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.
Economic Profit
Carnival Corp. & plc, economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
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
= 2,207 – 17.75% × 39,428 = -4,790
The financial trajectory over the analyzed six-year period is characterized by a persistent failure to generate positive economic profit, indicating that the return on invested capital remained below the weighted average cost of capital. A significant period of value destruction peaked in 2020, followed by a consistent recovery trend through 2023.
- Net Operating Profit After Taxes (NOPAT)
- A severe volatility pattern is observed in operating performance. NOPAT remained stable between 2018 and 2019 before collapsing to a deficit of 9,312 million US$ in 2020. A gradual recovery followed, with losses narrowing to 4,485 million US$ by 2022 and returning to a positive position of 2,207 million US$ in 2023.
- Cost of Capital
- The cost of capital exhibited a general downward trend for the majority of the period, decreasing from a peak of 27.46% in 2018 to a low of 14.99% in 2022. This trend was reversed in 2023, where the cost of capital rose to 17.75%, potentially reflecting changing market conditions or increased risk premiums.
- Invested Capital
- Invested capital increased significantly from 35,074 million US$ in 2018 to a peak of 49,017 million US$ in 2020. Since that peak, a steady contraction of the capital base has been observed, with invested capital reducing to 39,428 million US$ by 2023, suggesting a period of deleveraging or asset optimization.
- Economic Profit
- Economic profit remained negative throughout the entire period, signifying that the company did not create economic value. The deficit deepened drastically in 2020, reaching 18,260 million US$. However, from 2021 onward, the economic loss has narrowed consistently, improving from 15,678 million US$ in 2021 to 4,790 million US$ in 2023. The convergence toward a break-even point is driven by the simultaneous recovery of NOPAT and the reduction of the total invested capital base.
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Net Operating Profit after Taxes (NOPAT)
Carnival Corp. & plc, NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income (loss).
3 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,319 × 5.90% = 78
4 2023 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= 2,144 × -19.35% = -415
5 Addition of after taxes interest expense to net income (loss).
6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 233 × -19.35% = -45
7 Elimination of after taxes investment income.
The financial performance from 2018 to 2023 is characterized by an initial period of stability, a severe contraction in profitability, and a subsequent phased recovery. A sharp downturn occurred after 2019, resulting in substantial losses that peaked in 2020 before showing a consistent upward trajectory toward stabilization by late 2023.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT exhibited relative stability between 2018 and 2019, with a marginal decrease from US$ 3,339 million to US$ 3,226 million. A precipitous decline followed in 2020, where NOPAT fell to negative US$ 9,312 million. A gradual recovery trend is observed from 2021 onward, with losses narrowing to US$ 7,863 million in 2021 and US$ 4,485 million in 2022, eventually returning to a positive value of US$ 2,207 million by November 30, 2023.
- Correlation Between Net Income and NOPAT
- Net income and NOPAT movements remained highly correlated throughout the observed period. Both metrics experienced extreme volatility starting in 2020. However, by 2023, a notable divergence emerged: NOPAT returned to positive territory at US$ 2,207 million, while net income remained marginally negative at US$ -74 million. This suggests that core operating profitability has recovered more rapidly than the overall bottom line, indicating that non-operating expenses or financial charges continue to impact net results.
- Analysis of Recovery Velocity
- The recovery phase is marked by an accelerating improvement in operational results. The increase in NOPAT from 2020 to 2021 was approximately US$ 1,449 million, while the improvement from 2022 to 2023 was significantly more pronounced, representing a positive swing of US$ 6,692 million. This indicates a substantial restoration of operating efficiency and revenue generation in the final year of the period.
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Cash Operating Taxes
Carnival Corp. & plc, cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
The relationship between income tax expense and cash operating taxes demonstrates a period of close correlation followed by a significant divergence in the final reported year. Between 2018 and 2022, cash operating taxes largely mirrored the trajectory of the net income tax expense, reflecting a consistent alignment between accounting tax provisions and actual cash outflows for taxes.
