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
Monster Beverage Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 1,640,309 – 14.12% × 7,284,194 = 611,706
The financial performance from 2019 to 2023 demonstrates a general trajectory of growth in operational earnings and capital deployment, although the efficiency of value creation experienced notable volatility toward the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a positive growth trend for most of the period, rising from 1,081,692 thousand US$ in 2019 to a peak of 1,640,309 thousand US$ in 2023. A temporary contraction occurred in 2022, where NOPAT declined to 1,225,215 thousand US$, before rebounding strongly in 2023. This indicates a resilient ability to generate operating income despite a mid-period downturn.
- Invested Capital
- Invested capital grew consistently and aggressively throughout the five-year span, increasing from 3,936,622 thousand US$ in 2019 to 7,284,194 thousand US$ in 2023. The rate of expansion accelerated between 2021 and 2023, suggesting a period of significant internal investment or asset acquisition.
- Cost of Capital
- The cost of capital remained exceptionally stable, fluctuating minimally between 14.12% and 14.13%. This consistency indicates a steady risk profile and a constant hurdle rate for evaluating investment efficiency across the analyzed timeframe.
- Economic Profit
- Economic profit remained positive throughout the period, confirming that the entity consistently generated returns in excess of its cost of capital. Value creation peaked in 2021 at 695,567 thousand US$ before dropping sharply to 403,858 thousand US$ in 2022. This decline in 2022 was the result of a dual pressure: a decrease in NOPAT coinciding with a substantial increase in invested capital. While economic profit recovered to 611,706 thousand US$ in 2023, it did not return to the 2021 peak, reflecting the impact of a larger capital base requiring higher absolute returns to maintain previous levels of economic value added.
Overall, while the organization continues to create economic value, the divergence between the rapid growth of invested capital and the more moderate growth of NOPAT has led to fluctuations in economic profit. The recovery in 2023 suggests a return to operational efficiency, although the increased capital intensity of the business has shifted the baseline for value generation.
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Net Operating Profit after Taxes (NOPAT)
Monster Beverage Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts, sales returns and cash discounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 59,547 × 4.70% = 2,799
6 2023 Calculation
Tax benefit of interest on finance lease liabilities = Adjusted interest on finance lease liabilities × Statutory income tax rate
= 3,054 × 21.00% = 641
7 Addition of after taxes interest expense to net income.
The financial performance from 2019 to 2023 indicates a general upward trajectory in both net income and net operating profit after taxes (NOPAT), characterized by a period of volatility between 2021 and 2022 followed by a significant recovery in 2023.
- NOPAT Growth Trajectory
- Net operating profit after taxes experienced a steady increase from 2019 to 2021, rising from 1,081,692 thousand US$ to 1,381,324 thousand US$. Although a contraction occurred in 2022, where NOPAT fell to 1,225,215 thousand US$, the metric reached its five-year peak in 2023 at 1,640,309 thousand US$, representing a substantial growth in operational profitability.
- Net Income Performance
- Net income followed a similar pattern to NOPAT but exhibited greater variance. A sharp increase was observed in 2020, reaching 1,409,594 thousand US$, followed by a gradual decline through 2022 to 1,191,624 thousand US$. Similar to the operational profit, net income rebounded strongly in 2023 to 1,630,988 thousand US$.
- Comparative Analysis of Operational vs. Net Profitability
- A shift in the relationship between net income and NOPAT is evident. In 2019 and 2020, net income exceeded NOPAT, suggesting the influence of non-operating income. However, from 2021 through 2023, NOPAT consistently remained higher than net income. This trend indicates that the core operating performance of the business is the primary driver of value, while non-operating expenses or tax obligations have had a more pronounced reductive impact on the final net income during the latter three years of the period.
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Cash Operating Taxes
Monster Beverage Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of tax-related expenditures from 2019 to 2023 reveals a general upward trajectory characterized by periodic volatility. Both the provision for income taxes and actual cash operating taxes reached their five-year peaks in the 2023 fiscal year, indicating an overall increase in the company's tax burden over the period.
- Cash Operating Tax Trends
- Cash operating taxes demonstrated a consistent increase between 2019 and 2021, rising from 311,101 thousand to 399,574 thousand. This growth was interrupted by a contraction in 2022, where outflows decreased to 335,159 thousand, before recovering to a period high of 407,458 thousand in 2023.
