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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.

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

PepsiCo Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Net operating profit after taxes (NOPAT)¹	10,029)	9,364)	9,629)	8,429)	8,536)
Cost of capital²	8.40%	8.53%	8.30%	7.91%	8.48%
Invested capital³	75,038)	69,452)	69,829)	70,066)	59,384)

Economic profit⁴	3,724)	3,442)	3,833)	2,886)	3,501)

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 10,029 – 8.40% × 75,038 = 3,724

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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.	PepsiCo Inc. economic profit decreased from 2021 to 2022 but then increased from 2022 to 2023 not reaching 2021 level.

PepsiCo Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Net income attributable to PepsiCo	9,074)	8,910)	7,618)	7,120)	7,314)
Deferred income tax expense (benefit)¹	(381)	(683)	441)	137)	304)
Increase (decrease) in allowance²	25)	3)	(54)	96)	4)
Increase (decrease) in restructuring liability³	1)	125)	(56)	(22)	(71)
Increase (decrease) in equity equivalents⁴	(355)	(555)	331)	211)	237)
Interest expense	1,437)	1,119)	1,988)	1,252)	1,135)
Interest expense, operating lease liability⁵	118)	72)	61)	68)	62)
Adjusted interest expense	1,555)	1,191)	2,049)	1,320)	1,197)
Tax benefit of interest expense⁶	(327)	(250)	(430)	(277)	(251)
Adjusted interest expense, after taxes⁷	1,229)	941)	1,619)	1,043)	946)
Net income (loss) attributable to noncontrolling interest	81)	68)	61)	55)	39)
Net operating profit after taxes (NOPAT)	10,029)	9,364)	9,629)	8,429)	8,536)

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance.

³ Addition of increase (decrease) in restructuring liability.

⁴ Addition of increase (decrease) in equity equivalents to net income attributable to PepsiCo.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 2,956 × 4.00% = 118

⁶ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,555 × 21.00% = 327

⁷ Addition of after taxes interest expense to net income attributable to PepsiCo.

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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.	PepsiCo Inc. NOPAT decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

PepsiCo Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Provision for income taxes	2,262)	1,727)	2,142)	1,894)	1,959)
Less: Deferred income tax expense (benefit)	(381)	(683)	441)	137)	304)
Add: Tax savings from interest expense	327)	250)	430)	277)	251)
Cash operating taxes	2,970)	2,660)	2,131)	2,034)	1,906)

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

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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.	PepsiCo Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

PepsiCo Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Short-term debt obligations	6,510)	3,414)	4,308)	3,780)	2,920)
Long-term debt obligations, excluding current maturities	37,595)	35,657)	36,026)	40,370)	29,148)
Operating lease liability¹	2,956)	2,416)	2,044)	1,693)	1,560)
Total reported debt & leases	47,061)	41,487)	42,378)	45,843)	33,628)
Total PepsiCo common shareholders’ equity	18,503)	17,149)	16,043)	13,454)	14,786)
Net deferred tax (assets) liabilities²	(579)	(71)	516)	(88)	(268)
Allowance³	175)	150)	147)	201)	105)
Restructuring liability⁴	197)	196)	71)	127)	149)
Equity equivalents⁵	(207)	275)	734)	240)	(14)
Accumulated other comprehensive (income) loss, net of tax⁶	15,534)	15,302)	14,898)	15,476)	14,300)
Noncontrolling interests	134)	124)	108)	98)	82)
Adjusted total PepsiCo common shareholders’ equity	33,964)	32,850)	31,783)	29,268)	29,154)
Construction in progress⁷	(5,695)	(4,491)	(3,940)	(3,679)	(3,169)
Short-term investments⁸	(292)	(394)	(392)	(1,366)	(229)
Invested capital	75,038)	69,452)	69,829)	70,066)	59,384)

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

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 restructuring liability.

⁵ Addition of equity equivalents to total PepsiCo common shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

⁸ Subtraction of short-term investments.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	PepsiCo Inc. invested capital decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level.

PepsiCo Inc., cost of capital calculations

Dec 30, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	230,451)	230,451)	÷	274,407)	=	0.84	0.84	×	9.52%	=	8.00%
Debt obligations³	41,000)	41,000)	÷	274,407)	=	0.15	0.15	×	3.14% × (1 – 21.00%)	=	0.37%
Operating lease liability⁴	2,956)	2,956)	÷	274,407)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.03%
Total:	274,407)					1.00					8.40%

Based on: 10-K (reporting date: 2023-12-30).

