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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Keurig Dr Pepper Inc. pages available for free this week:
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Enterprise Value (EV)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2008
- Price to Earnings (P/E) since 2008
- Analysis of Debt
- Aggregate Accruals
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Economic Profit
Keurig Dr Pepper Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| 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).
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 financial data indicates several key trends over the four-year period ending in 2021.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a steady and notable increase year over year. It nearly doubled from 903 million US dollars in 2018 to 1753 million in 2019, followed by a smaller increase to 1786 million in 2020 and a significant rise to 2588 million in 2021. This consistent growth reflects improving operational profitability.
- Cost of Capital
- The cost of capital showed a gradual upward trend across the period, increasing from 8.76% in 2018 to 9.47% in 2021. This incremental rise suggests a slightly higher required return on invested capital, potentially reflecting changes in market conditions or the risk profile associated with the company.
- Invested Capital
- Invested capital remained relatively stable throughout the years, fluctuating narrowly around the mid-44,000 million US dollars level. From 44,635 million in 2018, there was a slight decrease to 44,138 million in 2019 and further to 43,835 million in 2020, before increasing slightly to 44,109 million in 2021. This stability indicates there was little change in the capital base supporting the company's operations during the period.
- Economic Profit
- Economic profit, which represents the value created above the cost of capital, was consistently negative but showed a clear improvement. The deficit decreased from -3,006 million in 2018 to -1,591 million in 2021. Despite remaining below zero, the reduction in negative economic profit highlights progress toward more efficient capital utilization and value creation over time.
In summary, the company improved its operating profitability significantly while maintaining a stable invested capital base. The increasing cost of capital indicates slightly higher financing costs or required returns, yet the economic profit deficits narrowed, demonstrating progress in generating returns above these costs. This overall trend suggests an improving financial health and operational efficiency during the analyzed period.
Net Operating Profit after Taxes (NOPAT)
Keurig Dr Pepper 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).
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 product warranties.
4 Addition of increase (decrease) in restructuring liabilities.
5 Addition of increase (decrease) in equity equivalents to net income attributable to KDP.
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 attributable to KDP.
The financial performance over the four-year period demonstrates a notably positive trend in profitability measures.
- Net Income Attributable to KDP
- The net income attributable to the company increased substantially, starting at 586 million US dollars in 2018 and rising to 2,146 million US dollars by the end of 2021. This represents a more than threefold increase over the period, with a particularly strong jump between 2020 and 2021, where net income grew by approximately 62%. The steady increases in the prior years reflect consistent growth in profitability.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also exhibited strong growth, increasing from 903 million US dollars in 2018 to 2,588 million US dollars in 2021. The year-over-year increases indicate robust operating profitability improvements, with the most significant rise observed in the last year, mirroring the trend seen in net income. The growth rate from 2020 to 2021 was approximately 45%, demonstrating enhanced operational efficiency and effective tax management contributing to increased net operating profits.
Overall, the data indicates significant and sustained financial improvement in key profitability metrics, with the largest gains occurring in the most recent year. This suggests successful management strategies and operational execution leading to stronger earnings and operational results over time.
Cash Operating Taxes
Keurig Dr Pepper Inc., cash operating taxes calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Provision for income taxes | |||||
| Less: Deferred income tax expense (benefit) | |||||
| Add: Tax savings from interest expense | |||||
| Cash operating taxes |
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).
The financial data reveals the trends in tax-related expenses over the four-year period ending December 31, 2021. There is an upward trajectory in both the provision for income taxes and cash operating taxes, though the growth rates and amounts vary between these two categories.
- Provision for Income Taxes
- This figure rose from 202 million US dollars in 2018 to 653 million US dollars in 2021. The largest year-over-year increase occurred between 2020 and 2021, with an increase of 225 million US dollars. The provision more than tripled over the four years, indicating a substantial increase in income tax expenses recognized during this period.
- Cash Operating Taxes
- Cash operating taxes demonstrated a consistent upward trend, increasing from 381 million US dollars in 2018 to 733 million US dollars in 2021. The increase across the period was approximately 92%, with the most significant jump occurring between 2018 and 2019 (224 million US dollars). The growth in cash taxes paid suggests rising tax obligations or improved tax payment alignments within the company.
Overall, the data reflects a significant increase in both accrued income tax provisions and actual cash tax payments over the examined period. The increases may be indicative of growing profitability, changes in tax regulation, or alterations in financial strategies related to tax expenses. The sharper rise in the provision for income taxes in the final year suggests a possible anticipation of higher tax liability.
Invested Capital
Keurig Dr Pepper 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).
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 product warranties.
