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.
Paying user area
Try for free
Costco Wholesale Corp. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Costco Wholesale Corp. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Costco Wholesale Corp., economic profit calculation
US$ in millions
| 12 months ended: | Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
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 financial data reveals several noteworthy trends over the observed periods. Net operating profit after taxes (NOPAT) demonstrated a generally upward trajectory with fluctuations, increasing from 3,979 million USD in 2019 to 7,032 million USD in 2024. A peak is observable in 2022 at 6,421 million USD, followed by a decline in 2023 to 5,694 million USD, before rising again in 2024.
The cost of capital showed a gradual increase from 12.09% in 2019 to 12.5% in 2024. This steady rise indicates a slowly increasing hurdle rate for investments, which could impact investment decisions and valuation metrics.
Invested capital rose from 23,959 million USD in 2019 to reach a peak of 34,903 million USD in 2023, before slightly decreasing to 32,993 million USD in 2024. This pattern suggests significant capital deployment over the years, with a slight reduction in the most recent period, possibly reflecting divestitures or capital efficiency measures.
Economic profit experienced variability but overall growth, starting at 1,083 million USD in 2019 and reaching 2,908 million USD in 2024. Notably, economic profit decreased sharply in 2020 compared to 2019, followed by a recovery and substantial increases in the subsequent years, peaking in 2022 at 2,544 million USD, a dip in 2023 to 1,386 million USD, and a strong rebound in 2024.
These patterns collectively suggest effective capital utilization with periods of varying profitability and economic value generation. Despite fluctuations, the company generally improved its economic profit alongside increasing invested capital and NOPAT, amid a rising cost of capital environment. The recent declines followed by recoveries in certain metrics highlight some volatility, which could be attributable to external factors or operational adjustments.
- Net Operating Profit After Taxes (NOPAT)
- Overall increasing trend with a peak in 2022, a decline in 2023, and recovery in 2024.
- Cost of Capital
- Gradual and steady increase over the years, indicating a higher required return on investments.
- Invested Capital
- Significant growth from 2019 to 2023, followed by a slight reduction in 2024.
- Economic Profit
- Volatile but generally improving, with a notable dip in 2020 and 2023 and peaks in 2021, 2022, and 2024.
Net Operating Profit after Taxes (NOPAT)
Costco Wholesale Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net income attributable to Costco.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to Costco.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
- Net income attributable to Costco
- The net income demonstrates a consistent upward trend over the six-year period. Starting at 3,659 million USD in 2019, it increased steadily each year, reaching 7,367 million USD by 2024. The growth is particularly notable between 2023 and 2024, showing a substantial increase of approximately 17%. This pattern indicates continuous improvement in profitability and effective management in generating earnings for shareholders.
- Net operating profit after taxes (NOPAT)
- NOPAT also shows a general upward trajectory, reflecting enhanced operational efficiency and after-tax profitability. The figure rose from 3,979 million USD in 2019 to 7,032 million USD in 2024. However, a deviation from the growth trend is observed between 2022 and 2023, where NOPAT declined from 6,421 million USD to 5,694 million USD, representing a decrease of about 11%. Despite this dip, the metric recovered strongly in 2024, exceeding previous highs. This suggests a temporary operational challenge in 2023, followed by a robust rebound.
Cash Operating Taxes
Costco Wholesale Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
The financial data indicates a consistent upward trend in both the provision for income taxes and cash operating taxes over the six-year period examined.
- Provision for income taxes
- This item shows a steady increase each year, starting at 1,061 million US dollars in 2019 and rising to 2,373 million US dollars by 2024. The growth is relatively smooth and continuous, reflecting an increasing tax burden or improved profitability subject to taxation during this period.
- Cash operating taxes
- Similar to the provision for income taxes, cash operating taxes exhibit a continuous rise from 944 million US dollars in 2019 to 2,412 million US dollars in 2024. The increase each year is consistent with growing operational tax payments, slightly exceeding the provision figures each year, which might indicate timely cash outflows related to tax obligations.
The parallel progression of both tax-related metrics suggests a stable and possibly expanding operational base contributing to higher taxable income and ensuing tax payments. The close alignment between provision and cash operating taxes implies effective tax management with minimal discrepancies between accrued and paid taxes over the period.
Invested Capital
Costco Wholesale Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of LIFO reserve. See details »
4 Addition of equity equivalents to total Costco stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of short-term investments.
The analysis of the annual financial data reveals several notable trends over the six-year period.
- Total reported debt & leases
- This liability metric shows a moderate fluctuation, beginning at $9,126 million in 2019, peaking in 2021 at $11,407 million, and then generally declining to $9,949 million by 2024. This suggests a strategy of managing and reducing debt levels following a peak in 2021, potentially improving the company's leverage position.
