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.
Economic Profit
Booking Holdings Inc., economic profit 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 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
= 5,449 – 18.03% × 12,912 = 3,121
The financial performance from 2021 to 2025 indicates a significant transition from value destruction to value creation. A positive trajectory in economic profit is observed, moving from a substantial deficit in 2021 to a peak in 2024, followed by a moderate correction in 2025.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is evident, with NOPAT increasing from 671 million USD in 2021 to a peak of 6,151 million USD in 2024. This rapid expansion in operational profitability served as the primary driver for the improvement in economic value. A decline to 5,449 million USD is noted in 2025, suggesting a softening of operational growth.
- Invested Capital and Efficiency
- Invested capital exhibited a downward trend between 2021 and 2023, decreasing from 15,004 million USD to 11,415 million USD. This reduction in the capital base, occurring simultaneously with rising NOPAT, indicates a marked improvement in capital efficiency. A subsequent increase to 12,973 million USD in 2024 reflects a period of reinvestment, which stabilized at 12,912 million USD in 2025.
- Cost of Capital
- The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a narrow range between 18.00% and 18.38%. The consistency of this rate implies that the volatility in economic profit was driven by operational results and capital allocation decisions rather than shifts in the cost of funding.
- Economic Profit Trends
- Economic profit transitioned from negative 2,059 million USD in 2021 to positive 3,767 million USD in 2024. This reversal confirms that the business began generating returns in excess of its cost of capital starting in 2022. The decline to 3,121 million USD in 2025 is directly correlated with the decrease in NOPAT, despite a stable cost of capital and nearly constant invested capital.
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Net Operating Profit after Taxes (NOPAT)
Booking Holdings Inc., 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 allowance for expected credit losses.
3 Addition of increase (decrease) in restructuring liabilities.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 672 × 3.80% = 26
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,643 × 21.00% = 345
7 Addition of after taxes interest expense to net income.
8 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 921 × 21.00% = 193
9 Elimination of after taxes investment income.
Net operating profit after taxes (NOPAT) demonstrates a significant upward trend over the observed period, though with a recent moderation. Initial values are substantially lower than subsequent years, indicating a period of growth. While net income also increased, the growth rate of NOPAT appears more pronounced in the earlier part of the period.
- Overall Trend
- NOPAT experienced substantial growth from 2021 to 2024. The value increased from US$671 million in 2021 to US$6,151 million in 2024, representing a considerable expansion. However, growth slowed in 2025, with NOPAT decreasing to US$5,449 million.
- Growth Rates
- The period between 2021 and 2022 saw a substantial increase in NOPAT. The growth rate decelerated between 2022 and 2023, but remained positive. The most significant growth occurred between 2023 and 2024. The decline in NOPAT between 2024 and 2025 warrants further investigation.
- Relationship to Net Income
- Both net income and NOPAT increased over the period. However, the magnitude of the increase in NOPAT was greater than that of net income in the initial years, suggesting changes in the company’s operating efficiency or capital structure. The difference in growth rates between the two metrics narrowed in 2025, coinciding with the decrease in NOPAT.
- Recent Performance
- The decrease in NOPAT from 2024 to 2025 is a notable development. While net income also decreased, the relative decline in NOPAT suggests potential issues with operational profitability or increased costs not fully reflected in net income. This recent trend breaks the previously established pattern of consistent growth.
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Cash Operating Taxes
Booking Holdings Inc., cash operating taxes calculation
US$ 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).
Income tax expense and cash operating taxes both demonstrate increasing values over the observed period. However, the magnitude and pattern of change differ between the two metrics.
- Income Tax Expense
- Income tax expense increased from US$300 million in 2021 to US$1,428 million in 2025. The most substantial increase occurred between 2021 and 2022, rising by US$565 million. Growth moderated in subsequent years, with increases of US$327 million (2022-2023), US$218 million (2023-2024), and US$18 million (2024-2025). This suggests a decelerating rate of growth in reported income tax expense.
- Cash Operating Taxes
- Cash operating taxes also exhibited an upward trend, moving from US$758 million in 2021 to US$2,096 million in 2025. Similar to income tax expense, the largest increase was observed between 2021 and 2022, with a rise of US$404 million. A significant increase of US$488 million occurred between 2022 and 2023. The rate of increase slowed in 2024, with a decrease of US$105 million, before resuming growth with an increase of US$741 million in 2025. This pattern indicates potential fluctuations influenced by factors beyond simple proportional growth.
