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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Coca-Cola Co. pages available for free this week:
- Income Statement
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Coca-Cola Co., economic profit calculation
US$ in millions
| 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
= – × =
- Net operating profit after taxes (NOPAT)
- The net operating profit after taxes exhibited an overall upward trend from 2020 to 2024. Starting at $8,649 million in 2020, it increased significantly to $11,202 million in 2021. However, there was a slight dip in 2022 to $10,120 million, followed by a recovery in 2023 and 2024, reaching $10,884 million and $10,945 million respectively. This indicates generally strong and stable profitability with minor fluctuations.
- Cost of capital
- The cost of capital showed a steady increase throughout the five-year period, rising from 9.25% in 2020 to 9.99% in 2024. This gradual increase suggests a rising risk perception or higher capital market costs faced by the company, potentially impacting investment and financing decisions.
- Invested capital
- The invested capital grew consistently over the years, from $75,674 million in 2020 to $86,857 million in 2024. This steady increase reflects ongoing investment in the company’s asset base or operating capacity, which could be aligned with growth strategies or maintenance of competitive positioning.
- Economic profit
- Economic profit, representing value creation beyond the cost of capital, showed volatility. It rose sharply from $1,650 million in 2020 to a peak of $3,497 million in 2021. Subsequently, it declined to $2,239 million in 2022, increased modestly to $2,602 million in 2023, and decreased again to $2,265 million in 2024. Despite fluctuations, economic profit remained positive, indicating consistent value generation above capital costs but with variability that might warrant attention.
Net Operating Profit after Taxes (NOPAT)
Coca-Cola Co., NOPAT calculation
US$ in millions
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
= × =
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income Attributable to Shareowners
-
The net income attributable to shareowners shows a generally positive trend over the five-year period. Starting at 7,747 million US dollars at the end of 2020, there was a significant increase to 9,771 million in 2021. Although the net income slightly declined to 9,542 million in 2022, it rebounded in 2023 to reach the highest value of 10,714 million. A marginal decrease occurred again in 2024, with net income at 10,631 million, which still represents a notable improvement compared to the initial figure in 2020.
- Net Operating Profit After Taxes (NOPAT)
-
The NOPAT figures also demonstrate an upward trajectory with some fluctuations. Beginning at 8,649 million US dollars in 2020, there was an increase to 11,202 million in 2021. This was followed by a decline to 10,120 million in 2022. Subsequently, NOPAT rose again to 10,884 million in 2023 and continued to increase slightly to 10,945 million by the end of 2024. Overall, the NOPAT values reflect growth over the period, despite the intermittent decreases.
- Comparative Insights
-
Both net income and NOPAT exhibited growth from 2020 through 2024, though neither metric maintained a strictly linear progression. The year 2021 marked a peak for both measures within the period, followed by declines in 2022. Recovery occurred in subsequent years, with net income reaching a maximum in 2023 before a slight drop in 2024, whereas NOPAT progressed to its highest point at the end of 2024. These trends suggest volatility but overall improved profitability and operational efficiency over the five-year span.
Cash Operating Taxes
Coca-Cola Co., cash operating taxes calculation
US$ in millions
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).
- Income Taxes
- Income taxes show a fluctuating trend over the reported periods. The value increased significantly from 1981 million US dollars in 2020 to 2621 million in 2021, indicating a rise in tax expenses. However, in 2022, there was a notable decrease to 2115 million US dollars. From 2022 onward, the income taxes resumed an upward trajectory, reaching 2249 million in 2023 and further increasing to 2437 million in 2024. Overall, the trend exhibits variability with a dip in 2022 amid a general tendency to increase.
- Cash Operating Taxes
- Cash operating taxes demonstrated a somewhat irregular pattern over the five-year span. Starting at 2201 million US dollars in 2020, there was a decline to 1907 million in 2021, suggesting reduced cash tax payments despite the prior increase in income taxes. The figure rebounded sharply in 2022 to 2414 million, surpassing the initial 2020 value. Slight reductions followed in 2023 to 2314 million, but the amount rose again in 2024, reaching the highest point of 2529 million US dollars. These fluctuations may reflect changes in taxable income, timing differences, or tax planning actions affecting cash tax outflows.
Invested Capital
Coca-Cola Co., invested capital calculation (financing approach)
US$ in millions
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.
