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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Hershey Co., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net operating profit after taxes (NOPAT)¹	1,821,868)	1,600,256)	1,432,349)	1,243,570)	1,303,042)
Cost of capital²	7.85%	7.60%	7.50%	7.67%	7.38%
Invested capital³	8,759,552)	8,529,610)	7,520,057)	6,702,394)	6,545,593)

Economic profit⁴	1,134,258)	952,283)	868,061)	729,511)	819,907)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,821,868 – 7.85% × 8,759,552 = 1,134,258

Download chart

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.	Hershey Co. economic profit increased from 2020 to 2021 and from 2021 to 2022.

Hershey Co., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Net income attributable to The Hershey Company	1,644,817)	1,477,512)	1,278,708)	1,149,692)	1,177,562)
Deferred income tax expense (benefit)¹	36,889)	13,374)	26,880)	(15,072)	36,255)
Increase (decrease) in allowances for doubtful accounts, anticipated discounts and write-offs of uncollectible accounts receivable²	(2,836)	3,862)	9)	356)	(17,182)
Increase (decrease) in LIFO reserve³	26,071)	(8,961)	5,484)	(8,730)	(2,532)
Increase (decrease) in equity equivalents⁴	60,124)	8,275)	32,373)	(23,446)	16,541)
Interest expense	140,095)	129,846)	153,471)	152,122)	146,858)
Interest expense, operating lease liability⁵	10,452)	10,763)	8,301)	8,108)	7,302)
Adjusted interest expense	150,547)	140,609)	161,772)	160,230)	154,160)
Tax benefit of interest expense⁶	(31,615)	(29,528)	(33,972)	(33,648)	(32,374)
Adjusted interest expense, after taxes⁷	118,932)	111,081)	127,800)	126,582)	121,786)
Interest income	(2,538)	(2,429)	(4,097)	(7,997)	(8,021)
Investment income, before taxes	(2,538)	(2,429)	(4,097)	(7,997)	(8,021)
Tax expense (benefit) of investment income⁸	533)	510)	860)	1,679)	1,684)
Investment income, after taxes⁹	(2,005)	(1,919)	(3,237)	(6,318)	(6,337)
Net income (loss) attributable to noncontrolling interest	—)	5,307)	(3,295)	(2,940)	(6,511)
Net operating profit after taxes (NOPAT)	1,821,868)	1,600,256)	1,432,349)	1,243,570)	1,303,042)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances for doubtful accounts, anticipated discounts and write-offs of uncollectible accounts receivable.

³ Addition of increase (decrease) in LIFO reserve. See details »

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to The Hershey Company.

⁵ 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 326,636 × 3.20% = 10,452

⁶ 2022 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 150,547 × 21.00% = 31,615

⁷ Addition of after taxes interest expense to net income attributable to The Hershey Company.

⁸ 2022 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 2,538 × 21.00% = 533

⁹ Elimination of after taxes investment income.

Download chart

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.	Hershey Co. NOPAT increased from 2020 to 2021 and from 2021 to 2022.

Hershey Co., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Provision for income taxes	272,254)	314,405)	219,584)	234,032)	239,010)
Less: Deferred income tax expense (benefit)	36,889)	13,374)	26,880)	(15,072)	36,255)
Add: Tax savings from interest expense	31,615)	29,528)	33,972)	33,648)	32,374)
Less: Tax imposed on investment income	533)	510)	860)	1,679)	1,684)
Cash operating taxes	266,447)	330,049)	225,816)	281,073)	233,444)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

Download chart

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.	Hershey Co. cash operating taxes increased from 2020 to 2021 but then slightly decreased from 2021 to 2022 not reaching 2020 level.

Hershey Co., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Short-term debt	693,790)	939,423)	74,041)	32,282)	1,197,929)
Current portion of long-term debt	753,578)	2,844)	438,829)	703,390)	5,387)
Long-term portion of long-term debt	3,343,977)	4,086,627)	4,089,755)	3,530,813)	3,254,280)
Operating lease liability¹	326,636)	347,191)	218,449)	213,372)	226,062)
Total reported debt & leases	5,117,981)	5,376,085)	4,821,074)	4,479,857)	4,683,658)
Total The Hershey Company stockholders’ equity	3,299,544)	2,757,229)	2,234,352)	1,739,222)	1,398,721)
Net deferred tax (assets) liabilities²	287,905)	247,131)	199,659)	168,985)	175,694)
Allowances for doubtful accounts, anticipated discounts and write-offs of uncollectible accounts receivable³	26,001)	28,837)	24,975)	24,966)	24,610)
Adjustment to LIFO⁴	192,008)	165,937)	174,898)	169,414)	178,144)
Equity equivalents⁵	505,914)	441,905)	399,532)	363,365)	378,448)
Accumulated other comprehensive (income) loss, net of tax⁶	252,333)	249,215)	338,082)	323,966)	356,780)
Noncontrolling interest in subsidiary	—)	—)	3,531)	5,772)	8,545)
Adjusted total The Hershey Company stockholders’ equity	4,057,791)	3,448,349)	2,975,497)	2,432,325)	2,142,494)
Construction in progress⁷	(416,220)	(294,824)	(276,514)	(209,788)	(280,559)
Invested capital	8,759,552)	8,529,610)	7,520,057)	6,702,394)	6,545,593)

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

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 LIFO reserve. See details »

⁵ Addition of equity equivalents to total The Hershey Company stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

Download chart

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Hershey Co. invested capital increased from 2020 to 2021 and from 2021 to 2022.

