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
Deckers Outdoor Corp., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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
= 502,935 – 15.93% × 1,948,548 = 192,518
A significant positive shift in value creation is evident between 2018 and 2023. The organization transitioned from a period of economic loss to a consistent trajectory of economic profit growth, indicating that the return on invested capital has steadily exceeded the weighted average cost of capital over the analyzed period.
- Net Operating Profit After Taxes (NOPAT)
- A substantial and continuous increase is observed in NOPAT, which rose from 130,421 thousand US$ in 2018 to 502,935 thousand US$ in 2023. The most pronounced growth occurred between 2018 and 2019, where the figure more than doubled, providing a strong foundation for the subsequent steady annual gains observed through 2023.
- Invested Capital and Cost of Capital
- Invested capital grew consistently from 1,227,436 thousand US$ to 1,948,548 thousand US$ over the six-year period. Throughout this expansion, the cost of capital remained relatively stable, fluctuating within a narrow range between 15.12% and 15.93%. This indicates that the cost of financing the expanded capital base remained predictable and did not escalate significantly despite the increase in total investment.
- Economic Profit Evolution
- Economic profit shifted from a deficit of 55,169 thousand US$ in 2018 to a surplus of 192,518 thousand US$ by 2023. Following a turnaround in 2019 and a slight contraction in 2020, a strong upward trend emerged. The widening gap between NOPAT and the capital charge demonstrates increasing operational efficiency and a growing capacity to generate returns that significantly outperform the required cost of capital.
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Net Operating Profit after Taxes (NOPAT)
Deckers Outdoor Corp., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in deferred revenue.
4 Addition of increase (decrease) in equity equivalents to net income.
5 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 246,488 × 3.20% = 7,888
6 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 11,330 × 21.00% = 2,379
7 Addition of after taxes interest expense to net income.
8 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 15,563 × 21.00% = 3,268
9 Elimination of after taxes investment income.
A sustained upward trajectory is observed in both Net Operating Profit After Taxes (NOPAT) and Net Income from March 31, 2018, through March 31, 2023. This consistent growth indicates a strengthening of the operational core and a significant increase in the capacity to generate profit from primary business activities.
- Net Operating Profit After Taxes (NOPAT) Trend
- NOPAT increased from 130,421 thousand US$ in 2018 to 502,935 thousand US$ in 2023. The most substantial growth occurred between 2018 and 2019, during which the value more than doubled. From 2019 onward, NOPAT maintained a steady climb, reflecting expanded operational efficiency and a growing base for calculating economic value added.
- Net Income Performance
- Net Income followed a similar growth pattern, rising from 114,394 thousand US$ in 2018 to 516,822 thousand US$ in 2023. The overall increase suggests a robust improvement in bottom-line profitability that closely parallels the growth seen in operating profits.
- Comparative Analysis of NOPAT and Net Income
- In the early years of the analyzed period, NOPAT consistently exceeded Net Income, indicating that operating performance was the primary driver of value, while financial expenses or non-operating items reduced the final net profit. However, a convergence is observed over time. By March 31, 2023, Net Income surpassed NOPAT, which may indicate an increase in non-operating income or a significant reduction in the net cost of capital relative to operating returns.
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Cash Operating Taxes
Deckers Outdoor Corp., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
An analysis of the tax expenditures from 2018 to 2023 reveals a period of initial decline followed by a sustained upward trajectory in both income tax expense and cash operating taxes. While both metrics follow a similar general trend, a divergence emerges in the latter half of the period, where cash outflows for taxes began to consistently exceed the reported tax expenses.
- Income Tax Expense Trends
- The reported income tax expense experienced a significant reduction between March 31, 2018, and March 31, 2019, falling from 106,302 thousand to 64,626 thousand. Following a period of stability in 2020, the expense grew substantially to 118,939 thousand in 2021, experienced a marginal dip in 2022, and reached a peak of 149,260 thousand by March 31, 2023.
- Cash Operating Taxes Trends
- Cash operating taxes mirrored the initial decline seen in tax expenses, dropping to 59,907 thousand in 2019. However, from 2020 onward, these cash outflows entered a phase of uninterrupted growth. The values rose from 63,160 thousand in 2020 to 158,090 thousand in 2023, representing an increase of approximately 150% over the four-year window.
- Accrual versus Cash Divergence
- A transition in the relationship between accrual-based tax expenses and cash-based tax payments is observed. In 2018 and 2019, income tax expenses exceeded cash operating taxes. Beginning in 2020, this relationship inverted. The gap widened significantly in 2022, when cash operating taxes exceeded income tax expense by 29,047 thousand, indicating a period where cash tax payments were substantially higher than the tax charges recognized on the income statement.
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Invested Capital
Deckers Outdoor Corp., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
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 deferred revenue.
5 Addition of equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
Invested capital exhibits a consistent upward trajectory over the analyzed six-year period, increasing from 1,227,436 thousand US dollars in March 2018 to 1,948,548 thousand US dollars in March 2023. This represents a sustained growth in the total capital base employed by the organization to generate economic value.
