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.
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Monsanto Co. pages available for free this week:
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Monsanto Co., economic profit calculation
US$ in millions
| 12 months ended: | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | |
|---|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | |||||||
| Cost of capital2 | |||||||
| Invested capital3 | |||||||
| Economic profit4 | |||||||
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2017 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibited an initial upward trend, increasing from 2,247 million USD in 2012 to a peak of 2,743 million USD in 2013. This was followed by a slight decline to 2,633 million USD in 2014 and a more pronounced decrease to 1,816 million USD by 2016. However, there was a recovery in 2017, with NOPAT rising again to 2,582 million USD.
- Cost of Capital
- The cost of capital remained relatively stable throughout the period, fluctuating between 14.05% and 16.01%. The highest cost was recorded in 2013 at 16.01%, with a gradual decline to around 14% in the mid-years, and a slight increase again to 14.62% in 2017.
- Invested Capital
- Invested capital showed a general increasing trend from 14,553 million USD in 2012 to a peak of 18,327 million USD in 2015. After 2015, invested capital decreased to 15,963 million USD in 2016, before rising again to 16,366 million USD in 2017. This indicates fluctuations possibly related to investment decisions or asset revaluation within the period.
- Economic Profit
- Economic profit displayed significant volatility. It started with a negative value of -65 million USD in 2012 but then improved, reaching positive figures in 2013 (217 million USD) and 2014 (244 million USD). Despite this, the economic profit fell sharply into negative territory in 2015 (-214 million USD) and further declined to -432 million USD in 2016. There was a notable recovery in 2017, with economic profit returning to a positive 189 million USD.
- Overall Insights
- The period under analysis shows fluctuations in key financial indicators, with NOPAT and economic profit both experiencing highs and lows. The cost of capital remained relatively stable, suggesting consistent capital cost structures. The invested capital’s rise and fall could have influenced the economic profit variability, indicating periods where returns did not fully cover the cost of capital. The recovery seen in 2017 across NOPAT and economic profit suggests improvements in operational efficiency or profitability metrics after a challenging period in 2015 and 2016.
Net Operating Profit after Taxes (NOPAT)
Monsanto Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful trade receivables.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in deferred revenues.
5 Addition of increase (decrease) in restructuring reserves.
6 Addition of increase (decrease) in equity equivalents to net income attributable to Monsanto Company.
7 2017 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2017 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 35.00% =
9 Addition of after taxes interest expense to net income attributable to Monsanto Company.
10 2017 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 35.00% =
11 Elimination of after taxes investment income.
12 Elimination of discontinued operations.
The financial data reveals certain trends in profitability for the analyzed company over a six-year period ending August 31, 2017.
- Net Income Attributable to the Company
-
Net income shows an overall fluctuating pattern across the years. It increased steadily from 2045 million US dollars in 2012 to a peak of 2740 million in 2014. Subsequently, it experienced a decline to 2314 million in 2015 and a more pronounced decrease to 1336 million in 2016, indicating a significant setback in profitability during that year. However, the net income rebounded sharply to 2260 million in 2017, signaling recovery but not reaching the earlier peak levels.
- Net Operating Profit After Taxes (NOPAT)
-
NOPAT similarly experienced variations over the examined period. It rose from 2247 million USD in 2012 to 2743 million in 2013, before slightly declining to 2633 million in 2014. The value then decreased further to 2361 million in 2015 and took a more substantial fall to 1816 million in 2016. In 2017, NOPAT saw a notable recovery to 2582 million. This suggests operational efficiency or profitability challenges during 2015 and 2016 with improvement thereafter.
Overall, both net income and NOPAT indicate a peak generally around 2013-2014, followed by declines in 2015 and notably in 2016. The recovery in 2017 reflects a positive turnaround. The inconsistency observed in both metrics suggests volatility in profitability and operational performance during these years, highlighting a period of financial challenges mid-cycle with subsequent recovery efforts yielding results by the final year reported.
Cash Operating Taxes
Monsanto Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
- Income Tax Provision from Continuing Operations
- The income tax provision from continuing operations exhibited a fluctuating trend over the six-year period. Starting at 901 million USD in 2012, a slight increase to 915 million USD was observed in 2013. This upward movement continued more notably in 2014, reaching a peak of 1,078 million USD. However, the subsequent years showed a declining pattern: it decreased to 864 million USD in 2015, further dropped to 695 million USD in 2016, and reached its lowest point at 626 million USD in 2017. Overall, despite an initial rise until 2014, the income tax provision has generally declined in the latter part of the timeframe.
- Cash Operating Taxes
- Cash operating taxes demonstrated more volatility relative to the income tax provision. Beginning at 708 million USD in 2012, there was a steady increase to 821 million USD in 2013, followed by a substantial spike to 1,179 million USD in 2014. The upward trend continued into 2015, peaking at 1,272 million USD. However, unlike income tax provision, cash operating taxes experienced a sharp decrease in 2016, falling to 801 million USD, and then a further decline to 719 million USD by 2017. Despite the fluctuations, the values at the end of the period remained higher than the initial 2012 figures.
- Comparative Observations
- Both income tax provision and cash operating taxes display a pattern of increasing values through the early years, reaching peaks around 2014 or 2015, followed by a notable decline in the last two years. The cash operating taxes showed more pronounced increases and decreases compared to the income tax provision, suggesting greater variability in actual tax cash outflows relative to the accounting provisions. The consistent decline in both items after 2015 might indicate changes in tax strategy, operational performance, or tax regulations affecting the company's tax liabilities.
Invested Capital
Monsanto Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
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 LIFO reserve. See details »
5 Addition of deferred revenues.
6 Addition of restructuring reserves.
7 Addition of equity equivalents to total Monsanto Company shareowners’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress and other.