- Total reported debt & leases
-
This financial metric experienced a general decline from 44,415 million US dollars in 2020 to 40,603 million US dollars in 2022. However, a reversal of this trend is observed in the subsequent years, with debt rising to 43,426 million US dollars in 2023 and continuing to increase to 45,735 million US dollars in 2024. This indicates an initial reduction in the company's leverage followed by a renewed accumulation of debt and lease obligations in the last two reported periods.
- Equity attributable to shareowners of The Coca-Cola Company
-
Equity shows a consistent upward trend from 19,299 million US dollars in 2020, rising to 22,999 million in 2021, further increasing to 24,105 million in 2022, and reaching its peak at 25,941 million in 2023. However, a slight decrease to 24,856 million occurs in 2024. Overall, the equity base has strengthened significantly over the period, reflecting potential retained earnings growth or capital infusions, despite a modest decline in the final year.
- Invested capital
-
Invested capital generally increased over the entire period. Starting from 75,674 million US dollars in 2020, it grew steadily to 80,311 million in 2021. A slight dip followed in 2022 to 79,959 million, but the upward momentum resumed with figures rising to 83,542 million in 2023 and 86,857 million in 2024. This suggests ongoing investment activities, possibly including both debt and equity financing components, resulting in a growing capital base employed by the company.
Cost of Capital
Coca-Cola Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Coca-Cola Co., 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 millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
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.
- Economic Profit
- Economic profit experienced a significant increase from 1650 million USD in 2020 to a peak of 3497 million USD in 2021. However, it declined in 2022 to 2239 million USD, followed by a modest recovery in 2023 to 2602 million USD, and then a further decrease in 2024 to 2265 million USD. Despite fluctuations, the economic profit in 2024 remains higher than the initial 2020 figure, indicating some long-term value generation.
- Invested Capital
- Invested capital showed a steady upward trend over the five-year period. Starting at 75,674 million USD in 2020, it gradually increased year over year to reach 86,857 million USD by the end of 2024. This consistent rise suggests ongoing investment or asset accumulation within the company.
- Economic Spread Ratio
- The economic spread ratio, which represents the return spread over invested capital, rose sharply from 2.18% in 2020 to a high of 4.35% in 2021. Subsequently, it declined to 2.8% in 2022, improved slightly to 3.11% in 2023, and then decreased again to 2.61% in 2024. The overall movement indicates variability in the company’s ability to generate returns above its cost of capital, with the highest efficiency in 2021 and more moderate performance in later years.
Economic Profit Margin
Coca-Cola Co., 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 millions) | ||||||
| Economic profit1 | ||||||
| Net operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
- Net Operating Revenues
- There is a consistent upward trend in net operating revenues over the five-year period. From approximately $33.0 billion in 2020, revenues increased to about $38.7 billion in 2021, followed by continued growth to $43.0 billion in 2022, $45.8 billion in 2023, and reaching $47.1 billion in 2024. This represents a steady expansion in the company's top-line performance.
- Economic Profit
- The economic profit exhibits variability despite the growing revenues. It increased significantly from $1.65 billion in 2020 to $3.50 billion in 2021, indicating a substantial improvement in profitability for that year. However, economic profit declined to $2.24 billion in 2022, rose moderately again to $2.60 billion in 2023, and then decreased to $2.27 billion in 2024. This fluctuation suggests that profitability gains have not been consistently sustained in proportion to revenue growth.
- Economic Profit Margin
- The economic profit margin, expressing economic profit as a percentage of net operating revenues, reflects the changing efficiency in generating value above the cost of capital. The margin rose sharply from 5.00% in 2020 to 9.05% in 2021, corresponding with the economic profit increase. Subsequently, the margin declined to 5.21% in 2022, experienced a slight recovery to 5.69% in 2023, and dropped again to 4.81% in 2024. This pattern aligns with the economic profit trend, indicating variable efficiency in capital utilization despite growing revenues.
- Summary
- Over the observed period, the company demonstrated robust revenue growth, yet economic profit and its margin showed volatility. The sharp increase in 2021's economic profit and margin suggests temporary improvements in operational efficiency or cost management. However, subsequent years indicate challenges in consistently converting higher revenues into proportional economic profits. This points to potential pressures on profit margins or increased costs that may merit further investigation to understand their drivers and implications on long-term value creation.