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
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Price to Book Value (P/BV) since 2005
- Aggregate Accruals
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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 illustrates key financial metrics over a five-year period. Net operating profit after taxes (NOPAT) exhibits a strong upward trend, increasing significantly from 670 million USD in 2020 to 6151 million USD in 2024. This growth reflects a substantial improvement, particularly noticeable between 2021 and 2022, and continuing robustly through 2024.
The cost of capital remains relatively stable across the years, fluctuating narrowly between 16.62% and 16.99%. This stability suggests consistent financing conditions or risk perceptions during the period, without significant external disruptions affecting the cost of capital.
Invested capital shows some variability, initially increasing slightly from 14563 million USD in 2020 to 15004 million USD in 2021, then decreasing to a low of 11415 million USD in 2023 before rising again to 12973 million USD in 2024. The decline followed by a rebound could indicate divestments, efficiency improvements, or changes in asset management strategies during these years.
Economic profit undergoes a marked transformation, starting with negative values of -1750 million USD in 2020 and -1853 million USD in 2021, indicating value destruction during the early period. However, the measure turns positive in 2022 at 693 million USD and subsequently increases sharply to 3946 million USD by 2024. This shift to consistent positive economic profit reflects enhanced profitability exceeding the cost of capital, and improved capital allocation effectiveness.
Overall, the data reveals a positive trajectory in operational profitability and economic value generation, accompanied by managed capital deployment and stable capital costs. The notable turnaround in economic profit aligns with the significant increases in NOPAT and underscores effective performance improvements over the most recent years.
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. | ||||||
| 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 demonstrates significant fluctuations in key performance indicators over the analyzed periods. A central focus is the economic profit, invested capital, and economic spread ratio, each providing insight into the company's financial health and operational efficiency.
- Economic Profit
- Initially, the economic profit figures were negative, with values of -1750 million USD at the end of 2020 and slightly worsening to -1853 million USD by the end of 2021. This negative trend indicates that during these two years, the company’s returns did not cover the cost of capital. However, there was a notable turnaround starting in 2022, with economic profit becoming positive at 693 million USD and continuing this upward trajectory through 2023 and 2024, ending at 3946 million USD. This marked improvement suggests increased profitability and more effective use of capital in recent years.
- Invested Capital
- The invested capital showed a declining trend from 14563 million USD in 2020 down to 11415 million USD by the end of 2023, indicating a possible reduction in asset base or divestitures. In 2024, however, the invested capital increased to 12973 million USD. This decrease followed by a moderate rise could reflect strategic adjustments in capital allocation or investment levels over the period.
- Economic Spread Ratio
- This ratio, which measures the return on invested capital in relation to the cost of capital, aligns with the economic profit pattern. The economic spread ratio started negative at around -12% in 2020 and 2021, confirming the underperformance relative to capital costs. From 2022 onward, it shifted sharply positive, reaching 5.08% in 2022, then accelerating substantially to 15.96% in 2023, and further increasing to 30.42% in 2024. Such a trend indicates improving returns exceeding the cost of capital by an increasing margin, highlighting improved operational efficiency or profitable investments.
Overall, the data reveals a significant positive turnaround in economic profit and economic spread starting in 2022, moving from losses to substantial gains. Simultaneously, the reduction and subsequent modest increase in invested capital suggest strategic capital management aligned with the improvement in return metrics. These trends collectively indicate stronger financial performance and more efficient capital utilization in the most recent years analyzed.
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. | ||||||
| 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.
- Revenues
- Revenues displayed a consistent upward trend over the five-year period. Starting at 6,796 million US dollars in 2020, there was a substantial increase each year, reaching 23,739 million US dollars by 2024. The largest year-over-year increases occurred between 2020 and 2021, and again from 2021 to 2022, reflecting strong growth momentum during these periods.
- Economic Profit
- The economic profit figures indicate a significant turnaround. Initially, the company recorded negative economic profit of -1,750 million US dollars in 2020, which further declined to -1,853 million in 2021. However, from 2022 onwards, the company shifted to positive values, registering 693 million US dollars in 2022, and then experienced robust growth to 1,822 million in 2023 and 3,946 million in 2024. This suggests improved profitability and value creation over time.
- Economic Profit Margin
- The economic profit margin mirrored the trend seen in economic profit. Starting with negative margins of -25.75% in 2020 and -16.91% in 2021, the company moved into positive territory with 4.05% in 2022. This margin continued to strengthen, increasing to 8.53% in 2023 and reaching 16.62% by 2024. This trend highlights effective operational improvements and better capital efficiency relative to revenues.
- Summary
- Overall, the data reveals strong growth in revenues coupled with a marked improvement in economic profit and its corresponding margin. The transition from negative to positive economic profit and margin indicates a successful turnaround in financial performance. The progressive increase in these metrics through to 2024 suggests enhanced profitability and value generation alongside continuous revenue expansion.