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:
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Total Asset Turnover since 2005
- Analysis of Revenues
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 presents a multi-year perspective on key performance indicators, including net operating profit after taxes (NOPAT), cost of capital, invested capital, and economic profit.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT has shown an overall upward trend from 2019 to 2024. Beginning at $3,979 million in 2019, it steadily increased each year, peaking at $6,421 million in 2022. There was a decline to $5,694 million in 2023, followed by a substantial rebound to $7,032 million in 2024. This indicates generally improving operational profitability with a minor setback in 2023 before a strong recovery.
- Cost of Capital
- The cost of capital has exhibited a gradual increase over the six-year period. Starting at 12.09% in 2019, it fluctuated slightly but consistently edged higher, reaching 12.51% by 2024. This steady rise suggests a marginal increase in the company’s required rate of return or perceived investment risk during the timeframe.
- Invested Capital
- Invested capital initially grew from $23,959 million in 2019 to $29,043 million in 2020, then saw a small decrease in 2021 to $28,508 million. Thereafter, the capital base expanded considerably to $31,671 million in 2022 and peaked at $34,903 million in 2023 before contracting to $32,993 million in 2024. This pattern reveals a general strategy of capital expansion, with a recent partial reduction in invested assets in the last reporting year.
- Economic Profit
- Economic profit has shown significant variability but an overall positive growth trajectory. After starting at $1,082 million in 2019, it dipped to $761 million in 2020. Subsequently, there was a sharp rise to $1,827 million in 2021 and further increases to $2,543 million in 2022. The figure declined again to $1,385 million in 2023, but rebounded strongly to a high of $2,906 million in 2024. These fluctuations indicate varying degrees of success in generating returns above the cost of capital, with the latest year reflecting strong value creation.
In summary, the data reflects overall growth in profitability and invested capital, accompanied by a slowly rising cost of capital. Despite some annual fluctuations, especially in economic profit and NOPAT, the company's ability to generate returns above its cost of capital appears to have improved over the period analyzed.
Net Operating Profit after Taxes (NOPAT)
Costco Wholesale Corp., NOPAT calculation
US$ 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.
- Economic profit
- The economic profit exhibits notable fluctuations over the examined period. Starting at 1082 million US dollars in 2019, it decreased to 761 million in 2020, followed by a marked increase to 1827 million in 2021. The upward trend continued in 2022, reaching 2543 million. However, a decline occurred in 2023, with economic profit dropping to 1385 million, before surging again to 2906 million in 2024. Overall, this reflects volatility with strong recovery and growth in certain years.
- Invested capital
- Invested capital showed a general increasing trend from 2019 to 2023. It started at 23959 million US dollars in 2019, rose to 29043 million in 2020, slightly decreased to 28508 million in 2021, then increased to 31671 million in 2022 and further to 34903 million in 2023. A slight reduction occurred in 2024, with invested capital lowering to 32993 million. Despite the minor dip in the final year, the overall trend is upward, indicating consistent asset base growth with periodic adjustments.
- Economic spread ratio
- The economic spread ratio demonstrates variability across the periods. It began at 4.52% in 2019, dropped significantly to 2.62% in 2020, and then markedly improved to 6.41% in 2021. The increasing trend continued to 8.03% in 2022, after which it declined to 3.97% in 2023. In 2024, a substantial recovery occurred, with the ratio reaching 8.81%. These fluctuations suggest changing efficiency or returns relative to cost of capital, with noteworthy improvements in certain years.
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.
The financial analysis over the periods from 2019 to 2024 reveals several noteworthy trends regarding economic profit, net sales, and economic profit margin.
- Economic Profit
- The economic profit shows a fluctuating yet overall increasing trend. Starting at 1,082 million USD in 2019, it declined to 761 million USD in 2020 before experiencing a significant rebound to 1,827 million USD in 2021. This upward trajectory continued in 2022, reaching 2,543 million USD. Although there was a decrease to 1,385 million USD in 2023, the figure sharply increased again in 2024, peaking at 2,906 million USD. This indicates volatility but a strong growth pattern overall.
- Net Sales
- Net sales consistently increased year-over-year across the entire period. Beginning at 149,351 million USD in 2019, sales rose steadily to 163,220 million USD in 2020, followed by continued growth to 192,052 million USD in 2021. The trend remained positive, with sales hitting 222,730 million USD in 2022, 237,710 million USD in 2023, and reaching 249,625 million USD in 2024. This steady increase reflects robust revenue growth.
- Economic Profit Margin
- The economic profit margin exhibits variability but generally reflects improvement over time. It started at 0.72% in 2019, dropped to 0.47% in 2020, and then more than doubled to 0.95% in 2021. The margin further increased to 1.14% in 2022 before declining to 0.58% in 2023. In 2024, it improved significantly again to 1.16%. These fluctuations indicate changing profitability efficiency, with a tendency toward stronger margins by the end of the period.
Overall, the data suggests a positive growth trajectory in sales and economic profit with some cyclical variations in profitability margins. The fluctuations in economic profit and profit margin may warrant further investigation into operational factors or market conditions influencing performance during specific years.