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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Booking Holdings Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Booking Holdings Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited a relatively stable level from 2020 to 2021, with values of approximately 670 million USD and 671 million USD respectively. A significant increase is observed in 2022, where NOPAT surged to 2,965 million USD, followed by continued growth in subsequent years reaching 3,758 million USD in 2023 and 6,151 million USD in 2024. This trend indicates a strong improvement in operating profitability over the analyzed period.
- Cost of Capital
- The cost of capital remained fairly consistent throughout the years, fluctuating slightly around the 17% mark. Values ranged from 16.99% in 2020 to 17.37% in 2024, showing a marginal upward trend. This relative stability suggests no significant changes in the firm’s capital structure risk or market conditions impacting the cost of financing.
- Invested Capital
- The amount of invested capital initially rose moderately from 14,563 million USD in 2020 to 15,004 million USD in 2021. Subsequently, there was a decline over the next two years, dropping to 13,642 million USD in 2022 and further to 11,415 million USD in 2023. In 2024, invested capital recovered partially to 12,973 million USD. This pattern suggests potential divestments or efficiency improvements followed by some reinvestment.
- Economic Profit
- Economic profit showed negative values in the years 2020 and 2021, with losses of -1,804 million USD and -1,909 million USD respectively, indicating that the company’s profits did not exceed the cost of capital during this period. However, a turnaround occurred in 2022 with positive economic profit of 643 million USD, which substantially increased to 1,779 million USD in 2023 and further to 3,897 million USD in 2024. This positive trend reflects improved value creation for shareholders and enhanced capital efficiency.
- Overall Analysis
- Over the five years, there is clear evidence of financial improvement characterized by rising profitability and economic value creation despite a relatively stable cost of capital. The notable increase in NOPAT alongside the reduction and subsequent moderate rebound in invested capital implies improved operational efficiency and capital management. The transition from negative to strong positive economic profit highlights enhanced corporate performance and effective use of invested funds to generate returns above the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Booking Holdings Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 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.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
The financial data indicates a pronounced upward trajectory in both net income and net operating profit after taxes (NOPAT) over the five-year period from 2020 to 2024. Specifically, net income exhibits significant growth, increasing from 59 million US dollars in 2020 to 5,882 million US dollars in 2024. This represents a nearly hundredfold rise, with the most substantial increases occurring between 2020 and 2021, and continuing robustly in the subsequent years.
Similarly, NOPAT trends upward, starting at 670 million US dollars in 2020 and reaching 6,151 million US dollars by 2024. This steady increase reflects growing operating efficiency and profitability after accounting for taxes over the period.
- Net Income
- 2020: 59 million US dollars
- 2021: 1,165 million US dollars
- 2022: 3,058 million US dollars
- 2023: 4,289 million US dollars
- 2024: 5,882 million US dollars
- Net Operating Profit After Taxes (NOPAT)
- 2020: 670 million US dollars
- 2021: 671 million US dollars
- 2022: 2,965 million US dollars
- 2023: 3,758 million US dollars
- 2024: 6,151 million US dollars
The disparity between the net income and NOPAT values in earlier years, particularly in 2020 and 2021 where net income is substantially lower than NOPAT, may signal differences in non-operating items, interest expenses, or taxes impacting net income. From 2022 onwards, the figures for both metrics converge more closely, indicating stronger alignment between operating performance and final profitability.
Overall, the data reveals marked improvement in financial performance, with increases in both earnings measures suggesting effective operational management and growth in core business profitability. This positive trend underscores an expanding capacity to generate net profits from operating activities over the period analyzed.
Cash Operating Taxes
Booking Holdings Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
The income tax expense exhibited a fluctuating upward trend over the five-year period. Beginning at 508 million US dollars in 2020, the expense decreased significantly to 300 million in 2021, followed by a sharp increase to 865 million in 2022. The upward momentum continued with the tax expense rising to 1,192 million in 2023 and further to 1,410 million in 2024, indicating increasing tax obligations over the most recent years.
Cash operating taxes, which typically reflect the actual cash outflows for taxes, showed a consistent increase from 362 million US dollars in 2020 to a peak of 1,650 million in 2023. This represents more than a fourfold increase within four years. However, in 2024, a decline to 1,355 million was observed, slightly reducing the cash tax burden compared to the previous year but still maintaining a substantially higher level relative to the earlier years.
- Income Tax Expense Trends
- Initial decline between 2020 and 2021 followed by substantial growth through 2024.