- Relationship between Metrics
- Cash operating taxes consistently exceeded income tax expense throughout the period. The difference between the two metrics varied annually. In 2021, cash operating taxes were approximately 2.5 times income tax expense (US$758 million vs. US$300 million). This ratio decreased over time, reaching approximately 1.47 times in 2025 (US$2,096 million vs. US$1,428 million). This narrowing gap suggests a potential shift in the timing of tax payments relative to reported income, or changes in non-cash tax items.
The observed trends suggest increasing tax obligations for the entity. The divergence in growth rates and the relationship between income tax expense and cash operating taxes warrant further investigation to understand the underlying drivers and potential implications for future financial performance.
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Invested Capital
Booking Holdings Inc., invested capital calculation (financing approach)
US$ 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 restructuring liabilities.
5 Addition of equity equivalents to stockholders’ equity (deficit).
6 Removal of accumulated other comprehensive income.
7 Subtraction of building construction-in-progress.
8 Subtraction of marketable securities.
The composition of invested capital exhibits notable shifts over the five-year period. Total reported debt & leases consistently increased, while stockholders’ equity experienced a significant decline, ultimately resulting in a deficit by the end of 2023. Despite these underlying changes, invested capital itself demonstrates a more moderate fluctuation.
- Debt & Leases
- Total reported debt & leases increased steadily from US$11,430 million in 2021 to US$19,414 million in 2025. This represents a cumulative increase of approximately 70% over the period. The rate of increase appears relatively consistent year-over-year.
- Stockholders’ Equity
- Stockholders’ equity decreased substantially from US$6,178 million in 2021 to a deficit of US$5,578 million in 2025. The decline was particularly pronounced between 2022 and 2023, transitioning from a positive equity position to a negative one. This negative trend continued through 2024 and 2025, with the deficit widening each year.
- Invested Capital
- Invested capital decreased from US$15,004 million in 2021 to US$11,415 million in 2023, a decline of approximately 24%. It then showed a modest recovery, increasing to US$12,973 million in 2024 and remaining relatively stable at US$12,912 million in 2025. The fluctuations in invested capital appear to be influenced by the offsetting movements in debt and equity, but are less dramatic than the changes observed in either component individually.
The increasing reliance on debt financing, coupled with the erosion of stockholders’ equity, suggests a shift in the company’s capital structure. While invested capital has not mirrored the full extent of the equity decline, the trend warrants further investigation to understand the implications for financial risk and future performance.
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Cost of Capital
Booking Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 135,245) | 135,245) | ÷ | 154,823) | = | 0.87 | 0.87 | × | 20.21% | = | 17.66% | ||
| Outstanding debt and finance lease liabilities3 | 18,906) | 18,906) | ÷ | 154,823) | = | 0.12 | 0.12 | × | 3.71% × (1 – 21.00%) | = | 0.36% | ||
| Operating lease liability4 | 672) | 672) | ÷ | 154,823) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 154,823) | 1.00 | 18.03% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 164,675) | 164,675) | ÷ | 184,113) | = | 0.89 | 0.89 | × | 20.21% | = | 18.08% | ||
| Outstanding debt and finance lease liabilities3 | 18,833) | 18,833) | ÷ | 184,113) | = | 0.10 | 0.10 | × | 3.54% × (1 – 21.00%) | = | 0.29% | ||
| Operating lease liability4 | 605) | 605) | ÷ | 184,113) | = | 0.00 | 0.00 | × | 3.90% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 184,113) | 1.00 | 18.38% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 133,335) | 133,335) | ÷ | 149,354) | = | 0.89 | 0.89 | × | 20.21% | = | 18.05% | ||
| Outstanding debt and finance lease liabilities3 | 15,268) | 15,268) | ÷ | 149,354) | = | 0.10 | 0.10 | × | 3.43% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 751) | 751) | ÷ | 149,354) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 149,354) | 1.00 | 18.34% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 91,354) | 91,354) | ÷ | 104,484) | = | 0.87 | 0.87 | × | 20.21% | = | 17.67% | ||
| Outstanding debt and finance lease liabilities3 | 12,453) | 12,453) | ÷ | 104,484) | = | 0.12 | 0.12 | × | 3.32% × (1 – 21.00%) | = | 0.31% | ||
| Operating lease liability4 | 677) | 677) | ÷ | 104,484) | = | 0.01 | 0.01 | × | 3.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 104,484) | 1.00 | 18.00% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 100,982) | 100,982) | ÷ | 113,586) | = | 0.89 | 0.89 | × | 20.21% | = | 17.97% | ||
| Outstanding debt and finance lease liabilities3 | 12,110) | 12,110) | ÷ | 113,586) | = | 0.11 | 0.11 | × | 2.54% × (1 – 21.00%) | = | 0.21% | ||
| Operating lease liability4 | 494) | 494) | ÷ | 113,586) | = | 0.00 | 0.00 | × | 2.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 113,586) | 1.00 | 18.19% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Booking Holdings Inc., 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 | 3,121) | 3,767) | 1,664) | 509) | (2,059) | |
| Invested capital2 | 12,912) | 12,973) | 11,415) | 13,642) | 15,004) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 24.17% | 29.03% | 14.58% | 3.73% | -13.72% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | 24.22% | 24.04% | 9.30% | 10.94% | -11.17% | |
