Stock Analysis on Net

Coca-Cola Co. (NYSE:KO)

Economic Value Added (EVA)

Microsoft Excel

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

Coca-Cola Co., economic profit calculation

US$ in millions

Microsoft Excel
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 10,945 10,884 10,120 11,202 8,649
Cost of capital2 9.94% 9.86% 9.80% 9.54% 9.20%
Invested capital3 86,857 83,542 79,959 80,311 75,674
 
Economic profit4 2,313 2,648 2,283 3,541 1,689

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
= 10,9459.94% × 86,857 = 2,313

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Coca-Cola Co. economic profit increased from 2022 to 2023 but then slightly decreased from 2023 to 2024 not reaching 2022 level.

Net Operating Profit after Taxes (NOPAT)

Coca-Cola Co., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to shareowners of The Coca-Cola Company 10,631 10,714 9,542 9,771 7,747
Deferred income tax expense (benefit)1 (11) (2) (122) 894 (18)
Increase (decrease) in allowances2 4 (14) (10) 2
Increase (decrease) in accrued expenses related to restructuring3 (3) (42) 6 (162) 136
Increase (decrease) in equity equivalents4 (10) (58) (116) 722 120
Interest expense 1,656 1,527 882 1,597 1,437
Interest expense, operating lease liability5 45 46 42 40 49
Adjusted interest expense 1,701 1,573 924 1,637 1,486
Tax benefit of interest expense6 (357) (330) (194) (344) (312)
Adjusted interest expense, after taxes7 1,344 1,243 730 1,293 1,174
(Gain) loss on marketable securities (325) (364) 367 (505) (153)
Interest income (988) (907) (449) (276) (370)
Investment income, before taxes (1,313) (1,271) (82) (781) (523)
Tax expense (benefit) of investment income8 276 267 17 164 110
Investment income, after taxes9 (1,037) (1,004) (65) (617) (413)
Net income (loss) attributable to noncontrolling interest 18 (11) 29 33 21
Net operating profit after taxes (NOPAT) 10,945 10,884 10,120 11,202 8,649

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 allowances.

3 Addition of increase (decrease) in accrued expenses related to restructuring.

4 Addition of increase (decrease) in equity equivalents to net income attributable to shareowners of The Coca-Cola Company.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,213 × 3.70% = 45

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,701 × 21.00% = 357

7 Addition of after taxes interest expense to net income attributable to shareowners of The Coca-Cola Company.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 1,313 × 21.00% = 276

9 Elimination of after taxes investment income.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Coca-Cola Co. NOPAT increased from 2022 to 2023 and from 2023 to 2024.

Cash Operating Taxes

Coca-Cola Co., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income taxes 2,437 2,249 2,115 2,621 1,981
Less: Deferred income tax expense (benefit) (11) (2) (122) 894 (18)
Add: Tax savings from interest expense 357 330 194 344 312
Less: Tax imposed on investment income 276 267 17 164 110
Cash operating taxes 2,529 2,314 2,414 1,907 2,201

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).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Coca-Cola Co. cash operating taxes decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level.

Invested Capital

Coca-Cola Co., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Loans and notes payable 1,499 4,557 2,373 3,307 2,183
Current maturities of long-term debt 648 1,960 399 1,338 485
Long-term debt, excluding current maturities 42,375 35,547 36,377 38,116 40,125
Operating lease liability1 1,213 1,362 1,454 1,471 1,622
Total reported debt & leases 45,735 43,426 40,603 44,232 44,415
Equity attributable to shareowners of The Coca-Cola Company 24,856 25,941 24,105 22,999 19,299
Net deferred tax (assets) liabilities2 1,150 1,078 1,168 692 (627)
Allowances3 506 502 516 516 526
Accrued expenses related to restructuring4 1 4 46 40 202
Equity equivalents5 1,657 1,584 1,730 1,248 101
Accumulated other comprehensive (income) loss, net of tax6 16,843 14,275 14,895 14,330 14,601
Equity attributable to noncontrolling interests 1,516 1,539 1,721 1,861 1,985
Adjusted equity attributable to shareowners of The Coca-Cola Company 44,872 43,339 42,451 40,438 35,986
Marketable securities7 (3,750) (3,223) (3,095) (4,359) (4,727)
Invested capital 86,857 83,542 79,959 80,311 75,674

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 accrued expenses related to restructuring.

