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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
Economic Profit Margin

Kraft Heinz Co., economic profit calculation

USD $ 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).

2018 Calculations

¹ NOPAT. See Details »

² Cost of capital. See Details »

³ Invested capital. See Details »

⁴ Economic profit = NOPAT – Cost of capital × Invested capital
= hidden – hidden × hidden = 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.

Kraft Heinz Co., NOPAT calculation

USD $ 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).

2018 Calculations

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

⁶ 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.

Kraft Heinz Co., cash operating taxes calculation

USD $ 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.

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

USD $ 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.

Kraft Heinz Co., cost of capital calculations


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 21.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 21.00%)	=
Total:

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

¹ USD $ in millions

² Equity. See Details »

³ Debt. See Details »

⁴ Operating lease liability. See Details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

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

¹ USD $ in millions

² Equity. See Details »

³ Debt. See Details »

⁴ Operating lease liability. See Details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

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

¹ USD $ in millions

² Equity. See Details »

³ Debt. See Details »

⁴ Operating lease liability. See Details »


Equity²	÷	=	×		=
Debt³	÷	=	×	× (1 – 35.00%)	=
Operating lease liability⁴	÷	=	×	× (1 – 35.00%)	=
Total:

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

¹ USD $ in millions

² Equity. See Details »

³ Debt. See Details »

⁴ Operating lease liability. See Details »

Kraft Heinz Co., economic spread calculation

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Selected Financial Data (USD $ in millions)
	Economic profit¹
	Invested capital²
	Ratio
	Economic spread³

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).

2018 Calculations

¹ Economic profit. See Details »

² Invested capital. See Details »

³ Economic spread = 100 × Economic profit ÷ Invested capital
= 100 × hidden ÷ hidden = hidden

Ratio	Description	The company
Economic spread	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 improved from 2016 to 2017 but then deteriorated significantly from 2017 to 2018.

Kraft Heinz Co., economic profit margin calculation

		Dec 29, 2018	Dec 30, 2017	Dec 31, 2016	Dec 31, 2015
	Selected Financial Data (USD $ in millions)
	Economic profit¹
	Net sales
	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).

2018 Calculations

¹ Economic profit. See Details »

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

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.

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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

Economic Profit Margin