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
Expedia Group Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 2,614 – 19.70% × 17,498 = -832
The analysis of economic value added indicates a consistent failure to generate positive economic profit between 2017 and 2021, suggesting that the organization did not create shareholder value over this five-year period.
- Net Operating Profit After Taxes (NOPAT)
- A positive growth trend was observed from 2017 to 2019, with NOPAT increasing from 1,026 million to 1,922 million. This progression was abruptly reversed in 2020, resulting in a significant operating loss of 5,503 million. A strong recovery occurred in 2021, with NOPAT reaching a period high of 2,614 million.
- Capital Investment and Cost of Capital
- Invested capital demonstrated a general upward trajectory, rising from 14,039 million in 2017 to 17,498 million in 2021, despite a marginal contraction in 2020. The cost of capital remained relatively stable, fluctuating between a high of 21.03% in 2018 and a low of 17.99% in 2020, ending the period at 19.70%.
- Economic Profit Performance
- Economic profit remained negative throughout the entire analyzed timeframe. While the scale of value destruction decreased gradually from 2017 to 2019, the 2020 fiscal year experienced a severe decline, with economic profit dropping to -8,338 million. Although 2021 showed a significant recovery to -832 million, the result remained negative, indicating that the return on invested capital was still insufficient to cover the cost of capital.
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Net Operating Profit after Taxes (NOPAT)
Expedia Group Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
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 deferred merchant bookings and deferred revenue.
4 Addition of increase (decrease) in restructuring and related reorganization accrued liability.
5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Expedia Group, Inc..
6 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 437 × 3.50% = 15
7 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 366 × 21.00% = 77
8 Addition of after taxes interest expense to net income (loss) attributable to Expedia Group, Inc..
9 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 9 × 21.00% = 2
10 Elimination of after taxes investment income.
The financial data reveals significant fluctuations in profitability over the analyzed periods.
- Net Income (Loss) Attributable to Expedia Group, Inc.
- The company experienced positive net income from 2017 through 2019, with values steadily increasing from 378 million USD in 2017 to 565 million USD in 2019. In 2020, there was a sharp and substantial loss of 2,612 million USD, indicating a major adverse impact on profitability. The net income slightly recovered in 2021, recording a marginal profit of 12 million USD, which suggests a fragile rebound but still far below pre-2020 levels.
- Net Operating Profit After Taxes (NOPAT)
- This metric exhibits a similar trend to net income, with continuous growth from 1,026 million USD in 2017 to 1,922 million USD in 2019. The year 2020 marked a deep negative NOPAT of 5,503 million USD, underscoring the operational difficulties faced during this period. In 2021, there was a notable improvement with NOPAT returning to a positive figure of 2,614 million USD, surpassing pre-pandemic levels, which may reflect operational recovery and enhanced efficiency or cost management.
Overall, the data illustrates strong growth in profitability through 2019, a severe downturn in 2020 presumably linked to extraordinary circumstances, followed by partial to full recovery across key profit measures in 2021. The divergence in magnitude of loss between net income and NOPAT in 2020 highlights the scale of operational and possibly non-operational challenges during that year.
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Cash Operating Taxes
Expedia Group Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The analysis of the provided financial data indicates noteworthy fluctuations in the income tax expense (benefit) and cash operating taxes over the observed five-year period.
- Income Tax Expense (Benefit)
- The income tax expense exhibits a rising trend from 2017 through 2019, increasing from 45 million USD to 203 million USD. However, this trend reverses strongly in 2020, with the figure turning negative to -423 million USD, indicating a tax benefit rather than an expense. In 2021, the amount remains negative but with a reduced benefit of -53 million USD. This significant shift in 2020 and 2021 reflects either substantial tax credits, loss carrybacks, or other tax relief measures impacting the income tax recorded.
- Cash Operating Taxes
- Cash operating taxes increase sharply from 212 million USD in 2017 to 427 million USD in 2018, followed by a decline to 323 million USD in 2019. The downward trend continues in 2020, dropping to 142 million USD, and then slightly recovers to 167 million USD in 2021. This pattern suggests a peak in cash outflows related to taxes in 2018, with subsequent moderation likely due to operational changes or tax planning strategies.
Overall, the data reveals contrasting movements between reported income tax expense and actual cash tax payments, especially notable in 2020 when the income tax expense turns into a substantial benefit while cash taxes paid decrease markedly. This divergence may indicate changes in accounting treatment or timing differences between tax expense recognition and cash tax payments.
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Invested Capital
Expedia Group Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
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 deferred merchant bookings and deferred revenue.
5 Addition of restructuring and related reorganization accrued liability.
6 Addition of equity equivalents to total Expedia Group, Inc. stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of projects in progress.