10 Subtraction of investments.
The financial data reveals several important trends and shifts over the six-year period ending August 31, 2017.
- Total reported debt & leases
- This metric shows a notable increase from 2012 through 2015, rising sharply from approximately $2.4 billion to $9.5 billion. The peak occurs in 2015 with a slight decline thereafter, dropping to $8.6 billion by 2017. This suggests a significant increase in leverage or borrowing activities during the mid-period, followed by some reduction in debt levels.
- Total Monsanto Company shareowners’ equity
- Shareowners’ equity exhibits a declining trend over the years. Starting at about $11.8 billion in 2012, equity increases slightly in 2013 but then declines steadily to a low of $4.5 billion in 2016. A partial recovery to $6.4 billion in 2017 is observed. This decreasing equity position alongside rising debt levels in the earlier years indicates possible financial restructuring or share buybacks impacting the equity base.
- Invested capital
- Invested capital shows a general upward trend from 2012 through 2015, rising from approximately $14.6 billion to $18.3 billion before declining to around $16.0 billion in 2016. A slight increase to $16.4 billion in 2017 occurs. The growth in invested capital up to 2015 parallels the increases in both debt and equity during that period, suggesting expansion or acquisition initiatives. The subsequent decrease and stabilization may reflect a period of consolidation or reevaluation of capital investment.
Overall, the data suggest that the company experienced increased leverage with a peak in debt around 2015, accompanied by declining shareholders’ equity after 2013. Despite fluctuations, invested capital remained relatively high, implying continued commitment to the company's operational base or growth efforts. The partial recovery in equity and reduction in debt post-2015 could indicate a strategic shift towards strengthening the balance sheet and deleveraging.
Cost of Capital
Monsanto Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2017-08-31).
1 US$ 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 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2016-08-31).
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 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2015-08-31).
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 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2014-08-31).
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 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2013-08-31).
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 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2012-08-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Monsanto Co., economic spread ratio calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| Economic spread ratio3 | |||||||
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| lululemon athletica inc. | |||||||
| Nike Inc. | |||||||
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2017 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrates considerable volatility over the analyzed period. It shows a negative value of -65 million USD in 2012, followed by a significant increase to 217 million USD in 2013 and a further rise to 244 million USD in 2014. However, there is a marked decline in 2015 and 2016, with values falling to -214 million USD and -432 million USD respectively. In 2017, economic profit recovers to 189 million USD, indicating improved profitability after two years of losses.
- Invested Capital
- Invested capital generally trends upwards from 14,553 million USD in 2012 to 18,327 million USD in 2015. A decline occurs in 2016, reducing the invested capital to 15,963 million USD, followed by a slight increase to 16,366 million USD in 2017. This pattern suggests capital expansion initially, a notable reduction in 2016, and stabilization thereafter.
- Economic Spread Ratio
- The economic spread ratio starts with a negative value of -0.45% in 2012, shifts positively to 1.38% in 2013 and slightly improves to 1.5% in 2014. It then declines sharply to -1.17% in 2015 and further to -2.71% in 2016, reflecting a weakening spread and lower returns relative to invested capital. In 2017, the ratio rebounds to 1.15%, showing a return to positive economic spreads, aligning with the resurgence in economic profit.
Economic Profit Margin
Monsanto Co., economic profit margin calculation, comparison to benchmarks
| Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | Aug 31, 2013 | Aug 31, 2012 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | |||||||
| Net sales | |||||||
| Add: Increase (decrease) in deferred revenues | |||||||
| Adjusted net sales | |||||||
| Performance Ratio | |||||||
| Economic profit margin2 | |||||||
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| lululemon athletica inc. | |||||||
| Nike Inc. | |||||||
Based on: 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31), 10-K (reporting date: 2013-08-31), 10-K (reporting date: 2012-08-31).
1 Economic profit. See details »
2 2017 Calculation
Economic profit margin = 100 × Economic profit ÷ Adjusted net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Adjusted net sales
- Over the observed period, adjusted net sales demonstrated a fluctuating trend. Starting at 13,435 million US dollars in 2012, sales increased steadily to reach a peak of 15,685 million in 2014. Subsequently, there was a decline in 2015 and 2016, falling to 13,688 million, before experiencing a moderate recovery in 2017 with sales rising to 14,878 million. This indicates variability in sales performance with a notable dip occurring during the mid-period.
- Economic profit
- The economic profit metric exhibited significant volatility throughout the years. Initially, a negative profit of -65 million US dollars was followed by a sharp increase to positive figures in 2013 and 2014, reaching as high as 244 million. However, this favorable performance reversed dramatically in 2015 and 2016 with deep negative economic profits of -214 million and -432 million respectively. A strong recovery occurred in 2017, with economic profit rising to 189 million. This pattern suggests intermittent profitability influenced by possibly varying operational or market conditions.
- Economic profit margin
- The economic profit margin mirrors the economic profit trend, starting at a negative margin of -0.49% in 2012, improving substantially to positive margins above 1.4% in 2013 and 2014. This improvement was followed by a regression to negative margins of -1.43% and -3.16% in 2015 and 2016, indicating decreased efficiency or profitability relative to sales in those years. The margin rebounded to 1.27% in 2017, reflecting an improvement in economic profitability as a percentage of sales.
- Overall trends and insights
- The financial data reveals a cyclical pattern of growth and contraction in sales alongside marked fluctuations in profitability metrics. The correlation between economic profit and profit margin with sales volume changes suggests that periods of lower sales were associated with diminished profitability and vice versa. The recovery seen in 2017 across all metrics may point to successful strategic or operational adjustments reversing prior negative trends. Continued monitoring of these indicators would be essential to assess stability and sustainability of performance improvements.