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	237,961)	237,961)	÷	275,377)	=	0.86	0.86	×	9.52%	=	8.23%
Debt obligations³	35,000)	35,000)	÷	275,377)	=	0.13	0.13	×	2.76% × (1 – 21.00%)	=	0.28%
Operating lease liability⁴	2,416)	2,416)	÷	275,377)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.02%
Total:	275,377)					1.00					8.53%

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

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 25, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	232,932)	232,932)	÷	277,976)	=	0.84	0.84	×	9.52%	=	7.98%
Debt obligations³	43,000)	43,000)	÷	277,976)	=	0.15	0.15	×	2.48% × (1 – 21.00%)	=	0.30%
Operating lease liability⁴	2,044)	2,044)	÷	277,976)	=	0.01	0.01	×	3.00% × (1 – 21.00%)	=	0.02%
Total:	277,976)					1.00					8.30%

Based on: 10-K (reporting date: 2021-12-25).

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 26, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	186,206)	186,206)	÷	237,899)	=	0.78	0.78	×	9.52%	=	7.45%
Debt obligations³	50,000)	50,000)	÷	237,899)	=	0.21	0.21	×	2.62% × (1 – 21.00%)	=	0.44%
Operating lease liability⁴	1,693)	1,693)	÷	237,899)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.02%
Total:	237,899)					1.00					7.91%

Based on: 10-K (reporting date: 2020-12-26).

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

Dec 28, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	203,527)	203,527)	÷	239,087)	=	0.85	0.85	×	9.52%	=	8.11%
Debt obligations³	34,000)	34,000)	÷	239,087)	=	0.14	0.14	×	3.13% × (1 – 21.00%)	=	0.35%
Operating lease liability⁴	1,560)	1,560)	÷	239,087)	=	0.01	0.01	×	4.00% × (1 – 21.00%)	=	0.02%
Total:	239,087)					1.00					8.48%

Based on: 10-K (reporting date: 2019-12-28).

¹ US$ in millions

² Equity. See details »

³ Debt obligations. See details »

⁴ Operating lease liability. See details »

PepsiCo Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	3,724)	3,442)	3,833)	2,886)	3,501)
Invested capital²	75,038)	69,452)	69,829)	70,066)	59,384)
Performance Ratio
Economic spread ratio³	4.96%	4.96%	5.49%	4.12%	5.90%
Benchmarks
Economic Spread Ratio, Competitors⁴
Altria Group Inc.	21.60%	11.05%	-2.04%	4.30%	-9.62%
Coca-Cola Co.	4.02%	3.72%	5.25%	3.04%	3.33%
Mondelēz International Inc.	0.13%	-3.69%	-0.68%	-1.84%	-2.29%

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 3,724 ÷ 75,038 = 4.96%

⁴ Click competitor name to see calculations.

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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.	PepsiCo Inc. economic spread ratio deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

PepsiCo Inc., economic profit margin calculation, comparison to benchmarks

	Dec 30, 2023	Dec 31, 2022	Dec 25, 2021	Dec 26, 2020	Dec 28, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	3,724)	3,442)	3,833)	2,886)	3,501)
Net revenue	91,471)	86,392)	79,474)	70,372)	67,161)
Performance Ratio
Economic profit margin²	4.07%	3.98%	4.82%	4.10%	5.21%
Benchmarks
Economic Profit Margin, Competitors³
Altria Group Inc.	25.28%	12.69%	-2.63%	6.82%	-16.33%
Coca-Cola Co.	7.35%	6.91%	10.91%	6.97%	6.60%
Mondelēz International Inc.	0.22%	-7.47%	-1.45%	-4.24%	-5.21%

Based on: 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26), 10-K (reporting date: 2019-12-28).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × 3,724 ÷ 91,471 = 4.07%

³ Click competitor name to see calculations.

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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.	PepsiCo Inc. economic profit margin deteriorated from 2021 to 2022 but then slightly improved from 2022 to 2023.

PepsiCo Inc. (NASDAQ:PEP)

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