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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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Price to Earnings (P/E) since 2011
- Price to Book Value (P/BV) since 2011
- Price to Sales (P/S) since 2011
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Economic Profit
HCA Healthcare Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2021 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a general upward trend over the observed period. Starting at $4,332 million in 2017, it increased significantly to $5,865 million in 2018 and slightly to $5,941 million in 2019. In 2020, there is a minor decline to $5,607 million, followed by a substantial increase to $9,050 million in 2021. This indicates improved operational profitability, particularly pronounced in the last year reported.
- Cost of Capital
- The cost of capital demonstrates an increasing trend throughout the period. From 12.36% in 2017, it rises to 14.44% in 2018, slightly declines to 13.97% in 2019, then climbs again to 14.8% in 2020, reaching a peak of 15.24% in 2021. This upward movement may reflect increasing risk perceptions or market conditions affecting the company’s required return on its investments.
- Invested Capital
- Invested capital shows consistent growth, increasing from $27,635 million in 2017 to $36,837 million in 2021. The growth appears steady year-over-year, suggesting ongoing investment in assets or business expansion.
- Economic Profit
- Economic profit exhibits volatility over the period. Beginning at $917 million in 2017, it rises to $1,572 million in 2018, then declines to $1,256 million in 2019. There is a significant drop to $491 million in 2020, possibly impacted by external or operational challenges. However, in 2021, economic profit surges to $3,435 million, indicating markedly improved value creation relative to the cost of capital.
Net Operating Profit after Taxes (NOPAT)
HCA Healthcare Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income attributable to HCA Healthcare, Inc..
3 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net income attributable to HCA Healthcare, Inc..
- Net Income Attributable to HCA Healthcare, Inc.
- The net income shows a general upward trend over the analyzed period. Starting at 2,216 million US dollars in 2017, the figure increased significantly to 3,787 million in 2018, representing strong growth. There was a slight decline in 2019 to 3,505 million, followed by a moderate recovery in 2020 to 3,754 million. Notably, the net income surged markedly in 2021, reaching 6,956 million US dollars, indicating a substantial increase and a possible improvement in operational efficiency or market conditions.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values also exhibit a consistent upward trajectory with minor fluctuations. Beginning at 4,332 million US dollars in 2017, it rose steadily to 5,865 million in 2018 and slightly higher to 5,941 million in 2019. A small decrease occurred in 2020, with NOPAT declining to 5,607 million. However, a significant increase is evident in 2021, with NOPAT rising sharply to 9,050 million US dollars. This substantial growth in 2021 may reflect enhanced operational performance or effective cost management, contributing to improved profitability after taxes.
Cash Operating Taxes
HCA Healthcare Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
- Provision for Income Taxes
- The provision for income taxes exhibited a fluctuating pattern over the five-year period. Initially, there was a decline from 1,638 million US dollars in 2017 to 946 million in 2018. This was followed by an increase in 2019 to 1,099 million. In 2020, the provision slightly decreased to 1,043 million, but surged significantly in 2021 to 2,112 million US dollars, representing the highest level in the observed timeframe.
- Cash Operating Taxes
- Cash operating taxes showed a general upward trend despite some variability. The amount decreased from 1,829 million US dollars in 2017 to 1,319 million in 2018, then marginally declined again to 1,225 million in 2019. However, there was a notable increase in 2020 to 1,505 million, followed by a substantial rise in 2021 to 2,444 million US dollars, reaching the peak value for the period under review.
- Comparative Analysis
- Both the provision for income taxes and cash operating taxes demonstrated significant increases in 2021, more than doubling their respective lows in 2018 and 2019. The divergence in trends between 2017 and 2018 indicates an initial reduction phase before a strong upward movement. The cash operating taxes consistently remained higher than the provision for income taxes each year, suggesting a potential difference in the timing or recognition of tax expenses compared to actual tax payments.
Invested Capital
HCA Healthcare Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to stockholders’ equity (deficit) attributable to HCA Healthcare, Inc..
