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
Booking Holdings Inc., economic profit 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 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
= 6,151 – 17.40% × 12,973 = 3,893
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrates a positive growth trend over the analyzed period. Beginning at $670 million in 2020 and 2021 with stagnation between these two years, it then significantly increased to $2,965 million in 2022, continuing to rise to $3,758 million in 2023, and reaching $6,151 million by 2024. This indicates a strong improvement in operational profitability over time.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating slightly between 17.02% and 17.4%. This consistency suggests that the company’s risk profile and financing costs have not undergone substantial changes during these years.
- Invested Capital
- Invested capital shows a declining trend from $14,563 million in 2020 to a low of $11,415 million in 2023, followed by a moderate increase to $12,973 million in 2024. The reduction in invested capital between 2020 and 2023 may indicate divestment or operational efficiencies, while the slight rebound in 2024 suggests renewed investments or asset acquisitions.
- Economic Profit
- Economic profit reveals a notable turnaround in the company's value creation. The economic profit was negative in 2020 and 2021, with losses of $1,808 million and $1,914 million respectively, despite relatively stable NOPAT levels. However, starting in 2022, economic profit turned positive at $638 million, increasing substantially to $1,775 million in 2023 and $3,893 million in 2024. This improvement reflects an enhanced ability to generate returns exceeding the cost of capital, likely driven by the rising NOPAT and management of invested capital.
- Overall Insights
- The data reflects a company that has significantly improved its profitability and value creation capability between 2020 and 2024. While the cost of capital remained stable, the substantial increase in net operating profit combined with effective capital management contributed to the shift from negative to strong positive economic profit. The initial decline in invested capital followed by a moderate increase may indicate strategic asset optimization, supporting the company’s enhanced financial performance.
Net Operating Profit after Taxes (NOPAT)
Booking Holdings Inc., NOPAT calculation
US$ 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
= 605 × 3.90% = 24
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,319 × 21.00% = 277
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
= 1,114 × 21.00% = 234
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 $12,973 million. The pattern indicates possible divestitures, asset sales, or reductions in net operating assets before some stabilization or reinvestment in the last year.
Cost of Capital
Booking Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 164,674) | 164,674) | ÷ | 184,112) | = | 0.89 | 0.89 | × | 19.13% | = | 17.11% | ||
| Outstanding debt and finance lease liabilities3 | 18,833) | 18,833) | ÷ | 184,112) | = | 0.10 | 0.10 | × | 3.54% × (1 – 21.00%) | = | 0.29% | ||
| Operating lease liability4 | 605) | 605) | ÷ | 184,112) | = | 0.00 | 0.00 | × | 3.90% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 184,112) | 1.00 | 17.40% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 | 133,335) | 133,335) | ÷ | 149,354) | = | 0.89 | 0.89 | × | 19.13% | = | 17.08% | ||
| Outstanding debt and finance lease liabilities3 | 15,268) | 15,268) | ÷ | 149,354) | = | 0.10 | 0.10 | × | 3.43% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 751) | 751) | ÷ | 149,354) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 149,354) | 1.00 | 17.37% | ||||||||||
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 | 91,353) | 91,353) | ÷ | 104,483) | = | 0.87 | 0.87 | × | 19.13% | = | 16.72% | ||
| Outstanding debt and finance lease liabilities3 | 12,453) | 12,453) | ÷ | 104,483) | = | 0.12 | 0.12 | × | 3.32% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 677) | 677) | ÷ | 104,483) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 104,483) | 1.00 | 17.05% | ||||||||||
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 | 100,986) | 100,986) | ÷ | 113,590) | = | 0.89 | 0.89 | × | 19.13% | = | 17.00% | ||
| Outstanding debt and finance lease liabilities3 | 12,110) | 12,110) | ÷ | 113,590) | = | 0.11 | 0.11 | × | 2.54% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 494) | 494) | ÷ | 113,590) | = | 0.00 | 0.00 | × | 2.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 113,590) | 1.00 | 17.23% | ||||||||||
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 | 100,090) | 100,090) | ÷ | 114,615) | = | 0.87 | 0.87 | × | 19.13% | = | 16.70% | ||
| Outstanding debt and finance lease liabilities3 | 14,000) | 14,000) | ÷ | 114,615) | = | 0.12 | 0.12 | × | 3.18% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 525) | 525) | ÷ | 114,615) | = | 0.00 | 0.00 | × | 2.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 114,615) | 1.00 | 17.02% | ||||||||||
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 | 3,893) | 1,775) | 638) | (1,914) | (1,808) | |
| Invested capital2 | 12,973) | 11,415) | 13,642) | 15,004) | 14,563) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 30.01% | 15.55% | 4.68% | -12.76% | -12.42% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | 27.21% | 12.78% | 14.20% | -8.06% | -114.36% | |
| Chipotle Mexican Grill Inc. | 8.04% | 6.40% | 2.41% | -2.28% | -4.32% | |
| DoorDash, Inc. | -22.32% | -34.78% | -48.62% | -35.07% | -30.79% | |
| McDonald’s Corp. | 8.01% | 8.09% | 5.29% | 7.74% | 3.52% | |
| Starbucks Corp. | 5.64% | 7.40% | 4.99% | 6.25% | -6.39% | |
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 × 3,893 ÷ 12,973 = 30.01%
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a notable recovery and positive trend over the analyzed periods. Initially, it was negative in 2020 and 2021, with values of -1,808 million USD and -1,914 million USD respectively, indicating losses in those years. However, starting from 2022, there was a significant shift to positive economic profit, reaching 638 million USD. This positive trajectory continued, with a substantial increase to 1,775 million USD in 2023, and further accelerating to 3,893 million USD by 2024. This trend suggests improved profitability and value creation for the company over time.
