Economic Value Added (EVA)
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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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Altria Group Inc. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Analysis of Revenues
- Aggregate Accruals
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Economic Profit
Altria Group Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant volatility over the five-year period. In 2019, the figure was negative, indicating an operational loss of 482 million USD. However, this turned positive in 2020 with a marked increase to 5,245 million USD. A decline followed in 2021, dropping to 2,233 million USD, but it rebounded notably in the subsequent years, reaching 5,753 million USD in 2022 and further increasing to 8,681 million USD in 2023. The overall trend from 2019 to 2023 reflects considerable recovery and growth in operating profitability after taxes.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating between 8.96% and 9.61%. It was lowest in 2020 at 8.96% and peaked in 2022 at 9.61%. By 2023, it slightly decreased to 9.36%. These small changes suggest consistent capital costs with minor variations, which may reflect market conditions or company risk profile changes over time.
- Invested Capital
- Invested capital displayed a clear downward trend over the analyzed period, decreasing from 42,624 million USD in 2019 to 28,647 million USD in 2023. The most significant reductions occurred between 2020 and 2022, with invested capital shrinking steadily each year. This contraction indicates a reduction in the company’s capital base, potentially through asset sales, depreciation exceeding investments, or strategic divestitures.
- Economic Profit
- The economic profit figures illustrate notable fluctuations, beginning with a substantial negative value of -4,371 million USD in 2019, indicating value destruction. This turned positive in 2020, yielding 1,526 million USD. However, 2021 saw a return to negative economic profit at -908 million USD before improving markedly in the next two years, with 2,984 million USD in 2022 and 5,999 million USD in 2023. This volatility in economic profit suggests varying levels of success in generating returns above the cost of capital, with a significant positive turnaround observable in the last two years.
Net Operating Profit after Taxes (NOPAT)
Altria Group Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in LIFO reserve. See details »
3 Addition of increase (decrease) in equity equivalents to net earnings (losses) attributable to Altria.
4 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net earnings (losses) attributable to Altria.
6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
7 Elimination of after taxes investment income.
- Net earnings (losses) attributable to Altria
- The net earnings attributable to the company demonstrated significant volatility over the analyzed period. In 2019, the company reported a net loss of $1,293 million. However, a substantial recovery occurred in 2020, with net earnings increasing sharply to $4,467 million. This positive trend continued, albeit with fluctuations, as earnings decreased to $2,475 million in 2021 before rising again to $5,764 million in 2022 and further to $8,130 million in 2023. Overall, the data indicates a strong recovery and growth in earnings after the initial loss in 2019.
- Net operating profit after taxes (NOPAT)
- NOPAT mirrored the pattern observed in net earnings, starting with a negative value of $482 million in 2019. This figure increased significantly to $5,245 million in 2020, reflecting improved operational profitability. After a decline to $2,233 million in 2021, NOPAT rebounded to $5,753 million in 2022 and further increased to $8,681 million in 2023. These trends signify a recovery in operating performance, with NOPAT surpassing net earnings figures consistently from 2020 onward, indicating effective operational management and tax impact considerations.
Cash Operating Taxes
Altria Group Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
- Provision (benefit) for income taxes
- The provision for income taxes experienced fluctuations over the five-year period. Starting at 2,064 million USD in 2019, it rose substantially to 2,436 million USD in 2020. A marked decline occurred in 2021, with the provision dropping to 1,349 million USD, followed by a moderate increase to 1,625 million USD in 2022. In 2023, the provision escalated sharply to 2,798 million USD, reaching its highest level in the observed period.
- Cash operating taxes
- Cash operating taxes showed a consistent upward trend across the years. The amount increased from 2,428 million USD in 2019 to 2,854 million USD in 2020. Although there was a minor decrease in 2021 to 2,753 million USD, the overall trajectory remained positive, with values climbing to 2,794 million USD in 2022 and further rising to 3,236 million USD in 2023. This indicates a steady growth in cash outflows related to operating taxes over the period.
- Comparative Insights
- While cash operating taxes demonstrated a relatively stable and progressive increase, the provision for income taxes displayed more volatility, with notable decreases and increases. The divergence between provision and cash taxes in some years, particularly in 2021 and 2023, could suggest variations in deferred tax accounting or changing tax planning strategies. The significant rise in both provisions and cash taxes in 2023 warrants careful examination to understand underlying drivers such as changes in taxable income or tax rates.
Invested Capital
Altria Group Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred taxes from assets and liabilities. See details »
2 Addition of LIFO reserve. See details »
3 Addition of equity equivalents to stockholders’ equity (deficit) attributable to Altria.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in progress.