| Chipotle Mexican Grill Inc. | 9.08% | 8.54% | 6.96% | 2.76% | -1.73% | |
| DoorDash, Inc. | -19.09% | -27.14% | -39.57% | -53.35% | -39.86% | |
| McDonald’s Corp. | 9.04% | 8.55% | 8.63% | 5.83% | 8.25% | |
| Starbucks Corp. | -4.70% | 3.45% | 5.15% | 2.75% | 4.01% | |
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 × 3,121 ÷ 12,912 = 24.17%
4 Click competitor name to see calculations.
Between 2021 and 2025, a significant transition occurred from value destruction to consistent economic value creation. The overall financial trajectory is characterized by a rapid recovery in profitability coupled with a strategic optimization of the capital base.
- Economic Profit Trends
- A substantial reversal is observed starting in 2022, where economic profit shifted from a deficit of US$ 2,059 million in 2021 to a surplus of US$ 509 million. This upward momentum continued through 2024, reaching a peak of US$ 3,767 million, before experiencing a moderate contraction to US$ 3,121 million in 2025.
- Invested Capital Dynamics
- Invested capital exhibited a downward trend from 2021 to 2023, decreasing from US$ 15,004 million to US$ 11,415 million. A subsequent stabilization occurred between 2024 and 2025, with capital levels maintaining a range around US$ 12,900 million, suggesting a period of capital rationalization followed by a phase of steady-state maintenance.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a sharp improvement in capital efficiency and value generation. After a low of -13.72% in 2021, the ratio entered positive territory in 2022 (3.73%) and expanded aggressively to a peak of 29.03% in 2024. Although the ratio moderated to 24.17% in 2025, it remains significantly elevated compared to the start of the period, indicating that the return on invested capital consistently exceeded the cost of capital from 2022 onwards.
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Economic Profit Margin
Booking Holdings Inc., 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 | 3,121) | 3,767) | 1,664) | 509) | (2,059) | |
| Revenues | 26,917) | 23,739) | 21,365) | 17,090) | 10,958) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 11.60% | 15.87% | 7.79% | 2.98% | -18.79% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | 11.28% | 13.06% | 5.41% | 8.69% | -10.10% | |
| Chipotle Mexican Grill Inc. | 5.55% | 5.14% | 4.22% | 1.72% | -1.25% | |
| DoorDash, Inc. | -15.65% | -15.85% | -24.00% | -43.11% | -25.92% | |
| McDonald’s Corp. | 18.01% | 16.38% | 16.94% | 11.42% | 16.95% | |
| Starbucks Corp. | -3.04% | 2.25% | 3.19% | 1.75% | 3.26% | |
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 ÷ Revenues
= 100 × 3,121 ÷ 26,917 = 11.60%
3 Click competitor name to see calculations.
The financial trajectory between 2021 and 2025 is characterized by a significant recovery in value creation, transitioning from substantial economic losses to consistent economic profit. While revenues exhibited steady growth throughout the period, the economic profit margin experienced a volatile but overall upward swing, peaking in 2024 before witnessing a moderate contraction in 2025.
- Revenue Growth Trends
- A consistent upward trend in revenues is observed, growing from 10,958 million USD in 2021 to 26,917 million USD by 2025. This represents a sustained expansion of the top line, providing the necessary scale to support the recovery of economic value.
- Economic Profit Evolution
- Economic profit shifted from a deficit of 2,059 million USD in 2021 to a positive value of 509 million USD in 2022, signaling a pivot toward generating returns above the cost of capital. This growth accelerated through 2023 and 2024, reaching a peak of 3,767 million USD. However, a decline to 3,121 million USD is noted in 2025, despite the continued increase in total revenues.
- Economic Profit Margin Analysis
- The economic profit margin reflects a sharp recovery from -18.79% in 2021 to 15.87% in 2024. This expansion indicates a period of increasing capital efficiency and operational optimization. The subsequent decrease to 11.60% in 2025 suggests that the growth in the cost of capital or operating expenses began to outpace the growth in net operating profit after tax (NOPAT) during the final year of the analyzed period.
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