- Provision for Income Taxes Volatility
- The provision for income taxes exhibited more pronounced fluctuations than cash payments. A significant decline was observed in 2020, with the provision dropping to 216,563 thousand, which was followed by a sharp increase to 423,944 thousand in 2021. The metric ended the period at 437,494 thousand, reflecting an increase of approximately 41.6% compared to 2019 levels.
- Variance Between Accruals and Cash Outflows
- A notable divergence occurred in 2020, where the provision for income taxes decreased while cash operating taxes increased, suggesting the settlement of tax liabilities from previous periods. In contrast, 2021 and 2022 saw the provision for income taxes exceed the actual cash paid, indicating a buildup of deferred tax liabilities or timing differences between recognized expenses and cash disbursements. By 2023, the two figures showed closer alignment, signaling a synchronization between tax accruals and actual cash outflows.
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Invested Capital
Monster Beverage Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
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 stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of assets under construction.
8 Subtraction of investments, available-for-sale.
Invested capital exhibits a consistent upward trajectory from 2019 through 2023, expanding from US$ 3,936,622 thousand to US$ 7,284,194 thousand. This growth indicates a sustained increase in the total capital deployed within the business to generate returns.
- Invested Capital Expansion
- A steady year-over-year increase is observed, with the most pronounced growth occurring between 2022 and 2023, during which invested capital rose by approximately US$ 1,468,727 thousand.
- Equity Funding Dominance
- Stockholders' equity has grown consistently from US$ 4,171,281 thousand in 2019 to US$ 8,228,744 thousand in 2023. The strong correlation between the rise in equity and the rise in invested capital demonstrates that internal funding and equity are the primary drivers of the capital base.
- Debt and Lease Dynamics
- Total reported debt and leases remained minimal relative to equity throughout the period. While obligations fluctuated slightly between 2019 and 2021, a significant upward trend emerged in 2022 and 2023, with debt reaching US$ 66,015 thousand by the end of 2023. Despite this recent increase, the reliance on debt for financing invested capital remains very low.
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Cost of Capital
Monster Beverage Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 61,501,601) | 61,501,601) | ÷ | 61,567,616) | = | 1.00 | 1.00 | × | 14.13% | = | 14.12% | ||
| Finance lease liabilities3 | 6,468) | 6,468) | ÷ | 61,567,616) | = | 0.00 | 0.00 | × | 6.30% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 59,547) | 59,547) | ÷ | 61,567,616) | = | 0.00 | 0.00 | × | 4.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 61,567,616) | 1.00 | 14.12% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 51,823,008) | 51,823,008) | ÷ | 51,861,139) | = | 1.00 | 1.00 | × | 14.13% | = | 14.12% | ||
| Finance lease liabilities3 | 798) | 798) | ÷ | 51,861,139) | = | 0.00 | 0.00 | × | 3.60% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 37,333) | 37,333) | ÷ | 51,861,139) | = | 0.00 | 0.00 | × | 3.40% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 51,861,139) | 1.00 | 14.12% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 44,677,888) | 44,677,888) | ÷ | 44,700,268) | = | 1.00 | 1.00 | × | 14.13% | = | 14.12% | ||
| Finance lease liabilities3 | 1,001) | 1,001) | ÷ | 44,700,268) | = | 0.00 | 0.00 | × | 1.30% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 21,379) | 21,379) | ÷ | 44,700,268) | = | 0.00 | 0.00 | × | 3.50% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 44,700,268) | 1.00 | 14.13% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 46,243,679) | 46,243,679) | ÷ | 46,265,015) | = | 1.00 | 1.00 | × | 14.13% | = | 14.13% | ||
| Finance lease liabilities3 | 823) | 823) | ÷ | 46,265,015) | = | 0.00 | 0.00 | × | 1.90% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 20,513) | 20,513) | ÷ | 46,265,015) | = | 0.00 | 0.00 | × | 3.60% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 46,265,015) | 1.00 | 14.13% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 33,513,057) | 33,513,057) | ÷ | 33,543,005) | = | 1.00 | 1.00 | × | 14.13% | = | 14.12% | ||
| Finance lease liabilities3 | 1,485) | 1,485) | ÷ | 33,543,005) | = | 0.00 | 0.00 | × | 2.90% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 28,463) | 28,463) | ÷ | 33,543,005) | = | 0.00 | 0.00 | × | 3.10% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 33,543,005) | 1.00 | 14.12% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Monster Beverage Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 611,706) | 403,858) | 695,567) | 625,926) | 525,777) | |
| Invested capital2 | 7,284,194) | 5,815,467) | 4,854,459) | 4,323,610) | 3,936,622) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 8.40% | 6.94% | 14.33% | 14.48% | 13.36% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 4.16% | 3.85% | 5.38% | — | — | |
| Mondelēz International Inc. | 0.06% | -3.76% | -0.75% | — | — | |
| PepsiCo Inc. | 4.39% | 4.37% | 4.92% | — | — | |
| Philip Morris International Inc. | 8.97% | 11.92% | 26.25% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 611,706 ÷ 7,284,194 = 8.40%
