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 – 17.80% × 39,428 = -4,812
The financial performance from 2018 to 2023 is characterized by a period of significant value erosion, with economic profit remaining negative throughout the entire duration. While a clear recovery trajectory is observable following a peak deficit in 2020, the operating returns have not yet surpassed the cost of capital required to generate positive economic value.
- Net Operating Profit After Taxes (NOPAT)
- A severe contraction in profitability occurred between 2019 and 2020, as NOPAT shifted from $3,226 million to a deficit of $9,312 million. This negative trend persisted through 2022, although the magnitude of losses narrowed sequentially. By November 30, 2023, NOPAT returned to a positive position of $2,207 million, indicating a restoration of operational profitability.
- Cost of Capital and Invested Capital
- The cost of capital exhibited a general downward trend from a high of 27.56% in 2018 to a low of 15.04% in 2022, before rising slightly to 17.80% in 2023. Concurrently, invested capital saw a substantial increase, peaking at $49,017 million in 2020. Following this peak, a steady reduction in invested capital was observed, descending to $39,428 million by 2023.
- Economic Profit Trends
- Economic profit remained negative across all reporting periods, confirming that the company failed to create value above its cost of capital. The most significant value destruction occurred in 2020, with an economic loss of $18,288 million. Despite the return to positive NOPAT in 2023, the economic profit remained negative at -$4,812 million, demonstrating that the current operating profit is still insufficient to cover the capital charge associated with the invested capital base.
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Net Operating Profit after Taxes (NOPAT)
Carnival Corp. & plc, NOPAT calculation
US$ 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 annual financial data exhibits significant fluctuations in profitability and operating performance over the analyzed periods.
- Net income (loss)
- The net income demonstrates a positive trend in the initial years, with values of 3,152 million USD in 2018 and a slight decrease to 2,990 million USD in 2019. However, a dramatic shift occurred thereafter, with net income turning negative in 2020 at -10,236 million USD. This substantial loss persisted through 2021 and 2022, albeit with a gradual improvement from -9,501 million USD to -6,093 million USD. By 2023, the net loss narrowed substantially to -74 million USD, indicating a near return to breakeven status.
- Net operating profit after taxes (NOPAT)
- The NOPAT followed a somewhat similar pattern to net income, starting at 3,339 million USD in 2018 and declining slightly to 3,226 million USD in 2019. A sharp reversal occurred in 2020, with NOPAT plunging to -9,312 million USD, reflective of significant operational challenges. While losses continued in 2021 and 2022, the operating profit losses reduced over time from -7,863 million USD to -4,485 million USD. Notably, in 2023, NOPAT turned positive at 2,207 million USD, suggesting a substantial recovery in operating performance.
Overall, the trends indicate that the entity faced severe financial difficulties starting in 2020, likely related to adverse external conditions impacting operational and net profitability. Despite initial sharp declines, a progressive improvement is evident in subsequent years, culminating in a recovery towards profitability by 2023 at the operating profit level and a significant reduction in net losses.
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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 financial data reveals distinct trends in the income tax expense and cash operating taxes over the examined period, reflecting significant fluctuations influenced by various operational or external factors.
- Income Tax Expense (Benefit), Net
- This item exhibited an increasing trend from US$54 million in 2018 to a peak of US$71 million in 2019, indicating a rise in tax obligations. The period of 2020 and 2021 shows a reversal into negative territory with values of -US$17 million and -US$21 million respectively, suggesting tax benefits or credits were realized during these years. This could be indicative of losses or deferred tax assets being recognized. In 2022 and 2023, the tax expense returned to positive figures, with US$13 million and US$12 million respectively, but remained substantially lower than the 2018-2019 levels, signaling a partial recovery or stabilization in taxable income.
- Cash Operating Taxes
- The cash operating taxes followed a similar pattern initially, increasing from US$57 million in 2018 to US$77 million in 2019. Subsequently, this measure also dipped below zero in 2020 and 2021, reflecting negative cash flows from operating tax payments of -US$15 million and -US$17 million respectively, which may align with tax refunds or credits received. Notably, in 2022, the cash operating taxes returned to a positive amount of US$10 million, but a dramatic decline occurred in 2023 with a significant cash outflow reported as -US$358 million. This sharp negative value could suggest a sizeable tax refund, an adjustment, or a one-off tax-related cash inflow that sharply contrasts with prior periods and warrants further investigation to understand underlying causes.
