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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Coca-Cola Co. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) 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 from 2021 to 2025 is characterized by a period of volatility in economic value creation, concluding with a significant expansion in the final year. Although the cost of capital rose consistently throughout the period, the ability to generate economic profit remained positive, peaking in 2025.
- Net Operating Profit After Taxes (NOPAT)
- A decline in NOPAT is observed between 2021 and 2022, dropping from $11,202 million to $10,120 million. This was followed by a period of gradual recovery through 2024, culminating in a substantial increase to $14,042 million by the end of 2025, representing a significant improvement in operational profitability.
- Cost of Capital
- The cost of capital exhibits a steady upward trajectory, rising from 8.31% in 2021 to 8.73% in 2025. This consistent increase suggests a higher hurdle rate for investments, meaning the company required greater returns on its capital to avoid value destruction.
- Invested Capital
- Invested capital remained relatively flat between 2021 and 2022 but entered a phase of consistent growth from 2023 onward. The capital base expanded from $79,959 million in 2022 to $92,902 million in 2025, indicating increased investment in the company's operational assets.
- Economic Profit Analysis
- Economic profit experienced a notable contraction in 2022, falling to $3,288 million, and remained under pressure through 2024. However, the trend reversed sharply in 2025, with economic profit reaching $5,935 million. This surge indicates that the growth in NOPAT in 2025 was sufficient to overcome both the rising cost of capital and the increased amount of invested capital, leading to enhanced shareholder value creation.
Net Operating Profit after Taxes (NOPAT)
Coca-Cola Co., NOPAT calculation
US$ 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 creation reveals a period of volatility between 2021 and 2024, followed by a significant expansion in value generation by the end of 2025. While invested capital grew steadily in the latter half of the period, the efficiency of this capital—as measured by the economic spread—experienced fluctuations before reaching a five-year peak.
- Economic Profit Trends
- Economic profit exhibited a downward trajectory initially, falling from US$ 4,527 million in 2021 to US$ 3,288 million in 2022. A modest recovery occurred in 2023, followed by a slight decline to US$ 3,410 million in 2024. However, a substantial increase is observed in 2025, with economic profit rising to US$ 5,935 million, marking the highest value within the analyzed timeframe.
- Invested Capital Growth
- Invested capital remained relatively stable between 2021 and 2022, with a marginal decrease from US$ 80,311 million to US$ 79,959 million. From 2023 onward, a consistent upward trend is evident, with capital increasing to US$ 83,542 million in 2023, US$ 86,857 million in 2024, and ultimately reaching US$ 92,902 million in 2025. This indicates a sustained expansion of the capital base used to generate returns.
- Economic Spread Ratio Performance
- The economic spread ratio, which reflects the difference between the return on invested capital and the cost of capital, mirrored the volatility of economic profit. The ratio declined from 5.64% in 2021 to 4.11% in 2022, with a slight correction to 4.42% in 2023 before hitting a period low of 3.93% in 2024. A sharp reversal occurred in 2025, where the ratio climbed to 6.39%, suggesting a significant improvement in the company's ability to generate returns above its cost of capital relative to the scale of its investments.
The convergence of increasing invested capital and a rising economic spread ratio in 2025 indicates a highly positive phase of value creation. The ability to increase the spread ratio while simultaneously expanding the capital base suggests improved operational efficiency or a more favorable cost of capital environment toward the end of the period.
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 trajectory from 2021 to 2025 is characterized by steady growth in net operating revenues contrasted with significant volatility in economic profit and the resulting economic profit margin.
- Net Operating Revenue Trend
- Net operating revenues exhibited a consistent upward trajectory, increasing annually from 38,655 million US dollars in 2021 to 47,941 million US dollars in 2025. This indicates a sustained expansion of the operational scale over the five-year period.
- Economic Profit Volatility
- Economic profit experienced notable fluctuations. A decrease was observed between 2021 and 2022, falling from 4,527 million US dollars to 3,288 million US dollars. While a slight recovery occurred in 2023, the figure declined again in 2024 to 3,410 million US dollars. This trend reversed sharply in 2025, with economic profit reaching a period high of 5,935 million US dollars.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of the absolute economic profit. A significant contraction occurred between 2021 and 2022, with the margin dropping from 11.71% to 7.64%. Between 2022 and 2024, the margin remained relatively stagnant, fluctuating within a narrow range between 7.24% and 8.06%. The period concluded with a substantial expansion in 2025, as the margin rose to 12.38%, representing the highest efficiency in generating economic value relative to revenue during the analyzed timeframe.