Stock Analysis on Net

Coca-Cola Co. (NYSE:KO)

$24.99

Economic Value Added (EVA)

Microsoft Excel

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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Economic Profit

Coca-Cola Co., economic profit calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net operating profit after taxes (NOPAT)1
Cost of capital2
Invested capital3
 
Economic profit4

Based on: 10-K (reporting date: 2024-12-31), 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).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= × =


Net Operating Profit After Taxes (NOPAT)
The net operating profit after taxes exhibited a generally positive trend from 2020 to 2024. It increased significantly from 8,649 million US dollars in 2020 to a peak of 11,202 million in 2021. Subsequently, there was a decline in 2022 to 10,120 million, followed by moderate recoveries in 2023 and 2024 to 10,884 million and 10,945 million respectively. This indicates resilience in operational profitability despite the fluctuation observed after 2021.
Cost of Capital
The cost of capital showed a steady upward trajectory over the five-year period, rising from 9.21% in 2020 to 9.95% in 2024. This gradual increase suggests a rising expense in financing or a shift in market risk perceptions, which could impact investment and financing decisions.
Invested Capital
Invested capital increased continually across the reviewed years, starting at 75,674 million US dollars in 2020 and reaching 86,857 million in 2024. This consistent growth reflects ongoing investments or asset accumulation, supporting the company’s operational scale and capacity over time.
Economic Profit
Economic profit demonstrated considerable variation, with a strong increase from 1,679 million US dollars in 2020 to a peak of 3,530 million in 2021. However, it declined in 2022 to 2,272 million, rebounded slightly in 2023 to 2,636 million, and then decreased again to 2,300 million in 2024. Despite the fluctuations, economic profit remained positive each year, indicating value creation above the cost of capital, although with some volatility.

Net Operating Profit after Taxes (NOPAT)

Coca-Cola Co., NOPAT calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Net income attributable to shareowners of The Coca-Cola Company
Deferred income tax expense (benefit)1
Increase (decrease) in allowances2
Increase (decrease) in accrued expenses related to restructuring3
Increase (decrease) in equity equivalents4
Interest expense
Interest expense, operating lease liability5
Adjusted interest expense
Tax benefit of interest expense6
Adjusted interest expense, after taxes7
(Gain) loss on marketable securities
Interest income
Investment income, before taxes
Tax expense (benefit) of investment income8
Investment income, after taxes9
Net income (loss) attributable to noncontrolling interest
Net operating profit after taxes (NOPAT)

Based on: 10-K (reporting date: 2024-12-31), 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).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowances.

3 Addition of increase (decrease) in accrued expenses related to restructuring.

4 Addition of increase (decrease) in equity equivalents to net income attributable to shareowners of The Coca-Cola Company.

5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =

6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =

7 Addition of after taxes interest expense to net income attributable to shareowners of The Coca-Cola Company.

8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =

9 Elimination of after taxes investment income.


Net Income Attributable to Shareowners

The net income attributable to shareowners shows a generally positive trend over the five-year period. Starting at 7,747 million US dollars at the end of 2020, there was a significant increase to 9,771 million in 2021. Although the net income slightly declined to 9,542 million in 2022, it rebounded in 2023 to reach the highest value of 10,714 million. A marginal decrease occurred again in 2024, with net income at 10,631 million, which still represents a notable improvement compared to the initial figure in 2020.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures also demonstrate an upward trajectory with some fluctuations. Beginning at 8,649 million US dollars in 2020, there was an increase to 11,202 million in 2021. This was followed by a decline to 10,120 million in 2022. Subsequently, NOPAT rose again to 10,884 million in 2023 and continued to increase slightly to 10,945 million by the end of 2024. Overall, the NOPAT values reflect growth over the period, despite the intermittent decreases.

Comparative Insights

Both net income and NOPAT exhibited growth from 2020 through 2024, though neither metric maintained a strictly linear progression. The year 2021 marked a peak for both measures within the period, followed by declines in 2022. Recovery occurred in subsequent years, with net income reaching a maximum in 2023 before a slight drop in 2024, whereas NOPAT progressed to its highest point at the end of 2024. These trends suggest volatility but overall improved profitability and operational efficiency over the five-year span.


