Kvartalsrapport Q4 2023

44 Q4 2023 FINANCIAL INFORMATION  
Net working capital as a percentage of revenues 
Definition  
Net working capital as a percentage of revenues 
Net working capital as a percentage of revenues is calculated as Net working capital divided by Adjusted revenues for the tra iling twelve months. 
Net working capital 
Net working capital is the sum of (i) receivables, net, (ii) contract assets, (iii) inventories, net, and (iv) prepaid expenses; less (v ) accounts payable, trade, 
(vi) contract liabilities and (vii) other current liabilities (excluding primarily: (a) income taxes payable, (b) current derivative liabilities, (c) pens ion and 
other employee benefits, (d) payables under the share buyback program , (e) liabilities related to certain other restructuring-related activities and 
(f) liabilities related to the divestment of the Power Grids business ); and including the amounts related to these accounts which have been presented as 
either assets or liabilities held for sale but excluding any amounts included in discontinued operations . 
Adjusted revenues for the trailing twelve months  
Adjusted revenues for the trailing twelve months includes total revenues recorded by ABB in the twelve months preceding the r elevant balance sheet 
date adjusted to eliminate revenues of divested businesses and the estimated impact of annualizing revenues of certain acquis itions which were 
completed in the same trailing twelve-month period. 
Reconciliation 
  December 31, 
 ($ in millions, unless otherwise indicated) 2023 2022 2021 
 Net working capital:    
  Receivables, net 7,446 6,858 6,551 
  Contract assets 1,090 954 990 
  Inventories, net 6,149 6,028 4,880 
  Prepaid expenses 235 230 206 
  Accounts payable, trade (4,847) (4,904) (4,921) 
  Contract liabilities(1) (2,844) (2,275) (1,894) 
  Other current liabilities(2) (3,972) (3,675) (3,509) 
 Net working capital 3,257 3,216 2,303 
 Total revenues for the twelve months ended  32,235 29,446 28,945 
 Adjustment to annualize/eliminate revenues of certain acquisitions/divestments  (186) (513) (517) 
 Adjusted revenues for the trailing twelve months 32,049 28,933 28,428 
 Net working capital as a percentage of revenues (%)  10.2% 11.1% 8.1% 
(1) Amount includes certain amounts relating to contract liabilities that are presented in other non-current liabilities.  
(2) Amounts exclude $999 million, $648 million and $858 million at December 31, 2023, 2022 and 2021, respectively, related primarily to (a) income taxes payable, (b) current 
derivative liabilities, (c) pension and other employee benefits, (d) payables under the share buyback program and (e) liabilities related to the divestment of the Power Grids 
business.

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45 Q4 2023 FINANCIAL INFORMATION  
 
Free cash flow conversion to net income 
Definition 
Free cash flow conversion to net income  
Free cash flow conversion to net income is calculated as free cash flow divided by Adjusted net income attributable to AB B. 
Adjusted net income attributable to ABB 
Adjusted net income attributable to ABB is calculated as net income attributable to ABB adjusted for: (i) impairment of goodwill, (ii) l osses from 
extinguishment of debt, and (iii) gains arising on the sale of the Power Conversion Division, the Hitachi Energy Joint Venture and the Power Grids 
business, the latter being included in discontinued operations.  
Free cash flow 
Free cash flow is calculated as net cash provided by operating activities adjusted for: (i) purchases of property, plant and equipment and intangible 
assets and (ii) proceeds from sales of property, plant and equipment.  
 
Free cash flow conversion to net income  
  Twelve months to 
 ($ in millions, unless otherwise indicated) December 31, 2023 December 31, 2022 
 Net cash provided by operating activities – continuing operations 4,301 1,334 
 Adjusted for the effects of continuing operations:    
 Purchases of property, plant and equipment and intangible assets  (770) (762) 
 Proceeds from sale of property, plant and equipment  147 127 
 Free cash flow from continuing operations 3,678 699 
 Net cash used in operating activities – discontinued operations (11) (47) 
 Free cash flow 3,667 652 
 Adjusted net income attributable to ABB (1) 3,686 2,442 
 Free cash flow conversion to net income  99% 27% 
(1) Adjusted net income attributable to ABB for the year ended December  31, 2023, is adjusted to exclude the gain on sale of the Power Conversion Division of $59 million. For 
the year ended December  31, 2022 , Adjusted net income attributable to ABB, is adjusted to exclude  the gain on the sale of Hitachi Energy Joint Venture of $43 million 
and reductions to the gain on the sale of Power Grids of $10  million.

