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:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Economic Profit
PepsiCo Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-26).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited an overall increasing trend over the five-year period. Starting at 8,429 million USD in 2020, it rose substantially to 10,978 million USD by 2024. There was a minor dip in 2022 to 9,364 million USD from 9,629 million USD in 2021, but the figure recovered and continued to grow thereafter, indicating generally strong profitability with some fluctuation.
- Cost of Capital
- The cost of capital showed a gradual upward trend from 8.43% in 2020 to a peak of 9.1% in 2022, followed by a slight decline to 8.83% by 2024. This pattern suggests that the company faced increasing capital costs early in the period, potentially reflecting higher risk or market conditions, before a modest reduction in later years.
- Invested Capital
- Invested capital remained relatively stable around the 69,000 to 70,000 million USD range from 2020 through 2022, with a slight decrease from 70,066 million USD to 69,452 million USD. From 2023 onward, invested capital increased to 75,038 million USD and then further to 76,674 million USD in 2024, indicating renewed investments or asset growth in the most recent years.
- Economic Profit
- The economic profit followed a positive and overall increasing pattern over the period. Starting at 2,522 million USD in 2020, it rose to 3,445 million USD in 2021, before a decrease to 3,044 million USD in 2022. Subsequently, economic profit resumed growth to 4,204 million USD by 2024. This trend reflects improvements in generating returns above the cost of capital after a temporary decline in 2022.
- Summary
- Over the analyzed period, the company demonstrated improving profitability and value creation despite some short-term fluctuations in 2022. The increase in NOPAT and economic profit signals effective operational performance and enhancements in economic value generation. The rise in invested capital in the later years may indicate strategic expansion or increased asset utilization. The temporary peak in the cost of capital in 2022, followed by a decline, reflects dynamic financial market conditions affecting the company's capital expense. Overall, the data portrays a resilient financial performance with positive growth trends in key profitability and investment measures.
Net Operating Profit after Taxes (NOPAT)
PepsiCo Inc., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-26).
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 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 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.
The annual financial data presents a general upward trend in key profitability metrics over the five-year period analyzed.
- Net Income Attributable to PepsiCo
- This metric shows a consistent increase throughout the period. Starting at 7,120 million US dollars in 2020, it rises to 7,618 million in 2021 and then experiences a notable jump to 8,910 million in 2022. This growth continues more moderately through 2023 and 2024, reaching 9,074 million and 9,578 million respectively. The trend suggests steady improvements in the company’s ability to generate profits attributable to shareholders.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT figures also demonstrate an overall growth trend but with a slight fluctuation in 2022. The measure increases from 8,429 million US dollars in 2020 to 9,629 million in 2021, reflecting enhanced operational efficiency or profitability. However, there is a decrease to 9,364 million in 2022, indicating a possible operational challenge or increased costs during that year. Despite this dip, NOPAT recovers and grows to 10,029 million in 2023 and further to 10,978 million in 2024, suggesting a strong rebound and continued operational success.
Overall, the data exhibits positive financial performance with increasing profitability over the studied years. While net income shows steady growth without decline, NOPAT reveals a minor fluctuation but recovers, highlighting the company’s resilience and operational strength.
Cash Operating Taxes
PepsiCo Inc., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-26).
- Provision for income taxes
- The provision for income taxes exhibited some variability over the five-year period. It increased from 1894 million US dollars in 2020 to a peak of 2142 million in 2021. The figure then declined to 1727 million in 2022, before rising again to 2262 million in 2023 and slightly increasing further to 2320 million in 2024. This fluctuation suggests changes in taxable income or adjustments in tax planning strategies over the years.
- Cash operating taxes
- Cash operating taxes demonstrated a consistent upward trend throughout the period. Starting at 2034 million US dollars in 2020, the outflow grew steadily each year, reaching 2131 million in 2021, 2660 million in 2022, 2970 million in 2023, and 3060 million in 2024. This continuous increase may reflect rising operational profitability, changes in tax regulations, or growing business activities impacting cash tax payments.
- Comparative insights
- While both provision for income taxes and cash operating taxes increased overall, cash operating taxes showed a more pronounced and consistent upward trajectory. The divergence seen particularly in 2022, where provision decreased but cash taxes increased significantly, could indicate timing differences between tax provision accruals and actual tax payments or variations in non-cash tax components. The steady rise in cash taxes suggests increasing cash tax obligations that might impact the company’s liquidity needs.
Invested Capital
PepsiCo Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-26).
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.
