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
Carnival Corp. & plc, economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,207 – 17.56% × 39,428 = -4,717
The financial performance from 2018 to 2023 is characterized by a period of severe value erosion followed by a gradual trend toward recovery. Throughout the entire analyzed timeframe, economic profit remained consistently negative, indicating that the entity failed to generate returns sufficient to cover its cost of capital, thereby destroying shareholder value during this period.
- Net Operating Profit After Taxes (NOPAT)
- A significant volatility pattern is observed in NOPAT. Following a period of stability in 2018 and 2019, there was a precipitous decline into deep negative territory in 2020, reaching a low of negative 9,312 million US dollars. A progressive recovery trend ensued from 2021 through 2023, with NOPAT returning to a positive value of 2,207 million US dollars by the end of the period.
- Cost of Capital
- The cost of capital experienced a sustained downward trajectory between 2018 and 2022, decreasing from 27.09% to 14.84%. This reduction suggests a period of decreasing risk premiums or changes in the financing mix. However, a reversal occurred in 2023, with the cost of capital rising to 17.56%.
- Invested Capital
- Invested capital exhibited a sharp increase during the onset of the crisis, peaking at 49,017 million US dollars in 2020, likely reflecting increased borrowing requirements to sustain operations. From 2021 to 2023, a steady contraction in invested capital is evident, reducing to 39,428 million US dollars, which suggests a strategy of deleveraging or asset optimization.
- Economic Profit
- Economic profit remained negative across all six years, highlighting a persistent gap between operating returns and the cost of capital. The most severe value destruction occurred in 2020, with a deficit of 18,165 million US dollars. While the economic profit has improved steadily since 2020, narrowing to negative 4,717 million US dollars in 2023, the entity has yet to reach the break-even point where it creates positive economic value.
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Net Operating Profit after Taxes (NOPAT)
Carnival Corp. & plc, NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income (loss).
3 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,319 × 5.90% = 78
4 2023 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= 2,144 × -19.35% = -415
5 Addition of after taxes interest expense to net income (loss).
6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 233 × -19.35% = -45
7 Elimination of after taxes investment income.
The financial performance from 2018 to 2023 is characterized by an initial period of stability, a severe contraction in profitability, and a subsequent phased recovery. A sharp downturn occurred after 2019, resulting in substantial losses that peaked in 2020 before showing a consistent upward trajectory toward stabilization by late 2023.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT exhibited relative stability between 2018 and 2019, with a marginal decrease from US$ 3,339 million to US$ 3,226 million. A precipitous decline followed in 2020, where NOPAT fell to negative US$ 9,312 million. A gradual recovery trend is observed from 2021 onward, with losses narrowing to US$ 7,863 million in 2021 and US$ 4,485 million in 2022, eventually returning to a positive value of US$ 2,207 million by November 30, 2023.
- Correlation Between Net Income and NOPAT
- Net income and NOPAT movements remained highly correlated throughout the observed period. Both metrics experienced extreme volatility starting in 2020. However, by 2023, a notable divergence emerged: NOPAT returned to positive territory at US$ 2,207 million, while net income remained marginally negative at US$ -74 million. This suggests that core operating profitability has recovered more rapidly than the overall bottom line, indicating that non-operating expenses or financial charges continue to impact net results.
- Analysis of Recovery Velocity
- The recovery phase is marked by an accelerating improvement in operational results. The increase in NOPAT from 2020 to 2021 was approximately US$ 1,449 million, while the improvement from 2022 to 2023 was significantly more pronounced, representing a positive swing of US$ 6,692 million. This indicates a substantial restoration of operating efficiency and revenue generation in the final year of the period.
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Cash Operating Taxes
Carnival Corp. & plc, cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
The relationship between income tax expense and cash operating taxes demonstrates a period of close correlation followed by a significant divergence in the final reported year. Between 2018 and 2022, cash operating taxes largely mirrored the trajectory of the net income tax expense, reflecting a consistent alignment between accounting tax provisions and actual cash outflows for taxes.
- Correlation and Pandemic Impact (2018-2021)
- From 2018 to 2019, both income tax expense and cash operating taxes increased, with cash payments slightly exceeding accounting expenses. A sharp reversal occurred in 2020 and 2021, where both metrics shifted to negative values. This indicates a transition from tax payments to tax benefits, likely resulting from operational losses during this period, which generated tax assets or refunds.
- Stabilization Period (2022)
- In 2022, both figures returned to positive territory, with income tax expense recorded at 13 million USD and cash operating taxes at 10 million USD. This suggests a return to a taxable operational state where cash outflows were again aligned with the reported accounting expense.
- Anomalous Divergence (2023)
- A substantial decoupling occurred in 2023. While the income tax expense remained a modest 12 million USD, cash operating taxes dropped precipitously to negative 358 million USD. This massive discrepancy indicates a significant cash inflow related to taxes—potentially through the realization of deferred tax assets, large-scale tax refunds, or one-time regulatory settlements—that was not reflected in the periodic income tax expense.
The extreme volatility in cash operating taxes during 2023 creates a significant positive impact on the cash flow component of Economic Value Added (EVA) calculations, as the cash tax recovery far exceeds the accounting tax burden for that period.