Cash Operating Taxes

Coca-Cola Co., cash operating taxes calculation

US$ in millions

Microsoft Excel
12 months ended: Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Income taxes
Less: Deferred income tax expense (benefit)
Add: Tax savings from interest expense
Less: Tax imposed on investment income
Cash operating taxes

Based on: 10-K (reporting date: 2024-12-31), 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).


Income Taxes
Income taxes show a fluctuating trend over the reported periods. The value increased significantly from 1981 million US dollars in 2020 to 2621 million in 2021, indicating a rise in tax expenses. However, in 2022, there was a notable decrease to 2115 million US dollars. From 2022 onward, the income taxes resumed an upward trajectory, reaching 2249 million in 2023 and further increasing to 2437 million in 2024. Overall, the trend exhibits variability with a dip in 2022 amid a general tendency to increase.
Cash Operating Taxes
Cash operating taxes demonstrated a somewhat irregular pattern over the five-year span. Starting at 2201 million US dollars in 2020, there was a decline to 1907 million in 2021, suggesting reduced cash tax payments despite the prior increase in income taxes. The figure rebounded sharply in 2022 to 2414 million, surpassing the initial 2020 value. Slight reductions followed in 2023 to 2314 million, but the amount rose again in 2024, reaching the highest point of 2529 million US dollars. These fluctuations may reflect changes in taxable income, timing differences, or tax planning actions affecting cash tax outflows.

Invested Capital

Coca-Cola Co., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Loans and notes payable
Current maturities of long-term debt
Long-term debt, excluding current maturities
Operating lease liability1
Total reported debt & leases
Equity attributable to shareowners of The Coca-Cola Company
Net deferred tax (assets) liabilities2
Allowances3
Accrued expenses related to restructuring4
Equity equivalents5
Accumulated other comprehensive (income) loss, net of tax6
Equity attributable to noncontrolling interests
Adjusted equity attributable to shareowners of The Coca-Cola Company
Marketable securities7
Invested capital

Based on: 10-K (reporting date: 2024-12-31), 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).

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 accrued expenses related to restructuring.

5 Addition of equity equivalents to equity attributable to shareowners of The Coca-Cola Company.

6 Removal of accumulated other comprehensive income.

7 Subtraction of marketable securities.


Total reported debt & leases

This financial metric experienced a general decline from 44,415 million US dollars in 2020 to 40,603 million US dollars in 2022. However, a reversal of this trend is observed in the subsequent years, with debt rising to 43,426 million US dollars in 2023 and continuing to increase to 45,735 million US dollars in 2024. This indicates an initial reduction in the company's leverage followed by a renewed accumulation of debt and lease obligations in the last two reported periods.

Equity attributable to shareowners of The Coca-Cola Company

Equity shows a consistent upward trend from 19,299 million US dollars in 2020, rising to 22,999 million in 2021, further increasing to 24,105 million in 2022, and reaching its peak at 25,941 million in 2023. However, a slight decrease to 24,856 million occurs in 2024. Overall, the equity base has strengthened significantly over the period, reflecting potential retained earnings growth or capital infusions, despite a modest decline in the final year.

Invested capital

Invested capital generally increased over the entire period. Starting from 75,674 million US dollars in 2020, it grew steadily to 80,311 million in 2021. A slight dip followed in 2022 to 79,959 million, but the upward momentum resumed with figures rising to 83,542 million in 2023 and 86,857 million in 2024. This suggests ongoing investment activities, possibly including both debt and equity financing components, resulting in a growing capital base employed by the company.


Cost of Capital

Coca-Cola Co., 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: 2024-12-31).

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 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2023-12-31).

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 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2022-12-31).

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 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2021-12-31).

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 – 21.00%) =
Operating lease liability4 ÷ = × × (1 – 21.00%) =
Total:

Based on: 10-K (reporting date: 2020-12-31).

