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.
Paying user area
Try for free
eBay Inc. pages available for free this week:
- Income Statement
- Cash Flow Statement
- Common-Size Income Statement
- Analysis of Geographic Areas
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to eBay Inc. for $22.49.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
eBay Inc., economic profit calculation
US$ 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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values exhibit significant fluctuation during the five-year period. The figure starts at 2846 million USD in 2014, declines noticeably to 1944 million USD in 2015, and remains relatively stable in 2016 at 1955 million USD. A sharp drop is observed in 2017, reaching a low of 821 million USD, followed by a strong recovery to 2553 million USD in 2018. This indicates volatility in operating profitability with a substantial rebound at the end of the period.
- Cost of Capital
- The cost of capital shows a gradual decreasing trend, moving from 15.63% in 2014 down to 13.91% in 2018. The decline, although moderate, may suggest improvements in perceived risk or capital efficiency over these years.
- Invested Capital
- Invested capital undergoes a steep reduction from 20,937 million USD in 2014 to 7,328 million USD in 2015, after which it remains relatively stable with slight fluctuations: 7,687 million USD in 2016, 6,903 million USD in 2017, and 7,597 million USD in 2018. The initial sharp decrease indicates a significant change in asset base or capital deployment strategy early in the period, followed by steady investment levels.
- Economic Profit
- Economic profit transitions from a negative value of -426 million USD in 2014 to positive results in 2015 and 2016, recording 896 million USD and 868 million USD, respectively. It then falls back into negative territory in 2017 with -170 million USD before experiencing a strong positive rebound to 1,497 million USD in 2018. This pattern mirrors the fluctuations in NOPAT and suggests varying efficiency in generating returns above the cost of capital, with notable recovery in the final year.
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 Trend
- The company exhibited considerable fluctuations in economic profit over the five-year period. Starting with a negative economic profit of -426 million USD at the end of 2014, there was a marked turnaround in 2015 with a significant positive economic profit of 896 million USD. This positive trend continued into 2016 with 868 million USD, followed by a decline back into negative territory at -170 million USD in 2017. The year 2018 marked a strong recovery, recording the highest economic profit in the period at 1497 million USD.
- Invested Capital Pattern
- Invested capital experienced a sharp decrease from 20,937 million USD in 2014 to 7,328 million USD in 2015, representing a substantial contraction in the capital base. For the next three years, invested capital maintained a relatively stable range between approximately 6,900 million USD and 7,700 million USD. The modest fluctuations during this latter period suggest a stabilization of capital investment levels following the significant reduction.
- Economic Spread Ratio Dynamics
- The economic spread ratio mirrored the volatility observed in economic profit. In 2014, the ratio was negative at -2.03%, reflecting underperformance relative to the cost of capital. The ratio rebounded sharply to 12.22% in 2015 and slightly declined to 11.29% in 2016, indicating periods of favorable returns on invested capital. However, in 2017, the ratio again turned negative to -2.46%, signalling a temporary decline in economic value creation. By 2018, the ratio reached its highest point in the series at 19.7%, denoting an exceptionally strong surplus return over the cost of capital.
- Overall Observations
- The analysis reveals a highly variable performance in economic profit and economic spread ratio, which exhibit a pattern of recovery and decline over the assessed years. The pronounced drop in invested capital between 2014 and 2015 suggests a major restructuring or divestment event. Following this adjustment, the company managed to generate substantial economic profit and achieve strong economic spread ratios in most years, except for the downturn in 2017. The improvements in 2018 highlight a potential successful strategic repositioning or operational enhancement leading to superior capital efficiency and profitability.
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 demonstrates notable fluctuations over the analyzed period. Initially, there was a negative value in 2014, indicating a loss in economic profit. This transitioned to a positive and substantial gain in 2015 and 2016, though it dropped into negative territory again in 2017 before achieving the highest positive value in 2018. This pattern suggests variable profitability and the potential influence of changing operational or market conditions.
- Adjusted Net Revenues
- The adjusted net revenues reveal an overall upward trend from 2014 through 2018. Revenues decreased sharply between 2014 and 2015 but began a steady recovery thereafter, growing each year from 2015 to 2018. This progression indicates effective revenue growth strategies or market expansion efforts after an initial dip.
- Economic Profit Margin
- The economic profit margin follows a trend consistent with the economic profit values. It started negative in 2014, improved significantly in 2015 and 2016, declined below zero again in 2017, and peaked at the highest positive margin in 2018. This margin volatility suggests swings in operational efficiency or cost structures affecting profitability relative to revenue.
- Overall Insights
- The financial data reflects a company experiencing inconsistency in profitability, as evidenced by the oscillating economic profit and margin figures. Despite early setbacks in revenue and profit in 2014 and 2017, there are clear signs of recovery and improvement, culminating in strong economic profit and margin results by 2018. The divergence between a recovering revenue base and the associated changes in economic profit margins highlights the importance of managing costs and capital efficiency alongside growing revenues.