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Invested Capital
Carnival Corp. & plc, invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to shareholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of ships under construction.
6 Subtraction of short-term investments.
Invested capital experienced a significant expansion between 2018 and 2020, peaking at US$ 49,017 million before entering a period of steady contraction through 2023. This trajectory reflects a fundamental shift in the capital structure, characterized by a transition from equity-heavy financing to a reliance on leveraged liabilities.
- Debt and Lease Obligations
- A sharp upward trend in total reported debt and leases is observed from 2018 to 2022, with values rising from US$ 10,686 million to a peak of US$ 35,881 million. This represents a substantial increase in leverage over a four-year period. A modest reduction followed in 2023, with debt levels decreasing to US$ 31,891 million.
- Shareholders' Equity
- Equity exhibited a consistent and severe decline throughout the analyzed period. After remaining relatively stable between 2018 and 2019, shareholders' equity dropped from US$ 20,555 million in 2020 to US$ 6,882 million by 2023. The most aggressive contraction occurred between 2020 and 2022, during which equity declined by approximately 65%.
- Capital Composition Dynamics
- The composition of invested capital shifted dramatically. In 2018, shareholders' equity was the primary component of the US$ 35,074 million in invested capital. By 2023, this relationship inverted; debt and leases became the dominant funding source, comprising the vast majority of the US$ 39,428 million in total invested capital, while the equity contribution reached its lowest point in the series.
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Cost of Capital
Carnival Corp. & plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 20,678) | 20,678) | ÷ | 51,725) | = | 0.40 | 0.40 | × | 33.63% | = | 13.44% | ||
| Debt3 | 29,728) | 29,728) | ÷ | 51,725) | = | 0.57 | 0.57 | × | 5.74% × (1 – -19.35%) | = | 3.94% | ||
| Operating lease liability4 | 1,319) | 1,319) | ÷ | 51,725) | = | 0.03 | 0.03 | × | 5.90% × (1 – -19.35%) | = | 0.18% | ||
| Total: | 51,725) | 1.00 | 17.56% | ||||||||||
Based on: 10-K (reporting date: 2023-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 14,322) | 14,322) | ÷ | 44,313) | = | 0.32 | 0.32 | × | 33.63% | = | 10.87% | ||
| Debt3 | 28,656) | 28,656) | ÷ | 44,313) | = | 0.65 | 0.65 | × | 5.89% × (1 – -0.21%) | = | 3.82% | ||
| Operating lease liability4 | 1,335) | 1,335) | ÷ | 44,313) | = | 0.03 | 0.03 | × | 5.20% × (1 – -0.21%) | = | 0.16% | ||
| Total: | 44,313) | 1.00 | 14.84% | ||||||||||
Based on: 10-K (reporting date: 2022-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 22,385) | 22,385) | ÷ | 56,229) | = | 0.40 | 0.40 | × | 33.63% | = | 13.39% | ||
| Debt3 | 32,463) | 32,463) | ÷ | 56,229) | = | 0.58 | 0.58 | × | 5.44% × (1 – 0.22%) | = | 3.13% | ||
| Operating lease liability4 | 1,381) | 1,381) | ÷ | 56,229) | = | 0.02 | 0.02 | × | 3.80% × (1 – 0.22%) | = | 0.09% | ||
| Total: | 56,229) | 1.00 | 16.61% | ||||||||||
Based on: 10-K (reporting date: 2021-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 20,897) | 20,897) | ÷ | 49,991) | = | 0.42 | 0.42 | × | 33.63% | = | 14.06% | ||
| Debt3 | 27,670) | 27,670) | ÷ | 49,991) | = | 0.55 | 0.55 | × | 7.07% × (1 – 0.17%) | = | 3.91% | ||
| Operating lease liability4 | 1,424) | 1,424) | ÷ | 49,991) | = | 0.03 | 0.03 | × | 3.40% × (1 – 0.17%) | = | 0.10% | ||
| Total: | 49,991) | 1.00 | 18.06% | ||||||||||
Based on: 10-K (reporting date: 2020-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,023) | 33,023) | ÷ | 46,942) | = | 0.70 | 0.70 | × | 33.63% | = | 23.66% | ||
| Debt3 | 12,030) | 12,030) | ÷ | 46,942) | = | 0.26 | 0.26 | × | 3.10% × (1 – 2.32%) | = | 0.78% | ||
| Operating lease liability4 | 1,889) | 1,889) | ÷ | 46,942) | = | 0.04 | 0.04 | × | 3.10% × (1 – 2.32%) | = | 0.12% | ||
| Total: | 46,942) | 1.00 | 24.55% | ||||||||||
Based on: 10-K (reporting date: 2019-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 40,529) | 40,529) | ÷ | 51,417) | = | 0.79 | 0.79 | × | 33.63% | = | 26.51% | ||
| Debt3 | 10,526) | 10,526) | ÷ | 51,417) | = | 0.20 | 0.20 | × | 2.80% × (1 – 1.71%) | = | 0.56% | ||
| Operating lease liability4 | 363) | 363) | ÷ | 51,417) | = | 0.01 | 0.01 | × | 2.80% × (1 – 1.71%) | = | 0.02% | ||
| Total: | 51,417) | 1.00 | 27.09% | ||||||||||
Based on: 10-K (reporting date: 2018-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Carnival Corp. & plc, economic spread ratio calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,717) | (11,037) | (15,591) | (18,165) | (6,186) | (6,162) | |
| Invested capital2 | 39,428) | 44,143) | 46,517) | 49,017) | 38,330) | 35,074) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -11.96% | -25.00% | -33.52% | -37.06% | -16.14% | -17.57% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Airbnb Inc. | 9.44% | 11.07% | -11.03% | — | — | — | |
| Booking Holdings Inc. | 14.72% | 3.87% | -13.58% | — | — | — | |
| Chipotle Mexican Grill Inc. | 7.01% | 2.81% | -1.68% | — | — | — | |
| DoorDash, Inc. | -39.16% | -52.94% | -39.45% | — | — | — | |
| McDonald’s Corp. | 8.50% | 5.70% | 8.13% | — | — | — | |
| Starbucks Corp. | 5.22% | 2.82% | 4.07% | -8.48% | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -4,717 ÷ 39,428 = -11.96%
