2,679)
Redeemable noncontrolling interest	118)	116)	122)	—)	—)
Noncontrolling interests	(11)	54)	62)	10)	—)
Adjusted total Thermo Fisher Scientific Inc. shareholders’ equity	51,410)	49,461)	46,302)	38,634)	34,148)
Construction in progress⁸	(2,238)	(2,695)	(2,567)	—)	—)
Invested capital	85,596)	82,839)	80,074)	61,179)	52,638)

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 LIFO reserve. See details »

⁵ Addition of accrued restructuring costs.

⁶ Addition of equity equivalents to total Thermo Fisher Scientific Inc. shareholders’ equity.

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.	Thermo Fisher Scientific Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	213,722)	213,722)	÷	247,687)	=	0.86	0.86	×	12.01%	=	10.36%
Debt obligations³	32,458)	32,458)	÷	247,687)	=	0.13	0.13	×	2.48% × (1 – 21.00%)	=	0.26%
Operating lease liability⁴	1,507)	1,507)	÷	247,687)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.02%
Total:	247,687)					1.00					10.64%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	212,353)	212,353)	÷	244,438)	=	0.87	0.87	×	12.01%	=	10.43%
Debt obligations³	30,500)	30,500)	÷	244,438)	=	0.12	0.12	×	1.92% × (1 – 21.00%)	=	0.19%
Operating lease liability⁴	1,585)	1,585)	÷	244,438)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	244,438)					1.00					10.64%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	211,310)	211,310)	÷	249,026)	=	0.85	0.85	×	12.01%	=	10.19%
Debt obligations³	36,247)	36,247)	÷	249,026)	=	0.15	0.15	×	1.49% × (1 – 21.00%)	=	0.17%
Operating lease liability⁴	1,469)	1,469)	÷	249,026)	=	0.01	0.01	×	2.60% × (1 – 21.00%)	=	0.01%
Total:	249,026)					1.00					10.37%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	177,786)	177,786)	÷	203,261)	=	0.87	0.87	×	12.01%	=	10.50%
Debt obligations³	24,665)	24,665)	÷	203,261)	=	0.12	0.12	×	2.47% × (1 – 21.00%)	=	0.24%
Operating lease liability⁴	810)	810)	÷	203,261)	=	0.00	0.00	×	3.40% × (1 – 21.00%)	=	0.01%
Total:	203,261)					1.00					10.75%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	123,302)	123,302)	÷	142,706)	=	0.86	0.86	×	12.01%	=	10.37%
Debt obligations³	18,666)	18,666)	÷	142,706)	=	0.13	0.13	×	2.33% × (1 – 21.00%)	=	0.24%
Operating lease liability⁴	738)	738)	÷	142,706)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.02%
Total:	142,706)					1.00					10.63%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Thermo Fisher Scientific 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	(3,987)	(2,386)	(840)	(31)	(2,073)
Invested capital²	85,596)	82,839)	80,074)	61,179)	52,638)
Performance Ratio
Economic spread ratio³	-4.66%	-2.88%	-1.05%	-0.05%	-3.94%
Benchmarks
Economic Spread Ratio, Competitors⁴
AbbVie Inc.	-4.02%	5.41%	4.79%	-3.05%	7.22%
Amgen Inc.	2.73%	7.40%	7.38%	11.71%	13.91%
Bristol-Myers Squibb Co.	2.02%	-0.68%	1.57%	-14.00%	-3.67%
Danaher Corp.	-7.76%	-2.81%	-2.15%	-3.54%	-6.94%
Eli Lilly & Co.	3.28%	10.61%	12.30%	18.96%	15.79%
Gilead Sciences Inc.	6.00%	2.49%	9.02%	-4.04%	7.27%
Johnson & Johnson	-0.01%	5.22%	10.28%	5.06%	3.97%
Merck & Co. Inc.	-8.49%	11.70%	11.83%	4.67%	11.25%
Moderna Inc.	-122.48%	29.65%	117.96%	53.81%	-145.84%
Pfizer Inc.	-8.95%	18.62%	11.78%	-2.93%	5.68%
Regeneron Pharmaceuticals Inc.	21.20%	24.31%	67.31%	39.18%	28.44%

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 × -3,987 ÷ 85,596 = -4.66%

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.	Thermo Fisher Scientific Inc. economic spread ratio deteriorated from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific 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	(3,987)	(2,386)	(840)	(31)	(2,073)
Revenues	42,857)	44,915)	39,211)	32,218)	25,542)
Performance Ratio
Economic profit margin²	-9.30%	-5.31%	-2.14%	-0.10%	-8.11%
Benchmarks
Economic Profit Margin, Competitors³
AbbVie Inc.	-5.04%	7.65%	8.18%	-6.92%	13.62%
Amgen Inc.	7.11%	11.85%	12.23%	18.72%	23.42%
Bristol-Myers Squibb Co.	3.03%	-1.06%	2.72%	-29.68%	-14.08%
Danaher Corp.	-25.47%	-6.97%	-5.37%	-10.39%	-22.52%
Eli Lilly & Co.	2.82%	9.03%	11.36%	18.98%	15.21%
Gilead Sciences Inc.	10.21%	4.21%	15.96%	-8.34%	10.34%
Johnson & Johnson	-0.01%	6.26%	10.77%	6.03%	4.69%
Merck & Co. Inc.	-9.88%	14.59%	17.18%	5.56%	12.89%
Moderna Inc.	-139.80%	14.80%	61.53%	55.69%	—
Pfizer Inc.	-23.69%	20.56%	12.70%	-7.26%	13.28%
Regeneron Pharmaceuticals Inc.	19.33%	24.48%	45.52%	38.18%	23.61%

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 ÷ Revenues
= 100 × -3,987 ÷ 42,857 = -9.30%

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.	Thermo Fisher Scientific Inc. economic profit margin deteriorated from 2021 to 2022 and from 2022 to 2023.

Thermo Fisher Scientific Inc. (NYSE:TMO)

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