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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- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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Economic Profit
eBay Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2018 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data indicates several notable trends over the five-year period from 2014 to 2018.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced significant fluctuations throughout the period. It started at a high level of 2,846 million USD in 2014 and then sharply declined to 1,944 million USD in 2015. It remained relatively stable in 2016, with a marginal increase to 1,955 million USD, but dropped drastically to 821 million USD in 2017. However, in 2018, NOPAT rebounded considerably to 2,553 million USD, approaching the earlier figures but still below the initial 2014 level.
- Cost of Capital
- The cost of capital showed a gradual decline across the years. It decreased from 15.61% in 2014 to 13.89% in 2018, indicating a reduction in the company’s overall required return. This trend suggests possibly reduced perceived risk or cheaper financing conditions over the period.
- Invested Capital
- Invested capital saw a dramatic decrease from 20,937 million USD in 2014 to 7,328 million USD in 2015, marking a significant reduction in the company’s investment base. After 2015, invested capital remained relatively stable between approximately 6,903 and 7,687 million USD from 2016 through 2018, indicating a maintained lower investment level following the sharp initial drop.
- Economic Profit
- Economic profit followed a volatile trajectory, starting negative at -421 million USD in 2014 before improving to positive figures of 897 million USD in 2015 and 869 million USD in 2016. It then reverted to a negative value of -168 million USD in 2017, followed by a strong recovery to 1,498 million USD in 2018. The variability in economic profit reflects changes in both operating performance and invested capital efficiency.
Net Operating Profit after Taxes (NOPAT)
eBay Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts and authorized credits.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in restructuring reserve.
5 Addition of increase (decrease) in equity equivalents to net income (loss).
6 2018 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2018 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss).
9 2018 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
11 Elimination of discontinued operations.
The financial data reveals notable fluctuations in profitability over the five-year period.
- Net Income (Loss)
- The net income shows significant volatility. It increased markedly from 46 million US dollars in 2014 to a peak of 7,266 million US dollars in 2016, indicating strong profitability during this period. However, there was a sharp decline in 2017, with a net loss of 1,016 million US dollars, signaling a challenging financial year. In 2018, the net income rebounded to a positive 2,530 million US dollars, suggesting a recovery but not returning to the peak levels observed in 2016.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a declining trend from 2,846 million US dollars in 2014 to 821 million US dollars in 2017, reflecting a gradual erosion of operating profitability over these years. Nonetheless, 2018 saw a significant improvement to 2,553 million US dollars, nearly returning to the level seen in 2014. This recovery in NOPAT suggests enhanced operational efficiency or better cost management in the last year of the period.
Overall, the data illustrates a period of growth followed by a downturn and partial recovery. The volatility in net income is more pronounced than in NOPAT, which may indicate that factors beyond core operations—such as extraordinary items or financial costs—impacted net profitability, particularly in 2017. The improvements in 2018 across both indicators suggest a positive shift in financial performance.
Cash Operating Taxes
eBay Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
- Provision (benefit) for income taxes
- The provision for income taxes exhibited significant volatility over the period analyzed. In 2014, the provision was substantially positive, amounting to 3,485 million US dollars, indicating a considerable tax expense. This value sharply decreased to 459 million US dollars in 2015. In 2016, the provision turned negative to -3,634 million US dollars, signaling a tax benefit rather than an expense. However, in 2017, the provision reverted to a positive figure of 3,288 million US dollars before dropping again to 190 million US dollars in 2018. This pattern suggests considerable fluctuations in taxable income or changes in tax regulations affecting the reported tax expense or benefit.
- Cash operating taxes
- Cash operating taxes demonstrated a generally declining trend from 2014 through 2016, starting at 659 million US dollars in 2014 and slightly decreasing to 505 million US dollars in 2016. A notable spike occurred in 2017, with cash operating taxes rising sharply to 1,600 million US dollars, which is more than a threefold increase compared to the previous year. This sudden increase might reflect a higher cash tax payment or changes in tax payment timing. In 2018, cash operating taxes fell substantially to 378 million US dollars. Overall, the data indicate variability in the company's cash tax payments, with the exceptional increase in 2017 representing a significant deviation from prior and subsequent years.
Invested Capital
eBay Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
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 deferred revenue.
5 Addition of restructuring reserve.
6 Addition of equity equivalents to stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
- Total reported debt & leases
- The total reported debt and leases showed fluctuations over the analyzed period. Starting at 8,046 million USD at the end of 2014, the figure decreased to 6,985 million USD in 2015. However, it then increased sharply to 9,172 million USD in 2016 and further rose to a peak of 10,296 million USD in 2017. In 2018, the total reported debt and leases slightly declined to 9,746 million USD. Overall, the trend suggests a general increase in debt levels, especially from 2015 to 2017, followed by a minor reduction in 2018.
