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:
- Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Current Ratio 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
= – × =
The data reveals significant developments in the company's financial performance and capital efficiency over the five-year period examined.
- Net Operating Profit After Taxes (NOPAT)
- The company's NOPAT remained essentially stable between 2020 and 2021, with values around US$670 million. However, a substantial increase occurred starting in 2022, reaching nearly US$3 billion, followed by continued growth to approximately US$3.8 billion in 2023 and over US$6.1 billion in 2024. This trajectory indicates a strong improvement in the company’s operational profitability.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating slightly between 16.89% and 17.27%. This consistent level suggests a steady capital market environment and consistent risk perception from investors.
- Invested Capital
- Invested capital exhibited a downward trend after 2021, decreasing from roughly US$15 billion in 2021 to about US$11.4 billion in 2023. A moderate recovery is observable in 2024, with invested capital rising to nearly US$13 billion. This pattern implies a period of capital reduction or asset disposals, followed by some reinvestment or acquisition activity in the latest year.
- Economic Profit
- Economic profit was negative in the years 2020 and 2021, indicating that the company was not generating returns above its cost of capital during those periods. Starting 2022, economic profit turned positive, with substantial increases in 2023 and 2024 to US$1.79 billion and US$3.91 billion, respectively. This shift underscores a marked enhancement in value creation and overall financial performance.
Overall, the company demonstrates a clear improvement in operating profitability and economic profitability beginning in 2022, despite a consistent cost of capital. The reduction in invested capital followed by a partial rebound may reflect strategic capital management aimed at optimizing returns. The positive economic profits from 2022 onward suggest effective deployment of capital relative to the company's cost of capital, leading to increased shareholder value.
Net Operating Profit after Taxes (NOPAT)
Booking Holdings Inc., NOPAT calculation
US$ 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.
- Economic Profit
- The economic profit showed a significant shift over the period. Initially, it was negative, with losses of -1789 million USD in 2020 and slightly worsening to -1894 million USD in 2021. However, there was a noticeable turnaround starting in 2022, with economic profit turning positive at 656 million USD. The positive momentum continued, reaching 1790 million USD in 2023 and sharply increasing to 3910 million USD by 2024. This indicates a strong improvement in profitability and value creation over the five-year span.
- Invested Capital
- The invested capital demonstrated a somewhat fluctuating downward trend from 2020 to 2023. Beginning at 14,563 million USD in 2020, it increased slightly to 15,004 million USD in 2021 before decreasing to 13,642 million USD in 2022. This decline continued to 11,415 million USD by 2023. In 2024, there was a rebound to 12,973 million USD. Overall, the invested capital contracted over most of the period but showed some recovery toward the end.
- Economic Spread Ratio
- This ratio, which measures the return on invested capital relative to its cost, evolved markedly over the analyzed timeframe. It was negative in the initial years, at -12.29% in 2020 and slightly more negative at -12.62% in 2021, reflecting returns below the cost of capital. The ratio turned positive in 2022, reaching 4.81%, and then enhanced significantly to 15.69% in 2023. By 2024, the economic spread ratio had increased substantially to 30.14%. This progression highlights improved efficiency in capital utilization and stronger value generation in recent years.
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.
The financial data exhibits distinct and significant trends over the five-year period under review.
- Revenues
- There is a consistent and robust increase in revenues year over year. Starting at US$6,796 million in 2020, revenues rose to US$10,958 million in 2021, representing a substantial year-over-year growth. The upward trajectory continues through 2022 and 2023, reaching US$17,090 million and US$21,365 million respectively, with a further increase to US$23,739 million in 2024. This represents a nearly 3.5-fold increase from the initial year, indicating strong sales performance and market growth.
- Economic Profit
- This metric reveals a notable turnaround. Initially, the company reported negative economic profits of US$-1,789 million in 2020 and US$-1,894 million in 2021, indicating losses beyond accounting profit. However, starting in 2022, there is a pronounced shift to positive territory, with economic profit rising to US$656 million. The momentum accelerates substantially in the subsequent years, with economic profit reaching US$1,790 million in 2023 and US$3,910 million in 2024. This significant improvement suggests increased value creation and operational efficiencies over the period.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, supports the observation of improving profitability. Initially negative at -26.33% in 2020 and -17.28% in 2021, the margin transitions into positive figures in 2022 at 3.84%, showing the beginning of profitability on an economic basis. This trend continues upward, with the margin expanding to 8.38% in 2023 and nearly doubling to 16.47% in 2024. The growing margin reflects enhanced profitability relative to revenues.
Overall, the data portrays a company undergoing a strong and sustained financial transformation, characterized by rapidly increasing revenues accompanied by a significant shift from economic losses to considerable economic profits. The enhancing economic profit margin further underscores the improvements in operational effectiveness and value generation over the period analyzed.