4 Click competitor name to see calculations.
The financial performance from 2018 to 2023 is characterized by a period of severe economic value destruction followed by a consistent trend of recovery. Throughout the analyzed period, economic profit remained negative, indicating that the returns generated were insufficient to cover the cost of invested capital.
- Economic Profit Trends
- Economic profit remained relatively stable between 2018 and 2019 before experiencing a drastic decline in 2020, reaching a minimum of -18,165 million USD. Subsequent years demonstrate a steady recovery, with economic losses narrowing significantly to -4,717 million USD by November 30, 2023.
- Invested Capital Dynamics
- Invested capital showed a marked increase between 2019 and 2020, rising from 38,330 million USD to a peak of 49,017 million USD. Following this peak, a gradual contraction of the capital base is observed, with invested capital decreasing annually to reach 39,428 million USD by the end of 2023.
- Economic Spread Ratio Analysis
- The economic spread ratio exhibits a pattern of deep volatility and subsequent improvement. After a slight improvement in 2019, the ratio plummeted to -37.06% in 2020, marking the lowest point of efficiency relative to the cost of capital. From 2021 onward, the ratio improved steadily, ending at -11.96% in 2023. This trajectory indicates that while the company is still operating below its cost of capital, the gap is closing rapidly.
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Economic Profit Margin
Carnival Corp. & plc, economic profit margin calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,717) | (11,037) | (15,591) | (18,165) | (6,186) | (6,162) | |
| Revenues | 21,593) | 12,168) | 1,908) | 5,595) | 20,825) | 18,881) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -21.84% | -90.70% | -817.16% | -324.66% | -29.70% | -32.64% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Airbnb Inc. | 5.49% | 8.80% | -9.98% | — | — | — | |
| Booking Holdings Inc. | 7.87% | 3.09% | -18.59% | — | — | — | |
| Chipotle Mexican Grill Inc. | 4.25% | 1.75% | -1.22% | — | — | — | |
| DoorDash, Inc. | -23.75% | -42.78% | -25.65% | — | — | — | |
| McDonald’s Corp. | 16.69% | 11.17% | 16.70% | — | — | — | |
| Starbucks Corp. | 3.23% | 1.80% | 3.32% | -8.26% | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × -4,717 ÷ 21,593 = -21.84%
3 Click competitor name to see calculations.
The financial performance from fiscal year 2018 through 2023 is characterized by a period of severe economic contraction followed by a progressive recovery. Economic profit remained negative throughout the entire observed period, indicating that the company consistently failed to generate returns exceeding its cost of capital.
- Economic Profit Trends
- Economic losses were relatively stable between 2018 and 2019, ranging from US$ 6.162 billion to US$ 6.186 billion. A significant deterioration occurred in 2020, where losses peaked at US$ 18.165 billion. Since that nadir, a consistent recovery trend has been observed, with economic losses narrowing to US$ 11.037 billion in 2022 and further improving to US$ 4.717 billion by November 30, 2023, representing the lowest loss level in the six-year sequence.
- Revenue Performance
- Revenues exhibited extreme volatility, moving from US$ 20.825 billion in 2019 to a critical low of US$ 1.908 billion in 2021. This collapse in top-line performance underscores a period of minimal operational activity. However, a strong V-shaped recovery is evident, with revenues surging to US$ 12.168 billion in 2022 and reaching US$ 21.593 billion in 2023, effectively restoring revenue levels to exceed those seen in 2019.
- Economic Profit Margin Dynamics
- The economic profit margin experienced extreme fluctuations, reflecting the impact of collapsing revenues against sustained capital costs. The margin transitioned from -29.70% in 2019 to a peak negative value of -817.16% in 2021. As revenues rebounded and absolute economic losses decreased, the margin improved sharply to -90.70% in 2022 and -21.84% in 2023. The 2023 margin represents a significant improvement over pre-2020 levels, although the persistent negative value indicates that economic value is still not being created.
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