Overall, the data portrays an environment of considerable tax-related volatility over the six-year span. The movement from positive to negative tax expenses and cash taxes from 2020 onwards may reflect the impact of external economic factors, regulatory changes, or internal losses. The substantial negative cash operating tax figure in 2023 is a prominent outlier that markedly differs from past trends, highlighting a need for a deeper review to ascertain the reasons behind such a significant cash tax flow reversal.
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Invested Capital
Carnival Corp. & plc, invested capital calculation (financing approach)
US$ 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.
- Total Reported Debt & Leases
- There is a significant upward trend in total reported debt and leases from 2018 to 2022, increasing from approximately $10.7 billion to $35.9 billion. This represents more than a threefold rise over this period. However, in 2023, a noticeable reduction occurred, bringing the debt down to around $31.9 billion. The substantial increase through 2022 suggests heightened leverage or increased borrowing, followed by some deleveraging or debt repayment in the most recent year.
- Shareholders’ Equity
- Shareholders' equity experienced a declining trend during the period, dropping from about $24.4 billion in 2018 to $6.9 billion in 2023. The decline was particularly steep between 2019 and 2022, with equity falling nearly by 70%. The reduction in equity indicates a possible decrease in net assets, which could result from accumulated losses, dividend payments exceeding earnings, or other equity-reducing events.
- Invested Capital
- Invested capital showed an initial increase from $35.1 billion in 2018 to a peak of about $49.0 billion in 2020. After reaching this peak, invested capital declined consistently through 2023, dropping to approximately $39.4 billion. The peak in 2020 followed by a decline suggests changes in the company’s asset base or capital structure, reflecting possible asset disposals, depreciation, or adjustments in working capital.
- Overall Insights
- The data reveals a period marked by increased borrowing and reduced equity, resulting in elevated financial leverage. While debt surged until 2022, some repayment or restructuring actions in 2023 led to a partial reduction in liabilities. Simultaneously, the decline in shareholders' equity points to weakened net asset positions. The fluctuations in invested capital align with these changes, indicating active management of capital resources amid shifting financial conditions.
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Cost of Capital
Carnival Corp. & plc, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 20,678) | 20,678) | ÷ | 51,725) | = | 0.40 | 0.40 | × | 34.23% | = | 13.68% | ||
| Debt3 | 29,728) | 29,728) | ÷ | 51,725) | = | 0.57 | 0.57 | × | 5.74% × (1 – -19.35%) | = | 3.94% | ||
| Operating lease liability4 | 1,319) | 1,319) | ÷ | 51,725) | = | 0.03 | 0.03 | × | 5.90% × (1 – -19.35%) | = | 0.18% | ||
| Total: | 51,725) | 1.00 | 17.80% | ||||||||||
Based on: 10-K (reporting date: 2023-11-30).
1 US$ 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 | × | 34.23% | = | 11.06% | ||
| 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 | 15.04% | ||||||||||
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 | × | 34.23% | = | 13.63% | ||
| 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 | 16.85% | ||||||||||
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 | × | 34.23% | = | 14.31% | ||
| 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 | 18.31% | ||||||||||
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 | × | 34.23% | = | 24.08% | ||
| 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 | 24.98% | ||||||||||
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 | × | 34.23% | = | 26.98% | ||
| 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 | 27.56% | ||||||||||
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 | (4,812) | (11,123) | (15,703) | (18,288) | (6,348) | (6,329) | |
| Invested capital2 | 39,428) | 44,143) | 46,517) | 49,017) | 38,330) | 35,074) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | -12.20% | -25.20% | -33.76% | -37.31% | -16.56% | -18.04% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Airbnb Inc. | 9.37% | 11.00% | -11.10% | — | — | — | |
| Booking Holdings Inc. | 14.64% | 3.79% | -13.66% | — | — | — | |
| Chipotle Mexican Grill Inc. | 7.02% | 2.82% | -1.67% | — | — | — | |
| DoorDash, Inc. | -39.50% | -53.28% | -39.79% | — | — | — | |
| McDonald’s Corp. | 8.67% | 5.87% | 8.30% | — | — | — | |
| Starbucks Corp. | 5.21% | 2.80% | 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 × -4,812 ÷ 39,428 = -12.20%
