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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Chipotle Mexican Grill Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Enterprise Value (EV)
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Economic Profit
Chipotle Mexican Grill Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial performance, as measured by economic profit, demonstrates a clear improving trend over the five-year period. Initially, the company experienced economic losses, but transitioned to generating positive economic profit in recent years. This shift is driven by increases in net operating profit after taxes and, to a lesser extent, changes in invested capital and the cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a consistent upward trajectory throughout the period, increasing from US$613,981 thousand in 2020 to US$1,706,003 thousand in 2024. This represents a substantial growth in operational profitability. The rate of increase appears to have accelerated between 2022 and 2024.
- Cost of Capital
- The cost of capital remained relatively stable, fluctuating within a narrow range between 19.45% and 19.87% over the five years. A slight increase is observed in 2023, followed by a minor decrease in 2024, but these changes are minimal and do not appear to significantly impact economic profit.
- Invested Capital
- Invested capital generally increased over the period, rising from US$4,937,915 thousand in 2020 to US$6,827,838 thousand in 2024. However, a slight decrease was noted between 2021 and 2022. The most significant increase occurred between 2023 and 2024, coinciding with the largest increase in NOPAT.
- Economic Profit
- Economic profit transitioned from negative values in 2020 (-US$354,966 thousand) and 2021 (-US$282,238 thousand) to near zero in 2022 (-US$23,472 thousand). Positive economic profit was achieved in 2023 (US$209,329 thousand) and continued to grow substantially in 2024 (US$350,480 thousand). This indicates that the company is now generating returns exceeding its cost of capital.
The positive trend in economic profit suggests improved capital allocation and enhanced shareholder value creation. The substantial growth in NOPAT, coupled with a relatively stable cost of capital, is the primary driver of this improvement. Continued monitoring of these metrics will be crucial to assess the sustainability of this positive performance.
Net Operating Profit after Taxes (NOPAT)
Chipotle Mexican Grill Inc., NOPAT calculation
US$ in thousands
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 credit losses.
3 Addition of increase (decrease) in unearned revenue.
4 Addition of increase (decrease) in restructuring liability.
5 Addition of increase (decrease) in equity equivalents to net income.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 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.
The financial data over the five-year period reveals a consistent upward trend in both net income and net operating profit after taxes (NOPAT).
- Net Income
- Net income has shown significant growth each year, starting at 355,766 thousand US dollars in 2020 and increasing steadily to 1,534,110 thousand US dollars by 2024. This represents a more than fourfold increase over the period, indicating strong profitability improvements and potentially effective cost management or revenue growth strategies.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also displays a continuous rise from 613,981 thousand US dollars in 2020 to 1,706,003 thousand US dollars in 2024. The growing NOPAT suggests enhanced operational efficiency and profitability, reflecting the company's ability to generate higher returns from its core operations after accounting for tax expenses.
Overall, the data illustrates robust financial performance, with net income and NOPAT improving substantially year over year. The parallel growth in both metrics underlines consistent operational success coupled with effective tax management. This positive trajectory indicates favorable prospects if the trends continue.
Cash Operating Taxes
Chipotle Mexican Grill Inc., cash operating taxes calculation
US$ in thousands
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 data reveals a consistent upward trend in both provision (benefit) for income taxes and cash operating taxes over the analyzed periods from 2020 to 2024.
- Provision (benefit) for income taxes (US$ in thousands)
- Initially, there was a negative value of -61,985 in 2020, indicating a tax benefit. However, this shifted to a positive figure in 2021, reaching 159,779, and continued to increase each subsequent year, culminating in 476,120 by 2024.
- Cash operating taxes (US$ in thousands)
- Similarly, cash operating taxes moved from a negative amount of -130,767 in 2020 to a positive 213,319 in 2021, with continuous growth each year thereafter. The amount more than doubled from 452,292 in 2023 to 573,988 in 2024.
The transition from negative to positive tax provisions and cash payments in 2021 suggests a significant change in the tax position or profitability of the company starting that year. The steady increase in both metrics through 2024 may indicate increasing taxable income or changes in tax rates or policies applied to the company. Additionally, the gap between provision for income taxes and cash operating taxes is evident and appears to widen over time, which could point to differences in deferred tax accounting effects or timing differences in tax payments.
Invested Capital
Chipotle Mexican Grill Inc., invested capital calculation (financing approach)
US$ in thousands
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 unearned revenue.