- Correlation and Pandemic Impact (2018-2021)
- From 2018 to 2019, both income tax expense and cash operating taxes increased, with cash payments slightly exceeding accounting expenses. A sharp reversal occurred in 2020 and 2021, where both metrics shifted to negative values. This indicates a transition from tax payments to tax benefits, likely resulting from operational losses during this period, which generated tax assets or refunds.
- Stabilization Period (2022)
- In 2022, both figures returned to positive territory, with income tax expense recorded at 13 million USD and cash operating taxes at 10 million USD. This suggests a return to a taxable operational state where cash outflows were again aligned with the reported accounting expense.
- Anomalous Divergence (2023)
- A substantial decoupling occurred in 2023. While the income tax expense remained a modest 12 million USD, cash operating taxes dropped precipitously to negative 358 million USD. This massive discrepancy indicates a significant cash inflow related to taxes—potentially through the realization of deferred tax assets, large-scale tax refunds, or one-time regulatory settlements—that was not reflected in the periodic income tax expense.
The extreme volatility in cash operating taxes during 2023 creates a significant positive impact on the cash flow component of Economic Value Added (EVA) calculations, as the cash tax recovery far exceeds the accounting tax burden for that period.
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Invested Capital
Carnival Corp. & plc, invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to shareholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of ships under construction.
6 Subtraction of short-term investments.
Invested capital experienced a significant expansion between 2018 and 2020, peaking at US$ 49,017 million before entering a period of steady contraction through 2023. This trajectory reflects a fundamental shift in the capital structure, characterized by a transition from equity-heavy financing to a reliance on leveraged liabilities.
- Debt and Lease Obligations
- A sharp upward trend in total reported debt and leases is observed from 2018 to 2022, with values rising from US$ 10,686 million to a peak of US$ 35,881 million. This represents a substantial increase in leverage over a four-year period. A modest reduction followed in 2023, with debt levels decreasing to US$ 31,891 million.
- Shareholders' Equity
- Equity exhibited a consistent and severe decline throughout the analyzed period. After remaining relatively stable between 2018 and 2019, shareholders' equity dropped from US$ 20,555 million in 2020 to US$ 6,882 million by 2023. The most aggressive contraction occurred between 2020 and 2022, during which equity declined by approximately 65%.
- Capital Composition Dynamics
- The composition of invested capital shifted dramatically. In 2018, shareholders' equity was the primary component of the US$ 35,074 million in invested capital. By 2023, this relationship inverted; debt and leases became the dominant funding source, comprising the vast majority of the US$ 39,428 million in total invested capital, while the equity contribution reached its lowest point in the series.
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Cost of Capital
Carnival Corp. & plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 20,678) | 20,678) | ÷ | 51,725) | = | 0.40 | 0.40 | × | 34.09% | = | 13.63% | ||
| Debt3 | 29,728) | 29,728) | ÷ | 51,725) | = | 0.57 | 0.57 | × | 5.74% × (1 – -19.35%) | = | 3.94% | ||
| Operating lease liability4 | 1,319) | 1,319) | ÷ | 51,725) | = | 0.03 | 0.03 | × | 5.90% × (1 – -19.35%) | = | 0.18% | ||
| Total: | 51,725) | 1.00 | 17.75% | ||||||||||
Based on: 10-K (reporting date: 2023-11-30).
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 | 14,322) | 14,322) | ÷ | 44,313) | = | 0.32 | 0.32 | × | 34.09% | = | 11.02% | ||
| Debt3 | 28,656) | 28,656) | ÷ | 44,313) | = | 0.65 | 0.65 | × | 5.89% × (1 – -0.21%) | = | 3.82% | ||
| Operating lease liability4 | 1,335) | 1,335) | ÷ | 44,313) | = | 0.03 | 0.03 | × | 5.20% × (1 – -0.21%) | = | 0.16% | ||
| Total: | 44,313) | 1.00 | 14.99% | ||||||||||
Based on: 10-K (reporting date: 2022-11-30).
