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:
- Income Statement
- Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
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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
= – × =
Over the five-year period, net operating profit after taxes (NOPAT) exhibited fluctuations. Initial decline from 2021 to 2022 was followed by a recovery and subsequent peak in 2024, before decreasing again in 2025. The cost of capital remained relatively stable, with a slight increase in 2022 and then a gradual decrease through 2025. Invested capital demonstrated a consistent upward trend throughout the period, indicating ongoing investment in the business. Consequently, economic profit mirrored the NOPAT trend, peaking in 2024 and declining in 2025.
- NOPAT Trend
- NOPAT decreased from US$9,629 million in 2021 to US$9,364 million in 2022, representing a 2.68% decline. It then increased to US$10,029 million in 2023, a 7.08% rise. The most substantial increase occurred between 2023 and 2024, with NOPAT reaching US$10,978 million, a 9.46% increase. However, NOPAT decreased by 18.26% in 2025, falling to US$9,762 million.
- Cost of Capital
- The cost of capital increased from 8.61% in 2021 to 8.85% in 2022, a 2.79% increase. It then decreased slightly to 8.71% in 2023, and continued to decline to 8.60% in 2024 and 8.59% in 2025. These fluctuations were relatively minor compared to the changes observed in NOPAT and invested capital.
- Invested Capital
- Invested capital increased steadily throughout the period. From US$69,829 million in 2021, it rose to US$69,452 million in 2022, a slight decrease of 0.54%. Subsequent increases were more pronounced, reaching US$75,038 million in 2023 (7.78% increase), US$76,674 million in 2024 (2.18% increase), and US$83,234 million in 2025 (8.55% increase). This consistent growth suggests ongoing capital deployment within the business.
- Economic Profit
- Economic profit followed a similar pattern to NOPAT. It decreased from US$3,615 million in 2021 to US$3,219 million in 2022, then increased to US$3,489 million in 2023. The largest increase in economic profit occurred between 2023 and 2024, reaching US$4,387 million. A significant decrease was observed in 2025, with economic profit falling to US$2,610 million. This suggests that while the business is generally generating economic profit, its ability to do so is sensitive to changes in NOPAT.
The correlation between NOPAT and economic profit is evident. The substantial increase in invested capital throughout the period did not consistently translate into proportional increases in economic profit, as evidenced by the decline in 2025 despite continued investment. The relatively stable cost of capital suggests that external factors influencing profitability, rather than financing costs, were the primary drivers of the observed fluctuations.
Net Operating Profit after Taxes (NOPAT)
PepsiCo Inc., NOPAT calculation
US$ 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 period under review demonstrates fluctuating performance in economic profit and invested capital, resulting in a corresponding variability in the economic spread ratio. Overall, economic profit exhibits volatility, while invested capital generally increases. The economic spread ratio mirrors this fluctuation, indicating changing efficiency in capital allocation.
- Economic Profit
- Economic profit began at US$3,615 million in 2021, decreased to US$3,219 million in 2022, and then recovered to US$3,489 million in 2023. A notable increase to US$4,387 million was observed in 2024, followed by a substantial decline to US$2,610 million in 2025. This suggests a sensitivity to underlying economic conditions or company-specific factors impacting profitability relative to the cost of capital.
- Invested Capital
- Invested capital experienced a slight decrease from US$69,829 million in 2021 to US$69,452 million in 2022. Subsequently, it increased consistently, reaching US$75,038 million in 2023, US$76,674 million in 2024, and US$83,234 million in 2025. This upward trend indicates ongoing investment in the business, potentially through capital expenditures or acquisitions.
- Economic Spread Ratio
- The economic spread ratio began at 5.18% in 2021, declining to 4.63% in 2022. A slight recovery to 4.65% occurred in 2023, followed by a significant increase to 5.72% in 2024. The ratio then decreased substantially to 3.14% in 2025. This pattern suggests that the return generated on invested capital, relative to the cost of that capital, has varied considerably over the period. The 2024 peak indicates a period of particularly efficient capital allocation, while the 2025 decline suggests a reduction in that efficiency.
The divergence between the increasing invested capital and the fluctuating economic profit suggests a need for further investigation into the drivers of profitability and the effectiveness of capital deployment. The decline in the economic spread ratio in 2025, despite continued investment, warrants particular attention.
Economic Profit Margin
PepsiCo Inc., economic profit margin calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 economic profit margin exhibited fluctuations over the five-year period. Initial values decreased before increasing and then declining again, suggesting a cyclical pattern in profitability relative to revenue. A review of the underlying factors driving revenue and cost of capital would be beneficial to understand these shifts.
- Economic Profit Margin Trend
- The economic profit margin began at 4.55% in 2021, representing a relatively strong economic profit performance. A decrease was observed in 2022, with the margin falling to 3.73%. This downward trend continued modestly into 2023, reaching 3.81%.
- A notable increase occurred in 2024, with the economic profit margin rising to 4.78%, the highest value within the observed period. However, this improvement was not sustained, as the margin decreased significantly in 2025 to 2.78%, indicating a substantial reduction in economic profit generated per dollar of revenue.
- Relationship to Net Revenue
- Net revenue consistently increased throughout the period, moving from US$79,474 million in 2021 to US$93,925 million in 2025. Despite this revenue growth, the economic profit margin did not consistently follow suit. The increase in revenue in 2022 did not translate to a higher margin, and the margin’s peak in 2024 occurred with only a modest increase in revenue compared to 2023.
- The decline in economic profit margin in 2025, despite continued revenue growth, suggests that costs or the cost of capital may have increased disproportionately, eroding profitability.
The observed volatility in the economic profit margin warrants further investigation. While revenue demonstrates consistent growth, the fluctuating margin indicates that the company’s ability to generate economic profit from that revenue is not stable. Understanding the drivers behind these fluctuations is crucial for informed decision-making and strategic planning.