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
PepsiCo Inc., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 9,762 – 8.84% × 83,234 = 2,400
The analysis of economic value added reveals a period of volatility in economic profit, despite consistent positive value creation. While the organization maintained its ability to generate returns exceeding its cost of capital from 2021 through 2025, the efficiency of capital deployment shifted significantly toward the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a general growth trajectory between 2021 and 2024, rising from 9,629 million to a peak of 10,978 million. However, a notable contraction occurred in 2025, where figures retreated to 9,762 million, effectively offsetting the gains achieved during the 2023-2024 expansion.
- Invested Capital and Cost of Capital
- Invested capital showed a steady upward trend starting in 2022, increasing from 69,452 million to 83,234 million by 2025. During this same period, the cost of capital remained relatively stable, fluctuating within a narrow range between 8.84% and 9.12%. A gradual decline in the cost of capital was observed from 2022 onwards, reaching its lowest point of 8.84% in 2025.
- Economic Profit Performance
- Economic profit reached its maximum in 2024 at 4,193 million, coinciding with the highest recorded NOPAT. A sharp decline is evident in 2025, with economic profit dropping to 2,400 million. This reduction is the result of a dual impact: a decrease in NOPAT and a substantial increase in invested capital, which elevated the total capital charge and diminished the overall economic surplus.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
PepsiCo Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in restructuring liability.
4 Addition of increase (decrease) in equity equivalents to net income attributable to PepsiCo.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,846 × 5.00% = 192
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,032 × 21.00% = 427
7 Addition of after taxes interest expense to net income attributable to PepsiCo.
Analysis of the presented financial information reveals trends in net income attributable to PepsiCo and net operating profit after taxes (NOPAT) over a five-year period. NOPAT demonstrates a generally positive trajectory, while net income exhibits more fluctuation.
- NOPAT Trend
- NOPAT experienced a slight decrease from US$9,629 million in 2021 to US$9,364 million in 2022. However, subsequent years show consistent growth, reaching US$10,029 million in 2023 and further increasing to US$10,978 million in 2024. A modest decline is observed in 2025, with NOPAT reported at US$9,762 million. Overall, the period indicates a positive trend in NOPAT, despite the final year’s reduction.
- Net Income Trend
- Net income attributable to PepsiCo increased from US$7,618 million in 2021 to US$8,910 million in 2022. This growth continued into 2023, reaching US$9,074 million, and further to US$9,578 million in 2024. A notable decrease is observed in 2025, with net income falling to US$8,240 million. The net income trend is characterized by more variability than the NOPAT trend.
- Relationship between NOPAT and Net Income
- While both metrics generally increased between 2021 and 2024, the divergence in 2025 suggests a potential shift in factors impacting profitability. The larger decrease in net income compared to NOPAT in 2025 could indicate changes in non-operating items, such as interest expense or other income, or a difference in the effective tax rate. Further investigation into these areas would be warranted.
The observed trends suggest that the core operating performance, as measured by NOPAT, remains relatively strong. However, fluctuations in net income highlight the importance of considering factors beyond core operations when assessing overall financial performance.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Cash Operating Taxes
PepsiCo Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
The provision for income taxes and cash operating taxes exhibited distinct patterns over the five-year period. While the provision for income taxes fluctuated, cash operating taxes generally increased before declining in the most recent year.
- Provision for Income Taxes
- The provision for income taxes decreased from US$2,142 million in 2021 to US$1,727 million in 2022, representing a decline of approximately 19.3%. It then increased to US$2,262 million in 2023 and further to US$2,320 million in 2024. A subsequent decrease was observed in 2025, with the provision falling to US$1,949 million. This indicates volatility in reported income tax expense.
- Cash Operating Taxes
- Cash operating taxes demonstrated an upward trend from 2021 to 2024. Starting at US$2,131 million in 2021, it rose to US$2,660 million in 2022, an increase of roughly 24.8%. Continued growth was seen in 2023, reaching US$2,970 million, and in 2024, reaching US$3,060 million. However, 2025 saw a decrease to US$2,351 million, representing a decline of approximately 23.1% from the 2024 peak. This suggests a potential shift in the company’s actual cash tax payments.
- Relationship between Provision and Cash Taxes
- The difference between the provision for income taxes and cash operating taxes varied across the period. In 2021, the difference was minimal, at US$11 million. This difference widened in 2022 to US$933 million, and further in 2023 to US$708 million, and 2024 to US$740 million. The gap narrowed significantly in 2025, falling to US$398 million. These variations could be attributed to factors such as deferred tax assets/liabilities, tax credits, or changes in tax laws impacting the timing of cash tax payments versus reported tax expense.