- Invested Capital
- Invested capital showed a declining trend from 2020 through 2023, decreasing from 14,563 million USD in 2020 to 11,415 million USD in 2023. This decline indicates a reduction in the capital deployed in the company's operations during this period. In 2024, the invested capital rose again to 12,973 million USD, suggesting a partial reinvestment or expansion after the downward trend.
- Economic Spread Ratio
- The economic spread ratio followed a similar pattern to economic profit, moving from negative to positive territory during the timeframe. In 2020 and 2021, the ratio was negative at -12.42% and -12.76%, respectively, indicating the company was not generating returns above its cost of capital. From 2022 onwards, the ratio turned positive and demonstrated significant improvement, increasing to 4.68% in 2022, then rising sharply to 15.55% in 2023 and further to 30.01% in 2024. This reflects an enhanced ability of the company to generate returns exceeding its capital costs, contributing to the increased economic profit observed.
- Summary
- The overall analysis reveals that the company managed to reverse negative economic profit and economic spread ratio trends from 2020 and 2021, achieving increasing profitability and value creation from 2022 onwards. Despite a reduction in invested capital over the initial years, a rebound was seen in 2024. The increasing economic spread ratio indicates improving efficiency in the use of capital and growing return on investment in recent years.
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 | 3,893) | 1,775) | 638) | (1,914) | (1,808) | |
| Revenues | 23,739) | 21,365) | 17,090) | 10,958) | 6,796) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 16.40% | 8.31% | 3.74% | -17.47% | -26.61% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | 14.74% | 7.33% | 11.21% | -7.25% | -175.10% | |
| Chipotle Mexican Grill Inc. | 4.84% | 3.88% | 1.50% | -1.66% | -3.54% | |
| DoorDash, Inc. | -13.03% | -21.09% | -39.29% | -22.81% | -51.12% | |
| McDonald’s Corp. | 15.34% | 15.88% | 10.37% | 15.89% | 8.55% | |
| Starbucks Corp. | 3.67% | 4.58% | 3.18% | 5.09% | -6.23% | |
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 × 3,893 ÷ 23,739 = 16.40%
3 Click competitor name to see calculations.
- Revenues
- The revenue figures demonstrate a consistent and significant upward trend over the analyzed period. Starting at 6,796 million US dollars at the end of 2020, revenues increased markedly to 10,958 million US dollars in 2021. This growth accelerated further in subsequent years, reaching 17,090 million in 2022, 21,365 million in 2023, and 23,739 million by the end of 2024. The data indicates robust growth in top-line performance, suggesting effective business expansion and increased market demand.
- Economic Profit
- The economic profit trends reflect a substantial improvement over the reported years. Initially, economic profit was negative, with losses of 1,808 million US dollars in 2020 and an increased loss of 1,914 million in 2021. A dramatic turnaround is observed in 2022, with economic profit turning positive at 638 million US dollars. This positive trajectory continued, with economic profit rising steeply to 1,775 million in 2023 and reaching 3,893 million by 2024. The shift from negative to positive economic profit indicates increased operational efficiency and value creation for shareholders.
- Economic Profit Margin
- The economic profit margin exhibits a parallel improvement to the absolute economic profit values. Negative margins of -26.61% in 2020 and -17.47% in 2021 shifted to positive territory in 2022 at 3.74%. Subsequently, the margin expanded significantly to 8.31% in 2023 and further to 16.4% by the close of 2024. This expanding margin suggests better cost management relative to revenues or increased pricing power, contributing to improved profitability on an economic value-added basis.
- Overall Analysis
- Over the five-year period, the company has demonstrated strong growth in revenues alongside a marked reversal in economic profitability, transitioning from losses to substantial gains. The improvements in economic profit margin further confirm that profitability gains are not solely due to revenue growth but also enhanced operational effectiveness. These trends collectively point towards increasing financial health and value creation capacity.