Hershey Co., cost of capital calculations

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,109,414)	49,109,414)	÷	53,733,350)	=	0.91	0.91	×	8.36%	=	7.64%
Debt³	4,297,300)	4,297,300)	÷	53,733,350)	=	0.08	0.08	×	3.07% × (1 – 21.00%)	=	0.19%
Operating lease liability⁴	326,636)	326,636)	÷	53,733,350)	=	0.01	0.01	×	3.20% × (1 – 21.00%)	=	0.02%
Total:	53,733,350)					1.00					7.85%

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

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	41,579,947)	41,579,947)	÷	47,143,709)	=	0.88	0.88	×	8.36%	=	7.37%
Debt³	5,216,571)	5,216,571)	÷	47,143,709)	=	0.11	0.11	×	2.35% × (1 – 21.00%)	=	0.21%
Operating lease liability⁴	347,191)	347,191)	÷	47,143,709)	=	0.01	0.01	×	3.10% × (1 – 21.00%)	=	0.02%
Total:	47,143,709)					1.00					7.60%

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

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	31,342,075)	31,342,075)	÷	36,557,279)	=	0.86	0.86	×	8.36%	=	7.17%
Debt³	4,996,755)	4,996,755)	÷	36,557,279)	=	0.14	0.14	×	2.95% × (1 – 21.00%)	=	0.32%
Operating lease liability⁴	218,449)	218,449)	÷	36,557,279)	=	0.01	0.01	×	3.80% × (1 – 21.00%)	=	0.02%
Total:	36,557,279)					1.00					7.50%

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

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	33,583,010)	33,583,010)	÷	38,198,067)	=	0.88	0.88	×	8.36%	=	7.35%
Debt³	4,401,685)	4,401,685)	÷	38,198,067)	=	0.12	0.12	×	3.33% × (1 – 21.00%)	=	0.30%
Operating lease liability⁴	213,372)	213,372)	÷	38,198,067)	=	0.01	0.01	×	3.80% × (1 – 21.00%)	=	0.02%
Total:	38,198,067)					1.00					7.67%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,983,052)	22,983,052)	÷	27,641,307)	=	0.83	0.83	×	8.36%	=	6.95%
Debt³	4,432,193)	4,432,193)	÷	27,641,307)	=	0.16	0.16	×	3.23% × (1 – 21.00%)	=	0.41%
Operating lease liability⁴	226,062)	226,062)	÷	27,641,307)	=	0.01	0.01	×	3.23% × (1 – 21.00%)	=	0.02%
Total:	27,641,307)					1.00					7.38%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Hershey Co., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	1,134,258)	952,283)	868,061)	729,511)	819,907)
Invested capital²	8,759,552)	8,529,610)	7,520,057)	6,702,394)	6,545,593)
Performance Ratio
Economic spread ratio³	12.95%	11.16%	11.54%	10.88%	12.53%
Benchmarks
Economic Spread Ratio, Competitors⁴
Coca-Cola Co.	3.23%	4.78%	2.59%	2.87%	—
Mondelēz International Inc.	-4.13%	-1.13%	-2.27%	-2.73%	—
PepsiCo Inc.	4.53%	5.08%	3.73%	—	—
Philip Morris International Inc.	11.11%	25.24%	18.97%	17.42%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 1,134,258 ÷ 8,759,552 = 12.95%

⁴ Click competitor name to see calculations.

Download chart

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.	Hershey Co. economic spread ratio deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Hershey Co., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Economic profit¹	1,134,258)	952,283)	868,061)	729,511)	819,907)
Net sales	10,419,294)	8,971,337)	8,149,719)	7,986,252)	7,791,069)
Performance Ratio
Economic profit margin²	10.89%	10.61%	10.65%	9.13%	10.52%
Benchmarks
Economic Profit Margin, Competitors³
Coca-Cola Co.	6.01%	9.93%	5.93%	5.67%	—
Mondelēz International Inc.	-8.37%	-2.41%	-5.23%	-6.22%	—
PepsiCo Inc.	3.64%	4.46%	3.72%	—	—
Philip Morris International Inc.	16.60%	23.53%	21.13%	18.29%	—

Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).

¹ Economic profit. See details »

² 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × 1,134,258 ÷ 10,419,294 = 10.89%

³ Click competitor name to see calculations.

Download chart

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.	Hershey Co. economic profit margin deteriorated from 2020 to 2021 but then improved from 2021 to 2022 exceeding 2020 level.

Hershey Co. (NYSE:HSY)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin