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.
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- Analysis of Geographic Areas
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2008
- Net Profit Margin since 2008
- Operating Profit Margin since 2008
- Return on Equity (ROE) since 2008
- Price to Operating Profit (P/OP) since 2008
- Price to Sales (P/S) since 2008
- Aggregate Accruals
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Economic Profit
Keurig Dr Pepper Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||
| Cost of capital2 | |||||
| Invested capital3 | |||||
| Economic profit4 | |||||
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).
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrates a consistent upward trend over the observed period. From 903 million USD in 2018, it nearly doubled to 1,753 million USD in 2019, followed by a moderate increase to 1,786 million USD in 2020, and a more significant rise to 2,588 million USD in 2021. This indicates an improvement in operational profitability.
- Cost of Capital
- The cost of capital shows a gradual increase over the four years. Starting at 8.71% in 2018, it slightly increased to 8.88% in 2019, then to 9.01% in 2020, and finally to 9.42% in 2021. This upward trend may suggest rising financing costs or perceived risk.
- Invested Capital
- Invested capital remained relatively stable, with minor fluctuations. It decreased slightly from 44,635 million USD in 2018 to 44,138 million USD in 2019, further decreased to 43,835 million USD in 2020, and then experienced a modest increase to 44,109 million USD in 2021. This stability indicates consistent investment levels in the company’s assets.
- Economic Profit
- Economic profit, calculated as the difference between NOPAT and the capital charge, is negative throughout the period, but there is a clear improvement trend. The negative economic profit decreased from -2,986 million USD in 2018 to -2,165 million USD in 2019 and 2020, and further improved to -1,568 million USD in 2021. Despite remaining negative, the reduction in economic loss suggests the company is moving closer to generating positive economic profit, reflecting enhanced value creation relative to its cost of capital.
Net Operating Profit after Taxes (NOPAT)
Keurig Dr Pepper 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).
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 product warranties.
4 Addition of increase (decrease) in restructuring liabilities.
5 Addition of increase (decrease) in equity equivalents to net income attributable to KDP.
6 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income attributable to KDP.
The financial performance over the four-year period demonstrates a notably positive trend in profitability measures.
- Net Income Attributable to KDP
- The net income attributable to the company increased substantially, starting at 586 million US dollars in 2018 and rising to 2,146 million US dollars by the end of 2021. This represents a more than threefold increase over the period, with a particularly strong jump between 2020 and 2021, where net income grew by approximately 62%. The steady increases in the prior years reflect consistent growth in profitability.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT also exhibited strong growth, increasing from 903 million US dollars in 2018 to 2,588 million US dollars in 2021. The year-over-year increases indicate robust operating profitability improvements, with the most significant rise observed in the last year, mirroring the trend seen in net income. The growth rate from 2020 to 2021 was approximately 45%, demonstrating enhanced operational efficiency and effective tax management contributing to increased net operating profits.
Overall, the data indicates significant and sustained financial improvement in key profitability metrics, with the largest gains occurring in the most recent year. This suggests successful management strategies and operational execution leading to stronger earnings and operational results over time.
Cash Operating Taxes
Keurig Dr Pepper Inc., cash operating taxes calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|
| Provision for income taxes | |||||
| Less: Deferred income tax expense (benefit) | |||||
| Add: Tax savings from interest expense | |||||
| Cash operating taxes |
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).
The financial data reveals the trends in tax-related expenses over the four-year period ending December 31, 2021. There is an upward trajectory in both the provision for income taxes and cash operating taxes, though the growth rates and amounts vary between these two categories.
- Provision for Income Taxes
- This figure rose from 202 million US dollars in 2018 to 653 million US dollars in 2021. The largest year-over-year increase occurred between 2020 and 2021, with an increase of 225 million US dollars. The provision more than tripled over the four years, indicating a substantial increase in income tax expenses recognized during this period.
- Cash Operating Taxes
- Cash operating taxes demonstrated a consistent upward trend, increasing from 381 million US dollars in 2018 to 733 million US dollars in 2021. The increase across the period was approximately 92%, with the most significant jump occurring between 2018 and 2019 (224 million US dollars). The growth in cash taxes paid suggests rising tax obligations or improved tax payment alignments within the company.
Overall, the data reflects a significant increase in both accrued income tax provisions and actual cash tax payments over the examined period. The increases may be indicative of growing profitability, changes in tax regulation, or alterations in financial strategies related to tax expenses. The sharper rise in the provision for income taxes in the final year suggests a possible anticipation of higher tax liability.
