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.
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Booking Holdings Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
Booking Holdings Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data indicates significant changes and notable trends over the analyzed period. Net operating profit after taxes (NOPAT) demonstrates a strong upward trajectory, increasing from US$670 million in 2020 to US$6,151 million in 2024. This reflects a substantial improvement in operational profitability over five years.
Cost of capital has remained relatively stable, fluctuating slightly around 17% throughout the period. The minor variations suggest that the overall risk profile or capital expense did not experience major deviations, maintaining a consistent benchmark for performance evaluation.
Invested capital experienced some fluctuations with an initial increase from US$14,563 million in 2020 to US$15,004 million in 2021, followed by declines reaching a low of US$11,415 million in 2023. There is a rebound in 2024 to US$12,973 million, though it remains below the earlier high levels. This pattern may indicate divestitures, asset optimization, or changes in investment strategy affecting the asset base.
Economic profit, which integrates NOPAT with cost of capital and invested capital, reveals a transition from negative values in 2020 and 2021 (-US$1,766 million and -US$1,870 million respectively) to positive and growing economic profit in subsequent years. Specifically, economic profit rises to US$678 million in 2022 before accelerating to US$3,931 million in 2024. This improvement suggests that returns on invested capital increasingly exceeded the cost of capital, underpinning enhanced value creation within the company.
- Key observations:
- The sharp increase in NOPAT reflects enhanced operational efficiency or revenue growth.
- Stable cost of capital implies a consistent risk assessment and financing environment.
- Volatility in invested capital points to possible strategic asset management adjustments.
- The marked shift from negative to positive economic profit demonstrates improving capital allocation and profitable investment decisions.
Net Operating Profit after Taxes (NOPAT)
Booking Holdings Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 restructuring liabilities.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
The financial data indicates a pronounced upward trajectory in both net income and net operating profit after taxes (NOPAT) over the five-year period from 2020 to 2024. Specifically, net income exhibits significant growth, increasing from 59 million US dollars in 2020 to 5,882 million US dollars in 2024. This represents a nearly hundredfold rise, with the most substantial increases occurring between 2020 and 2021, and continuing robustly in the subsequent years.
Similarly, NOPAT trends upward, starting at 670 million US dollars in 2020 and reaching 6,151 million US dollars by 2024. This steady increase reflects growing operating efficiency and profitability after accounting for taxes over the period.
- Net Income
- 2020: 59 million US dollars
- 2021: 1,165 million US dollars
- 2022: 3,058 million US dollars
- 2023: 4,289 million US dollars
- 2024: 5,882 million US dollars
- Net Operating Profit After Taxes (NOPAT)
- 2020: 670 million US dollars
- 2021: 671 million US dollars
- 2022: 2,965 million US dollars
- 2023: 3,758 million US dollars
- 2024: 6,151 million US dollars
The disparity between the net income and NOPAT values in earlier years, particularly in 2020 and 2021 where net income is substantially lower than NOPAT, may signal differences in non-operating items, interest expenses, or taxes impacting net income. From 2022 onwards, the figures for both metrics converge more closely, indicating stronger alignment between operating performance and final profitability.
Overall, the data reveals marked improvement in financial performance, with increases in both earnings measures suggesting effective operational management and growth in core business profitability. This positive trend underscores an expanding capacity to generate net profits from operating activities over the period analyzed.
Cash Operating Taxes
Booking Holdings Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
The income tax expense exhibited a fluctuating upward trend over the five-year period. Beginning at 508 million US dollars in 2020, the expense decreased significantly to 300 million in 2021, followed by a sharp increase to 865 million in 2022. The upward momentum continued with the tax expense rising to 1,192 million in 2023 and further to 1,410 million in 2024, indicating increasing tax obligations over the most recent years.
Cash operating taxes, which typically reflect the actual cash outflows for taxes, showed a consistent increase from 362 million US dollars in 2020 to a peak of 1,650 million in 2023. This represents more than a fourfold increase within four years. However, in 2024, a decline to 1,355 million was observed, slightly reducing the cash tax burden compared to the previous year but still maintaining a substantially higher level relative to the earlier years.
- Income Tax Expense Trends
- Initial decline between 2020 and 2021 followed by substantial growth through 2024.
- Cash Operating Taxes Trends
- Strong upward trajectory from 2020 to 2023, with a decrease noted in 2024.
- Comparison Insights
- The divergence in behavior during 2021, when income tax expense significantly dropped while cash operating taxes increased, could suggest timing differences or changes in non-cash tax items. The overall rising trend in both metrics from 2022 onwards aligns with increasing taxable income or changes in tax rates or regulations.
Invested Capital
Booking Holdings Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 restructuring liabilities.