- Invested Capital Growth
- The total invested capital grew steadily each year, with the most significant annual increases occurring between March 2020 and March 2021, and again between March 2022 and March 2023. The cumulative increase over the period reflects a deliberate expansion of the resource base.
- Stockholders' Equity Contribution
- Growth in invested capital is primarily driven by a continuous and substantial increase in stockholders' equity. Equity rose from 940,779 thousand US dollars in 2018 to 1,765,733 thousand US dollars in 2023. This consistent growth suggests strong retained earnings or capital contributions, indicating that the expansion of the capital base is predominantly funded through internal equity rather than external borrowing.
- Debt and Lease Dynamics
- Total reported debt and leases remained relatively stable with a general downward bias compared to the 2018 peak. While there were fluctuations—including a dip to 222,070 thousand US dollars in 2022 followed by a moderate increase to 246,488 thousand US dollars in 2023—debt levels did not keep pace with equity growth. This indicates a reduction in financial leverage as a proportion of the total invested capital over time.
The overall financial structure demonstrates a shift toward a more equity-heavy capital composition. The expansion of invested capital, paired with stabilized or declining debt levels, suggests a low-risk approach to funding the company's growth and a strengthening of the overall balance sheet solvency.
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Cost of Capital
Deckers Outdoor Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 12,169,037) | 12,169,037) | ÷ | 12,415,525) | = | 0.98 | 0.98 | × | 16.20% | = | 15.88% | ||
| Mortgage payable3 | —) | —) | ÷ | 12,415,525) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 246,488) | 246,488) | ÷ | 12,415,525) | = | 0.02 | 0.02 | × | 3.20% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 12,415,525) | 1.00 | 15.93% | ||||||||||
Based on: 10-K (reporting date: 2023-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 7,282,824) | 7,282,824) | ÷ | 7,504,894) | = | 0.97 | 0.97 | × | 16.20% | = | 15.72% | ||
| Mortgage payable3 | —) | —) | ÷ | 7,504,894) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 222,070) | 222,070) | ÷ | 7,504,894) | = | 0.03 | 0.03 | × | 2.60% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 7,504,894) | 1.00 | 15.78% | ||||||||||
Based on: 10-K (reporting date: 2022-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 9,329,600) | 9,329,600) | ÷ | 9,552,642) | = | 0.98 | 0.98 | × | 16.20% | = | 15.82% | ||
| Mortgage payable3 | —) | —) | ÷ | 9,552,642) | = | 0.00 | 0.00 | × | 0.00% × (1 – 21.00%) | = | 0.00% | ||
| Operating lease liability4 | 223,042) | 223,042) | ÷ | 9,552,642) | = | 0.02 | 0.02 | × | 3.10% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 9,552,642) | 1.00 | 15.88% | ||||||||||
Based on: 10-K (reporting date: 2021-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 5,482,856) | 5,482,856) | ÷ | 5,778,572) | = | 0.95 | 0.95 | × | 16.20% | = | 15.37% | ||
| Mortgage payable3 | 30,901) | 30,901) | ÷ | 5,778,572) | = | 0.01 | 0.01 | × | 4.93% × (1 – 21.00%) | = | 0.02% | ||
| Operating lease liability4 | 264,815) | 264,815) | ÷ | 5,778,572) | = | 0.05 | 0.05 | × | 3.30% × (1 – 21.00%) | = | 0.12% | ||
| Total: | 5,778,572) | 1.00 | 15.51% | ||||||||||
Based on: 10-K (reporting date: 2020-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,421,716) | 4,421,716) | ÷ | 4,695,413) | = | 0.94 | 0.94 | × | 16.20% | = | 15.26% | ||
| Mortgage payable3 | 31,504) | 31,504) | ÷ | 4,695,413) | = | 0.01 | 0.01 | × | 4.93% × (1 – 21.00%) | = | 0.03% | ||
| Operating lease liability4 | 242,193) | 242,193) | ÷ | 4,695,413) | = | 0.05 | 0.05 | × | 4.93% × (1 – 21.00%) | = | 0.20% | ||
| Total: | 4,695,413) | 1.00 | 15.48% | ||||||||||
Based on: 10-K (reporting date: 2019-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 3,349,259) | 3,349,259) | ÷ | 3,657,826) | = | 0.92 | 0.92 | × | 16.20% | = | 14.84% | ||
| Mortgage payable3 | 32,082) | 32,082) | ÷ | 3,657,826) | = | 0.01 | 0.01 | × | 4.93% × (1 – 31.52%) | = | 0.03% | ||
| Operating lease liability4 | 276,486) | 276,486) | ÷ | 3,657,826) | = | 0.08 | 0.08 | × | 4.93% × (1 – 31.52%) | = | 0.26% | ||
| Total: | 3,657,826) | 1.00 | 15.12% | ||||||||||
Based on: 10-K (reporting date: 2018-03-31).