- Total reported debt & leases
-
The total reported debt and leases show a relatively stable yet slightly declining trend over the five-year period. Starting at $28,042 million in 2019, the figure increased moderately to $29,471 million in 2020, signaling a short-term rise in liabilities. However, from 2021 onwards, the debt levels consistently decreased each year, falling to $28,044 million in 2021, $26,680 million in 2022, and further down to $26,233 million in 2023. This pattern suggests an effort to reduce overall debt and lease obligations after a peak in 2020.
- Stockholders’ equity (deficit) attributable to Altria
-
The stockholders' equity attributable to the company experienced a marked and continuous decline throughout the period. Beginning at $6,222 million in 2019, equity reduced sharply to $2,839 million in 2020. In 2021, equity became negative, registering at -$1,606 million, indicating that liabilities exceeded assets. The negative trend intensified in subsequent years, reaching -$3,973 million in 2022 and slightly improving to -$3,540 million in 2023. This deterioration reflects possible sustained losses, share repurchases, or other factors diminishing equity value over time.
- Invested capital
-
Invested capital demonstrated a clear downward trend from 2019 through 2023. It started relatively high at $42,624 million in 2019, followed by a moderate decline to $41,498 million in 2020. The reduction accelerated thereafter, with invested capital dropping to $33,524 million in 2021, and further to $28,802 million in 2022 and $28,647 million in 2023. The consistent decrease in invested capital suggests contraction in assets employed in the business or disposition of investments over the analyzed timeframe.
Cost of Capital
Altria Group Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
Economic Spread Ratio
Altria Group Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic profit
- The economic profit demonstrated notable volatility across the observed periods. Initially, there was a significant negative value in 2019, reflecting a substantial economic loss. A recovery was observed in 2020 with a positive economic profit, followed by another downturn in 2021. Subsequently, a strong improvement occurred in both 2022 and 2023, culminating in a considerable positive economic profit of 5999 million US dollars, suggesting enhanced value creation in recent years.
- Invested capital
- Invested capital showed a steady decline throughout the years under review. Beginning at 42624 million US dollars in 2019, this figure gradually decreased each year, reaching 28647 million US dollars by 2023. This downward trend may indicate a reduction in the capital base or more efficient use of capital resources.
- Economic spread ratio
- The economic spread ratio exhibited significant improvement over the period. From a negative spread ratio in 2019, indicating returns below the cost of capital, the ratio rose to a positive figure in 2020. Although a slight regression occurred in 2021, the ratio rebounded strongly in the following years, peaking at 20.94% in 2023. This pattern signifies progressively better economic profitability relative to the invested capital.
Economic Profit Margin
Altria Group Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
| Philip Morris International Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrated notable volatility over the five-year period. It started with a significant negative value of -4371 million USD in 2019, indicating a considerable economic loss. This shifted to a positive economic profit of 1526 million USD in 2020, suggesting a recovery or increased efficiency. However, in 2021, economic profit again turned negative, reaching -908 million USD, implying a setback. Subsequently, the company experienced strong improvement in 2022 and 2023, with economic profits ascending to 2984 million USD and then substantially increasing to 5999 million USD by the end of 2023, reflecting enhanced profitability and value creation.
- Net Revenues
- Net revenues exhibited a gradual declining trend throughout the observed period. Revenues increased slightly from 25110 million USD in 2019 to a peak of 26153 million USD in 2020. Thereafter, revenues decreased steadily to 26013 million USD in 2021, followed by further declines to 25096 million USD in 2022 and 24483 million USD in 2023. This consistent reduction in revenue over the last three years indicates potential challenges in sales volume, pricing power, or market conditions.
- Economic Profit Margin
- The economic profit margin mirrored the volatility observed in economic profit values. It began at a negative margin of -17.41% in 2019, turned positive to 5.84% in 2020, and then reverted to negative -3.49% in 2021. Following 2021, the margin improved significantly, rising to 11.89% in 2022 and further to a robust 24.5% in 2023. This positive trajectory after 2021 suggests improved operational efficiency or cost management, resulting in greater value generated per unit of revenue despite declining sales.
- Summary of Trends
- The overall analysis depicts a company facing fluctuating economic profitability amid a backdrop of decreasing net revenues. The strong improvement in economic profit and margins during 2022 and 2023 indicates effective strategic or operational adjustments that compensated for declining revenue. This suggests a shift towards more profitable activities or cost containment, enhancing economic value despite a shrinking top line.