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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PepsiCo Inc. pages available for free this week:
- Common-Size Income Statement
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Analysis of Debt
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Economic Profit
PepsiCo Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
Economic profit remained positive throughout the analyzed period, indicating that the company consistently generated value in excess of its required return on invested capital. However, the magnitude of this value creation exhibited volatility, peaking in 2024 before experiencing a significant contraction in 2025.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a fluctuating trend, starting at 9,629 million USD in 2021 and declining slightly in 2022. A recovery period followed, with profits rising to a peak of 10,978 million USD in 2024. A notable decline occurred in 2025, where NOPAT fell to 9,762 million USD, returning to levels similar to those seen at the beginning of the period.
- Cost of Capital
- The cost of capital remained relatively stable, oscillating within a narrow range between 8.64% and 8.90%. After a peak of 8.90% in 2022, the rate trended downward and stabilized at 8.64% during 2024 and 2025.
- Invested Capital
- A consistent upward trajectory in invested capital is observed from 2022 onwards. After a marginal dip to 69,452 million USD in 2022, the capital base expanded steadily, reaching 83,234 million USD by 2025. This indicates a period of sustained investment in the company's asset base.
- Economic Profit Trends
- Economic profit mirrored the volatility of NOPAT but was further influenced by the expanding capital base. The highest value creation occurred in 2024 at 4,351 million USD, driven by the simultaneous peak in NOPAT and a reduction in the cost of capital. In 2025, economic profit dropped sharply to 2,571 million USD, the lowest point in the five-year period. This decline is attributed to the divergence between decreasing NOPAT and increasing invested capital, which compressed the surplus generated over the cost of capital.
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
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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$8,240 million. The net income trend is characterized by more variability than the NOPAT trend.
- Relationship between NOPAT and Net Income
- While both metrics generally increased between 2021 and 2024, the divergence in 2025 suggests a potential shift in factors impacting profitability. The larger decrease in net income compared to NOPAT in 2025 could indicate changes in non-operating items, such as interest expense or other income, or a difference in the effective tax rate. Further investigation into these areas would be warranted.
The observed trends suggest that the core operating performance, as measured by NOPAT, remains relatively strong. However, fluctuations in net income highlight the importance of considering factors beyond core operations when assessing overall financial performance.
Cash Operating Taxes
PepsiCo Inc., cash operating taxes calculation
US$ 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$398 million. These variations could be attributed to factors such as deferred tax assets/liabilities, tax credits, or changes in tax laws impacting the timing of cash tax payments versus reported tax expense.
The divergence between the provision for income taxes and cash operating taxes warrants further investigation to understand the underlying drivers and potential implications for future cash flows and economic value added calculations.
Invested Capital
PepsiCo Inc., invested capital calculation (financing approach)
US$ 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$83,234 million. This growth is consistent with the trends observed in both debt and equity, suggesting a deliberate expansion of the capital base.
The consistent growth in invested capital, particularly in the later years of the period, warrants further investigation to determine the effectiveness of capital allocation and its impact on returns. The increasing proportion of debt within the capital structure should also be monitored for potential financial risk.
Cost of Capital
PepsiCo Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-27).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| Philip Morris International Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The analysis of economic value added metrics reveals a period of volatility in value creation efficiency, characterized by a significant contraction in the final observed fiscal year.
- Economic Spread Ratio Trends
- The economic spread ratio experienced fluctuations throughout the period, starting at 5.13% in 2021 and declining to 4.59% in 2022. A period of relative stability followed in 2023 at 4.60%, preceding a peak of 5.68% in 2024. However, 2025 saw a substantial decline to 3.09%, marking the lowest efficiency level within the five-year window.
- Invested Capital Trajectory
- A consistent upward trend in invested capital is observed from 2022 onwards. Following a slight dip to 69,452 million US dollars in 2022, the capital base grew steadily to 75,038 million US dollars in 2023 and 76,674 million US dollars in 2024, ultimately reaching a peak of 83,234 million US dollars in 2025.
- Economic Profit Dynamics
- Economic profit demonstrated a non-linear relationship with invested capital. While profit grew to a period high of 4,351 million US dollars in 2024, it suffered a sharp decline to 2,571 million US dollars in 2025. The divergence in 2025, where invested capital reached its maximum while economic profit reached its minimum, explains the precipitous drop in the economic spread ratio.
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 | ||||||
| Net revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| Philip Morris International Inc. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial trajectory from 2021 to 2025 is characterized by steady growth in net revenue contrasted with significant volatility in economic profit and its corresponding margin. While the top-line figures demonstrate a consistent upward trend, the ability to generate value above the cost of capital has fluctuated, culminating in a sharp decline in the final observed period.
- Net Revenue Trends
- A consistent upward trend in net revenue is observed, increasing from US$ 79,474 million in 2021 to US$ 93,925 million by 2025. This represents a steady expansion of the revenue base over the five-year period, indicating sustained market demand or effective pricing strategies.
- Economic Profit Performance
- Economic profit exhibited a non-linear pattern, starting at US$ 3,582 million in 2021, dipping in 2022, and then rising to a peak of US$ 4,351 million in 2024. However, a substantial contraction occurred in 2025, with economic profit falling to US$ 2,571 million, the lowest level within the analyzed timeframe.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of the absolute economic profit. After an initial decrease from 4.51% in 2021 to 3.69% in 2022, the margin improved to reach a five-year high of 4.74% in 2024. The subsequent drop to 2.74% in 2025 indicates a significant reduction in value creation efficiency, as the growth in net revenue failed to offset the factors leading to the decline in economic profit.