1 US$ in thousands
2 Equity. See details »
3 Mortgage payable. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Deckers Outdoor Corp., economic spread ratio calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 192,518) | 164,538) | 124,475) | 65,455) | 78,770) | (55,169) | |
| Invested capital2 | 1,948,548) | 1,736,074) | 1,642,284) | 1,422,595) | 1,307,197) | 1,227,436) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 9.88% | 9.48% | 7.58% | 4.60% | 6.03% | -4.49% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | 1.46% | 7.35% | -0.77% | — | — | — | |
| Nike Inc. | 7.25% | 9.28% | 9.25% | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 192,518 ÷ 1,948,548 = 9.88%
4 Click competitor name to see calculations.
An analysis of the financial performance from 2018 to 2023 reveals a significant transition from economic value destruction to consistent value creation. The company shifted from a negative economic profit position in 2018 to a period of sustained growth, indicating that returns on invested capital have progressively exceeded the weighted average cost of capital.
- Economic Profit Trends
- A substantial recovery is evident, moving from a deficit of US$ 55.17 million in 2018 to a peak of US$ 192.52 million by March 31, 2023. While a slight contraction occurred in 2020, where profit dipped to US$ 65.46 million, the subsequent three years demonstrated aggressive growth, with economic profit increasing by approximately 194% between 2020 and 2023.
- Invested Capital Growth
- Invested capital has followed a consistent upward trajectory throughout the analyzed period. Starting at US$ 1.23 billion in 2018, the capital base expanded annually to reach US$ 1.95 billion by 2023. This steady increase indicates a continuous deployment of resources into the business to support operational scaling.
- Economic Spread Ratio Performance
- The economic spread ratio reflects a strong positive correlation with economic profit. After starting at -4.49% in 2018, the ratio turned positive in 2019 at 6.03%. Despite a moderate decline to 4.60% in 2020, the ratio expanded steadily thereafter, reaching 9.88% by 2023. This progression suggests an increasing efficiency in generating returns above the required cost of capital, demonstrating improved operational leverage and capital productivity.
The convergence of increasing invested capital and an expanding economic spread ratio confirms that the growth in the capital base has been managed effectively, resulting in an accelerated generation of economic value over the six-year period.
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Economic Profit Margin
Deckers Outdoor Corp., economic profit margin calculation, comparison to benchmarks
| Mar 31, 2023 | Mar 31, 2022 | Mar 31, 2021 | Mar 31, 2020 | Mar 31, 2019 | Mar 31, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Economic profit1 | 192,518) | 164,538) | 124,475) | 65,455) | 78,770) | (55,169) | |
| Net sales | 3,627,286) | 3,150,339) | 2,545,641) | 2,132,689) | 2,020,437) | 1,903,339) | |
| Add: Increase (decrease) in deferred revenue | (2,356) | 10,379) | —) | —) | —) | —) | |
| Adjusted net sales | 3,624,930) | 3,160,718) | 2,545,641) | 2,132,689) | 2,020,437) | 1,903,339) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 5.31% | 5.21% | 4.89% | 3.07% | 3.90% | -2.90% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| lululemon athletica inc. | 0.81% | 4.55% | -0.63% | — | — | — | |
| Nike Inc. | 2.88% | 4.19% | 4.35% | — | — | — | |
Based on: 10-K (reporting date: 2023-03-31), 10-K (reporting date: 2022-03-31), 10-K (reporting date: 2021-03-31), 10-K (reporting date: 2020-03-31), 10-K (reporting date: 2019-03-31), 10-K (reporting date: 2018-03-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × 192,518 ÷ 3,624,930 = 5.31%
3 Click competitor name to see calculations.
The financial trajectory over the analyzed six-year period indicates a transition from economic value destruction to sustainable value creation. A significant recovery is observed starting in 2019, followed by a period of accelerated growth in both absolute economic profit and efficiency margins.
- Economic Profit Trend
- A reversal of fortunes is evident between 2018 and 2019, where economic profit shifted from a deficit of US$ 55.17 million to a surplus of US$ 78.77 million. Despite a moderate contraction in 2020 to US$ 65.46 million, a strong upward trend emerged thereafter, culminating in a peak of US$ 192.52 million by March 31, 2023. This progression suggests an increasing ability to generate returns above the cost of capital.
- Adjusted Net Sales Growth
- Consistent expansion in adjusted net sales was maintained throughout the period. Revenue grew steadily from US$ 1.90 billion in 2018 to US$ 3.62 billion in 2023. The growth accelerated notably after 2020, indicating an expansion in market reach or pricing power that supported the overall increase in economic profit.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the absolute profit trend, moving from a negative 2.90% in 2018 to a positive 5.31% in 2023. The slight dip to 3.07% in 2020 was followed by a steady recovery, with margins expanding to 4.89% in 2021 and continuing to climb through 2023. This upward trend in the margin signifies that the company is not only growing its top line but is doing so with increasing capital efficiency.
The correlation between rising adjusted net sales and an expanding economic profit margin suggests that the scale of operations is contributing positively to the company's economic value. The transition from a negative margin to a consistent growth pattern indicates a strengthened competitive position and improved operational effectiveness.
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