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:
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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Economic Profit
Coca-Cola Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial performance between 2021 and 2025 is characterized by a period of volatility in operational profitability and a steady increase in the cost of funding, culminating in a significant expansion of economic profit by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- A contraction was observed in 2022, with NOPAT decreasing to 10,120 million US dollars from 11,202 million US dollars in 2021. This was followed by a gradual recovery through 2024, ending in a substantial increase to 14,042 million US dollars by December 31, 2025, signaling a strong improvement in operational earnings.
- Cost of Capital
- A consistent upward trend is evident in the cost of capital, which rose incrementally from 8.34% in 2021 to 8.76% in 2025. This suggests a progressive increase in the required rate of return or a rise in the cost of financing over the five-year period.
- Invested Capital
- After a slight decrease in 2022 to 79,959 million US dollars, invested capital entered a phase of steady expansion. By December 31, 2025, the capital base reached 92,902 million US dollars, indicating a strategic increase in the deployment of resources into the business.
- Economic Profit
- Economic profit exhibited volatility, dropping from 4,501 million US dollars in 2021 to 3,261 million US dollars in 2022. Although levels fluctuated between 2023 and 2024, a sharp increase occurred in 2025, reaching 5,904 million US dollars. Because the economic profit remained positive throughout the entire period, it is concluded that the company consistently generated returns in excess of its cost of capital, with the 2025 results demonstrating a heightened capacity for value creation despite the simultaneous rise in both the cost of capital and the total invested capital base.
Net Operating Profit after Taxes (NOPAT)
Coca-Cola Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 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 2025 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 and net operating profit after taxes (NOPAT) exhibited distinct patterns over the five-year period. While net income experienced fluctuations, NOPAT demonstrated a generally positive trajectory, particularly in the later years.
- NOPAT Trend
- NOPAT decreased from US$11,202 million in 2021 to US$10,120 million in 2022, representing a decline of approximately 9.6%. This was followed by a period of relative stability, with NOPAT reaching US$10,884 million in 2023 and US$10,945 million in 2024. A significant increase is then observed in 2025, with NOPAT rising to US$14,042 million. This represents a substantial year-over-year growth of approximately 28.3% from 2024.
- Net Income Trend
- Net income attributable to shareowners decreased from US$9,771 million in 2021 to US$9,542 million in 2022, a decrease of approximately 2.4%. It then increased to US$10,714 million in 2023, followed by a slight decrease to US$10,631 million in 2024. A notable increase occurred in 2025, with net income reaching US$13,107 million, representing a 23.3% increase from 2024.
- Relationship between NOPAT and Net Income
- While both metrics generally trended upwards from 2022 to 2025, NOPAT consistently exceeded net income attributable to shareowners throughout the observed period. The difference between the two metrics suggests the presence of significant non-operating items or differences in accounting treatment impacting reported net income. The larger increase in NOPAT in 2025, compared to net income, further emphasizes this divergence.
The observed increase in both NOPAT and net income in 2025 warrants further investigation to determine the underlying drivers of this growth. The initial decline in NOPAT in 2022 also merits attention to understand the contributing factors and whether they represent a temporary fluctuation or a more persistent issue.
Cash Operating Taxes
Coca-Cola Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported income taxes and cash operating taxes exhibit distinct patterns over the five-year period. Income taxes generally increased, while cash operating taxes demonstrated more fluctuation.
- Income Taxes
- Income taxes decreased from US$2,621 million in 2021 to US$2,115 million in 2022, representing a notable decline. Subsequently, income taxes increased each year, reaching US$2,861 million in 2025. This indicates a consistent upward trend in reported income taxes following the initial decrease.
- Cash Operating Taxes
- Cash operating taxes increased significantly from US$1,907 million in 2021 to US$2,414 million in 2022. This was followed by a slight decrease to US$2,314 million in 2023. Further increases were observed in 2024, reaching US$2,529 million, before a modest decline to US$2,450 million in 2025. The pattern suggests a generally higher level of cash taxes compared to the earlier period, with some year-to-year variability.
- Relationship between Income Taxes and Cash Operating Taxes
- While both metrics generally trended upwards over the period, cash operating taxes were consistently lower than reported income taxes in each year. The difference between the two varied, but suggests the presence of timing differences or non-cash tax items impacting the reported income tax expense. The gap narrowed in 2022 and 2023, then widened again in 2024 and 2025.
The fluctuations in cash operating taxes may warrant further investigation to understand the underlying drivers, such as changes in tax credits, deferred tax assets/liabilities, or tax planning strategies. The increasing trend in income taxes, despite the variability in cash taxes, suggests a growing tax burden overall.