5 Addition of equity equivalents to stockholders’ equity (deficit).
6 Removal of accumulated other comprehensive income.
7 Subtraction of building construction-in-progress.
8 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases exhibited an overall upward trend from 2020 to 2024. Starting at $12,539 million in 2020, the debt decreased slightly to $11,430 million in 2021 but then increased consistently over the following years, reaching $17,236 million by 2024. This indicates a rising reliance on debt financing or increased lease obligations over the analyzed period.
- Stockholders’ equity (deficit)
- Stockholders’ equity showed significant volatility and a declining trajectory across the five-year span. The value rose from $4,893 million in 2020 to a peak of $6,178 million in 2021. However, it dropped sharply to $2,782 million in 2022 and then moved into negative territory, reaching a deficit of $2,744 million in 2023 and further declining to a deficit of $4,020 million in 2024. This substantial decrease suggests deteriorating net asset value, potentially due to accumulated losses, share repurchases, or other equity-reducing activities.
- Invested capital
- Invested capital stayed relatively stable initially but showed a downward trend over time. It modestly increased from $14,563 million in 2020 to $15,004 million in 2021, followed by declines in the subsequent years, reaching a low of $11,415 million in 2023. A slight recovery occurred in 2024 when invested capital rose to $12,973 million. The pattern indicates possible divestitures, asset sales, or reductions in net operating assets before some stabilization or reinvestment in the last year.
Cost of Capital
Booking Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Booking Holdings Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals significant shifts in economic profit and related metrics over the five-year period. Initially, the economic profit was negative, indicating losses, but over time it transitioned to positive territory with substantial growth.
- Economic Profit
- The economic profit showed a negative trend in 2020 and 2021, with values of -1766 million USD and -1870 million USD respectively. However, starting in 2022, there was a notable improvement, turning positive at 678 million USD. This upward trend continued sharply in 2023 and 2024, reaching 1809 million USD and then 3931 million USD, signaling enhanced profitability and value creation for the company.
- Invested Capital
- Invested capital displayed some fluctuation. It increased slightly from 14563 million USD in 2020 to 15004 million USD in 2021 but then declined over the next two years to 13642 million USD in 2022 and further down to 11415 million USD in 2023. There was a rebound in 2024, with invested capital rising to 12973 million USD. This pattern suggests a period of capital reduction followed by renewed investment.
- Economic Spread Ratio
- The economic spread ratio followed a pattern consistent with the economic profit. It was negative in 2020 and 2021, at -12.13% and -12.46% respectively, indicating returns below the cost of capital. In 2022, the ratio crossed into positive territory at 4.97%, implying a recovery and improvement in returns relative to invested capital. This positive trend accelerated in subsequent years, reaching 15.85% in 2023 and a strong 30.3% in 2024, reflecting increasingly efficient use of capital and enhanced profitability.
Overall, the data exhibits a turnaround from economic losses to significant gains, accompanied by fluctuations in invested capital and marked improvements in economic spread. This suggests the company has successfully enhanced operational efficiency and capital allocation over the period analyzed.
Economic Profit Margin
Booking Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals significant improvements in economic performance over the analyzed five-year period. Initially, the company experienced substantial negative economic profits in 2020 and 2021, recorded at -1,766 million USD and -1,870 million USD respectively. However, starting in 2022, economic profit turned positive, reaching 678 million USD, and continued to increase markedly in subsequent years, hitting 1,809 million USD in 2023 and 3,931 million USD in 2024.
Revenues demonstrated a consistent upward trajectory throughout the period, starting at 6,796 million USD in 2020 and rising steadily each year. Particularly notable is the sharp increase from 2020 to 2021, where revenue grew by approximately 61% to 10,958 million USD. This growth momentum persisted, with revenues surging to 17,090 million USD in 2022, 21,365 million USD in 2023, and reaching 23,739 million USD by the end of 2024.
The economic profit margin followed a pattern closely aligned with economic profit figures. Initially negative at -25.99% in 2020, the margin improved to -17.06% in 2021, reflecting narrowing losses relative to revenue. By 2022, the company achieved a positive margin of 3.97%, which strengthened further to 8.47% in 2023 and 16.56% in 2024. This trend indicates a growing capacity to convert revenues into economic profit effectively.
- Overall trends
- There is a clear and sustained improvement in the company's profitability and efficiency from 2020 to 2024.
- Revenue growth
- Revenues increased substantially each year, with particularly rapid growth occurring between 2020 and 2022, and continued strong growth through 2024.
- Economic profit transition
- The shift from significant economic losses in the initial years to substantial economic gains beginning in 2022 reflects enhanced operational efficiency or more effective capital utilization.
- Profit margin development
- The recovery and strengthening of the economic profit margin, moving from deeply negative percentages to increasingly positive double digits, suggest improved cost management, pricing strategies, or business mix favoring higher margin activities.