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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Monster Beverage Corp. pages available for free this week:
- Income Statement
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
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Economic Profit
Monster Beverage Corp., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The period under review demonstrates a generally positive trend in net operating profit after taxes, with fluctuations in economic profit and a consistent cost of capital. Invested capital increased steadily throughout the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from US$1,081,692 thousand in 2019 to US$1,236,715 thousand in 2020, representing a growth of approximately 14.3%. Further growth was observed in 2021, reaching US$1,381,324 thousand. A decrease occurred in 2022, with NOPAT falling to US$1,225,215 thousand, before rebounding significantly in 2023 to US$1,640,309 thousand. This indicates a volatile but ultimately upward trajectory in operational profitability.
- Cost of Capital
- The cost of capital remained remarkably stable across the five-year period, fluctuating minimally between 13.93% and 13.94%. This consistency suggests a stable risk profile and financing structure for the entity.
- Invested Capital
- Invested capital exhibited a consistent upward trend, increasing from US$3,936,622 thousand in 2019 to US$4,323,610 thousand in 2020, US$4,854,459 thousand in 2021, US$5,815,467 thousand in 2022, and reaching US$7,284,194 thousand in 2023. This substantial growth in invested capital suggests ongoing investment in operations and expansion.
- Economic Profit
- Economic profit followed a pattern of growth, decline, and recovery. It rose from US$533,290 thousand in 2019 to US$634,181 thousand in 2020, and continued to increase to US$704,835 thousand in 2021. A notable decrease was observed in 2022, with economic profit falling to US$414,959 thousand. However, economic profit recovered strongly in 2023, reaching US$625,605 thousand. The fluctuations in economic profit appear to be influenced by the interplay between NOPAT and invested capital, with the 2022 decline likely attributable to the significant increase in invested capital outpacing NOPAT growth.
Overall, the entity demonstrates increasing operational profitability and substantial investment. While economic profit experienced a temporary decline, it ultimately recovered, indicating the ability to generate returns exceeding the cost of capital. The consistent cost of capital provides a stable baseline for evaluating performance.
Net Operating Profit after Taxes (NOPAT)
Monster Beverage Corp., NOPAT calculation
US$ 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
= × =
6 2023 Calculation
Tax benefit of interest on finance lease liabilities = Adjusted interest on finance lease liabilities × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
The financial data reveals notable trends in profitability over the five-year period ending December 31, 2023. Both net income and net operating profit after taxes (NOPAT) exhibit fluctuations, with discernible variations that suggest changes in operational efficiency and overall profitability.
- Net Income
- Net income increased significantly from approximately 1.11 billion USD in 2019 to a peak of about 1.41 billion USD in 2020. This increase was followed by a slight decline to roughly 1.38 billion USD in 2021, then a more pronounced decrease to approximately 1.19 billion USD in 2022. However, net income rebounded strongly in 2023, reaching the highest value in the period, approximately 1.63 billion USD. This trajectory indicates periods of both growth and contraction, with a robust recovery in the latest year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT shows a similar pattern to net income but with slightly different magnitudes. It rose from about 1.08 billion USD in 2019 to approximately 1.24 billion USD in 2020, continuing to increase to about 1.38 billion USD in 2021. However, it then declined to approximately 1.23 billion USD in 2022 before surging to its highest level of approximately 1.64 billion USD in 2023. This pattern of growth, decline, and subsequent recovery parallels the net income trend, reflecting operational profitability dynamics.
Overall, the data suggests that while there were challenges in 2021 and 2022, the company managed to overcome these setbacks by improving profitability significantly in 2023. The alignment between net income and NOPAT trends supports the interpretation that improvements in core operations and tax management contributed to the strong financial performance in the final year presented.
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 the financial data over the five-year period reveals fluctuations and trends in the provision for income taxes and cash operating taxes.
- Provision for Income Taxes
- The provision for income taxes began at $308,127 thousand at the end of 2019. There was a decline in 2020 to $216,563 thousand, indicating a significant reduction in tax provisions for that year. This was followed by a sharp increase to $423,944 thousand in 2021, nearly doubling from 2020. The value slightly decreased to $380,340 thousand in 2022 but rose again to $437,494 thousand by the end of 2023. Overall, the provision shows volatility with an upward trend after 2020, suggesting changing profitability or tax strategy impacts during the period.
- Cash Operating Taxes
- Cash operating taxes rose from $311,101 thousand in 2019 to a peak of $399,574 thousand in 2021. After the peak, cash taxes decreased substantially to $335,159 thousand in 2022. The following year, 2023, saw cash operating taxes increase again to $407,458 thousand, the highest in the five-year period. This pattern indicates some variability year over year but an overall growth trend in actual cash taxes paid, despite the fluctuations.
In summary, both provisions for income taxes and cash operating taxes demonstrate variability over the period, with an overall upward trajectory after the dip in 2020. The divergence between provision and cash taxes in certain years points to timing differences or adjustments in tax liabilities and payments. These dynamics highlight the company’s changing tax expense environment and potential shifts in earnings or tax strategies across the analyzed timeframe.