5 Addition of restructuring liability.
6 Addition of equity equivalents to shareholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in Progress.
9 Subtraction of debt investments.
The financial data reveals consistent growth in key capital structure components over the observed five-year period.
- Total reported debt & leases
- There is a steady increase in total reported debt and lease obligations, rising from approximately $3.16 billion in 2020 to about $4.54 billion in 2024. The growth trend is continuous year-over-year, indicating an increasing reliance on leverage or lease obligations to finance operations or expansion initiatives.
- Shareholders’ equity
- Shareholders' equity shows a positive and notable growth trend, expanding from around $2.02 billion in 2020 to nearly $3.66 billion in 2024. The equity increases are more pronounced from 2022 onwards, suggesting retained earnings accumulation, equity infusion, or improved profitability driving the net asset value upwards.
- Invested capital
- Invested capital, representing the total amount of capital used for operations, also demonstrates an overall upward trend. It rises from about $4.94 billion in 2020 to approximately $6.83 billion in 2024, with a slight dip noted in 2022 relative to 2021. The rebound following 2022 highlights expansion or reinvestment efforts surpassing the previous year's level.
Overall, the data indicates a firm that is progressively increasing both its debt and equity bases to support growing invested capital. The increasing equity base alongside rising debt suggests balanced financing efforts, potentially enhancing financial flexibility and capacity for continued growth.
Cost of Capital
Chipotle Mexican Grill Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Operating lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
Economic Spread Ratio
Chipotle Mexican Grill 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 thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio demonstrates a clear improving trend over the five-year period. Initially negative, the ratio transitions to positive values, indicating a growing ability to generate returns exceeding the cost of capital.
- Economic Spread Ratio
- In 2020, the economic spread ratio stood at -7.19%, representing a substantial shortfall in returns relative to invested capital. This negative value persisted in 2021, although it improved to -5.13%. A significant shift occurred in 2022, with the ratio nearing parity at -0.43%, suggesting a considerable reduction in the gap between returns and the cost of capital.
- The year 2023 marked a turning point, as the economic spread ratio became positive at 3.48%. This positive trend continued into 2024, with the ratio reaching 5.13%, indicating a robust generation of value above the cost of capital.
The progression of the economic spread ratio aligns with the trend in economic profit. While economic profit was negative in 2020, 2021, and 2022, it became positive in 2023 and further increased in 2024. This correlation suggests that improvements in the economic spread ratio directly contribute to increased economic profit.
- Invested Capital
- Invested capital consistently increased throughout the period, rising from US$4,937,915 thousand in 2020 to US$6,827,838 thousand in 2024. Despite this growth in capital employed, the improving economic spread ratio demonstrates an increasing efficiency in utilizing those resources to generate returns.
The observed pattern suggests a strengthening financial performance, characterized by an increasing capacity to generate returns that exceed the cost of capital. The positive economic spread ratio in the latter two years indicates successful value creation.
Economic Profit Margin
Chipotle Mexican Grill Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Booking Holdings Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 ÷ Adjusted revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin demonstrates a clear improving trend over the five-year period. Initially negative, the metric transitions to positive values, indicating increasing value creation for stakeholders.
- Economic Profit Margin
- In 2020, the economic profit margin stood at -5.90%, representing a substantial economic loss. This figure improved to -3.73% in 2021, suggesting a reduction in the magnitude of the economic loss, though remaining negative. The trend continued positively in 2022, with the margin reaching -0.27%, indicating near break-even performance from an economic perspective.
- A significant shift occurred in 2023, as the economic profit margin turned positive, reaching 2.11%. This signifies that the company generated economic profit, exceeding the cost of capital. The upward trajectory continued into 2024, with the economic profit margin further increasing to 3.09%, demonstrating sustained value creation and improved financial performance.
The progression from negative to positive economic profit margins correlates with increases in adjusted revenue. While economic profit was negative in 2020 and 2021, the absolute value decreased, coinciding with revenue growth. The substantial revenue increases observed in 2022, 2023, and 2024 are accompanied by increasingly positive economic profit margins, suggesting improved operational efficiency and capital allocation.
The consistent improvement in the economic profit margin indicates a strengthening ability to generate returns above the cost of capital. This trend is favorable and suggests enhanced financial health and potential for future growth.