Economic Value Added (EVA)
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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.
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Expedia Group Inc. pages available for free this week:
- Cash Flow Statement
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
Expedia Group Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- There is a notable upward trend in NOPAT from 2017 to 2019, with values increasing from 1,026 million USD to 1,922 million USD, indicating improved profitability. However, in 2020, there is a significant decline to a negative figure of -5,503 million USD, reflecting a substantial loss. This negative performance recovers in 2021 with a positive value of 2,614 million USD, suggesting a strong rebound in operating profit post-2020.
- Cost of Capital
- The cost of capital exhibits moderate fluctuations over the period analyzed. It starts at 16.45% in 2017, rises slightly to a peak of 17.53% in 2018, then declines to 16.38% in 2019 and further decreases to 15.14% in 2020, before increasing again to 16.44% in 2021. These variations suggest some adjustments in the capital structure or market conditions affecting the company's required return on investment.
- Invested Capital
- Invested capital shows a steady upward trend across the five years, growing from 14,039 million USD in 2017 to 17,498 million USD in 2021. This increase indicates ongoing investment in assets or operational capacity, with a slight dip from 16,161 million USD in 2019 to 15,765 million USD in 2020, which might be related to the adverse conditions experienced in 2020.
- Economic Profit
- The economic profit remains negative throughout the entire period, indicating a consistent shortfall in generated profit relative to the cost of capital. Although the deficit narrows from -1,283 million USD in 2017 to -726 million USD in 2019, there is a marked deterioration in 2020, with economic profit plunging to -7,889 million USD. This worsened position improves in 2021 to -262 million USD, suggesting recovery but still reflecting a failure to exceed the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Expedia Group Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
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 deferred merchant bookings and deferred revenue.
4 Addition of increase (decrease) in restructuring and related reorganization accrued liability.
5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Expedia Group, Inc..
6 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss) attributable to Expedia Group, Inc..
9 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
The financial data reveals significant fluctuations in profitability over the analyzed periods.
- Net Income (Loss) Attributable to Expedia Group, Inc.
- The company experienced positive net income from 2017 through 2019, with values steadily increasing from 378 million USD in 2017 to 565 million USD in 2019. In 2020, there was a sharp and substantial loss of 2,612 million USD, indicating a major adverse impact on profitability. The net income slightly recovered in 2021, recording a marginal profit of 12 million USD, which suggests a fragile rebound but still far below pre-2020 levels.
- Net Operating Profit After Taxes (NOPAT)
- This metric exhibits a similar trend to net income, with continuous growth from 1,026 million USD in 2017 to 1,922 million USD in 2019. The year 2020 marked a deep negative NOPAT of 5,503 million USD, underscoring the operational difficulties faced during this period. In 2021, there was a notable improvement with NOPAT returning to a positive figure of 2,614 million USD, surpassing pre-pandemic levels, which may reflect operational recovery and enhanced efficiency or cost management.
Overall, the data illustrates strong growth in profitability through 2019, a severe downturn in 2020 presumably linked to extraordinary circumstances, followed by partial to full recovery across key profit measures in 2021. The divergence in magnitude of loss between net income and NOPAT in 2020 highlights the scale of operational and possibly non-operational challenges during that year.
Cash Operating Taxes
Expedia Group Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
The analysis of the provided financial data indicates noteworthy fluctuations in the income tax expense (benefit) and cash operating taxes over the observed five-year period.
- Income Tax Expense (Benefit)
- The income tax expense exhibits a rising trend from 2017 through 2019, increasing from 45 million USD to 203 million USD. However, this trend reverses strongly in 2020, with the figure turning negative to -423 million USD, indicating a tax benefit rather than an expense. In 2021, the amount remains negative but with a reduced benefit of -53 million USD. This significant shift in 2020 and 2021 reflects either substantial tax credits, loss carrybacks, or other tax relief measures impacting the income tax recorded.
- Cash Operating Taxes
- Cash operating taxes increase sharply from 212 million USD in 2017 to 427 million USD in 2018, followed by a decline to 323 million USD in 2019. The downward trend continues in 2020, dropping to 142 million USD, and then slightly recovers to 167 million USD in 2021. This pattern suggests a peak in cash outflows related to taxes in 2018, with subsequent moderation likely due to operational changes or tax planning strategies.
Overall, the data reveals contrasting movements between reported income tax expense and actual cash tax payments, especially notable in 2020 when the income tax expense turns into a substantial benefit while cash taxes paid decrease markedly. This divergence may indicate changes in accounting treatment or timing differences between tax expense recognition and cash tax payments.