4 Click competitor name to see calculations.
The financial results indicate a period of significant economic instability followed by a sustained recovery phase. Economic profit remained negative throughout the analyzed period, signaling that the company did not generate returns exceeding its cost of capital, although the magnitude of these losses diminished considerably toward the end of the timeframe.
- Economic Profit Analysis
- A substantial deterioration in economic profit occurred between 2019 and 2020, with losses widening from -6,348 million US dollars to a peak deficit of -18,288 million US dollars. From 2021 through 2023, a consistent recovery trend is observed, as economic profit improved to -4,812 million US dollars, representing a significant reduction in economic value loss.
- Invested Capital Trends
- Invested capital grew steadily from 35,074 million US dollars in 2018 to a maximum of 49,017 million US dollars in 2020. This expansion was followed by a period of contraction, with invested capital declining for three consecutive years to reach 39,428 million US dollars by November 30, 2023.
- Economic Spread Ratio Performance
- The economic spread ratio reflects the volatility observed in profit and capital. The ratio reached its lowest point in 2020 at -37.31%, coinciding with the peak in invested capital and the lowest economic profit. Following this trough, the ratio improved steadily, ending at -12.20% in 2023. This upward trajectory suggests a narrowing gap between the return on capital and the cost of capital, although the ratio remains in negative territory.
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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 | (4,812) | (11,123) | (15,703) | (18,288) | (6,348) | (6,329) | |
| Revenues | 21,593) | 12,168) | 1,908) | 5,595) | 20,825) | 18,881) | |
| Performance Ratio | |||||||
| Economic profit margin2 | -22.28% | -91.41% | -823.01% | -326.86% | -30.48% | -33.52% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Airbnb Inc. | 5.45% | 8.74% | -10.04% | — | — | — | |
| Booking Holdings Inc. | 7.82% | 3.02% | -18.71% | — | — | — | |
| Chipotle Mexican Grill Inc. | 4.26% | 1.76% | -1.21% | — | — | — | |
| DoorDash, Inc. | -23.96% | -43.06% | -25.88% | — | — | — | |
| McDonald’s Corp. | 17.02% | 11.51% | 17.04% | — | — | — | |
| 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 × -4,812 ÷ 21,593 = -22.28%
3 Click competitor name to see calculations.
The financial performance from 2018 to 2023 is characterized by persistent negative economic profit, indicating that the company failed to generate returns exceeding its cost of capital throughout the period. Despite the consistent value destruction, a distinct recovery trajectory is observable following a period of extreme volatility between 2020 and 2021.
- Economic Profit Trends
- Economic profit remained negative across all six years of analysis. Losses were relatively stable between 2018 and 2019, followed by a severe deterioration in 2020, where the deficit peaked at US$ 18,288 million. A consistent trend of improvement has been recorded since 2021, with the economic loss narrowing to US$ 4,812 million by November 30, 2023.
- Revenue Fluctuations
- Revenues experienced a precipitous decline, falling from US$ 20,825 million in 2019 to a minimum of US$ 1,908 million in 2021. This contraction was followed by a sharp rebound, with revenues climbing to US$ 12,168 million in 2022 and reaching US$ 21,593 million in 2023, surpassing the pre-contraction levels observed in 2019.
- Economic Profit Margin Analysis
- The economic profit margin exhibited extreme volatility, driven primarily by the collapse and subsequent recovery of revenues. The margin shifted from -30.48% in 2019 to an anomalous -823.01% in 2021, as revenues plummeted while capital charges remained substantial. As revenue streams were restored, the margin normalized significantly, improving to -91.41% in 2022 and reaching -22.28% in 2023, marking the most favorable efficiency level in the analyzed period.
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