Invested Capital
Coca-Cola Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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.
The reported invested capital exhibited an overall increasing trend throughout the observed period. While fluctuations occurred, the company consistently reinvested in its operations, as reflected in the growth of invested capital from 2021 to 2025.
- Total Reported Debt & Leases
- Total reported debt and leases decreased from US$44,232 million in 2021 to US$40,603 million in 2022, indicating a reduction in financial leverage. However, debt levels subsequently increased, reaching US$47,214 million by 2025. This suggests a renewed reliance on debt financing in later years, potentially to fund expansion or acquisitions.
- Equity Attributable to Shareowners
- Equity attributable to shareowners demonstrated growth from US$22,999 million in 2021 to US$25,941 million in 2023. A slight decrease was observed in 2024, falling to US$24,856 million, before a substantial increase to US$32,169 million in 2025. This indicates strengthening shareholder equity, with a particularly significant boost in the final year of the period.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2022, fluctuating around US$80 billion. A noticeable increase occurred in 2023, reaching US$83,542 million, and continued upward through 2025, culminating in US$92,902 million. This consistent growth suggests ongoing investment in the business, potentially through a combination of debt and equity financing. The increase in invested capital outpaced the growth in equity during the latter part of the period, indicating a greater reliance on debt to fund these investments.
The interplay between debt and equity in financing invested capital warrants further investigation. The increasing debt levels alongside growing invested capital suggest a potential shift in the company’s capital structure. The substantial increase in equity in 2025 may indicate successful profitability or strategic financial maneuvers.
Cost of Capital
Coca-Cola Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Coca-Cola Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis of economic value added indicates a period of fluctuation in value creation followed by a significant expansion by the end of the observed timeframe. While the capital base grew steadily, the ability to generate economic profit above the cost of capital experienced a period of compression before reaching a five-year peak in 2025.
- Economic Profit Trends
- Economic profit exhibited volatility between 2021 and 2024, declining from US$ 4,501 million in 2021 to a low of US$ 3,261 million in 2022, and fluctuating marginally through 2024. A substantial recovery is observed in 2025, with economic profit rising to US$ 5,904 million, representing a significant increase in the absolute value generated beyond the required return on capital.
- Invested Capital Expansion
- Following a marginal decrease between 2021 and 2022, invested capital entered a phase of consistent growth. The capital base expanded from US$ 79,959 million in 2022 to US$ 92,902 million by 2025. This steady upward trajectory indicates an increase in the total resources deployed to generate returns.
- Economic Spread Ratio Dynamics
- The economic spread ratio experienced a downward trend for the majority of the period, falling from 5.60% in 2021 to a period low of 3.89% in 2024. This decline suggests that the margin between the return on invested capital and the cost of capital narrowed, indicating reduced capital efficiency. However, this trend reversed sharply in 2025, with the ratio ascending to 6.36%, signaling a marked improvement in the efficiency of value creation relative to the invested capital base.
Economic Profit Margin
Coca-Cola Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by consistent growth in net operating revenues contrasted by volatility in economic profit and its associated margin. While the top-line figures demonstrate a steady upward trajectory, the ability to generate economic value above the cost of capital fluctuated significantly before reaching a peak in the final year of the period.
- Net Operating Revenues
- A continuous growth trend is observed in net operating revenues, which increased from 38,655 million US$ in 2021 to 47,941 million US$ by 2025. This represents a steady expansion of the operational scale over the five-year duration.
- Economic Profit
- Economic profit exhibited significant instability. Following a decline from 4,501 million US$ in 2021 to 3,261 million US$ in 2022, the value remained relatively suppressed through 2024, oscillating between 3,381 million US$ and 3,661 million US$. A substantial recovery occurred in 2025, with economic profit rising to 5,904 million US$, marking the highest value in the observed period.
- Economic Profit Margin
- The economic profit margin mirrored the volatility of the absolute economic profit. The margin contracted sharply from 11.64% in 2021 to 7.58% in 2022, indicating that revenue growth during this phase did not translate into proportional economic value creation. This compressed margin persisted through 2024, reaching a low of 7.18%. However, 2025 saw a significant expansion to 12.32%, suggesting a marked improvement in capital efficiency and value generation relative to revenue.
The divergence between steady revenue growth and fluctuating economic profit suggests that external pressures or internal capital costs impacted value creation between 2022 and 2024. The sharp increase in both economic profit and margin in 2025 indicates a successful realignment of operational returns relative to the cost of capital.