Invested Capital
Keurig Dr Pepper 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).
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 product warranties.
5 Addition of restructuring liabilities.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction-in-progress.
The financial data reveals a consistent trend in the company's capital structure over the analyzed period from 2018 to 2021. There is a clear decline in the total reported debt and leases, indicating a steady reduction in liabilities.
- Total reported debt & leases
- Starting at 16,236 million US dollars in 2018, this figure decreases each year, reaching 13,266 million US dollars by the end of 2021. This downward trend suggests a strategic effort to reduce financial leverage or improve the balance sheet strength.
- Stockholders’ equity
- Stockholders' equity shows a gradual increase across the same timeframe, moving from 22,533 million US dollars in 2018 to 24,972 million US dollars in 2021. This incremental rise indicates growth in the company’s net assets, which may reflect retained earnings accumulation or capital infusions.
- Invested capital
- Invested capital remains relatively stable, fluctuating slightly without a clear upward or downward trajectory. It begins at 44,635 million US dollars in 2018, decreases marginally to 43,835 million US dollars in 2020, and recovers slightly to 44,109 million US dollars in 2021. This stability may imply consistent investment levels despite changing debt and equity components.
Overall, the reduction in debt combined with the increase in equity suggests an improvement in the financial robustness and potentially a lower risk profile. The steadiness of invested capital implies that the company maintained its asset base, possibly reflecting controlled investment or capital expenditure activities balanced by depreciation or disposals.
Cost of Capital
Keurig Dr Pepper Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (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 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Short-term borrowings, long-term obligations (including current portion), and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Short-term borrowings, long-term obligations (including current portion), and finance lease liability. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Keurig Dr Pepper Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | |||||
| Invested capital2 | |||||
| Performance Ratio | |||||
| Economic spread ratio3 | |||||
| Benchmarks | |||||
| Economic Spread Ratio, Competitors4 | |||||
| Coca-Cola Co. | |||||
| Mondelēz International Inc. | |||||
| PepsiCo Inc. | |||||
| Philip Morris International Inc. | |||||
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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit showed a consistent negative trend across the analyzed period, indicating ongoing losses in economic value generation. The losses decreased from -2986 million US dollars in 2018 to -1568 million US dollars in 2021, demonstrating an improving trajectory although still remaining in negative territory.
- Invested Capital
- Invested capital exhibited relative stability over the four years, fluctuating slightly around the 44,000 million US dollars mark. It decreased marginally from 44,635 million in 2018 to 43,835 million in 2020, before rising slightly to 44,109 million in 2021, showing no significant expansion or contraction in capital investment.
- Economic Spread Ratio
- The economic spread ratio remained negative throughout the period, indicating the return on invested capital was below the cost of capital. However, the ratio improved steadily from -6.69% in 2018 to -3.56% in 2021. This improvement suggests a reduction in value destruction, aligning with the less negative economic profit figure over the years.
Economic Profit Margin
Keurig Dr Pepper Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Economic profit1 | |||||
| Net sales | |||||
| Performance Ratio | |||||
| Economic profit margin2 | |||||
| Benchmarks | |||||
| Economic Profit Margin, Competitors3 | |||||
| Coca-Cola Co. | |||||
| Mondelēz International Inc. | |||||
| PepsiCo Inc. | |||||
| Philip Morris International Inc. | |||||
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).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Net Sales
- The net sales demonstrate a consistent upward trend over the four-year period. Starting at $7,442 million in 2018, sales rose significantly to $11,120 million in 2019, followed by steady growth to $11,618 million in 2020 and further to $12,683 million in 2021. This indicates a robust expansion in revenue generation capacity over time.
- Economic Profit
- Economic profit remains negative throughout the period, reflecting that the company did not earn returns exceeding its cost of capital during these years. However, the deficit has narrowed substantially, improving from a loss of $2,986 million in 2018 to $1,568 million in 2021. This reduction in negative economic profit cues a trend towards better value creation or more efficient capital utilization.
- Economic Profit Margin
- The economic profit margin, which measures economic profit relative to net sales, also exhibits a marked improvement. The margin improved from -40.12% in 2018 to -12.37% in 2021. Although still negative, this signifies that economic losses as a proportion of sales have diminished considerably, aligning with the improvements seen in economic profit figures and overall sales growth.