5 Addition of equity equivalents to equity attributable to shareowners of The Coca-Cola Company.

6 Removal of accumulated other comprehensive income.

7 Subtraction of marketable securities.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Coca-Cola Co. invested capital increased from 2022 to 2023 and from 2023 to 2024.

Cost of Capital

Coca-Cola Co., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 301,242 301,242 ÷ 342,006 = 0.88 0.88 × 10.92% = 9.61%
Debt3 39,551 39,551 ÷ 342,006 = 0.12 0.12 × 3.44% × (1 – 21.00%) = 0.31%
Operating lease liability4 1,213 1,213 ÷ 342,006 = 0.00 0.00 × 3.70% × (1 – 21.00%) = 0.01%
Total: 342,006 1.00 9.94%

Based on: 10-K (reporting date: 2024-12-31).

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 261,766 261,766 ÷ 301,130 = 0.87 0.87 × 10.92% = 9.49%
Debt3 38,002 38,002 ÷ 301,130 = 0.13 0.13 × 3.59% × (1 – 21.00%) = 0.36%
Operating lease liability4 1,362 1,362 ÷ 301,130 = 0.00 0.00 × 3.40% × (1 – 21.00%) = 0.01%
Total: 301,130 1.00 9.86%

Based on: 10-K (reporting date: 2023-12-31).

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 258,736 258,736 ÷ 295,261 = 0.88 0.88 × 10.92% = 9.56%
Debt3 35,071 35,071 ÷ 295,261 = 0.12 0.12 × 2.40% × (1 – 21.00%) = 0.23%
Operating lease liability4 1,454 1,454 ÷ 295,261 = 0.00 0.00 × 2.90% × (1 – 21.00%) = 0.01%
Total: 295,261 1.00 9.80%

Based on: 10-K (reporting date: 2022-12-31).

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 270,013 270,013 ÷ 315,102 = 0.86 0.86 × 10.92% = 9.35%
Debt3 43,618 43,618 ÷ 315,102 = 0.14 0.14 × 1.61% × (1 – 21.00%) = 0.18%
Operating lease liability4 1,471 1,471 ÷ 315,102 = 0.00 0.00 × 2.70% × (1 – 21.00%) = 0.01%
Total: 315,102 1.00 9.54%

Based on: 10-K (reporting date: 2021-12-31).

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 216,198 216,198 ÷ 263,221 = 0.82 0.82 × 10.92% = 8.97%
Debt3 45,401 45,401 ÷ 263,221 = 0.17 0.17 × 1.59% × (1 – 21.00%) = 0.22%
Operating lease liability4 1,622 1,622 ÷ 263,221 = 0.01 0.01 × 3.00% × (1 – 21.00%) = 0.01%
Total: 263,221 1.00 9.20%

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Coca-Cola Co., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 2,313 2,648 2,283 3,541 1,689
Invested capital2 86,857 83,542 79,959 80,311 75,674
Performance Ratio
Economic spread ratio3 2.66% 3.17% 2.86% 4.41% 2.23%
Benchmarks
Economic Spread Ratio, Competitors4
Mondelēz International Inc. 0.05% -0.11% -3.91% -0.91% -2.06%
PepsiCo Inc. 5.53% 4.45% 4.43% 4.98% 3.64%
Philip Morris International Inc. 8.17% 8.80% 11.75% 25.93% 19.60%

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 × 2,313 ÷ 86,857 = 2.66%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Coca-Cola Co. economic spread ratio improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.

Economic Profit Margin

Coca-Cola Co., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1 2,313 2,648 2,283 3,541 1,689
Net operating revenues 47,061 45,754 43,004 38,655 33,014
Performance Ratio
Economic profit margin2 4.91% 5.79% 5.31% 9.16% 5.12%
Benchmarks
Economic Profit Margin, Competitors3
Mondelēz International Inc. 0.09% -0.18% -7.93% -1.94% -4.75%
PepsiCo Inc. 4.61% 3.65% 3.56% 4.37% 3.63%
Philip Morris International Inc. 10.43% 12.87% 17.56% 24.16% 21.83%

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 ÷ Net operating revenues
= 100 × 2,313 ÷ 47,061 = 4.91%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Coca-Cola Co. economic profit margin improved from 2022 to 2023 but then deteriorated significantly from 2023 to 2024.