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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Coca-Cola Co. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Coca-Cola Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial performance between 2021 and 2025 indicates a period of volatility in value creation, characterized by a mid-period contraction followed by a significant expansion. While economic profit experienced a decline and subsequent stagnation from 2022 through 2024, a substantial recovery occurred by the end of 2025, signaling enhanced operational efficiency relative to the cost of funding.
- Net Operating Profit After Taxes (NOPAT)
- A decline is observed in 2022, where NOPAT dropped from 11,202 million to 10,120 million. A gradual recovery followed through 2024, culminating in a sharp increase to 14,042 million in 2025, representing the peak operational earnings for the analyzed period.
- Cost of Capital
- A consistent upward trajectory is evident in the cost of capital, which rose incrementally from 8.54% in 2021 to 8.96% in 2025. This steady increase indicates a rising hurdle rate for investments, which places additional pressure on the company to generate higher operating returns to maintain value creation.
- Invested Capital
- Invested capital remained relatively stable in 2022 before entering a growth phase. The capital base expanded from 79,959 million in 2022 to 92,902 million by 2025, reflecting a sustained increase in the deployment of resources into the business asset base.
- Economic Profit
- Economic profit demonstrated significant fluctuations, falling from 4,343 million in 2021 to 3,100 million in 2022. Between 2022 and 2024, economic profit remained suppressed as the growth in invested capital and the rising cost of capital offset modest gains in NOPAT. However, the surge in NOPAT in 2025 resulted in a substantial increase in economic profit to 5,714 million, confirming that the returns on invested capital significantly exceeded the cost of capital in the final year.
Net Operating Profit after Taxes (NOPAT)
Coca-Cola Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 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 2025 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 and net operating profit after taxes (NOPAT) exhibited distinct patterns over the five-year period. While net income experienced fluctuations, NOPAT demonstrated a generally positive trajectory, particularly in the later years.
- NOPAT Trend
- NOPAT decreased from US$11,202 million in 2021 to US$10,120 million in 2022, representing a decline of approximately 9.6%. This was followed by a period of relative stability, with NOPAT reaching US$10,884 million in 2023 and US$10,945 million in 2024. A significant increase is then observed in 2025, with NOPAT rising to US$14,042 million. This represents a substantial year-over-year growth of approximately 28.3% from 2024.
- Net Income Trend
- Net income attributable to shareowners decreased from US$9,771 million in 2021 to US$9,542 million in 2022, a decrease of approximately 2.4%. It then increased to US$10,714 million in 2023, followed by a slight decrease to US$10,631 million in 2024. A notable increase occurred in 2025, with net income reaching US$13,107 million, representing a 23.3% increase from 2024.
- Relationship between NOPAT and Net Income
- While both metrics generally trended upwards from 2022 to 2025, NOPAT consistently exceeded net income attributable to shareowners throughout the observed period. The difference between the two metrics suggests the presence of significant non-operating items or differences in accounting treatment impacting reported net income. The larger increase in NOPAT in 2025, compared to net income, further emphasizes this divergence.
The observed increase in both NOPAT and net income in 2025 warrants further investigation to determine the underlying drivers of this growth. The initial decline in NOPAT in 2022 also merits attention to understand the contributing factors and whether they represent a temporary fluctuation or a more persistent issue.
Cash Operating Taxes
Coca-Cola Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported income taxes and cash operating taxes exhibit distinct patterns over the five-year period. Income taxes generally increased, while cash operating taxes demonstrated more fluctuation.
- Income Taxes
- Income taxes decreased from US$2,621 million in 2021 to US$2,115 million in 2022, representing a notable decline. Subsequently, income taxes increased each year, reaching US$2,861 million in 2025. This indicates a consistent upward trend in reported income taxes following the initial decrease.
- Cash Operating Taxes
- Cash operating taxes increased significantly from US$1,907 million in 2021 to US$2,414 million in 2022. This was followed by a slight decrease to US$2,314 million in 2023. Further increases were observed in 2024, reaching US$2,529 million, before a modest decline to US$2,450 million in 2025. The pattern suggests a generally higher level of cash taxes compared to the earlier period, with some year-to-year variability.
- Relationship between Income Taxes and Cash Operating Taxes
- While both metrics generally trended upwards over the period, cash operating taxes were consistently lower than reported income taxes in each year. The difference between the two varied, but suggests the presence of timing differences or non-cash tax items impacting the reported income tax expense. The gap narrowed in 2022 and 2023, then widened again in 2024 and 2025.