Invested Capital
Monster Beverage Corp., invested capital calculation (financing approach)
US$ 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.
The financial data reveals notable trends in the company's capital structure and equity position over the given five-year period.
- Total reported debt & leases
- The total reported debt and leases exhibit a fluctuating upward trend. Initially, the debt decreases from $29,948 thousand in 2019 to $21,336 thousand in 2020, showing a reduction in financial obligations. However, from 2020 onward, the debt burden increases consistently, reaching $66,015 thousand by the end of 2023. This represents more than a doubling from the 2019 level, indicating a rising reliance on debt financing or lease obligations in recent years.
- Stockholders’ equity
- Stockholders’ equity demonstrates continuous and substantial growth throughout the period. It rises from approximately $4,171,281 thousand in 2019 to $8,228,744 thousand in 2023. This nearly doubles the equity base, suggesting strong retained earnings, potential equity infusions, or value appreciation over time, reflecting a solid and expanding capital foundation for the company.
- Invested capital
- Invested capital also shows a consistent upward trajectory, increasing from $3,936,622 thousand in 2019 to $7,284,194 thousand in 2023. The growth in invested capital aligns with the growth in equity and rising debt levels, which indicates the company’s expansion efforts or reinvestment strategies. This suggests the company has increased its resources deployed in operations or assets, supporting ongoing business growth.
Overall, the data displays a pattern of expanding financial scale with increasing equity and invested capital, accompanied by a significant rise in debt and lease obligations in recent years. The upward trends in both equity and debt signify an aggressive growth strategy, leveraging both internal funds and external financing. While the equity growth reassures financial stability, the marked increase in debt from 2021 to 2023 may warrant attention regarding leverage and associated risks moving forward.
Cost of Capital
Monster Beverage Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| 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: 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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited a fluctuating pattern over the five-year period. Initial increases were followed by a significant decline and a subsequent partial recovery. Economic profit demonstrated growth initially, peaked in 2021, experienced a substantial decrease in 2022, and then rebounded in 2023. Invested capital consistently increased throughout the period.
- Economic Spread Ratio
- The economic spread ratio increased from 13.55% in 2019 to 14.67% in 2020, indicating an improved ability to generate returns exceeding the cost of capital. A slight decrease to 14.52% occurred in 2021. However, a marked decline was observed in 2022, with the ratio falling to 7.14%. This suggests a diminished capacity to generate value relative to invested capital. The ratio partially recovered in 2023, rising to 8.59%, but remained below levels seen in the earlier years of the period.
- Economic Profit
- Economic profit increased from US$533,290 thousand in 2019 to US$634,181 thousand in 2020, and continued to grow, reaching US$704,835 thousand in 2021. This positive trend reversed in 2022, with economic profit decreasing substantially to US$414,959 thousand. The final year of the period saw a recovery, with economic profit increasing to US$625,605 thousand in 2023, though it did not reach the peak observed in 2021.
- Invested Capital
- Invested capital consistently increased throughout the period, rising from US$3,936,622 thousand in 2019 to US$7,284,194 thousand in 2023. This continuous growth in invested capital, coupled with the fluctuations in economic profit, likely contributed to the observed changes in the economic spread ratio. The increasing capital base suggests ongoing investment and expansion activities.
The decline in the economic spread ratio in 2022, despite continued growth in invested capital, warrants further investigation. The recovery in 2023 is a positive sign, but the ratio remains below its earlier levels. The relationship between invested capital and economic profit should be examined to understand the drivers of these trends.
Economic Profit Margin
Monster Beverage Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted 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: 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 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited fluctuations over the five-year period. Initial increases were followed by a significant decline and a subsequent partial recovery. Economic profit itself demonstrated an overall upward trend, though not consistently year-over-year.
- Economic Profit Margin
- The economic profit margin increased from 12.77% in 2019 to 13.86% in 2020, indicating improved profitability relative to sales. This positive trend stalled in 2021, with the margin remaining relatively flat at 12.78%. A substantial decrease was then observed in 2022, with the margin falling to 6.59%. The most recent year, 2023, showed a recovery to 8.79%, though it did not reach the levels seen in 2019 or 2020.
- Economic Profit
- Economic profit increased steadily from US$533,290 thousand in 2019 to US$634,181 thousand in 2020, and continued to rise to US$704,835 thousand in 2021. A notable decline occurred in 2022, with economic profit decreasing to US$414,959 thousand. The final year analyzed, 2023, saw a rebound, with economic profit reaching US$625,605 thousand.
The divergence between the economic profit and economic profit margin suggests that while overall profitability, as measured by economic profit, generally increased, the efficiency with which sales generated that profit varied. The significant drop in margin in 2022, despite a still substantial economic profit, indicates a potential increase in the cost of generating each dollar of sales. The partial recovery in 2023 suggests some improvement in this area, but further investigation would be needed to understand the underlying drivers of these changes.
- Adjusted Net Sales
- Adjusted net sales consistently increased throughout the period, moving from US$4,176,256 thousand in 2019 to US$7,119,081 thousand in 2023. This consistent growth in sales did not translate directly into a consistent increase in economic profit margin, highlighting the importance of cost management and operational efficiency.