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 – 17.97% × 12,912 = 3,128
The financial trajectory from 2021 to 2025 indicates a significant transition from economic value destruction to substantial value creation. The most prominent trend is the rapid recovery and expansion of profitability, which allowed the entity to surpass its cost of capital and generate positive economic profit starting in 2022.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trajectory is observed in NOPAT, which grew from 671 million US$ in 2021 to a peak of 6,151 million US$ in 2024. This represents a substantial increase in operational efficiency and earnings power over the four-year period. A slight contraction occurred in 2025, with NOPAT declining to 5,449 million US$, though it remained significantly higher than pre-2024 levels.
- Invested Capital and Cost of Capital
- Invested capital exhibited a downward trend between 2021 and 2023, decreasing from 15,004 million US$ to 11,415 million US$, suggesting a period of capital optimization or divestment. Capital levels stabilized thereafter, ending 2025 at 12,912 million US$. Throughout this entire period, the cost of capital remained remarkably stable, fluctuating within a narrow range between 17.95% and 18.32%, indicating a consistent risk profile and hurdle rate for investments.
- Economic Profit Performance
- The economic profit transitioned from a deficit of 2,050 million US$ in 2021 to a surplus of 3,774 million US$ by 2024. This reversal was driven by the simultaneous increase in NOPAT and the reduction in invested capital through 2023, which lowered the absolute capital charge. The peak in value creation occurred in 2024, followed by a moderation to 3,128 million US$ in 2025, mirroring the dip observed in operational profits.
Overall, the data reflects a period of aggressive operational scaling and capital refinement. The entity successfully shifted its financial position to ensure that the returns on invested capital consistently exceeded the cost of capital, thereby generating sustainable economic value for stakeholders.
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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$12,912 million in 2025. The fluctuations in invested capital appear to be influenced by the offsetting movements in debt and equity, but are less dramatic than the changes observed in either component individually.
The increasing reliance on debt financing, coupled with the erosion of stockholders’ equity, suggests a shift in the company’s capital structure. While invested capital has not mirrored the full extent of the equity decline, the trend warrants further investigation to understand the implications for financial risk and future performance.
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Cost of Capital
Booking Holdings Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 135,245) | 135,245) | ÷ | 154,823) | = | 0.87 | 0.87 | × | 20.15% | = | 17.60% | ||
| Outstanding debt and finance lease liabilities3 | 18,906) | 18,906) | ÷ | 154,823) | = | 0.12 | 0.12 | × | 3.71% × (1 – 21.00%) | = | 0.36% | ||
| Operating lease liability4 | 672) | 672) | ÷ | 154,823) | = | 0.00 | 0.00 | × | 3.80% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 154,823) | 1.00 | 17.97% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 20.15% | = | 18.02% | ||
| 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 | 18.32% | ||||||||||
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 | × | 20.15% | = | 17.99% | ||
| 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 | 18.28% | ||||||||||
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 | × | 20.15% | = | 17.62% | ||
| 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 | 17.95% | ||||||||||
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 | × | 20.15% | = | 17.91% | ||
| 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 | 18.13% | ||||||||||
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 | 3,128) | 3,774) | 1,671) | 516) | (2,050) | |
| Invested capital2 | 12,912) | 12,973) | 11,415) | 13,642) | 15,004) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 24.23% | 29.09% | 14.64% | 3.79% | -13.66% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Airbnb Inc. | 24.28% | 24.10% | 9.37% | 11.00% | -11.10% | |
| Chipotle Mexican Grill Inc. | 9.14% | 8.60% | 7.02% | 2.82% | -1.67% | |
| DoorDash, Inc. | -19.02% | -27.06% | -39.50% | -53.28% | -39.79% | |
| McDonald’s Corp. | 9.08% | 8.60% | 8.67% | 5.87% | 8.30% | |
| Starbucks Corp. | -4.65% | 3.51% | 5.21% | 2.80% | 4.06% | |
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 × 3,128 ÷ 12,912 = 24.23%
4 Click competitor name to see calculations.
The analysis of economic value creation from 2021 through 2025 reveals a significant transition from value destruction to substantial value generation. The company experienced a period of recovery and expansion, characterized by a sharp increase in economic profit and a marked improvement in the spread between the return on invested capital and the cost of capital.
- Economic Profit
- A strong upward trajectory is observed, moving from a deficit of US$ 2,050 million in 2021 to a peak of US$ 3,774 million in 2024. The shift to positive economic profit in 2022 indicates the point at which returns began to exceed the total cost of capital. While a slight reduction to US$ 3,128 million occurred in 2025, the overall trend reflects a consistent increase in the amount of wealth generated for shareholders over the five-year period.
- Invested Capital
- Invested capital exhibited a contraction from 2021 to 2023, decreasing from US$ 15,004 million to US$ 11,415 million. This downward trend suggests a period of capital optimization or a reduction in the asset base. A subsequent stabilization is noted in 2024 and 2025, with capital levels remaining relatively constant at approximately US$ 12.9 billion, indicating a shift toward a more stable capital structure.
- Economic Spread Ratio
- The economic spread ratio demonstrates a substantial expansion, rising from -13.66% in 2021 to a maximum of 29.09% in 2024. This progression indicates a widening margin between the internal rate of return and the weighted average cost of capital, signifying enhanced operational efficiency and value creation. The ratio moderated to 24.23% in 2025, yet it remains significantly higher than the levels observed during the 2021-2022 period.
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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 | 3,128) | 3,774) | 1,671) | 516) | (2,050) | |
| Revenues | 26,917) | 23,739) | 21,365) | 17,090) | 10,958) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 11.62% | 15.90% | 7.82% | 3.02% | -18.71% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Airbnb Inc. | 11.31% | 13.09% | 5.45% | 8.74% | -10.04% | |
| Chipotle Mexican Grill Inc. | 5.59% | 5.18% | 4.26% | 1.76% | -1.21% | |
| DoorDash, Inc. | -15.59% | -15.80% | -23.96% | -43.06% | -25.88% | |
| McDonald’s Corp. | 18.11% | 16.47% | 17.02% | 11.51% | 17.04% | |
| Starbucks Corp. | -3.01% | 2.28% | 3.22% | 1.79% | 3.31% | |
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 × 3,128 ÷ 26,917 = 11.62%
3 Click competitor name to see calculations.
The financial trajectory indicates a significant transition from value destruction to substantial value creation between 2021 and 2025. A strong recovery phase is evident, as economic profit moved from a negative position to consistently positive territory, peaking in 2024 before experiencing a moderate correction.
- Revenue Growth Trends
- Revenues exhibited a consistent upward trajectory, increasing from US$ 10,958 million in 2021 to US$ 26,917 million by 2025. This steady expansion provided the fundamental scale necessary to facilitate the recovery of economic profitability.
- Economic Profit Evolution
- A sharp reversal in value generation occurred after 2021, where an economic loss of US$ 2,050 million shifted to a profit of US$ 516 million in 2022. This positive momentum accelerated through 2024, reaching a peak of US$ 3,774 million. A subsequent decline to US$ 3,128 million in 2025 suggests a cooling period in absolute value addition.
- Economic Profit Margin Analysis
- The economic profit margin reflects a volatile but generally improving efficiency in value creation. The margin rose from -18.71% in 2021 to a peak of 15.90% in 2024. However, the 2025 margin contracted to 11.62%, indicating that while revenues continued to grow, the economic profit did not scale proportionally, leading to a reduction in the efficiency of capital utilization relative to sales.
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