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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 Ratio
Economic Profit Margin

Marriott International Inc., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net operating profit after taxes (NOPAT)¹	1,577)	2,260)	1,463)	1,039)	1,097)
Cost of capital²	12.91%	13.40%	13.80%	12.98%	12.89%
Invested capital³	13,992)	14,627)	14,229)	16,537)	758)

Economic profit⁴	(229)	301)	(500)	(1,106)	1,000)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,577 – 12.91% × 13,992 = -229

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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.	Marriott International Inc. economic profit increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.

Marriott International Inc., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Net income	1,273)	1,907)	1,372)	780)	859)
Deferred income tax expense (benefit)¹	(164)	(109)	(119)	104)	139)
Increase (decrease) in accounts receivable reserve²	10)	20)	9)	(5)	(8)
Increase (decrease) in deferred revenue³	129)	146)	—)	—)	—)
Increase (decrease) in equity equivalents⁴	(25)	57)	(110)	99)	131)
Interest expense	394)	340)	288)	234)	167)
Interest expense, operating lease liability⁵	49)	57)	59)	48)	27)
Adjusted interest expense	443)	397)	347)	282)	194)
Tax benefit of interest expense⁶	(93)	(83)	(121)	(99)	(68)
Adjusted interest expense, after taxes⁷	350)	314)	226)	183)	126)
Interest income	(26)	(22)	(38)	(35)	(29)
Investment income, before taxes	(26)	(22)	(38)	(35)	(29)
Tax expense (benefit) of investment income⁸	5)	5)	13)	12)	10)
Investment income, after taxes⁹	(21)	(17)	(25)	(23)	(19)
Net operating profit after taxes (NOPAT)	1,577)	2,260)	1,463)	1,039)	1,097)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in accounts receivable reserve.

³ Addition of increase (decrease) in deferred revenue.

⁴ Addition of increase (decrease) in equity equivalents to net income.

⁵ 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,012 × 4.80% = 49

⁶ 2019 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 443 × 21.00% = 93

⁷ Addition of after taxes interest expense to net income.

⁸ 2019 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 26 × 21.00% = 5

⁹ Elimination of after taxes investment income.

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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.	Marriott International Inc. NOPAT increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level.

Marriott International Inc., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Provision for income taxes	326)	438)	1,464)	404)	396)
Less: Deferred income tax expense (benefit)	(164)	(109)	(119)	104)	139)
Add: Tax savings from interest expense	93)	83)	121)	99)	68)
Less: Tax imposed on investment income	5)	5)	13)	12)	10)
Cash operating taxes	577)	626)	1,691)	386)	315)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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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.	Marriott International Inc. cash operating taxes decreased from 2017 to 2018 and from 2018 to 2019.

Marriott International Inc., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Current portion of long-term debt	977)	833)	398)	309)	300)
Long-term debt, excluding current portion	9,963)	8,514)	7,840)	8,197)	3,807)
Operating lease liability¹	1,012)	1,621)	1,819)	1,408)	806)
Total reported debt & leases	11,952)	10,968)	10,057)	9,914)	4,913)
Shareholders’ equity (deficit)	703)	2,225)	3,731)	5,357)	(3,590)
Net deferred tax (assets) liabilities²	136)	314)	511)	904)	(656)
Accounts receivable reserve³	76)	66)	29)	20)	25)
Deferred revenue⁴	960)	831)	—)	—)	—)
Equity equivalents⁵	1,172)	1,211)	540)	924)	(631)
Accumulated other comprehensive (income) loss, net of tax⁶	361)	391)	17)	497)	196)
Adjusted shareholders’ equity (deficit)	2,236)	3,827)	4,288)	6,778)	(4,025)
Construction in progress⁷	(196)	(168)	(116)	(155)	(130)
Invested capital	13,992)	14,627)	14,229)	16,537)	758)

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

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 revenue.

⁵ Addition of equity equivalents to shareholders’ equity (deficit).