9 Subtraction of investments.
The presented financial data reveals several notable trends over the five-year period from 2017 to 2021.
- Total Reported Debt & Leases
- There is an overall increasing trend in total reported debt and leases, rising from $4,941 million in 2017 to $8,887 million by the end of 2021. Notably, the increase between 2019 ($5,589 million) and 2020 ($8,855 million) is substantial, indicating a significant rise in leverage during that period, which then stabilizes into 2021.
- Total Stockholders’ Equity
- Total stockholders' equity shows a declining trend over the same period. Starting at $4,522 million in 2017, it decreases somewhat gradually to $3,967 million in 2019, followed by a sharper decline to $2,532 million in 2020 and then further to $2,057 million in 2021. This decreasing equity trend suggests potential erosion of shareholder value or increased liabilities relative to assets.
- Invested Capital
- Invested capital remains relatively steady between 2017 and 2020, fluctuating mildly from $14,039 million in 2017 to $15,765 million in 2020. However, a noticeable increase occurs in 2021, reaching $17,498 million. This rise may reflect accumulated investments, retained earnings, or other capital inputs despite the reduction in equity.
In summary, the financial structure indicates rising debt levels alongside falling equity, which could imply increased financial risk or strategic leveraging. The increase in invested capital alongside these changes indicates ongoing commitments to assets or operations. These trends warrant further investigation into the underlying causes, such as capital expenditures, income performance, or financing activities, to comprehensively assess financial health and risk exposure.
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Cost of Capital
Expedia Group Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 29,924) | 29,924) | ÷ | 39,561) | = | 0.76 | 0.76 | × | 25.13% | = | 19.01% | ||
| Series A Preferred Stock | —) | —) | ÷ | 39,561) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt, including current maturities3 | 9,200) | 9,200) | ÷ | 39,561) | = | 0.23 | 0.23 | × | 3.57% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 437) | 437) | ÷ | 39,561) | = | 0.01 | 0.01 | × | 3.50% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 39,561) | 1.00 | 19.70% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 21,078) | 21,078) | ÷ | 31,839) | = | 0.66 | 0.66 | × | 25.13% | = | 16.64% | ||
| Series A Preferred Stock | 1,022) | 1,022) | ÷ | 31,839) | = | 0.03 | 0.03 | × | 7.34% | = | 0.24% | ||
| Long-term debt, including current maturities3 | 9,100) | 9,100) | ÷ | 31,839) | = | 0.29 | 0.29 | × | 4.68% × (1 – 21.00%) | = | 1.06% | ||
| Operating lease liability4 | 639) | 639) | ÷ | 31,839) | = | 0.02 | 0.02 | × | 3.60% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 31,839) | 1.00 | 17.99% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 17,191) | 17,191) | ÷ | 22,961) | = | 0.75 | 0.75 | × | 25.13% | = | 18.82% | ||
| Series A Preferred Stock | —) | —) | ÷ | 22,961) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt, including current maturities3 | 5,119) | 5,119) | ÷ | 22,961) | = | 0.22 | 0.22 | × | 4.05% × (1 – 21.00%) | = | 0.71% | ||
| Operating lease liability4 | 651) | 651) | ÷ | 22,961) | = | 0.03 | 0.03 | × | 3.50% × (1 – 21.00%) | = | 0.08% | ||
| Total: | 22,961) | 1.00 | 19.61% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 19,252) | 19,252) | ÷ | 23,739) | = | 0.81 | 0.81 | × | 25.13% | = | 20.38% | ||
| Series A Preferred Stock | —) | —) | ÷ | 23,739) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt, including current maturities3 | 3,728) | 3,728) | ÷ | 23,739) | = | 0.16 | 0.16 | × | 4.31% × (1 – 21.00%) | = | 0.53% | ||
| Operating lease liability4 | 759) | 759) | ÷ | 23,739) | = | 0.03 | 0.03 | × | 4.31% × (1 – 21.00%) | = | 0.11% | ||
| Total: | 23,739) | 1.00 | 21.03% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 15,791) | 15,791) | ÷ | 20,941) | = | 0.75 | 0.75 | × | 25.13% | = | 18.95% | ||
| Series A Preferred Stock | —) | —) | ÷ | 20,941) | = | 0.00 | 0.00 | × | 0.00% | = | 0.00% | ||
| Long-term debt, including current maturities3 | 4,458) | 4,458) | ÷ | 20,941) | = | 0.21 | 0.21 | × | 4.66% × (1 – 35.00%) | = | 0.64% | ||
| Operating lease liability4 | 692) | 692) | ÷ | 20,941) | = | 0.03 | 0.03 | × | 4.66% × (1 – 35.00%) | = | 0.10% | ||
| Total: | 20,941) | 1.00 | 19.70% | ||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Expedia Group Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (832) | (8,338) | (1,247) | (1,683) | (1,739) | |
| Invested capital2 | 17,498) | 15,765) | 16,161) | 14,424) | 14,039) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -4.76% | -52.89% | -7.72% | -11.67% | -12.39% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | -1.99% | — | — | — | — | |
| Home Depot Inc. | 12.21% | — | — | — | — | |
| Lowe’s Cos. Inc. | 9.17% | — | — | — | — | |
| TJX Cos. Inc. | -12.59% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -832 ÷ 17,498 = -4.76%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by a persistent inability to generate positive economic profit, indicating that the returns on invested capital remained below the company's cost of capital throughout the period. While a general trend toward recovery was evident in the early years and the final year of the period, a severe contraction occurred in 2020.
