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
Mosaic Co., economic profit calculation
US$ in thousands
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
= 1,881,191 – 21.08% × 15,843,300 = -1,458,687
The financial performance from 2017 to 2021 is characterized by persistent negative economic profit, indicating that the returns generated were insufficient to cover the cost of the invested capital. While a trend of recovery is observable toward the end of the period, the company operated in a state of value destruction throughout the entire five-year window.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited significant volatility, declining from 610,470 thousand US$ in 2017 to a substantial deficit of 1,197,855 thousand US$ in 2019. A recovery phase followed, with profits returning to positive territory at 136,357 thousand US$ in 2020 and reaching a period peak of 1,881,191 thousand US$ in 2021.
- Invested Capital and Cost of Capital
- The invested capital remained relatively stable, oscillating around 15 billion US$, with a slight contraction between 2018 and 2020 before increasing to 15,843,300 thousand US$ in 2021. During this same period, the cost of capital fluctuated between 16.42% and 21.08%, ending the period at its highest level in 2021.
- Economic Profit Analysis
- Economic profit remained negative across all reporting years, reaching its lowest point in 2019 with a loss of 3,676,381 thousand US$. Although the company failed to achieve a positive economic profit, the magnitude of the loss narrowed significantly from 2020 onward, improving to -1,458,687 thousand US$ by 2021. This improvement is primarily attributable to the sharp increase in NOPAT, which partially offset the burden of the increasing cost of capital applied to the invested base.
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Net Operating Profit after Taxes (NOPAT)
Mosaic Co., NOPAT calculation
US$ in thousands
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 allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to Mosaic.
4 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 124,000 × 4.80% = 5,952
5 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 200,252 × 21.00% = 42,053
6 Addition of after taxes interest expense to net earnings (loss) attributable to Mosaic.
7 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 25,200 × 21.00% = 5,292
8 Elimination of after taxes investment income.
The financial performance between 2017 and 2021 is characterized by significant volatility in both operational and bottom-line profitability. A pattern of cyclical fluctuations is evident, culminating in a substantial increase in profitability by the end of the analyzed period.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT exhibited extreme variance over the five-year period. After a slight decline from 610,470 thousand US$ in 2017 to 515,089 thousand US$ in 2018, the metric experienced a severe contraction in 2019, falling to a deficit of 1,197,855 thousand US$. A recovery phase began in 2020 with a positive return of 136,357 thousand US$, followed by a sharp surge to 1,881,191 thousand US$ in 2021, representing the peak operational profit within the period.
- Analysis of Net Earnings Divergence
- The relationship between operational profit and net earnings reveals critical discrepancies. In 2017, NOPAT remained positive despite a net loss of 107,200 thousand US$, suggesting that while core operations were profitable, non-operating expenses or financial costs adversely impacted the net result. The 2019 period showed a synchronized decline, where both metrics reached their lowest points. By 2021, a strong correlation emerged as both NOPAT and net earnings reached their five-year highs, indicating high operational efficiency and robust overall profitability.
- Profitability Volatility and Recovery
- The transition from a net loss of 1,067,400 thousand US$ in 2019 to a net profit of 1,630,600 thousand US$ in 2021 demonstrates a rapid turnaround in financial health. The substantial growth in NOPAT during the final two years suggests that the recovery was driven primarily by operational improvements or favorable market conditions affecting core business activities.
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Cash Operating Taxes
Mosaic Co., cash operating taxes calculation
US$ in thousands
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).
An analysis of the tax components between 2017 and 2021 reveals a significant divergence between accrual-based tax provisions and actual cash tax outflows. While the provision for income taxes exhibited high volatility, including periods of substantial tax benefits, cash operating taxes demonstrated a general upward trajectory culminating in a peak in 2021.
