Paying users zone. Data is covered by hidden .

Get 1-month access to Kraft Heinz Co. for $13.99, or
get full access to entire website for at least 3 months from $49.99.

We accept:

Unlock

This is a one-time payment. There is no automatic renewal.

Kraft Heinz Co. (KHC)

Economic Value Added (EVA)

Difficulty: Advanced

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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Economic Profit

Kraft Heinz Co., economic profit calculation

US$ in millions

	12 months ended	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Net operating profit after taxes (NOPAT)¹
	Cost of capital²
	Invested capital³

	Economic profit⁴

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

<>⁴ 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= hidden

–

Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Kraft Heinz Co.’s economic profit increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Net Operating Profit after Taxes (NOPAT)

Kraft Heinz Co., NOPAT calculation

US$ in millions

	12 months ended	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Net income (loss) attributable to Kraft Heinz
	Deferred income tax expense (benefit)¹
	Increase (decrease) in allowances related to trade accounts receivable²
	Increase (decrease) in liability balance for Integration Program and restructuring project costs³
	Increase (decrease) in equity equivalents⁴
	Interest expense
	Interest expense, operating lease liability⁵
	Adjusted interest expense
	Tax benefit of interest expense⁶
	Adjusted interest expense, after taxes⁷
	Net income (loss) attributable to noncontrolling interest
	Net operating profit after taxes (NOPAT)

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowances related to trade accounts receivable.

³ Addition of increase (decrease) in liability balance for Integration Program and restructuring project costs.

⁴ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Kraft Heinz.

⁵ 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= hidden × hidden = hidden

⁶ 2018 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= hidden × 21.00% = hidden

⁷ Addition of after taxes interest expense to net income (loss) attributable to Kraft Heinz.

Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Kraft Heinz Co.’s NOPAT increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Cash Operating Taxes

Kraft Heinz Co., cash operating taxes calculation

US$ in millions

	12 months ended	Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Provision for (benefit from) income taxes
	Less: Deferred income tax expense (benefit)
	Add: Tax savings from interest expense
	Cash operating taxes

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Kraft Heinz Co.’s cash operating taxes declined from 2016 to 2017 and from 2017 to 2018.

Invested Capital

Kraft Heinz Co., invested capital calculation (financing approach)

US$ in millions

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Commercial paper and other short-term debt
	Current portion of long-term debt
	Long-term debt, excluding current portion
	Operating lease liability¹
	Total reported debt & leases
	Shareholders’ equity
	Net deferred tax (assets) liabilities²
	Allowances related to trade accounts receivable³
	Liability balance for Integration Program and restructuring project costs⁴
	Equity equivalents⁵
	Accumulated other comprehensive (income) loss, net of tax⁶
	Redeemable noncontrolling interest
	Noncontrolling interest
	Adjusted shareholders’ equity
	Construction in progress⁷
	Invested capital

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

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 liability balance for Integration Program and restructuring project costs.

⁵ Addition of equity equivalents to shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Kraft Heinz Co.’s invested capital increased from 2016 to 2017 but then declined significantly from 2017 to 2018.

Cost of Capital

Kraft Heinz Co., cost of capital calculations

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 21.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 21.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2019-06-07).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2018-02-16).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2017-02-23).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

	Weights			Cost of capital
Equity²		÷	=		×		=
Debt³		÷	=		×	× (1 – 35.00%)	=
Operating lease liability⁴		÷	=		×	× (1 – 35.00%)	=
Total capital:	Total weights:			Cost of total capital:

Based on: 10-K (filing date: 2016-03-03).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Economic Spread Ratio

Kraft Heinz Co., economic spread ratio calculation

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Selected Financial Data (US$ in millions)
	Economic profit¹
	Invested capital²
	Performance Ratio
	Economic spread ratio³

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Kraft Heinz Co.’s economic spread ratio improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Economic Profit Margin

Kraft Heinz Co., economic profit margin calculation

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Selected Financial Data (US$ in millions)
	Economic profit¹
	Net sales
	Performance Ratio
	Economic profit margin²

Based on: 10-K (filing date: 2019-06-07), 10-K (filing date: 2018-02-16), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-03-03).

¹ Economic profit. See details »

² 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × hidden ÷ hidden = hidden

Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Kraft Heinz Co.’s economic profit margin improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

	Kraft Heinz Co.	Other companies (not purchased previously)
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

	All companies
Financial Statements
Common-Size Financial Statements
Ratios
Relative Valuation
Discounted Cash Flow (DCF) Valuation
Economic Value Added (EVA)
Long-term Trends
Analysis
Financial Reporting Quality

Kraft Heinz Co. (KHC)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Dec 29, 2018

Dec 30, 2017

Dec 31, 2016

Dec 31, 2015

Economic Spread Ratio

Economic Profit Margin