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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

United Rentals Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	3,088)	2,048)	1,323)	1,925)	1,784)
Cost of capital²	17.48%	16.62%	15.43%	12.96%	12.32%
Invested capital³	22,485)	19,019)	17,027)	18,200)	17,871)

Economic profit⁴	(841)	(1,113)	(1,304)	(433)	(418)

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,088 – 17.48% × 22,485 = -841

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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.	United Rentals Inc. economic profit increased from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income	2,105)	1,386)	890)	1,174)	1,096)
Deferred income tax expense (benefit)¹	537)	268)	(121)	204)	257)
Increase (decrease) in allowance for credit losses²	22)	4)	5)	10)	25)
Increase (decrease) in deferred revenue³	48)	32)	(4)	(1)	10)
Increase (decrease) in equity equivalents⁴	607)	304)	(120)	213)	292)
Interest expense, net	445)	424)	669)	648)	481)
Interest expense, operating lease liability⁵	32)	29)	31)	33)	21)
Adjusted interest expense, net	477)	453)	700)	681)	502)
Tax benefit of interest expense, net⁶	(100)	(95)	(147)	(143)	(105)
Adjusted interest expense, net, after taxes⁷	376)	358)	553)	538)	396)
Net operating profit after taxes (NOPAT)	3,088)	2,048)	1,323)	1,925)	1,784)

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for credit losses.

³ Addition of increase (decrease) in deferred revenue.

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

⁵ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 853 × 3.70% = 32

⁶ 2022 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 477 × 21.00% = 100

⁷ Addition of after taxes interest expense to net 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.	United Rentals Inc. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Provision for income taxes	697)	460)	249)	340)	380)
Less: Deferred income tax expense (benefit)	537)	268)	(121)	204)	257)
Add: Tax savings from interest expense, net	100)	95)	147)	143)	105)
Cash operating taxes	260)	287)	517)	279)	228)

Based on: 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), 10-K (reporting date: 2018-12-31).

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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.	United Rentals Inc. cash operating taxes decreased from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Short-term debt and current maturities of long-term debt	161)	906)	704)	997)	903)
Long-term debt, excluding current maturities	11,209)	8,779)	8,978)	10,431)	10,844)
Operating lease liability¹	853)	823)	727)	711)	648)
Total reported debt & leases	12,223)	10,508)	10,409)	12,139)	12,395)
Stockholders’ equity	7,062)	5,991)	4,545)	3,830)	3,403)
Net deferred tax (assets) liabilities²	2,671)	2,154)	1,768)	1,887)	1,687)
Allowance for credit losses³	134)	112)	108)	103)	93)
Deferred revenue⁴	131)	83)	51)	55)	56)
Equity equivalents⁵	2,936)	2,349)	1,927)	2,045)	1,836)
Accumulated other comprehensive (income) loss, net of tax⁶	264)	171)	146)	186)	237)
Adjusted stockholders’ equity	10,262)	8,511)	6,618)	6,061)	5,476)
Invested capital	22,485)	19,019)	17,027)	18,200)	17,871)

Based on: 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), 10-K (reporting date: 2018-12-31).

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 deferred revenue.

⁵ Addition of equity equivalents to stockholders’ equity.