- Economic Profit Trends
- Economic profit remained negative for all five years analyzed. A gradual improvement was observed from 2017 to 2019, with losses narrowing from -1,739 million USD to -1,247 million USD. This positive trajectory was abruptly reversed in 2020, where economic profit plummeted to -8,338 million USD, marking a significant destruction of shareholder value. However, a substantial recovery occurred by 2021, with the loss reducing to -832 million USD, the lowest deficit in the observed timeframe.
- Invested Capital Growth
- Invested capital exhibited a general upward trend, increasing from 14,039 million USD in 2017 to 17,498 million USD in 2021. This represents a steady expansion of the capital base despite the negative economic profit. A marginal decrease was noted in 2020, dropping to 15,765 million USD, before rebounding to its peak in 2021.
- Economic Spread Ratio Analysis
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained negative throughout the period, confirming consistent value erosion. The ratio improved from -12.39% in 2017 to -7.72% in 2019. The 2020 fiscal year saw an extreme deterioration, with the ratio falling to -52.89%, reflecting the severity of the operational shock during that year. By 2021, the ratio recovered significantly to -4.76%, suggesting that the company moved closer to achieving economic break-even than at any other point in the five-year sequence.
In summary, the analysis reveals a volatile period of value destruction. The sharp divergence in 2020 underscores a period of extreme financial instability, while the 2021 figures demonstrate a strong recovery in efficiency and a narrowing gap between the actual return on invested capital and the required cost of capital.
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Economic Profit Margin
Expedia Group Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (832) | (8,338) | (1,247) | (1,683) | (1,739) | |
| Revenue | 8,598) | 5,199) | 12,067) | 11,223) | 10,060) | |
| Add: Increase (decrease) in deferred merchant bookings and deferred revenue | 2,575) | (2,721) | 1,309) | 1,146) | 645) | |
| Adjusted revenue | 11,173) | 2,478) | 13,376) | 12,369) | 10,705) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -7.45% | -336.50% | -9.32% | -13.61% | -16.25% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Amazon.com Inc. | -0.85% | — | — | — | — | |
| Home Depot Inc. | 4.59% | — | — | — | — | |
| Lowe’s Cos. Inc. | 2.90% | — | — | — | — | |
| TJX Cos. Inc. | -8.77% | — | — | — | — | |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenue
= 100 × -832 ÷ 11,173 = -7.45%
3 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by persistent negative economic profit, indicating that the company failed to generate returns in excess of its cost of capital throughout the analyzed period. Despite a consistent trend of improvement between 2017 and 2019, a severe contraction occurred in 2020, followed by a partial recovery in 2021.
- Economic Profit Trends
- Economic profit remained negative across all five years. A gradual improvement was observed from 2017 to 2019, with losses narrowing from -1,739 million US$ to -1,247 million US$. However, 2020 saw a precipitous decline, with economic profit dropping to -8,338 million US$. By 2021, the loss recovered significantly to -832 million US$, marking the lowest level of economic loss within the five-year sequence.
- Adjusted Revenue Fluctuations
- Adjusted revenue showed a steady upward trajectory from 10,705 million US$ in 2017 to a peak of 13,376 million US$ in 2019. This growth was abruptly reversed in 2020, where revenue plummeted to 2,478 million US$. In 2021, revenue rebounded to 11,173 million US$, returning to levels near those seen in 2017.
- Economic Profit Margin Analysis
- The economic profit margin reflects the volatility of the underlying earnings and revenue. Between 2017 and 2019, the margin improved from -16.25% to -9.32%. The 2020 fiscal year experienced an extreme outlier, with the margin crashing to -336.50%, illustrating a disproportionate increase in economic losses relative to the collapsed revenue base. The margin improved to -7.45% in 2021, the most favorable margin recorded during the period, although it remained negative.
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