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 – 8.45% × 83,234 = 2,732
Over the five-year period examined, net operating profit after taxes (NOPAT) exhibited fluctuations. Initial decline from 2021 to 2022 was followed by a recovery and subsequent growth through 2024, before decreasing again in 2025. The cost of capital remained relatively stable, with a slight increase in 2022, followed by a decrease and stabilization in subsequent years. Invested capital demonstrated a consistent upward trend throughout the period, indicating ongoing investment in the business. Economic profit mirrored the NOPAT trend, initially decreasing, then increasing, and finally decreasing in the most recent year.
- NOPAT Analysis
- NOPAT decreased from US$9,629 million in 2021 to US$9,364 million in 2022, representing a decline of approximately 2.7%. A recovery was then observed, with NOPAT increasing to US$10,029 million in 2023 and further to US$10,978 million in 2024, a peak within the observed period. However, NOPAT decreased to US$9,762 million in 2025, suggesting potential challenges impacting profitability in the latest year.
- Cost of Capital Analysis
- The cost of capital experienced a minor increase from 8.46% in 2021 to 8.69% in 2022. It then decreased to 8.56% in 2023 and continued to decline to 8.45% in both 2024 and 2025, indicating a relatively stable and potentially favorable financing environment over the latter part of the period.
- Invested Capital Analysis
- Invested capital consistently increased throughout the period, rising from US$69,829 million in 2021 to US$83,234 million in 2025. This represents a cumulative increase of approximately 19.1% over the five years, suggesting a sustained commitment to expanding the business and its asset base.
- Economic Profit Analysis
- Economic profit followed a similar pattern to NOPAT. It decreased from US$3,720 million in 2021 to US$3,326 million in 2022, then increased to US$3,602 million in 2023 and peaked at US$4,500 million in 2024. A subsequent decline to US$2,732 million in 2025 indicates that while the company is generating profit, the return on invested capital may be diminishing in the most recent year, or that the cost of capital is becoming more impactful relative to NOPAT.
The interplay between NOPAT, cost of capital, and invested capital significantly influences economic profit. The increase in invested capital, coupled with the relatively stable cost of capital, contributed to the growth in economic profit observed between 2022 and 2024. However, the decrease in NOPAT in 2025 offset some of these gains, resulting in a lower economic profit figure.
Net Operating Profit after Taxes (NOPAT)
PepsiCo Inc., NOPAT calculation
US$ 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$8,240 million. The net income trend is characterized by more variability than the NOPAT trend.
- Relationship between NOPAT and Net Income
- While both metrics generally increased between 2021 and 2024, the divergence in 2025 suggests a potential shift in factors impacting profitability. The larger decrease in net income compared to NOPAT in 2025 could indicate changes in non-operating items, such as interest expense or other income, or a difference in the effective tax rate. Further investigation into these areas would be warranted.
The observed trends suggest that the core operating performance, as measured by NOPAT, remains relatively strong. However, fluctuations in net income highlight the importance of considering factors beyond core operations when assessing overall financial performance.
Cash Operating Taxes
PepsiCo Inc., cash operating taxes calculation
US$ 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$83,234 million. This growth is consistent with the trends observed in both debt and equity, suggesting a deliberate expansion of the capital base.
The consistent growth in invested capital, particularly in the later years of the period, warrants further investigation to determine the effectiveness of capital allocation and its impact on returns. The increasing proportion of debt within the capital structure should also be monitored for potential financial risk.
Cost of Capital
PepsiCo Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 222,559) | 222,559) | ÷ | 272,405) | = | 0.82 | 0.82 | × | 9.72% | = | 7.94% | ||
| Debt obligations3 | 46,000) | 46,000) | ÷ | 272,405) | = | 0.17 | 0.17 | × | 3.39% × (1 – 21.00%) | = | 0.45% | ||
| Operating lease liability4 | 3,846) | 3,846) | ÷ | 272,405) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 272,405) | 1.00 | 8.45% | ||||||||||
Based on: 10-K (reporting date: 2025-12-27).