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.	United Rentals Inc. invested capital increased from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	27,222)	27,222)	÷	38,876)	=	0.70	0.70	×	23.31%	=	16.32%
Debt³	10,801)	10,801)	÷	38,876)	=	0.28	0.28	×	4.98% × (1 – 21.00%)	=	1.09%
Operating lease liability⁴	853)	853)	÷	38,876)	=	0.02	0.02	×	3.70% × (1 – 21.00%)	=	0.06%
Total:	38,876)					1.00					17.48%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,289)	22,289)	÷	33,104)	=	0.67	0.67	×	23.31%	=	15.69%
Debt³	9,992)	9,992)	÷	33,104)	=	0.30	0.30	×	3.59% × (1 – 21.00%)	=	0.86%
Operating lease liability⁴	823)	823)	÷	33,104)	=	0.02	0.02	×	3.50% × (1 – 21.00%)	=	0.07%
Total:	33,104)					1.00					16.62%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	17,059)	17,059)	÷	27,973)	=	0.61	0.61	×	23.31%	=	14.21%
Debt³	10,187)	10,187)	÷	27,973)	=	0.36	0.36	×	3.92% × (1 – 21.00%)	=	1.13%
Operating lease liability⁴	727)	727)	÷	27,973)	=	0.03	0.03	×	4.20% × (1 – 21.00%)	=	0.09%
Total:	27,973)					1.00					15.43%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	11,324)	11,324)	÷	23,884)	=	0.47	0.47	×	23.31%	=	11.05%
Debt³	11,849)	11,849)	÷	23,884)	=	0.50	0.50	×	4.59% × (1 – 21.00%)	=	1.80%
Operating lease liability⁴	711)	711)	÷	23,884)	=	0.03	0.03	×	4.70% × (1 – 21.00%)	=	0.11%
Total:	23,884)					1.00					12.96%

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

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,234)	9,234)	÷	21,160)	=	0.44	0.44	×	23.31%	=	10.17%
Debt³	11,277)	11,277)	÷	21,160)	=	0.53	0.53	×	4.93% × (1 – 21.00%)	=	2.08%
Operating lease liability⁴	648)	648)	÷	21,160)	=	0.03	0.03	×	3.18% × (1 – 21.00%)	=	0.08%
Total:	21,160)					1.00					12.32%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

United Rentals Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(841)	(1,113)	(1,304)	(433)	(418)
Invested capital²	22,485)	19,019)	17,027)	18,200)	17,871)
Performance Ratio
Economic spread ratio³	-3.74%	-5.85%	-7.66%	-2.38%	-2.34%
Benchmarks
Economic Spread Ratio, Competitors⁴
Boeing Co.	-21.04%	-19.59%	-31.10%	—	—
Caterpillar Inc.	0.18%	0.33%	-6.19%	—	—
Eaton Corp. plc	-5.90%	-5.64%	-7.73%	—	—
GE Aerospace	-10.02%	-14.99%	-4.85%	—	—
Honeywell International Inc.	-2.10%	-1.03%	-2.36%	—	—
Lockheed Martin Corp.	12.74%	13.74%	17.06%	—	—
RTX Corp.	-2.83%	-2.37%	-7.92%	—	—

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -841 ÷ 22,485 = -3.74%

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.	United Rentals Inc. economic spread ratio improved from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in millions)
Economic profit¹	(841)	(1,113)	(1,304)	(433)	(418)

Revenues	11,642)	9,716)	8,530)	9,351)	8,047)
Add: Increase (decrease) in deferred revenue	48)	32)	(4)	(1)	10)
Adjusted revenues	11,690)	9,748)	8,526)	9,350)	8,057)
Performance Ratio
Economic profit margin²	-7.20%	-11.42%	-15.30%	-4.64%	-5.19%
Benchmarks
Economic Profit Margin, Competitors³
Boeing Co.	-16.06%	-15.54%	-25.47%	—	—
Caterpillar Inc.	0.17%	0.38%	-8.57%	—	—
Eaton Corp. plc	-8.75%	-8.47%	-11.87%	—	—
GE Aerospace	-9.08%	-15.13%	-7.75%	—	—
Honeywell International Inc.	-2.77%	-1.43%	-3.50%	—	—
Lockheed Martin Corp.	5.14%	5.86%	7.32%	—	—
RTX Corp.	-4.78%	-4.22%	-16.18%	—	—

Based on: 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), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -841 ÷ 11,690 = -7.20%

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.	United Rentals Inc. economic profit margin improved from 2020 to 2021 and from 2021 to 2022.

United Rentals Inc. (NYSE:URI)

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