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 | 22,385) | 22,385) | ÷ | 56,229) | = | 0.40 | 0.40 | × | 34.09% | = | 13.57% | ||
| Debt3 | 32,463) | 32,463) | ÷ | 56,229) | = | 0.58 | 0.58 | × | 5.44% × (1 – 0.22%) | = | 3.13% | ||
| Operating lease liability4 | 1,381) | 1,381) | ÷ | 56,229) | = | 0.02 | 0.02 | × | 3.80% × (1 – 0.22%) | = | 0.09% | ||
| Total: | 56,229) | 1.00 | 16.80% | ||||||||||
Based on: 10-K (reporting date: 2021-11-30).
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 | 20,897) | 20,897) | ÷ | 49,991) | = | 0.42 | 0.42 | × | 34.09% | = | 14.25% | ||
| Debt3 | 27,670) | 27,670) | ÷ | 49,991) | = | 0.55 | 0.55 | × | 7.07% × (1 – 0.17%) | = | 3.91% | ||
| Operating lease liability4 | 1,424) | 1,424) | ÷ | 49,991) | = | 0.03 | 0.03 | × | 3.40% × (1 – 0.17%) | = | 0.10% | ||
| Total: | 49,991) | 1.00 | 18.25% | ||||||||||
Based on: 10-K (reporting date: 2020-11-30).
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 | 33,023) | 33,023) | ÷ | 46,942) | = | 0.70 | 0.70 | × | 34.09% | = | 23.98% | ||
| Debt3 | 12,030) | 12,030) | ÷ | 46,942) | = | 0.26 | 0.26 | × | 3.10% × (1 – 2.32%) | = | 0.78% | ||
| Operating lease liability4 | 1,889) | 1,889) | ÷ | 46,942) | = | 0.04 | 0.04 | × | 3.10% × (1 – 2.32%) | = | 0.12% | ||
| Total: | 46,942) | 1.00 | 24.88% | ||||||||||
Based on: 10-K (reporting date: 2019-11-30).
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 | 40,529) | 40,529) | ÷ | 51,417) | = | 0.79 | 0.79 | × | 34.09% | = | 26.87% | ||
| Debt3 | 10,526) | 10,526) | ÷ | 51,417) | = | 0.20 | 0.20 | × | 2.80% × (1 – 1.71%) | = | 0.56% | ||
| Operating lease liability4 | 363) | 363) | ÷ | 51,417) | = | 0.01 | 0.01 | × | 2.80% × (1 – 1.71%) | = | 0.02% | ||
| Total: | 51,417) | 1.00 | 27.46% | ||||||||||
Based on: 10-K (reporting date: 2018-11-30).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Carnival Corp. & plc, economic spread ratio calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,790) | (11,103) | (15,678) | (18,260) | (6,311) | (6,291) | |
| Invested capital2 | 39,428) | 44,143) | 46,517) | 49,017) | 38,330) | 35,074) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -12.15% | -25.15% | -33.70% | -37.25% | -16.47% | -17.94% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Airbnb Inc. | 9.38% | 11.02% | -11.09% | — | — | — | |
| Booking Holdings Inc. | 14.66% | 3.80% | -13.64% | — | — | — | |
| Chipotle Mexican Grill Inc. | 7.02% | 2.82% | -1.67% | — | — | — | |
| DoorDash, Inc. | -39.42% | -53.20% | -39.71% | — | — | — | |
| McDonald’s Corp. | 8.64% | 5.84% | 8.26% | — | — | — | |
| Starbucks Corp. | 5.21% | 2.81% | 4.06% | -8.49% | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -4,790 ÷ 39,428 = -12.15%
4 Click competitor name to see calculations.
The financial performance from 2018 to 2023 is characterized by a period of significant economic value destruction followed by a consistent recovery phase. The most acute decline occurred in 2020, after which key metrics began to trend toward stabilization and improvement.