1 US$ in millions

2 Equity. See details »

3 Debt. See details »

4 Operating lease liability. See details »


Economic Spread Ratio

Coca-Cola Co., economic spread ratio calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Invested capital2
Performance Ratio
Economic spread ratio3
Benchmarks
Economic Spread Ratio, Competitors4
Mondelēz International Inc.
PepsiCo Inc.
Philip Morris International Inc.

Based on: 10-K (reporting date: 2024-12-31), 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).

1 Economic profit. See details »

2 Invested capital. See details »

3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =

4 Click competitor name to see calculations.


Economic Profit
The economic profit experienced significant fluctuations over the observed periods. It increased substantially from 1679 million US$ in 2020 to a peak of 3530 million US$ in 2021, demonstrating strong value creation during that year. However, in the following years, economic profit decreased to 2272 million US$ in 2022, followed by a moderate recovery to 2636 million US$ in 2023. The value then declined again to 2300 million US$ in 2024, indicating a trend of volatility after the 2021 peak.
Invested Capital
Invested capital showed a steady upward trend throughout the entire period. It increased from 75,674 million US$ in 2020 to 86,857 million US$ in 2024. The growth was consistent, with modest increases each year, suggesting ongoing investment and expansion of the company's asset base.
Economic Spread Ratio
The economic spread ratio, an indicator of return on invested capital relative to the cost of capital, also exhibited a fluctuating pattern. It more than doubled from 2.22% in 2020 to 4.39% in 2021, aligning with the peak in economic profit. Subsequently, it declined to 2.84% in 2022, rose slightly to 3.16% in 2023, and then fell again to 2.65% in 2024. This variation reflects changing profitability dynamics in relation to invested capital.
Overall Insights
Overall, the data indicate that while invested capital expanded steadily, profitability as measured by economic profit and economic spread ratio was more volatile. The peak performance occurred in 2021, followed by a period of decreased economic profit and economic spread, despite continuous growth in invested capital. This pattern may suggest challenges in maintaining returns on the increased capital base or variable operational efficiency over recent years.

Economic Profit Margin

Coca-Cola Co., economic profit margin calculation, comparison to benchmarks

Microsoft Excel
Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Selected Financial Data (US$ in millions)
Economic profit1
Net operating revenues
Performance Ratio
Economic profit margin2
Benchmarks
Economic Profit Margin, Competitors3
Mondelēz International Inc.
PepsiCo Inc.
Philip Morris International Inc.

Based on: 10-K (reporting date: 2024-12-31), 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).

1 Economic profit. See details »

2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net operating revenues
= 100 × ÷ =

3 Click competitor name to see calculations.


Economic Profit
The economic profit experienced substantial growth from 2020 to 2021, increasing from 1,679 million US dollars to 3,530 million US dollars. However, it decreased in 2022 to 2,272 million US dollars, followed by a slight recovery in 2023 to 2,636 million US dollars. In 2024, economic profit declined again, reaching 2,300 million US dollars. Overall, the trend shows volatility with a peak in 2021 and fluctuating values thereafter.
Net Operating Revenues
Net operating revenues demonstrated a consistent upward trend over the period. Starting at 33,014 million US dollars in 2020, revenues increased steadily each year, reaching 47,061 million US dollars in 2024. This reflects a continuous expansion in operating income, indicative of growth in sales or improved pricing power.
Economic Profit Margin
The economic profit margin showed an initial increase from 5.09% in 2020 to 9.13% in 2021, indicating improved profitability relative to revenues during that year. Subsequently, the margin declined sharply to 5.28% in 2022, followed by a moderate increase to 5.76% in 2023. By 2024, the margin decreased again to 4.89%. This pattern suggests fluctuating efficiency or cost management, with profitability margins not sustaining their peak from 2021.
Summary of Relationships
While net operating revenues grew consistently over the five-year period, economic profit and economic profit margin displayed considerable volatility. The significant rise in economic profit and margin in 2021 was not maintained, with both metrics declining in subsequent years despite continuing revenue growth. This diverging trend implies that although sales increased, cost structures or capital charges may have adversely affected overall profitability and economic value generation after 2021.