- Total Costco stockholders’ equity
- This equity measure exhibits a consistent upward trend overall. Starting at $15,243 million in 2019, it rises significantly to $25,058 million by 2023 before declining somewhat to $23,622 million in 2024. The growth in stockholders’ equity indicates accumulation of retained earnings and possible capital infusions over these years, although the slight decrease in the final year may warrant further review.
- Invested capital
- Invested capital mirrors the combined effect of liabilities and equity, showing an overall increases from $23,959 million in 2019 to a peak of $34,903 million in 2023, followed by a decrease to $32,993 million in 2024. This pattern reflects growth in the total capital invested in the business up to 2023, with some withdrawal or reduction in the most recent year.
Overall, the data suggests strengthened equity position alongside careful debt management, with a general trend of growth in invested capital that slightly recedes in the final year observed. These patterns could indicate strategic financial adjustments aimed at optimizing capital structure and supporting company growth.
Cost of Capital
Costco Wholesale Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-09-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-09-03).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-08-28).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-08-29).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-08-30).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-09-01).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Costco Wholesale Corp., economic spread ratio calculation, comparison to benchmarks
| Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
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 several notable trends in economic profitability and capital investment over the examined periods.
- Economic Profit
- Economic profit exhibits fluctuations with an overall upward trajectory. Starting at 1,083 million USD in 2019, it declined to 763 million USD in 2020, possibly reflecting challenges faced during that year. Subsequently, economic profit increased substantially to 1,829 million USD in 2021 and continued to rise to 2,544 million USD in 2022. Following a dip to 1,386 million USD in 2023, it rebounded strongly to reach 2,908 million USD in 2024, marking the highest value within the series.
- Invested Capital
- There is an increasing trend in invested capital overall, despite some variability. Invested capital rose from 23,959 million USD in 2019 to 29,043 million USD in 2020. It then slightly decreased to 28,508 million USD in 2021 before increasing steadily to 31,671 million USD in 2022 and further to 34,903 million USD in 2023. In 2024, invested capital declined moderately to 32,993 million USD, indicating some capital management adjustments.
- Economic Spread Ratio
- The economic spread ratio, which indicates the return spread over the cost of capital, shows significant variability but a generally positive trend. It decreased from 4.52% in 2019 to 2.63% in 2020, reflecting potentially lower efficiency or returns relative to capital costs in that year. It then increased markedly to 6.41% in 2021 and further to 8.03% in 2022. After another decline to 3.97% in 2023, the ratio surged to a peak of 8.81% in 2024, suggesting improving profitability relative to capital cost.
In summary, despite some fluctuations commonly associated with economic cycles or specific market conditions, economic profit and economic spread ratio demonstrate a strong recovery and expansion, particularly in the most recent period. Invested capital follows an overall upward trend with some recent moderation, suggesting capital allocation adjustments in response to changing circumstances. The marked improvements in economic profitability and spread ratio in 2024 highlight enhanced operational efficiency or favorable market factors contributing to value creation.
Economic Profit Margin
Costco Wholesale Corp., economic profit margin calculation, comparison to benchmarks
| Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | Sep 1, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2024-09-01), 10-K (reporting date: 2023-09-03), 10-K (reporting date: 2022-08-28), 10-K (reporting date: 2021-08-29), 10-K (reporting date: 2020-08-30), 10-K (reporting date: 2019-09-01).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates notable fluctuations over the observed periods. Starting at 1083 million USD in 2019, it declined significantly to 763 million USD in 2020, which could indicate challenges faced during that period. However, there was a substantial recovery in 2021, with economic profit increasing to 1829 million USD. This upward trend continued into 2022, reaching 2544 million USD, marking the highest value in the series until that point. In 2023, economic profit decreased sharply to 1386 million USD, suggesting a possible decline in operational efficiency or external factors impacting profitability. The data for 2024 shows a strong rebound with economic profit hitting 2908 million USD, the highest level recorded, indicating an improvement in profitability conditions.
- Net Sales
- Net sales exhibit a consistent upward trajectory throughout the entire period. The values rose steadily from 149351 million USD in 2019 to 249625 million USD in 2024. This reflects continuous growth in revenue generation, with no evident periods of decline or stagnation. The growth appears to be robust, with year-over-year increases suggesting positive market conditions, expansion strategies, or effective sales performance.
- Economic Profit Margin
- The economic profit margin follows a pattern of variability. It begins at 0.73% in 2019, declines sharply to 0.47% in 2020, indicating reduced profitability relative to sales volume. The margin then rises significantly to 0.95% in 2021 and peaks at 1.14% in 2022, aligning with increased economic profit in those years. Similar to economic profit, the margin drops to 0.58% in 2023, reflecting a decrease in profit efficiency during that year. By 2024, the margin recovers to 1.16%, the highest observed margin, signaling improved economic profit relative to net sales.