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Marriott International Inc. invested capital increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Marriott International Inc., cost of capital calculations

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	38,789)	38,789)	÷	51,023)	=	0.76	0.76	×	16.12%	=	12.26%
Long-term debt, including current portion³	11,222)	11,222)	÷	51,023)	=	0.22	0.22	×	3.34% × (1 – 21.00%)	=	0.58%
Operating lease liability⁴	1,012)	1,012)	÷	51,023)	=	0.02	0.02	×	4.80% × (1 – 21.00%)	=	0.08%
Total:	51,023)					1.00					12.91%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	42,272)	42,272)	÷	53,109)	=	0.80	0.80	×	16.12%	=	12.83%
Long-term debt, including current portion³	9,217)	9,217)	÷	53,109)	=	0.17	0.17	×	3.51% × (1 – 21.00%)	=	0.48%
Operating lease liability⁴	1,621)	1,621)	÷	53,109)	=	0.03	0.03	×	3.51% × (1 – 21.00%)	=	0.08%
Total:	53,109)					1.00					13.40%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	50,502)	50,502)	÷	60,540)	=	0.83	0.83	×	16.12%	=	13.45%
Long-term debt, including current portion³	8,219)	8,219)	÷	60,540)	=	0.14	0.14	×	3.24% × (1 – 35.00%)	=	0.29%
Operating lease liability⁴	1,819)	1,819)	÷	60,540)	=	0.03	0.03	×	3.24% × (1 – 35.00%)	=	0.06%
Total:	60,540)					1.00					13.80%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2016

	Capital (fair value)¹	Weights					Cost of capital
Equity²	33,750)	33,750)	÷	43,613)	=	0.77	0.77	×	16.12%	=	12.48%
Long-term debt, including current portion³	8,455)	8,455)	÷	43,613)	=	0.19	0.19	×	3.40% × (1 – 35.00%)	=	0.43%
Operating lease liability⁴	1,408)	1,408)	÷	43,613)	=	0.03	0.03	×	3.40% × (1 – 35.00%)	=	0.07%
Total:	43,613)					1.00					12.98%

Based on: 10-K (reporting date: 2016-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2015

	Capital (fair value)¹	Weights					Cost of capital
Equity²	16,461)	16,461)	÷	21,433)	=	0.77	0.77	×	16.12%	=	12.38%
Long-term debt, including current portion³	4,166)	4,166)	÷	21,433)	=	0.19	0.19	×	3.36% × (1 – 35.00%)	=	0.42%
Operating lease liability⁴	806)	806)	÷	21,433)	=	0.04	0.04	×	3.36% × (1 – 35.00%)	=	0.08%
Total:	21,433)					1.00					12.89%

Based on: 10-K (reporting date: 2015-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current portion. See details »

⁴ Operating lease liability. See details »

Marriott International Inc., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit¹	(229)	301)	(500)	(1,106)	1,000)
Invested capital²	13,992)	14,627)	14,229)	16,537)	758)
Performance Ratio
Economic spread ratio³	-1.64%	2.06%	-3.52%	-6.69%	131.91%
Benchmarks
Economic Spread Ratio, Competitors⁴
Airbnb Inc.	—	—	—	—	—
Booking Holdings Inc.	30.94%	—	—	—	—
Carnival Corp. & plc	-10.34%	-11.08%	—	—	—
Chipotle Mexican Grill Inc.	-2.50%	—	—	—	—
McDonald’s Corp.	8.54%	—	—	—	—
Starbucks Corp.	0.08%	36.43%	—	—	—

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -229 ÷ 13,992 = -1.64%

⁴ Click competitor name to see calculations.

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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.	Marriott International Inc. economic spread ratio improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Marriott International Inc., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017	Dec 31, 2016	Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit¹	(229)	301)	(500)	(1,106)	1,000)

Revenues	20,972)	20,758)	22,894)	17,072)	14,486)
Add: Increase (decrease) in deferred revenue	129)	146)	—)	—)	—)
Adjusted revenues	21,101)	20,904)	22,894)	17,072)	14,486)
Performance Ratio
Economic profit margin²	-1.09%	1.44%	-2.19%	-6.48%	6.90%
Benchmarks
Economic Profit Margin, Competitors³
Airbnb Inc.	—	—	—	—	—
Booking Holdings Inc.	22.63%	—	—	—	—
Carnival Corp. & plc	-19.04%	-20.57%	—	—	—
Chipotle Mexican Grill Inc.	-1.89%	—	—	—	—
McDonald’s Corp.	17.26%	—	—	—	—
Starbucks Corp.	0.06%	30.59%	—	—	—

Based on: 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31).

¹ Economic profit. See details »

² 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted revenues
= 100 × -229 ÷ 21,101 = -1.09%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company 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.	Marriott International Inc. economic profit margin improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Marriott International Inc. (NASDAQ:MAR)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin