Economic Value Added (EVA)
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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.
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- Income Statement
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity 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 economic profit, though with some fluctuation. Net operating profit after taxes (NOPAT) increased from 2019 to 2021, experienced a decline in 2022, and then rebounded strongly in 2023. Invested capital consistently increased throughout the period, indicating ongoing investment in the business. The cost of capital remained remarkably stable across all years examined.
- NOPAT Trend
- NOPAT increased from US$1,081,692 thousand in 2019 to US$1,381,324 thousand in 2021, representing a substantial growth of approximately 27.7%. A decrease was then observed in 2022, with NOPAT falling to US$1,225,215 thousand. However, 2023 saw a significant recovery, with NOPAT reaching US$1,640,309 thousand, exceeding the 2021 peak.
- Invested Capital Trend
- Invested capital exhibited a consistent upward trend throughout the five-year period. Starting at US$3,936,622 thousand in 2019, it grew to US$7,284,194 thousand in 2023, representing an increase of approximately 85.1%. This suggests continuous reinvestment of profits into the business operations.
- Cost of Capital Stability
- The cost of capital remained stable at 13.85% or 13.86% across all years. This indicates a consistent risk profile and financing structure for the company during the period. The minimal fluctuation suggests the company’s access to capital markets remained consistent.
- Economic Profit Trend
- Economic profit generally increased from US$536,396 thousand in 2019 to US$708,666 thousand in 2021. A notable decline occurred in 2022, with economic profit decreasing to US$419,547 thousand. The economic profit recovered substantially in 2023, reaching US$631,351 thousand, though remaining below the 2021 level. The fluctuations in economic profit appear to be correlated with the changes in NOPAT, while the consistent cost of capital and increasing invested capital contribute to the overall pattern.
In summary, while invested capital consistently rose, the economic profit experienced volatility, largely driven by changes in NOPAT. The stable cost of capital provides a consistent benchmark against which to evaluate performance. The strong NOPAT and economic profit figures in 2023 suggest a positive trajectory, but the dip in 2022 warrants further investigation.
Net Operating Profit after Taxes (NOPAT)
Monster Beverage Corp., NOPAT calculation
US$ 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 generally positive trend from 2019 through 2020, followed by a significant decline in 2022, with a partial recovery in 2023. Economic profit demonstrated growth from 2019 to 2021, experienced a substantial decrease in 2022, and then increased again in 2023. Invested capital consistently increased throughout the observed period.
- Economic Spread Ratio
- The economic spread ratio increased from 13.63% in 2019 to 14.75% in 2020, indicating an improved ability to generate returns exceeding the cost of capital. The ratio remained relatively stable at 14.60% in 2021. A marked decrease was observed in 2022, with the ratio falling to 7.21%, suggesting a diminished capacity to generate value relative to invested capital. The ratio partially recovered to 8.67% in 2023, but remained below levels seen in the 2019-2021 timeframe.
- Economic Profit
- Economic profit increased from US$536,396 thousand in 2019 to US$637,593 thousand in 2020, and further to US$708,666 thousand in 2021. This growth indicates increasing value creation. However, economic profit declined significantly to US$419,547 thousand in 2022, mirroring the decrease in the economic spread ratio. A subsequent increase to US$631,351 thousand was noted in 2023, though it did not reach the peak observed in 2021.
- Invested Capital
- Invested capital consistently rose throughout the period, increasing from US$3,936,622 thousand in 2019 to US$7,284,194 thousand in 2023. This continuous growth in invested capital, coupled with the fluctuations in economic profit and the economic spread ratio, suggests that while the company continued to invest in its operations, the efficiency of capital deployment varied across the years. The decline in the economic spread ratio in 2022, despite the increase in invested capital, warrants further investigation.
The observed patterns suggest a period of strong value creation from 2019 to 2021, followed by a period of reduced efficiency in 2022, and a partial recovery in 2023. The increasing invested capital base requires continued monitoring in relation to economic profit and the economic spread ratio to ensure sustainable value creation.
Economic Profit Margin
Monster Beverage Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 exhibited fluctuations over the five-year period, while adjusted net sales demonstrated consistent growth. The economic profit margin, calculated as economic profit divided by adjusted net sales, reveals the company’s efficiency in generating profit relative to its revenue. An examination of this margin provides insights into the company’s performance and potential areas for improvement.
- Economic Profit
- Economic profit increased from US$536,396 thousand in 2019 to US$637,593 thousand in 2020, representing a positive trend. Further growth was observed in 2021, reaching US$708,666 thousand. However, a substantial decrease occurred in 2022, with economic profit falling to US$419,547 thousand. A partial recovery was noted in 2023, with economic profit rising to US$631,351 thousand, though remaining below the 2021 peak.
- Adjusted Net Sales
- Adjusted net sales consistently increased throughout the period. From US$4,176,256 thousand in 2019, sales rose to US$4,576,797 thousand in 2020, US$5,517,266 thousand in 2021, US$6,292,382 thousand in 2022, and ultimately reached US$7,119,081 thousand in 2023. This indicates a sustained growth in revenue generation.
- Economic Profit Margin
- The economic profit margin initially increased from 12.84% in 2019 to 13.93% in 2020, suggesting improved profitability relative to sales. The margin remained stable at 12.84% in 2021. A significant decline was observed in 2022, with the margin dropping to 6.67%. The margin partially recovered in 2023, increasing to 8.87%, but remained considerably lower than the levels seen in 2019, 2020, and 2021. The decrease in margin in 2022, despite increasing sales, suggests a potential rise in costs or a decrease in pricing power.
The divergence between the growth in adjusted net sales and the fluctuations in economic profit margin warrants further investigation. While revenue consistently increased, the ability to translate those sales into economic profit varied considerably, particularly with the marked decline in 2022. The recovery in 2023 is positive, but the margin has not returned to its previous levels.