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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- Cash Flow Statement
- Analysis of Short-term (Operating) Activity Ratios
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT showed a declining trend from 2014 to 2017, dropping significantly from 2,846 million USD in 2014 to 821 million USD in 2017. However, in 2018, there was a strong recovery, with NOPAT increasing to 2,553 million USD, almost regaining the level observed in 2014.
- Cost of Capital
- The cost of capital demonstrated a gradual decrease over the observed period, moving from 15.38% in 2014 to 13.69% in 2018. This steady decline indicates a lowering in the company’s capital expense, potentially reflecting an improved risk profile or favorable market conditions.
- Invested Capital
- Invested capital experienced a sharp drop from 20,937 million USD in 2014 to 7,328 million USD in 2015, followed by relative stability with minor fluctuations in subsequent years, ranging between 6,903 million USD and 7,687 million USD. This substantial reduction early in the period suggests a significant divestment or restructuring, after which the capital base stabilized.
- Economic Profit
- Economic profit showed notable volatility, with a negative value of -374 million USD in 2014 followed by positive performance in 2015 and 2016, recording 912 million USD and 885 million USD respectively. In 2017, economic profit again turned negative at -154 million USD but rebounded sharply in 2018 to 1,513 million USD, the highest across the examined years. This pattern suggests fluctuating profitability relative to the cost of capital, with the strongest value creation observed in the most recent period.
- Overall Insights
- The data indicate a period of financial instability or transition from 2014 through 2017, characterized by declining profits, major capital reduction, and fluctuating economic profit. The year 2018 marks a recovery phase with significant improvement in profitability, economic profit, and a continued lowering of capital costs. This enhanced performance in the final year analyzed points to successful operational or strategic changes reversing earlier negative trends.
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 shows significant fluctuations throughout the periods. In 2014, the value was negative at -374 million USD, indicating a loss. This turned into a substantial positive profit of 912 million USD in 2015, followed by a slight decline to 885 million USD in 2016. However, economic profit sharply dropped to -154 million USD in 2017, representing another loss, before recovering strongly to reach 1,513 million USD in 2018. This pattern indicates notable volatility in profitability within the observed timeframe.
- Invested Capital
- Invested capital decreased significantly from 20,937 million USD in 2014 to 7,328 million USD in 2015 and then remained relatively stable in the subsequent years, with figures hovering around 7,000 to 7,600 million USD. The sharp reduction from 2014 to 2015 suggests a substantial divestment or asset reallocation, followed by a period of steady investment levels through 2018.
- Economic Spread Ratio
- The economic spread ratio experienced considerable variation, starting at -1.78% in 2014, indicating a negative spread. This increased sharply to 12.45% in 2015 and remained elevated at 11.51% in 2016. There was a dip to -2.24% in 2017, showing a contraction in economic value added, but the ratio surged to its highest point of 19.92% in 2018. These shifts demonstrate periods of both negative economic returns and strong economic value creation, reflecting changes in company performance and capital efficiency.
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 exhibits significant fluctuations over the analyzed period. Initially, it was negative at -374 million US dollars in 2014, followed by a strong positive increase to 912 million US dollars in 2015. This positive trend continued in 2016 with 885 million US dollars, before dropping sharply to -154 million US dollars in 2017. In 2018, there was a substantial recovery, reaching 1513 million US dollars, the highest value in the period.
- Adjusted Net Revenues
- Adjusted net revenues display a generally upward trend. Beginning at 17,932 million US dollars in 2014, revenues declined significantly in 2015 to 8,590 million US dollars. Subsequently, revenues increased steadily each year, reaching 8,983 million US dollars in 2016, 9,574 million US dollars in 2017, and 10,779 million US dollars in 2018. Despite the initial sharp drop, the recovery phase shows consistent growth over the later years.
- Economic Profit Margin
- The economic profit margin shows notable variability. Starting at a negative margin of -2.08% in 2014, it improved markedly to 10.62% in 2015 and slightly decreased to 9.85% in 2016. In 2017, the margin turned negative again, dropping to -1.61%, before improving substantially to 14.04% in 2018, the highest margin within the timeframe considered.
- Overall Insights
- The data reveal a pattern of volatility with regard to economic profit and profit margin, in contrast to a more consistent increase in adjusted net revenues after a significant drop in 2015. The recovery in economic profit and profit margin in 2018 suggests an improved operational efficiency or profitability in that period. The divergence between revenue trends and economic profit in certain years highlights potential variations in cost structure, investments, or other financial factors impacting profitability beyond mere revenue changes.