The divergence between the provision for income taxes and cash operating taxes warrants further investigation to understand the underlying drivers and potential implications for future cash flows and economic value added calculations.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Invested Capital
PepsiCo Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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 restructuring liability.
5 Addition of equity equivalents to total PepsiCo common shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of short-term investments.
Over the five-year period examined, invested capital demonstrated a generally increasing trend. While fluctuations occurred, the overall trajectory indicates growing capital employed within the business. A closer examination of the components contributing to invested capital reveals further insights.
- Total Reported Debt & Leases
- Total reported debt and leases exhibited initial stability, decreasing from US$42,378 million in 2021 to US$41,487 million in 2022. However, beginning in 2022, an upward trend is observed, with values reaching US$47,061 million in 2023, US$47,751 million in 2024, and culminating in US$53,028 million in 2025. This suggests an increasing reliance on debt financing or potentially significant capital lease obligations.
- Total PepsiCo Common Shareholders’ Equity
- Total PepsiCo common shareholders’ equity generally increased throughout the period. From US$16,043 million in 2021, it rose to US$17,149 million in 2022 and continued to US$18,503 million in 2023. A slight decrease was noted in 2024, falling to US$18,041 million, before resuming an upward trend and reaching US$20,406 million in 2025. This indicates growing retained earnings and/or successful equity issuance.
- Invested Capital
- Invested capital, calculated as the sum of total debt and shareholders’ equity, remained relatively stable between 2021 and 2022, fluctuating around US$69.8 billion. A noticeable increase occurred in 2023, reaching US$75,038 million, and continued into 2024 with a value of US$76,674 million. The most substantial increase was observed between 2024 and 2025, with invested capital growing to US$83,234 million. This growth is consistent with the trends observed in both debt and equity, suggesting a deliberate expansion of the capital base.
The consistent growth in invested capital, particularly in the later years of the period, warrants further investigation to determine the effectiveness of capital allocation and its impact on returns. The increasing proportion of debt within the capital structure should also be monitored for potential financial risk.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Cost of Capital
PepsiCo Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 222,559) | 222,559) | ÷ | 272,405) | = | 0.82 | 0.82 | × | 10.20% | = | 8.34% | ||
| Debt obligations3 | 46,000) | 46,000) | ÷ | 272,405) | = | 0.17 | 0.17 | × | 3.39% × (1 – 21.00%) | = | 0.45% | ||
| Operating lease liability4 | 3,846) | 3,846) | ÷ | 272,405) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 272,405) | 1.00 | 8.84% | ||||||||||
Based on: 10-K (reporting date: 2025-12-27).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 196,797) | 196,797) | ÷ | 240,242) | = | 0.82 | 0.82 | × | 10.20% | = | 8.36% | ||
| Debt obligations3 | 40,000) | 40,000) | ÷ | 240,242) | = | 0.17 | 0.17 | × | 3.38% × (1 – 21.00%) | = | 0.44% | ||
| Operating lease liability4 | 3,445) | 3,445) | ÷ | 240,242) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 240,242) | 1.00 | 8.85% | ||||||||||
Based on: 10-K (reporting date: 2024-12-28).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 230,451) | 230,451) | ÷ | 274,407) | = | 0.84 | 0.84 | × | 10.20% | = | 8.57% | ||
| Debt obligations3 | 41,000) | 41,000) | ÷ | 274,407) | = | 0.15 | 0.15 | × | 3.14% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 2,956) | 2,956) | ÷ | 274,407) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 274,407) | 1.00 | 8.97% | ||||||||||
Based on: 10-K (reporting date: 2023-12-30).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 237,961) | 237,961) | ÷ | 275,377) | = | 0.86 | 0.86 | × | 10.20% | = | 8.82% | ||
| Debt obligations3 | 35,000) | 35,000) | ÷ | 275,377) | = | 0.13 | 0.13 | × | 2.76% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 2,416) | 2,416) | ÷ | 275,377) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 275,377) | 1.00 | 9.12% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 232,932) | 232,932) | ÷ | 277,976) | = | 0.84 | 0.84 | × | 10.20% | = | 8.55% | ||
| Debt obligations3 | 43,000) | 43,000) | ÷ | 277,976) | = | 0.15 | 0.15 | × | 2.48% × (1 – 21.00%) | = | 0.30% | ||
| Operating lease liability4 | 2,044) | 2,044) | ÷ | 277,976) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 277,976) | 1.00 | 8.87% | ||||||||||
Based on: 10-K (reporting date: 2021-12-25).