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46 Q4 2023 FINANCIAL INFORMATION  
Net finance expenses  
Definition  
Net finance expenses is calculated as Interest and dividend income less Interest and other finance expense.  
Reconciliation 
  Year ended December 31, Three months ended December 31, 
 ($ in millions) 2023 2022 2023 2022 
 Interest and dividend income 165 72 50 22 
 Interest and other finance expense (275) (130) (78) (23) 
 Net finance expenses (110) (58) (28) (1) 
 
 
 
Book-to-bill ratio 
Definition  
Book-to-bill ratio is calculated as Orders received divided by Total revenues. 
Reconciliation 
  Year ended December 31, 
  2023 2022 
 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill 
 Electrification 15,189 14,584 1.04 15,182 13,619 1.11 
 Motion 8,222 7,814 1.05 7,896 6,745 1.17 
 Process Automation 7,535 6,270 1.20 6,825 6,044 1.13 
 Robotics & Discrete Automation 3,066 3,640 0.84 4,116 3,181 1.29 
 Corporate and Other (incl. intersegment eliminations) (194) (73) n.a. (31) (143) n.a. 
 ABB Group 33,818 32,235 1.05 33,988 29,446 1.15 
        
 
  Three months ended December 31, 
  2023 2022 
 ($ in millions, except Book-to-bill presented as a ratio) Orders Revenues Book-to-bill Orders Revenues Book-to-bill 
 Electrification 3,395 3,698 0.92 3,385 3,498 0.97 
 Motion 1,937 1,946 1.00 1,649 1,845 0.89 
 Process Automation 1,870 1,727 1.08 1,746 1,551 1.13 
 Robotics & Discrete Automation 550 852 0.65 798 891 0.90 
 Corporate and Other (incl. intersegment eliminations) (103) 22 n.a. 42 39 n.a. 
 ABB Group 7,649 8,245 0.93 7,620 7,824 0.97

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47 Q4 2023 FINANCIAL INFORMATION  
Return on Capital employed (ROCE) 
Definition 
Return on Capital employed (ROCE) 
Return on Capital employed is calculated as Operational EBITA after tax, divided by the average of the period’s opening and closing Capital employed, 
adjusted to reflect impacts from the timing of significant acquisitions/divestments occurring during the period. 
Capital employed 
Capital employed is calculated as the sum of Adjusted total fixed assets and Net working capital (as defined above). 
Adjusted total fixed assets 
Adjusted total fixed assets is the sum of (i) property, plant and equipment, net, (ii) goodwill, (iii) other intangible asset s, net, (iv) investments in 
equity-accounted companies, and (v) operating lease right-of-use assets, less (vi) deferred tax liabilities recognized in certain acquisitions.  
Notional tax on Operational EBITA 
The Notional tax on Operational EBITA is computed using the adjusted group effective tax rate multiplied by Operational EBITA .  
Adjusted Group effective tax rate 
The Adjusted Group effective tax rate is computed by dividing a n adjusted income tax expense by an adjusted pre -tax income. Certain amounts 
recorded in income before taxes and the related income tax expense (primarily due to gains and losses from sale of businesses  and in 2022, regulatory 
penalties in connection with the Kusile project) are removed from the reported amounts when computing these adjusted amounts. Certain other 
amounts recorded in income tax expense are also excluded from the computation to determine the Adjusted Group effective tax r ate. 
 
Reconciliation 
  December 31,  
 ($ in millions, unless otherwise indicated) 2023 2022 2021 
 Adjusted total fixed assets:    
 Property, plant and equipment, net 4,142 3,911 4,045 
 Goodwill 10,561 10,511 10,482 
 Other intangible assets, net 1,223 1,406 1,561 
 Investments in equity-accounted companies 187 130 1,670 
 Operating lease right-of-use assets 893 841 895 
 Total fixed assets 17,006 16,799 18,653 
 Less: Deferred taxes recognized in certain acquisitions (1) (297) (358) (417) 
 Adjusted total fixed assets 16,709 16,441 18,236 
 Net working capital - (as defined above) 3,257 3,216 2,303 
 Capital employed 19,966 19,657 20,539 
     
 Average Capital employed:    
 Capital employed at the end of the previous year  19,657 20,539 21,976 
 Capital employed at the end of the current year  19,966 19,657 20,539 
  19,812 20,098 21,258 
 Adjusted for timing of acquisitions/divestments  – 948 224 
 Average Capital employed 19,812 21,046 21,482 
     
 Operational EBITA for the year ended 5,427 4,510 4,122 
 Notional tax on Operational EBITA (1,248) (1,037) (929) 
 Operational EBITA after tax 4,179 3,473 3,193 
 Return on Capital employed (ROCE) 21.1% 16.5% 14.9% 
(1) Amount relates to GEIS acquired in 2018, B&R acquired in 2017, Thomas & Betts acquired in 2012 and Baldor acquired in 2011.

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— 
ABB Ltd 
Corporate Communications  
P.O. Box 8131  
805 0 Zurich  
Switzerland  
Tel: +41 (0)43  317 71 11 
 
www.abb.com