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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- Income Statement
- Common-Size Income Statement
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Analysis of Revenues
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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
= – × =
The analysis of the annual financial metrics reveals distinct trends across the reported periods, indicating fluctuations in operational profitability and economic value creation.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a generally positive trajectory from 2017 through 2019, increasing from 1,026 million US dollars to 1,922 million US dollars. However, a significant decline occurred in 2020, with NOPAT turning sharply negative to -5,503 million US dollars. This loss was partially recovered in 2021, where positive NOPAT resumed at 2,614 million US dollars, though still below the 2019 peak value.
- Cost of Capital
- The cost of capital exhibited moderate variability throughout the analyzed period. Starting at 16.76% in 2017, it rose slightly to 17.87% in 2018 before decreasing to 16.7% in 2019. This declining trend continued to 15.41% in 2020, marking the lowest cost of capital in the dataset. In 2021, the cost of capital increased again to 16.75%, approaching the initial levels observed in 2017.
- Invested Capital
- Invested capital showed a consistent increase over the years. Beginning with 14,039 million US dollars in 2017, it gradually rose each year, reaching 17,498 million US dollars by 2021. Despite slight reductions in 2020 relative to 2019, the overall trend indicates steady growth in capital investment.
- Economic Profit
- Economic profit remained negative for all reported years. The deficit narrowed slightly from -1,328 million US dollars in 2017 to -776 million US dollars in 2019, indicating improving economic profitability. A sharp deteriorization occurred in 2020, with economic profit falling drastically to -7,932 million US dollars. In 2021, the negative economic profit diminished substantially to -318 million US dollars, suggesting a recovery phase though not yet achieving positive economic profit.
In summary, the financial data reveals a period of steady improvement in operational profitability and economic profit up to 2019, followed by a severe adverse impact in 2020, likely attributable to extraordinary or market-wide conditions. The recovery seen in 2021 shows a return to operational profitability and a marked reduction in economic loss, though economic profit remains negative. Invested capital increased steadily throughout, while the cost of capital showed moderate fluctuations with a notable dip in 2020, potentially reflecting capital market conditions during that year.
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.
The economic profit of the company demonstrates a fluctuating trend over the five-year period. Initially, the company experienced negative economic profit, starting at -1,328 million USD in 2017 and slightly improving to -1,228 million USD in 2018. This improvement continued into 2019, with economic profit decreasing in negative magnitude to -776 million USD. However, in 2020, there was a significant deterioration in economic profit, dropping sharply to -7,932 million USD. By 2021, the economic profit showed recovery, decreasing the loss to -318 million USD.
Invested capital exhibits an upward trend throughout the period. It increased steadily from 14,039 million USD at the end of 2017 to 14,424 million USD in 2018, then sharply increased to 16,161 million USD in 2019. There was a slight decline in 2020 to 15,765 million USD, followed by a significant increase to 17,498 million USD in 2021. This general increase in invested capital suggests the company has been expanding its asset base or reinvesting capital over time.
The economic spread ratio, reflecting the return on invested capital less the cost of capital, remains negative throughout the observed period. It starts at -9.46% in 2017, improves slightly to -8.51% in 2018, and further improves to -4.8% in 2019. However, in 2020, it deteriorates drastically to -50.32%, indicating a significant decline in value creation relative to the cost of capital during that year. The economic spread ratio recovers somewhat in 2021 to -1.81%, signaling an improvement though the company has not yet achieved positive economic spread.
Overall, the data indicates that while the company has been increasing its invested capital, it has struggled to generate positive economic profit and maintain a positive economic spread ratio. Notably, the sharp decline in economic profit and economic spread ratio in 2020 suggests a challenging period, likely precipitated by adverse external or operational factors, which partially reversed in 2021 according to the trends shown.
- Economic Profit
- Negative throughout the period with improvement until 2019, a severe decline in 2020, and recovery in 2021.
- Invested Capital
- Generally increasing trend indicating asset growth, with a slight dip in 2020.
- Economic Spread Ratio
- Negative across all years, significant deterioration in 2020, partial recovery by 2021 but remaining negative.
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.
The financial data analyzed reveals significant fluctuations in key performance metrics over the span of five years. These metrics include economic profit, adjusted revenue, and economic profit margin, each demonstrating distinctive trends worthy of detailed examination.
- Economic Profit
- The economic profit exhibited a negative trend throughout the period, consistently reporting losses each year. Starting at -1,328 million US dollars in 2017, the losses slightly reduced to -1,228 million in 2018 and further declined to -776 million in 2019, indicating some improvement. However, there was a dramatic deterioration in 2020, with economic profit plunging to -7,932 million USD. This substantial negative spike can be largely attributed to extraordinary circumstances impacting the industry during that year. In 2021, economic profit significantly recovered to a loss of -318 million USD, indicating a stabilization and a return towards profitability.
- Adjusted Revenue
- Adjusted revenue displayed a generally increasing trend from 2017 through 2019, rising from 10,705 million USD to 13,376 million USD, reflecting business growth during this phase. However, in 2020, adjusted revenue experienced a sharp contraction to 2,478 million USD, coinciding with the abrupt downturn in economic profit. This decline is likely connected to external disruptions affecting revenue-generating operations. By 2021, adjusted revenue rebounded to 11,173 million USD, nearing pre-2020 levels, suggesting a recovery in core business activities.
- Economic Profit Margin
- The economic profit margin followed a pattern consistent with the economic profit figures. Initially, it showed a reducing negative margin from -12.4% in 2017 to -5.8% in 2019, signaling incremental improvements in operational efficiency or profitability. However, 2020 saw an extraordinary drop to -320.12%, reflecting the severe losses recorded in economic profit against diminished revenue. By 2021, this margin improved sharply to -2.84%, indicating a near return to a minimal negative margin and an enhanced economic profit scenario.
Overall, the data illustrates the significant impact of a disruptive event in 2020, which severely affected revenue and profitability metrics. Prior to this, the company showed gradual improvement, and the subsequent recovery in 2021 suggests resilience and a potential return to more normalized financial performance levels.