- Cash Operating Taxes Trends
- Strong upward trajectory from 2020 to 2023, with a decrease noted in 2024.
- Comparison Insights
- The divergence in behavior during 2021, when income tax expense significantly dropped while cash operating taxes increased, could suggest timing differences or changes in non-cash tax items. The overall rising trend in both metrics from 2022 onwards aligns with increasing taxable income or changes in tax rates or regulations.
Invested Capital
Booking Holdings Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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.
- Total reported debt & leases
- The total reported debt and leases exhibited an overall upward trend from 2020 to 2024. Starting at $12,539 million in 2020, the debt decreased slightly to $11,430 million in 2021 but then increased consistently over the following years, reaching $17,236 million by 2024. This indicates a rising reliance on debt financing or increased lease obligations over the analyzed period.
- Stockholders’ equity (deficit)
- Stockholders’ equity showed significant volatility and a declining trajectory across the five-year span. The value rose from $4,893 million in 2020 to a peak of $6,178 million in 2021. However, it dropped sharply to $2,782 million in 2022 and then moved into negative territory, reaching a deficit of $2,744 million in 2023 and further declining to a deficit of $4,020 million in 2024. This substantial decrease suggests deteriorating net asset value, potentially due to accumulated losses, share repurchases, or other equity-reducing activities.
- Invested capital
- Invested capital stayed relatively stable initially but showed a downward trend over time. It modestly increased from $14,563 million in 2020 to $15,004 million in 2021, followed by declines in the subsequent years, reaching a low of $11,415 million in 2023. A slight recovery occurred in 2024 when invested capital rose to $12,973 million. The pattern indicates possible divestitures, asset sales, or reductions in net operating assets before some stabilization or reinvestment in the last year.
Cost of Capital
Booking Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (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 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (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 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (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 Outstanding debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Outstanding debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals a marked improvement in the economic profitability of the company over the analyzed five-year period. Initially, the company recorded significant negative economic profits in 2020 and 2021, indicating losses relative to the invested capital. However, from 2022 onward, there is a clear reversal, with economic profits becoming positive and progressively increasing through to 2024. This shift suggests enhanced efficiency in generating returns above the cost of capital.
Invested capital shows a fluctuating trend. It increased slightly from 2020 to 2021, then declined notably in 2022 and 2023, reaching its lowest point in 2023 before recovering somewhat in 2024. This reduction followed by partial recovery may reflect strategic asset management, divestitures, or operational scaling in response to changing business conditions.
The economic spread ratio, representing the return on invested capital relative to cost, follows a similar trajectory to economic profit. The ratio was negative and worsening through 2021, signaling returns below the required threshold. A positive spread ratio emerges in 2022, with significant and accelerating growth through 2024. By the end of the period, the spread ratio is substantially positive, indicating strong value creation and efficient capital utilization.
- Economic Profit
- Shifted from large negative values in 2020 and 2021 to positive and rapidly increasing figures from 2022 to 2024, reflecting an enhanced ability to generate profit beyond capital costs.
- Invested Capital
- Increased modestly in the early period before declining substantially in 2022-2023, with a moderate recovery in 2024, indicating active capital management or structural adjustments.
- Economic Spread Ratio
- Improved from significantly negative percentages to strong positive levels by 2024, underscoring a turnaround in investment returns and improved economic value generation.
Economic Profit Margin
Booking Holdings Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| DoorDash, Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- Revenues exhibited a strong upward trajectory over the five-year period, rising from $6,796 million in 2020 to $23,739 million in 2024. This represents a compound increase, indicating sustained growth in the company's top line.
- Economic Profit
- The company reported negative economic profits in 2020 and 2021, with losses of $1,804 million and $1,909 million respectively. However, from 2022 onward, there was a marked turnaround, with economic profit turning positive at $643 million in 2022, further increasing to $1,779 million in 2023, and nearly doubling again to $3,897 million in 2024. This suggests significant improvements in operational efficiency or profitability beyond mere accounting profits.
- Economic Profit Margin
- The economic profit margin, reflecting economic profit as a percentage of revenues, was negative in 2020 and 2021 at -26.54% and -17.42% respectively, indicating losses relative to the capital employed. Starting in 2022, the margin turned positive, reaching 3.76%, and continued to improve in subsequent years to 8.33% in 2023 and 16.42% in 2024. This upward trend indicates an increasing ability to generate returns above the cost of capital, highlighting an enhancement in economic value creation.