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 – 13.96% × 7,284,194 = 623,560
Monster Beverage Corp. consistently generated positive economic profit between 2019 and 2023, demonstrating an ability to create value exceeding its cost of capital. The overall financial trajectory is characterized by a steady expansion of the invested capital base and a generally increasing trend in operational profitability, despite a notable contraction in value creation during the 2022 fiscal year.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed a general growth pattern, rising from US$ 1,081,692 thousand in 2019 to a peak of US$ 1,640,309 thousand in 2023. A temporary decline was observed in 2022, when NOPAT dropped to US$ 1,225,215 thousand, before recovering sharply in 2023.
- Invested Capital Trends
- A consistent and accelerating increase in invested capital is evident throughout the period. The capital base grew from US$ 3,936,622 thousand in 2019 to US$ 7,284,194 thousand in 2023. This represents a significant expansion in the resources deployed into the business operations.
- Economic Profit Dynamics
- Economic profit increased from 2019 to 2021, reaching a high of US$ 703,471 thousand. However, a significant downturn occurred in 2022, with economic profit falling to US$ 413,325 thousand. This decline was driven by the combination of lower NOPAT and a larger capital base, which increased the total capital charge. Although economic profit recovered to US$ 623,560 thousand in 2023, the value remained below 2021 levels despite the record NOPAT, reflecting the impact of the substantially higher invested capital on the cost of capital charge.
- Cost of Capital Stability
- The cost of capital remained constant at 13.96% throughout the entire five-year analysis period, providing a stable benchmark for assessing economic value added.
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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 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.
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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 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 $407,458 thousand, the highest in the five-year period. This pattern indicates some variability year over year but an overall growth trend in actual cash taxes paid, despite the fluctuations.
In summary, both provisions for income taxes and cash operating taxes demonstrate variability over the period, with an overall upward trajectory after the dip in 2020. The divergence between provision and cash taxes in certain years points to timing differences or adjustments in tax liabilities and payments. These dynamics highlight the company’s changing tax expense environment and potential shifts in earnings or tax strategies across the analyzed timeframe.
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Invested Capital
Monster Beverage Corp., invested capital calculation (financing approach)
US$ 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.
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 $7,284,194 thousand in 2023. The growth in invested capital aligns with the growth in equity and rising debt levels, which indicates the company’s expansion efforts or reinvestment strategies. This suggests the company has increased its resources deployed in operations or assets, supporting ongoing business growth.
Overall, the data displays a pattern of expanding financial scale with increasing equity and invested capital, accompanied by a significant rise in debt and lease obligations in recent years. The upward trends in both equity and debt signify an aggressive growth strategy, leveraging both internal funds and external financing. While the equity growth reassures financial stability, the marked increase in debt from 2021 to 2023 may warrant attention regarding leverage and associated risks moving forward.
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Cost of Capital
Monster Beverage Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 61,501,601) | 61,501,601) | ÷ | 61,567,616) | = | 1.00 | 1.00 | × | 13.97% | = | 13.95% | ||
| Finance lease liabilities3 | 6,468) | 6,468) | ÷ | 61,567,616) | = | 0.00 | 0.00 | × | 6.30% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 59,547) | 59,547) | ÷ | 61,567,616) | = | 0.00 | 0.00 | × | 4.70% × (1 – 21.00%) | = | 0.00% | ||
| Total: | 61,567,616) | 1.00 | 13.96% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ 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 | × | 13.97% | = | 13.96% | ||
| 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 | 13.96% | ||||||||||
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 | × | 13.97% | = | 13.96% | ||
| 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 | 13.96% | ||||||||||
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 | × | 13.97% | = | 13.96% | ||
| 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 | 13.96% | ||||||||||
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 | × | 13.97% | = | 13.96% | ||
| 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 | 13.96% | ||||||||||
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 | 623,560) | 413,325) | 703,471) | 632,966) | 532,184) | |
| Invested capital2 | 7,284,194) | 5,815,467) | 4,854,459) | 4,323,610) | 3,936,622) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 8.56% | 7.11% | 14.49% | 14.64% | 13.52% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 4.38% | 4.07% | 5.60% | — | — | |
| Mondelēz International Inc. | 0.27% | -3.55% | -0.55% | — | — | |
| PepsiCo Inc. | 4.60% | 4.58% | 5.12% | — | — | |
| Philip Morris International Inc. | 9.16% | 12.12% | 26.47% | — | — | |
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 × 623,560 ÷ 7,284,194 = 8.56%
4 Click competitor name to see calculations.
The financial performance between 2019 and 2023 is characterized by a continuous expansion of the capital base contrasted with volatile economic profit and a downward shift in the economic spread ratio following 2020.
- Invested Capital Trends
- A consistent upward trajectory in invested capital is observed, increasing from 3.94 billion USD in 2019 to 7.28 billion USD by 2023. This indicates a steady and aggressive deployment of resources into the business operations over the five-year period.
- Economic Profit Dynamics
- Economic profit exhibited growth during the initial phase of the period, peaking at 703.47 million USD in 2021. A significant contraction occurred in 2022, with profit falling to 413.33 million USD, representing a sharp decline in value creation. While a recovery to 623.56 million USD was achieved in 2023, the figure remains below the 2021 peak despite the significantly larger capital base.
- Economic Spread Ratio Analysis
- The economic spread ratio highlights a reduction in the efficiency of capital utilization. The ratio reached its zenith at 14.64% in 2020 and remained stable through 2021. However, a substantial compression is noted in 2022, where the ratio dropped to 7.11%. The subsequent rise to 8.56% in 2023 suggests a partial recovery, yet the overall trend indicates that the spread between the return on invested capital and the cost of capital has diminished since 2020.
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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 | 623,560) | 413,325) | 703,471) | 632,966) | 532,184) | |
| 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 | 8.76% | 6.57% | 12.75% | 13.83% | 12.74% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | 7.99% | 7.57% | 11.63% | — | — | |
| Mondelēz International Inc. | 0.46% | -7.20% | -1.17% | — | — | |
| PepsiCo Inc. | 3.77% | 3.68% | 4.50% | — | — | |
| Philip Morris International Inc. | 13.37% | 18.07% | 24.57% | — | — | |
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 × 623,560 ÷ 7,119,081 = 8.76%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2019 to 2023 reveals a divergence between consistent revenue growth and fluctuating economic value creation.
- Adjusted Net Sales Trend
- A consistent upward trajectory is observed in adjusted net sales, which increased steadily from US$ 4,176,256 thousand in 2019 to US$ 7,119,081 thousand by 2023. This represents continuous growth in top-line performance over the five-year period.
- Economic Profit Volatility
- Economic profit demonstrated an initial growth phase, peaking at US$ 703,471 thousand in 2021. This was followed by a sharp contraction in 2022, where profit fell to US$ 413,325 thousand. A recovery occurred in 2023, with economic profit rising back to US$ 623,560 thousand.
- Economic Profit Margin Analysis
- The economic profit margin reached its highest point in 2020 at 13.83%. A significant compression is evident in 2022, when the margin dropped to 6.57%, indicating that the growth in adjusted net sales was offset by a higher cost of capital or reduced operational efficiency relative to the capital employed. Although the margin improved to 8.76% in 2023, it has not yet returned to the baseline levels observed between 2019 and 2021.
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