- Stockholders’ equity
- Stockholders’ equity experienced significant volatility during the period. It started at a relatively high level of 19,906 million USD in 2014, then declined substantially to 6,576 million USD in 2015. There was a partial recovery in 2016, with equity rising to 10,539 million USD, but this was not sustained in subsequent years. Equity decreased again to 8,063 million USD in 2017 and further declined to 6,281 million USD by the end of 2018. The overall pattern indicates considerable erosion of equity value compared to the initial year, with notable declines after 2016.
- Invested capital
- Invested capital mirrored the general downward trend observed in stockholders’ equity, beginning at 20,937 million USD in 2014 and decreasing sharply to 7,328 million USD by 2015. From 2015 to 2018, invested capital remained relatively stable but low, fluctuating around the 6,900 to 7,600 million USD range. This indicates a significant contraction in the invested capital base post-2014, with minimal recovery through to the final year observed.
- Summary
- The overall financial pattern presents a scenario of increasing leverage as evidenced by rising total reported debt after 2015, contrasted against declining stockholders’ equity and reduced invested capital. The significant drop in equity and invested capital in 2015 could suggest a major restructuring, asset reduction, or other strategic adjustments affecting the capital structure. The leverage increase may indicate a higher reliance on debt financing over the latter years, potentially affecting the company's financial stability and risk profile.
Cost of Capital
eBay Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2016-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2015-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2014-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
eBay Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2018 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations over the reported periods. Initially, there was a negative value of -421 million US dollars in 2014, which sharply rose to 897 million in 2015 and was maintained at a high level of 869 million in 2016. However, in 2017, the economic profit reverted to a negative figure of -168 million, followed by a strong recovery to 1,498 million in 2018, indicating volatile but overall improving economic profitability.
- Invested Capital
- The invested capital shows a declining trend from 20,937 million US dollars in 2014 to 7,597 million in 2018. A steep drop occurred between 2014 and 2015, decreasing to 7,328 million, and remaining generally stable with minor variations 7,687 million, 6,903 million, and 7,597 million through 2016 to 2018. This suggests a significant reduction in capital investment or asset base over the five years.
- Economic Spread Ratio
- The economic spread ratio, expressed as a percentage, displayed marked variability. It began at a negative -2.01% in 2014, dramatically improved to 12.24% in 2015, and maintained a high positive range at 11.31% in 2016. The ratio again turned negative at -2.44% in 2017, but surged to a peak of 19.72% in 2018. This indicator reflects the company’s varied ability to generate returns above its cost of capital, with notable volatility but a generally positive trend in the latter years.
- Overall Analysis
- The data reveals considerable volatility in both profitability and capital employed across the five-year period. Despite reducing invested capital substantially after 2014, the company experienced alternating periods of positive and negative economic profit and spread ratio. The recovery to high positive levels in 2018 for both economic profit and the spread ratio indicates an improvement in operational efficiency and value generation in that year. The interplay between declining capital investment and fluctuating profitability metrics suggests active management of resources and strategic adjustments in response to varying market or operational conditions.
Economic Profit Margin
eBay Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Economic profit. See details »
2 2018 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows significant volatility over the analyzed period. Starting with a negative value of -421 million US dollars in 2014, it improved sharply to a positive 897 million US dollars in 2015. The profit level remained high in 2016 at 869 million US dollars but dropped substantially to -168 million in 2017. It then rebounded strongly in 2018 to reach a peak of 1498 million US dollars. This pattern indicates fluctuating profitability with notable recovery and growth in the last reported year.
- Adjusted Net Revenues
- The adjusted net revenues experienced a dramatic decline from 17,932 million US dollars in 2014 to 8,590 million in 2015, representing a reduction of more than 50%. This lower revenue base remained relatively stable in subsequent years, showing a gradual but consistent rise each year: 8,983 million in 2016, 9,574 million in 2017, and 10,779 million in 2018. The trend suggests an initial contraction followed by steady revenue growth over the latter part of the period.
- Economic Profit Margin
- The economic profit margin mirrors the fluctuations observed in economic profit. It started at a negative margin of -2.35% in 2014 but improved markedly to reach 10.44% in 2015. The margin slightly declined to 9.68% in 2016 before turning negative again at -1.76% in 2017. In 2018, it increased substantially to 13.9%, the highest margin over the period. This variability indicates inconsistency in profitability relative to revenue, with strong margins in 2015, 2016, and 2018 and negative performance in 2014 and 2017.