The fluctuations in cash operating taxes may warrant further investigation to understand the underlying drivers, such as changes in tax credits, deferred tax assets/liabilities, or tax planning strategies. The increasing trend in income taxes, despite the variability in cash taxes, suggests a growing tax burden overall.
Invested Capital
Coca-Cola Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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.
The reported invested capital exhibited an overall increasing trend throughout the observed period. While fluctuations occurred, the company consistently reinvested in its operations, as reflected in the growth of invested capital from 2021 to 2025.
- Total Reported Debt & Leases
- Total reported debt and leases decreased from US$44,232 million in 2021 to US$40,603 million in 2022, indicating a reduction in financial leverage. However, debt levels subsequently increased, reaching US$47,214 million by 2025. This suggests a renewed reliance on debt financing in later years, potentially to fund expansion or acquisitions.
- Equity Attributable to Shareowners
- Equity attributable to shareowners demonstrated growth from US$22,999 million in 2021 to US$25,941 million in 2023. A slight decrease was observed in 2024, falling to US$24,856 million, before a substantial increase to US$32,169 million in 2025. This indicates strengthening shareholder equity, with a particularly significant boost in the final year of the period.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2022, fluctuating around US$80 billion. A noticeable increase occurred in 2023, reaching US$83,542 million, and continued upward through 2025, culminating in US$92,902 million. This consistent growth suggests ongoing investment in the business, potentially through a combination of debt and equity financing. The increase in invested capital outpaced the growth in equity during the latter part of the period, indicating a greater reliance on debt to fund these investments.
The interplay between debt and equity in financing invested capital warrants further investigation. The increasing debt levels alongside growing invested capital suggest a potential shift in the company’s capital structure. The substantial increase in equity in 2025 may indicate successful profitability or strategic financial maneuvers.
Cost of Capital
Coca-Cola Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Coca-Cola Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by a steady expansion of the capital base and fluctuating levels of economic value creation, culminating in a significant performance peak in the final year of the analyzed period.
- Invested Capital Trends
- A consistent upward trajectory in invested capital is observed from 2022 onwards, rising from 80,311 million USD in 2021 to 92,902 million USD by 2025. This growth indicates a sustained increase in the total resources deployed to support operations and generate returns.
- Economic Profit Analysis
- Economic profit experienced a period of volatility between 2021 and 2024, declining from 4,343 million USD to 3,205 million USD. This downward movement suggests a compression in value creation above the cost of capital. However, a substantial recovery is noted in 2025, with economic profit surging to 5,714 million USD, marking the highest value in the five-year sequence.
- Economic Spread Ratio Dynamics
- The economic spread ratio reflects the correlation between profit generation and capital employment. The ratio declined from 5.41% in 2021 to a period low of 3.69% in 2024, indicating a narrowing gap between the return on invested capital and the cost of capital. This trend reversed sharply in 2025, with the ratio expanding to 6.15%, signifying a marked improvement in capital efficiency and an increased ability to generate excess value per unit of capital invested.
Economic Profit Margin
Coca-Cola Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Net operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
An analysis of the financial performance from 2021 to 2025 reveals a divergence between consistent revenue growth and volatile economic value creation. While net operating revenues maintained a steady upward trajectory throughout the period, economic profit and its corresponding margin experienced significant fluctuations, culminating in a strong recovery in the final year.
- Net Operating Revenues
- A consistent growth trend is observed in net operating revenues, which increased from 38,655 million USD in 2021 to 47,941 million USD by 2025. This represents a steady expansion of the top line over the five-year period, indicating sustained market demand and successful revenue generation strategies.
- Economic Profit
- Economic profit exhibited a non-linear pattern. After a decline from 4,343 million USD in 2021 to 3,100 million USD in 2022, the figures fluctuated between 3,205 million USD and 3,495 million USD through 2024. However, a substantial increase occurred in 2025, with economic profit reaching a period peak of 5,714 million USD, suggesting a significant improvement in value creation above the cost of capital.
- Economic Profit Margin
- The economic profit margin mirrors the volatility of the absolute economic profit. A sharp contraction is noted between 2021 and 2022, where the margin dropped from 11.24% to 7.21%. This downward pressure continued through 2024, reaching a low of 6.81%. This indicates that for several years, revenue growth did not translate proportionally into economic value. This trend reversed sharply in 2025, with the margin expanding to 11.92%, the highest level in the analyzed timeframe, reflecting enhanced operational efficiency or a reduction in the capital charge relative to operating returns.