- Total reported debt & leases
- The total reported debt and lease obligations showed a downward trend from 45,843 million USD in 2020 to 41,487 million USD in 2022, indicating a reduction in overall leverage during this period. However, starting in 2023, the debt level increased significantly to 47,061 million USD and continued to rise slightly to 47,751 million USD in 2024, suggesting a shift toward higher leverage or increased financing activity in recent years.
- Total PepsiCo common shareholders’ equity
- Shareholders’ equity exhibited steady growth from 13,454 million USD in 2020 up to a peak of 18,503 million USD in 2023, reflecting accumulation of retained earnings or capital injections over time. In 2024, equity slightly declined to 18,041 million USD, indicating a minor reduction in net assets attributable to common shareholders.
- Invested capital
- Invested capital remained relatively stable around the high 69,000 million USD range between 2020 and 2022, with values of 70,066 million USD in 2020 and 69,452 million USD in 2022. From 2023 onward, it increased noticeably to 75,038 million USD in 2023 and further to 76,674 million USD in 2024, signaling an expansion in the capital deployed in the business or acquisitions of additional assets.
- Summary
- Overall, the financial data reveals a period of debt reduction followed by increased borrowing after 2022. The rise in shareholders’ equity from 2020 through 2023 reflects strengthening capital base, though a slight dip in 2024 could merit attention. The invested capital trend aligns with the recent increase in debt, highlighting possible growth strategies or capital intensive initiatives pursued post-2022.
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: 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 »
| 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: 2020-12-26).
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 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a generally increasing trend over the five-year period. Starting at 2522 million US dollars in 2020, it rose significantly in 2021 to 3445 million US dollars. Although there was a slight decline to 3044 million US dollars in 2022, the figure recovered to 3306 million in 2023 and reached a peak of 4204 million US dollars by the end of 2024. This overall upward movement suggests improving profitability and value creation for the company.
- Invested Capital
- Invested capital exhibited moderate fluctuations over the examined years. It began at 70066 million US dollars in 2020 and slightly decreased to 69829 million in 2021, then continued to decline to 69452 million in 2022. Thereafter, it increased notably to 75038 million in 2023 and marginally to 76674 million in 2024. The rise in invested capital towards the later years might indicate expanded investments or asset growth within the company.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, displayed a positive upward trajectory overall. The ratio increased from 3.6% in 2020 to 4.93% in 2021, followed by a minor dip to 4.38% in 2022. It then stabilized at approximately 4.41% in 2023 before improving significantly to 5.48% in 2024. This increase in economic spread ratio suggests enhanced efficiency in generating returns over the cost of capital throughout the period.
- Summary of Insights
- The data indicates overall improved financial performance and capital efficiency over the five years. The economic profit growth, especially the substantial rise in 2024, reflects stronger value generation. The recovery and growth in invested capital after a period of decline suggest increasing asset deployment. Concurrently, the rising economic spread ratio signifies better returns relative to invested capital costs, underlining more effective utilization of capital resources. Despite some minor fluctuations, the company appears to be progressing favorably in terms of profitability and capital investment efficiency.
Economic Profit Margin
PepsiCo Inc., economic profit margin calculation, comparison to benchmarks
| Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | Dec 26, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25), 10-K (reporting date: 2020-12-26).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenue
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a generally increasing trend over the five-year period. Starting at $2,522 million in 2020, it rose sharply to $3,445 million in 2021. A slight decline occurred in 2022 to $3,044 million, but the figure rebounded in 2023 to $3,306 million and reached its highest point of $4,204 million in 2024.
- Net Revenue
- Net revenue showed consistent growth throughout the period. Beginning at $70,372 million in 2020, it increased steadily each year, reaching $79,474 million in 2021, $86,392 million in 2022, and peaking at $91,854 million in 2024, with a slight deceleration in growth rate observed between 2023 and 2024, where revenue rose only marginally from $91,471 million to $91,854 million.
- Economic Profit Margin
- The economic profit margin fluctuated during the period but generally followed an upward trajectory. It started at 3.58% in 2020, improved notably to 4.33% in 2021, dropped to 3.52% in 2022, slightly increased to 3.61% in 2023, and rose significantly to 4.58% by 2024. This indicates an improvement in economic profitability relative to revenue over the five years.
- Summary
- Overall, the data indicate that the company experienced steady revenue growth accompanied by increased economic profitability, both in absolute terms and as a margin. The transient decline in economic profit and margin in 2022 suggests a period of reduced efficiency or increased costs; however, the recovery in the subsequent years implies an effective response to these challenges. The economic profit margin's increase to 4.58% in 2024 demonstrates enhanced capability to convert revenue into economic profit, reflecting improved operational performance or cost management.