4 Click competitor name to see calculations.
The financial performance concerning economic value added exhibits a period of initial expansion followed by significant volatility between 2019 and 2023. While the resource base has scaled consistently, the resulting economic spread has experienced fluctuations, with a notable contraction in 2022 followed by a partial recovery in 2023.
- Economic Profit Trends
- Economic profit demonstrated a steady upward trajectory from 2019 to 2021, reaching a peak of 695,567 thousand US dollars. A sharp contraction occurred in 2022, where profit declined to 403,858 thousand US dollars, the lowest value in the analyzed period. By the end of 2023, a recovery was observed, with economic profit rising to 611,706 thousand US dollars.
- Invested Capital Expansion
- Invested capital grew monotonically throughout the five-year period. Starting at 3,936,622 thousand US dollars in 2019, the capital base increased every year, reaching 7,284,194 thousand US dollars by 2023. This indicates a sustained and aggressive expansion of the capital employed in operations.
- Economic Spread Ratio Performance
- The economic spread ratio peaked at 14.48% in 2020 and remained stable at 14.33% in 2021. A significant decline was recorded in 2022, with the ratio dropping to 6.94%. Although the ratio improved to 8.40% in 2023, it remained well below the levels seen prior to 2022. This divergence suggests that the growth in invested capital has outpaced the generation of economic profit, leading to a dilution of the economic spread despite the recovery in absolute profit terms.
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Economic Profit Margin
Monster Beverage Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 611,706) | 403,858) | 695,567) | 625,926) | 525,777) | |
| Net sales | 7,140,027) | 6,311,050) | 5,541,352) | 4,598,638) | 4,200,819) | |
| Add: Increase (decrease) in deferred revenue | (20,946) | (18,668) | (24,086) | (21,841) | (24,563) | |
| Adjusted net sales | 7,119,081) | 6,292,382) | 5,517,266) | 4,576,797) | 4,176,256) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 8.59% | 6.42% | 12.61% | 13.68% | 12.59% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | 7.59% | 7.16% | 11.18% | — | — | |
| Mondelēz International Inc. | 0.10% | -7.62% | -1.61% | — | — | |
| PepsiCo Inc. | 3.60% | 3.51% | 4.32% | — | — | |
| Philip Morris International Inc. | 13.10% | 17.77% | 24.37% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 611,706 ÷ 7,119,081 = 8.59%
3 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by consistent expansion in top-line revenue contrasted with significant volatility in economic value generation. While adjusted net sales demonstrated an uninterrupted growth trend, the ability to generate economic profit fluctuated, leading to a notable compression and subsequent partial recovery of the economic profit margin.
- Adjusted Net Sales Growth
- A steady and linear upward trajectory is observed in adjusted net sales, which rose from 4,176,256 thousand US$ in 2019 to 7,119,081 thousand US$ by 2023. This represents a consistent increase in market reach or pricing power throughout the five-year period.
- Economic Profit Fluctuations
- Economic profit exhibited an initial growth phase, peaking at 695,567 thousand US$ in 2021. A substantial contraction occurred in 2022, with profit falling to 403,858 thousand US$, the lowest point in the analyzed period. A recovery was recorded in 2023, with economic profit increasing to 611,706 thousand US$, though it remained below the 2021 peak.
- Economic Profit Margin Analysis
- The economic profit margin peaked at 13.68% in 2020, followed by a sharp decline to 6.42% in 2022. This divergence suggests that during 2022, the costs of capital or operational expenses grew at a rate that significantly outpaced the growth in adjusted net sales. The margin improved to 8.59% in 2023, indicating a recovery in capital efficiency, although the margin has not returned to the double-digit levels maintained between 2019 and 2021.
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