1 US$ in millions
2 Equity. See details »
3 Debt obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
PepsiCo Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 2,400) | 4,193) | 3,295) | 3,034) | 3,435) | |
| Invested capital2 | 83,234) | 76,674) | 75,038) | 69,452) | 69,829) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 2.88% | 5.47% | 4.39% | 4.37% | 4.92% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 6.12% | 3.66% | 4.16% | 3.85% | 5.38% | |
| Mondelēz International Inc. | -3.61% | 0.21% | 0.06% | -3.76% | -0.75% | |
| Philip Morris International Inc. | 13.29% | 8.31% | 8.97% | 11.92% | 26.25% | |
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 2,400 ÷ 83,234 = 2.88%
4 Click competitor name to see calculations.
The financial performance concerning economic value added demonstrates a period of volatility in value creation despite a steady expansion of the capital base. While the company maintained a positive economic profit throughout the five-year period, the efficiency of the invested capital peaked in 2024 before experiencing a notable contraction in 2025.
- Economic Spread Ratio Trends
- The economic spread ratio exhibited fluctuations, beginning at 4.92% in 2021 and declining to 4.37% in 2022. A period of stabilization occurred in 2023 (4.39%), followed by a peak of 5.47% in 2024, indicating a maximum efficiency in generating returns above the cost of capital. However, a sharp decline is observed in 2025, with the ratio falling to 2.88%, the lowest point in the analyzed period.
- Invested Capital Growth
- A general upward trajectory in invested capital is evident. Following a marginal decrease in 2022 to 69,452 million US$, capital investments grew consistently, reaching 75,038 million US$ in 2023 and continuing to climb to 83,234 million US$ by 2025. This represents a significant increase in the total capital deployed into the business over the five-year window.
- Economic Profit Correlation
- Economic profit did not mirror the steady growth of invested capital. Profit decreased in 2022 and recovered through 2024, reaching a high of 4,193 million US$. A critical divergence occurred in 2025, where economic profit dropped to 2,400 million US$ despite the capital base reaching its maximum level. This inverse relationship between the highest invested capital and the lowest economic profit accounts for the substantial compression of the economic spread ratio in the final year.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?
Economic Profit Margin
PepsiCo Inc., economic profit margin calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 2,400) | 4,193) | 3,295) | 3,034) | 3,435) | |
| Net revenue | 93,925) | 91,854) | 91,471) | 86,392) | 79,474) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.55% | 4.57% | 3.60% | 3.51% | 4.32% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | 11.86% | 6.76% | 7.59% | 7.16% | 11.18% | |
| Mondelēz International Inc. | -5.77% | 0.34% | 0.10% | -7.62% | -1.61% | |
| Philip Morris International Inc. | 17.43% | 10.60% | 13.10% | 17.77% | 24.37% | |
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × 2,400 ÷ 93,925 = 2.55%
3 Click competitor name to see calculations.
An analysis of the financial performance from December 2021 through December 2025 reveals a divergence between revenue growth and the generation of economic value. While net revenue demonstrated a consistent upward trajectory, economic profit and the corresponding economic profit margin exhibited significant volatility, ending the period with a marked decline.
- Net Revenue Trends
- Net revenue experienced uninterrupted growth over the five-year period, rising from US$ 79,474 million in 2021 to US$ 93,925 million in 2025. The most substantial growth occurred between 2021 and 2023, followed by a period of relative stabilization in 2024 and a moderate increase in 2025.
- Economic Profit Performance
- Economic profit followed a non-linear path, characterized by an initial dip in 2022 to US$ 3,034 million, followed by a recovery and a peak of US$ 4,193 million in 2024. However, a sharp contraction occurred in 2025, with economic profit falling to US$ 2,400 million, representing the lowest value in the analyzed timeframe.
- Economic Profit Margin Analysis
- The economic profit margin reflects the volatility of the absolute economic profit figures. The margin declined from 4.32% in 2021 to 3.51% in 2022, before recovering to a peak of 4.57% in 2024. By December 2025, the margin dropped precipitously to 2.55%, indicating a significant reduction in the company's ability to generate value above its cost of capital relative to its total revenue.
The data suggests that although the company successfully expanded its top-line revenue, this growth did not translate into a sustainable increase in economic value. The substantial drop in the economic profit margin in 2025, despite reaching record revenue levels, indicates a potential increase in the cost of capital or a decrease in operational efficiency during the final year of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
Without a user account, I tend to respond rather slowly.
How can I help you?