- Economic Profit
- Economic profit remained negative throughout the analyzed period, indicating that returns were insufficient to cover the cost of capital. A severe contraction occurred in 2020, with losses peaking at -18,260 million USD. A subsequent recovery trend is observed from 2021 through 2023, with the loss narrowing to -4,790 million USD by the end of the period, representing a substantial reduction in annual value erosion.
- Invested Capital
- Invested capital exhibited a volatile trajectory, rising from 35,074 million USD in 2018 to a peak of 49,017 million USD in 2020. This increase suggests a significant expansion of the capital base during the height of the crisis. Following 2020, a steady contraction is observed, with invested capital decreasing to 39,428 million USD by November 30, 2023.
- Economic Spread Ratio
- The economic spread ratio, which measures the difference between the return on invested capital and the cost of capital, remained negative for the entire duration. The ratio reached its lowest point in 2020 at -37.25%. A consistent upward trajectory followed, improving to -33.70% in 2021, -25.15% in 2022, and -12.15% in 2023. This trend indicates a narrowing gap between the company's actual returns and its required cost of capital, signaling a move toward economic breakeven.
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Economic Profit Margin
Carnival Corp. & plc, economic profit margin calculation, comparison to benchmarks
| Nov 30, 2023 | Nov 30, 2022 | Nov 30, 2021 | Nov 30, 2020 | Nov 30, 2019 | Nov 30, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | (4,790) | (11,103) | (15,678) | (18,260) | (6,311) | (6,291) | |
| Revenues | 21,593) | 12,168) | 1,908) | 5,595) | 20,825) | 18,881) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -22.18% | -91.25% | -821.68% | -326.36% | -30.31% | -33.32% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Airbnb Inc. | 5.46% | 8.75% | -10.03% | — | — | — | |
| Booking Holdings Inc. | 7.83% | 3.04% | -18.68% | — | — | — | |
| Chipotle Mexican Grill Inc. | 4.26% | 1.75% | -1.21% | — | — | — | |
| DoorDash, Inc. | -23.91% | -42.99% | -25.83% | — | — | — | |
| McDonald’s Corp. | 16.95% | 11.43% | 16.97% | — | — | — | |
| Starbucks Corp. | 3.22% | 1.79% | 3.31% | -8.28% | — | — | |
Based on: 10-K (reporting date: 2023-11-30), 10-K (reporting date: 2022-11-30), 10-K (reporting date: 2021-11-30), 10-K (reporting date: 2020-11-30), 10-K (reporting date: 2019-11-30), 10-K (reporting date: 2018-11-30).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × -4,790 ÷ 21,593 = -22.18%
3 Click competitor name to see calculations.
The analysis of economic profit and revenue indicates a period of extreme financial volatility characterized by a severe contraction followed by a phased recovery. While economic profit remained negative throughout the entire period, there is a observable trend toward stabilization as of November 30, 2023.
- Economic Profit Trends
- Economic profit experienced a significant decline, reaching a trough of -18,260 million US dollars in 2020. Following this low, a consistent upward trajectory has been observed, with losses narrowing to -4,790 million US dollars by 2023. This suggests a reduction in the gap between net operating profit after taxes and the cost of capital.
- Revenue Performance
- Revenues exhibited a drastic collapse between 2019 and 2021, falling from 20,825 million US dollars to a minimum of 1,908 million US dollars. A robust recovery followed, with 2023 revenues reaching 21,593 million US dollars, surpassing the pre-contraction levels seen in 2018 and 2019.
- Economic Profit Margin Analysis
- The economic profit margin demonstrated extreme sensitivity to the revenue decline. The margin deteriorated from -33.32% in 2018 to a peak negative value of -821.68% in 2021, reflecting a scenario where capital charges and operating losses far exceeded the diminished revenue base. However, the margin improved substantially in the subsequent two years, reaching -22.18% by 2023, the most favorable margin within the analyzed timeframe.
The correlation between the recovery in revenues and the improvement in the economic profit margin indicates a return toward operational viability, although the persistence of negative economic profit suggests that the cost of capital has not yet been fully covered.
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