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction in progress.
- Total reported debt & leases
-
This liability metric showed a generally stable pattern throughout the observed periods, fluctuating slightly but remaining within the range of approximately US$33 billion to US$37 billion. Specifically, the value decreased from US$34.8 billion in 2017 to US$33.1 billion in 2020, followed by an increase to US$36.7 billion in 2021. This trend suggests a degree of active debt management, with a reduction during the 2018-2020 period and an increase in the most recent year.
- Stockholders’ equity (deficit) attributable to HCA Healthcare, Inc.
-
The equity position exhibited a significant improvement from a negative value of US$6.8 billion in 2017 to nearly break-even at US$572 million in 2020, indicating a substantial repair of shareholders’ equity over this four-year span. However, in 2021, there was a reversal back to a negative equity balance of US$933 million, though this deficit was still less severe than the initial figures at the beginning of the period. This reflects volatility in retained earnings or other components influencing equity, as well as possible impacts of operational or non-operational factors on equity structure.
- Invested capital
-
A steady and continuous increase in invested capital is evident across the five-year timeframe, rising from US$27.6 billion in 2017 to US$36.8 billion in 2021. This indicates ongoing investment activity and capital deployment in the business, suggesting expansion or renewal efforts. The upward trend is consistent year-over-year without any contractions or plateaus, signaling sustained capital growth.
Cost of Capital
HCA Healthcare Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term 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 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
HCA Healthcare Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2021 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The economic profit demonstrates a fluctuating trend over the five-year period. It increased significantly from 917 million US dollars in 2017 to 1,572 million US dollars in 2018, followed by a decline to 1,256 million US dollars in 2019. A more pronounced drop occurred in 2020, with economic profit falling to 491 million US dollars. However, in 2021, the economic profit experienced a substantial recovery, reaching its highest value at 3,435 million US dollars.
Invested capital exhibits a consistent upward trajectory throughout the observed periods. Starting at 27,635 million US dollars in 2017, the invested capital steadily rose each year, culminating in 36,837 million US dollars by the end of 2021. This persistent increase suggests ongoing investment and asset accumulation by the company.
The economic spread ratio shows notable variability during the timeframe. It rose from 3.32% in 2017 to 5.29% in 2018, indicating an improvement in the company's return above the cost of capital. This ratio declined to 3.74% in 2019 and further decreased to 1.42% in 2020, reflecting diminishing profitability margins. In 2021, the ratio surged sharply to 9.32%, implying a substantial increase in economic value creation relative to invested capital.
- Summary of key trends
- - Economic profit experienced volatility with a peak in 2018, a low in 2020, and a strong rebound in 2021.
- - Invested capital consistently increased, indicating ongoing investment and growth in asset base.
- - The economic spread ratio fluctuated, demonstrating initial improvement, subsequent decline, and a significant increase by 2021.
- - The positive movement in economic spread ratio in 2021 aligns with the significant rise in economic profit, suggesting improved efficiency or profitability.
Economic Profit Margin
HCA Healthcare Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Economic profit. See details »
2 2021 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues exhibit a consistent upward trajectory over the analyzed period, increasing from $43,614 million in 2017 to $58,752 million in 2021. This represents a steady growth trend, including modest growth between 2019 and 2020 and a more pronounced increase from 2020 to 2021.
- Economic Profit
- Economic profit shows more volatility compared to revenues. It grew from $917 million in 2017 to a peak of $1,572 million in 2018, then declined to $491 million by 2020. A notable recovery occurs in 2021, with economic profit surging significantly to $3,435 million, the highest value in the period analyzed.
- Economic Profit Margin
- The economic profit margin reflects a similarly variable trend, moving from 2.1% in 2017 up to 3.37% in 2018 before declining to 0.95% in 2020. The margin then dramatically improves to 5.85% in 2021, surpassing previous years and indicating a marked increase in profitability relative to revenue.