Invested Capital
Expedia Group Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2017-12-31).
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 merchant bookings and deferred revenue.
5 Addition of restructuring and related reorganization accrued liability.
6 Addition of equity equivalents to total Expedia Group, Inc. stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of projects in progress.
9 Subtraction of investments.
The presented financial data reveals several notable trends over the five-year period from 2017 to 2021.
- Total Reported Debt & Leases
- There is an overall increasing trend in total reported debt and leases, rising from $4,941 million in 2017 to $8,887 million by the end of 2021. Notably, the increase between 2019 ($5,589 million) and 2020 ($8,855 million) is substantial, indicating a significant rise in leverage during that period, which then stabilizes into 2021.
- Total Stockholders’ Equity
- Total stockholders' equity shows a declining trend over the same period. Starting at $4,522 million in 2017, it decreases somewhat gradually to $3,967 million in 2019, followed by a sharper decline to $2,532 million in 2020 and then further to $2,057 million in 2021. This decreasing equity trend suggests potential erosion of shareholder value or increased liabilities relative to assets.
- Invested Capital
- Invested capital remains relatively steady between 2017 and 2020, fluctuating mildly from $14,039 million in 2017 to $15,765 million in 2020. However, a noticeable increase occurs in 2021, reaching $17,498 million. This rise may reflect accumulated investments, retained earnings, or other capital inputs despite the reduction in equity.
In summary, the financial structure indicates rising debt levels alongside falling equity, which could imply increased financial risk or strategic leveraging. The increase in invested capital alongside these changes indicates ongoing commitments to assets or operations. These trends warrant further investigation into the underlying causes, such as capital expenditures, income performance, or financing activities, to comprehensively assess financial health and risk exposure.
Cost of Capital
Expedia Group Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (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 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series A Preferred Stock | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Expedia Group Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a generally negative trend over the analyzed periods. From 2017 to 2019, there was an improvement with losses decreasing from -1,283 million USD to -726 million USD. However, in 2020, economic profit sharply declined to -7,889 million USD, indicating a significant deterioration, before partially recovering in 2021 to -262 million USD.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the periods, increasing from 14,039 million USD in 2017 to 17,498 million USD in 2021. The increase was steady and moderate year over year with no apparent reversals or stagnation.
- Economic Spread Ratio
- The economic spread ratio was persistently negative, reflecting challenges in generating returns above the cost of capital. The ratio improved from -9.14% in 2017 to -4.49% in 2019, suggesting some improvement in operational efficiency or returns. In 2020, there was a drastic decline to -50.04%, signaling a sharp erosion in economic value creation, which aligns with the steep drop in economic profit that year. By 2021, the ratio recovered significantly to -1.5%, indicating a near return to breakeven with regard to economic returns.
Economic Profit Margin
Expedia Group Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred merchant bookings and deferred revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- There is a consistent negative economic profit across the periods analyzed, indicating that the company operated at an economic loss throughout. From 2017 to 2019, the economic loss decreased, moving from -1283 million US dollars to -726 million US dollars. However, in 2020, there was a sharp deterioration, with economic profit plummeting to -7889 million US dollars. By 2021, a significant recovery is observed with the figure improving to -262 million US dollars, which is the smallest loss in the time frame except for 2019.
- Adjusted Revenue
- Adjusted revenue showed growth between 2017 and 2019, rising from 10705 million US dollars to 13376 million US dollars. In 2020, there was a drastic drop to 2478 million US dollars, representing a substantial decline likely influenced by external factors affecting revenue generation. In 2021, adjusted revenue rebounded significantly to 11173 million US dollars, approaching levels recorded prior to 2020 but still below the peak of 2019.
- Economic Profit Margin
- The economic profit margin trend mirrors the economic profit pattern, with negative margins throughout the period. From -11.99% in 2017, the margin improved to -5.43% in 2019. In 2020, the margin deteriorated sharply to -318.36%, which suggests a dramatic reduction in profitability relative to revenue. By 2021, the margin improved substantially to -2.35%, reflecting recovery, although remaining negative.
- Overall Insights
- The data indicates a period of worsening economic performance in 2020, characterized by sharp falling revenues and dramatically increased economic losses and margin contraction. This is followed by a notable recovery in 2021, where both revenue and economic profit margin improved substantially but did not fully return to pre-2020 peak levels. The period before 2020 showed steady improvement in economic metrics. The overall pattern suggests that 2020 was an exceptional year likely affected by extraordinary external factors, with partial normalization occurring in the subsequent year.