5 Addition of restructuring liabilities.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction-in-progress.
The financial data reveals a consistent trend in the company's capital structure over the analyzed period from 2018 to 2021. There is a clear decline in the total reported debt and leases, indicating a steady reduction in liabilities.
- Total reported debt & leases
- Starting at 16,236 million US dollars in 2018, this figure decreases each year, reaching 13,266 million US dollars by the end of 2021. This downward trend suggests a strategic effort to reduce financial leverage or improve the balance sheet strength.
- Stockholders’ equity
- Stockholders' equity shows a gradual increase across the same timeframe, moving from 22,533 million US dollars in 2018 to 24,972 million US dollars in 2021. This incremental rise indicates growth in the company’s net assets, which may reflect retained earnings accumulation or capital infusions.
- Invested capital
- Invested capital remains relatively stable, fluctuating slightly without a clear upward or downward trajectory. It begins at 44,635 million US dollars in 2018, decreases marginally to 43,835 million US dollars in 2020, and recovers slightly to 44,109 million US dollars in 2021. This stability may imply consistent investment levels despite changing debt and equity components.
Overall, the reduction in debt combined with the increase in equity suggests an improvement in the financial robustness and potentially a lower risk profile. The steadiness of invested capital implies that the company maintained its asset base, possibly reflecting controlled investment or capital expenditure activities balanced by depreciation or disposals.
Cost of Capital
Keurig Dr Pepper Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Keurig Dr Pepper Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | |||||
| Invested capital2 | |||||
| Performance Ratio | |||||
| Economic spread ratio3 | |||||
| Benchmarks | |||||
| Economic Spread Ratio, Competitors4 | |||||
| Coca-Cola Co. | |||||
| Mondelēz International Inc. | |||||
| PepsiCo Inc. | |||||
| Philip Morris International 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).
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 shows a consistent improvement over the four-year period. Starting at a negative value of -3006 million US$ in 2018, it decreases in absolute loss each year, reaching -1591 million US$ by the end of 2021. This trend indicates a gradual reduction in negative economic returns, suggesting that the company is moving towards better profitability or efficiency in utilizing its invested capital.
- Invested Capital
- The invested capital remains relatively stable throughout the period, fluctuating slightly around the 44,000 million US$ mark. It begins at 44,635 million US$ in 2018 and shows a marginal decline to 44,138 million US$ in 2019 and further down to 43,835 million US$ in 2020, before increasing slightly to 44,109 million US$ in 2021. This stability in invested capital suggests a steady asset base with no significant expansions or contractions in capital employed.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, exhibits a less negative trend over the years, moving from -6.73% in 2018 to -3.61% in 2021. Although remaining negative throughout the period, the consistent upward movement indicates an improvement in the return on invested capital relative to its cost. The narrowing negative spread supports the observations from economic profit, signaling enhanced operational efficiency or better capital utilization.
Economic Profit Margin
Keurig Dr Pepper Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | |||||
| Net sales | |||||
| Performance Ratio | |||||
| Economic profit margin2 | |||||
| Benchmarks | |||||
| Economic Profit Margin, Competitors3 | |||||
| Coca-Cola Co. | |||||
| Mondelēz International Inc. | |||||
| PepsiCo Inc. | |||||
| Philip Morris International 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).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial data exhibits several notable trends over the four-year period ending December 31, 2021.
- Economic Profit
- The economic profit shows a consistent improvement. Starting from a significant negative value of -3,006 million USD in 2018, it improved to -2,186 million USD in 2019 and remained relatively stable in 2020 at roughly the same level (-2,182 million USD). In 2021, there was a further improvement, reducing the loss to -1,591 million USD. This upward trajectory indicates a gradual reduction in economic losses, reflecting better profitability or operating efficiency over time.
- Net Sales
- Net sales reveal a notable upward trend. The company’s net sales grew substantially from 7,442 million USD in 2018 to 11,120 million USD in 2019. The growth momentum continued, albeit at a slower pace, reaching 11,618 million USD in 2020 and further increasing to 12,683 million USD in 2021. This consistent increase in sales suggests successful revenue growth strategies and market expansion efforts.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, mirrors the improvements seen in economic profit. Starting at a deeply negative margin of -40.39% in 2018, it improved significantly to -19.65% in 2019. Subsequent improvements were smaller in magnitude but steady, with margins of -18.78% in 2020 and -12.54% in 2021. The narrowing negative margin indicates that while the company has not yet reached positive economic profit margins, it has reduced losses as a proportion of net sales substantially.
Overall, the data indicates that the entity has experienced strong growth in net sales accompanied by a significant reduction in economic losses over the period. The continuous improvement in economic profit and margins suggests enhanced operational performance, although the company remains below break-even on an economic profit basis as of the latest period.