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:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
- Analysis of Debt
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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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited a general upward trend over the analyzed period, increasing from 1,081,692 thousand US dollars in 2019 to 1,640,309 thousand US dollars in 2023. Notably, there was a peak in 2021 at 1,381,324 thousand US dollars, followed by a slight decline in 2022 before rising again in 2023.
- Cost of Capital
- The cost of capital remained constant at 12.13% throughout the entire period from 2019 to 2023, indicating stability in the company’s required rate of return or capital structure assumptions over this time frame.
- Invested Capital
- Invested capital consistently increased year over year, starting at 3,936,622 thousand US dollars in 2019 and reaching 7,284,194 thousand US dollars by 2023. The most pronounced increase occurred between 2021 and 2023, reflecting significant investments or asset growth during this period.
- Economic Profit
- Economic profit showed growth from 604,356 thousand US dollars in 2019 to a peak of 792,505 thousand US dollars in 2021. However, it declined substantially in 2022 to 519,959 thousand US dollars before rebounding to 757,080 thousand US dollars in 2023. This pattern suggests a temporary erosion of value creation in 2022, with recovery thereafter.
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.
- Economic Profit
- Over the examined period, economic profit demonstrated a rising trend initially, increasing from approximately 604 million US dollars in 2019 to a peak of about 792 million US dollars in 2021. However, this was followed by a significant decline in 2022 to around 520 million US dollars, before recovering again to approximately 757 million US dollars in 2023. This indicates volatility in the company's ability to generate economic profit after a steady growth phase.
- Invested Capital
- Invested capital showed consistent and substantial growth throughout the period. Starting from roughly 3.94 billion US dollars in 2019, it increased steadily each year, reaching around 7.28 billion US dollars by 2023. This highlights ongoing expansion or reinvestment activities, with the invested capital nearly doubling over five years.
- Economic Spread Ratio
- The economic spread ratio maintained a relatively strong position from 2019 to 2021, ranging between approximately 15.3% and 16.5%. However, it experienced a notable decline in 2022 to just under 9%, before partially rebounding to about 10.4% in 2023. This suggests a reduction in the efficiency or profitability of the invested capital in the recent period compared to earlier years, despite some improvement in the final year analyzed.
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 financial data reveals several significant trends over the five-year period from 2019 to 2023.
- Adjusted Net Sales
- There is a consistent upward trend in adjusted net sales, increasing each year from $4,176,256 thousand in 2019 to $7,119,081 thousand in 2023. This represents robust growth, reflecting expanding market demand or successful sales strategies.
- Economic Profit
- Economic profit rose from $604,356 thousand in 2019 to a peak of $792,505 thousand in 2021. However, this was followed by a significant decrease to $519,959 thousand in 2022. By 2023, economic profit recovered to $757,080 thousand. This fluctuation suggests some volatility in profitability, possibly due to increased costs or other operational factors in 2022 before a rebound occurred.
- Economic Profit Margin
- The economic profit margin saw an increase from 14.47% in 2019 to 15.56% in 2020, indicating improved profitability relative to sales. This was followed by a decline to 14.36% in 2021, and a more pronounced drop to 8.26% in 2022. The margin improved again to 10.63% in 2023 but did not return to the levels observed in the earlier years. The reduced margin in 2022 suggests higher relative costs or reduced efficiency in converting sales into economic profit during that period.
In summary, the data indicates a strong sales growth trajectory accompanied by variability in economic profit and profit margins. The year 2022 stands out as an anomaly with decreased profitability and margin despite rising sales, but there is evidence of recovery in 2023. Attention should be given to the factors driving the margin compression in 2022 to sustain improved profitability moving forward.