1 US$ 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 | × | 9.72% | = | 7.96% | ||
| 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 | 8.45% | ||||||||||
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 | × | 9.72% | = | 8.16% | ||
| 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 | 8.56% | ||||||||||
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 | × | 9.72% | = | 8.40% | ||
| 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 | 8.69% | ||||||||||
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 | × | 9.72% | = | 8.14% | ||
| 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 | 8.46% | ||||||||||
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 | 2,732) | 4,500) | 3,602) | 3,326) | 3,720) | |
| Invested capital2 | 83,234) | 76,674) | 75,038) | 69,452) | 69,829) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 3.28% | 5.87% | 4.80% | 4.79% | 5.33% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | 6.58% | 4.11% | 4.60% | 4.30% | 5.82% | |
| Mondelēz International Inc. | -3.22% | 0.62% | 0.48% | -3.35% | -0.34% | |
| Philip Morris International Inc. | 13.71% | 8.73% | 9.34% | 12.31% | 26.68% | |
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 × 2,732 ÷ 83,234 = 3.28%
4 Click competitor name to see calculations.
The economic spread ratio exhibited fluctuations over the five-year period. Initial values decreased before stabilizing and then declining again. Economic profit demonstrated a similar pattern of initial decline, subsequent increase, and eventual decrease. Invested capital consistently increased throughout the period.
- Economic Spread Ratio
- The economic spread ratio began at 5.33% in 2021, decreasing to 4.79% in 2022. It remained relatively stable at 4.80% in 2023 before increasing significantly to 5.87% in 2024. A notable decline was then observed in 2025, with the ratio falling to 3.28%. This suggests a diminishing ability to generate returns exceeding the cost of capital in the most recent year.
- Economic Profit
- Economic profit started at US$3,720 million in 2021, then decreased to US$3,326 million in 2022. It recovered to US$3,602 million in 2023 and further increased to US$4,500 million in 2024. However, economic profit decreased substantially to US$2,732 million in 2025. This indicates that while the company was able to improve profitability in the intervening years, the most recent year saw a significant reduction in value creation.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the period. It increased from US$69,829 million in 2021 to US$69,452 million in 2022, then to US$75,038 million in 2023, US$76,674 million in 2024, and finally to US$83,234 million in 2025. This continuous growth in invested capital, coupled with the fluctuations in economic profit, suggests that increased investment did not consistently translate into proportional gains in economic profit.
The divergence between the increasing invested capital and the fluctuating economic spread ratio and economic profit warrants further investigation. While the company continues to invest, its ability to generate returns above the cost of capital appears to be weakening, particularly in the latest observed period.
Economic Profit Margin
PepsiCo Inc., economic profit margin calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | 2,732) | 4,500) | 3,602) | 3,326) | 3,720) | |
| Net revenue | 93,925) | 91,854) | 91,471) | 86,392) | 79,474) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 2.91% | 4.90% | 3.94% | 3.85% | 4.68% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | 12.75% | 7.59% | 8.40% | 7.99% | 12.09% | |
| Mondelēz International Inc. | -5.14% | 1.02% | 0.82% | -6.80% | -0.74% | |
| Philip Morris International Inc. | 17.99% | 11.13% | 13.64% | 18.36% | 24.77% | |
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 × 2,732 ÷ 93,925 = 2.91%
3 Click competitor name to see calculations.
The economic profit margin exhibited fluctuations over the five-year period. Initial values demonstrated a decline followed by a recovery and subsequent decrease. A review of the economic profit and net revenue figures reveals the underlying drivers of these changes.
- Economic Profit Margin Trend
- The economic profit margin began at 4.68% in 2021, decreasing to 3.85% in 2022. A modest increase was then observed in 2023, reaching 3.94%. The margin experienced a more substantial rise in 2024, attaining 4.90%, before declining to 2.91% in 2025.
- Relationship to Economic Profit
- Economic profit generally increased from 2021 to 2024, moving from US$3,720 million to US$4,500 million. This increase aligns with the rise in the economic profit margin during the same period. However, in 2025, economic profit decreased significantly to US$2,732 million, contributing to the substantial drop in the economic profit margin.
- Relationship to Net Revenue
- Net revenue consistently increased over the period, from US$79,474 million in 2021 to US$93,925 million in 2025. The increase in net revenue did not consistently translate into a higher economic profit margin, particularly evident in 2022 and 2025, suggesting that increases in costs or capital charges may have offset revenue gains.
The largest year-over-year change in economic profit margin occurred between 2024 and 2025, with a decrease of 2.0 percentage points. This decline, coupled with the reduction in economic profit, warrants further investigation to determine the underlying causes, such as increased operating expenses, higher capital costs, or changes in the cost of capital.