- Provision for (benefit from) income taxes
- The provision for income taxes demonstrated extreme variability over the five-year period. A substantial decrease was observed from 2017 (US$ 494.9 million) to 2018 (US$ 77.1 million), transitioning into tax benefits in 2019 and 2020, with the benefit peaking at US$ 578.5 million in 2020. A sharp reversal occurred in 2021, where the provision returned to a significant expense of US$ 597.7 million.
- Cash operating taxes
- Cash tax payments shifted from a negative position in 2017 (US$ -68.7 million), indicating a net cash inflow or refund, to consistent outflows from 2018 onward. Following a reduction in 2019 (US$ 79.3 million), cash taxes rose steadily through 2020 (US$ 136.6 million) and experienced a significant surge in 2021, reaching US$ 526.6 million.
- Comparative Analysis for Economic Value Added (EVA)
- A notable disconnect is observed between the accrual-based tax provision and actual cash payments, particularly during 2019 and 2020. During these periods, the company recognized tax benefits on the income statement, yet continued to experience cash outflows for operating taxes. From an EVA perspective, the reliance on cash operating taxes provides a more precise measure of the actual cash leakage from the organization, neutralizing the volatility introduced by non-cash accounting adjustments found in the tax provision.
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Invested Capital
Mosaic Co., invested capital calculation (financing approach)
US$ in thousands
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 allowance for doubtful accounts receivable.
4 Addition of equity equivalents to total Mosaic stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in-progress.
7 Subtraction of marketable securities held in trust.
The financial data for the period between December 31, 2017, and December 31, 2021, reveals a relatively stable base of invested capital, characterized by a strategic reduction in debt offset by fluctuations in stockholders' equity.
- Total Reported Debt and Leases
- A consistent downward trend is observed in the total reported debt and leases. From a high of 5,879,606 thousand US dollars in 2017, the balance decreased to 5,149,300 thousand US dollars by 2021. This represents a total reduction of approximately 12.4% over the five-year period, suggesting a systematic deleveraging of the balance sheet.
- Total Stockholders’ Equity
- Stockholders' equity exhibited significant volatility during the analyzed period. Following an initial increase to 10,397,300 thousand US dollars in 2018, a notable contraction occurred in 2019, with equity dropping to 9,185,500 thousand US dollars. However, a recovery phase followed, leading to a peak of 10,604,100 thousand US dollars by December 31, 2021, indicating a strengthening of the equity position toward the end of the period.
- Invested Capital Trends
- The total invested capital remained comparatively stable, oscillating around the 15 billion US dollar mark. After reaching a local peak of 15,589,131 thousand US dollars in 2018, the figure declined through 2020 to a period low of 14,653,500 thousand US dollars. The period concluded with a significant increase to 15,843,300 thousand US dollars in 2021, the highest value in the five-year series. This indicates that while the components of the capital structure shifted—specifically the reduction of debt and the recovery of equity—the overall scale of capital deployed in the business remained consistent.
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Cost of Capital
Mosaic Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 16,647,579) | 16,647,579) | ÷ | 22,334,179) | = | 0.75 | 0.75 | × | 26.91% | = | 20.06% | ||
| Total debt3 | 5,562,600) | 5,562,600) | ÷ | 22,334,179) | = | 0.25 | 0.25 | × | 5.08% × (1 – 21.00%) | = | 1.00% | ||
| Operating lease liability4 | 124,000) | 124,000) | ÷ | 22,334,179) | = | 0.01 | 0.01 | × | 4.80% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 22,334,179) | 1.00 | 21.08% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 11,259,072) | 11,259,072) | ÷ | 17,244,872) | = | 0.65 | 0.65 | × | 26.91% | = | 17.57% | ||
| Total debt3 | 5,812,200) | 5,812,200) | ÷ | 17,244,872) | = | 0.34 | 0.34 | × | 4.95% × (1 – 21.00%) | = | 1.32% | ||
| Operating lease liability4 | 173,600) | 173,600) | ÷ | 17,244,872) | = | 0.01 | 0.01 | × | 4.80% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 17,244,872) | 1.00 | 18.93% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 6,995,779) | 6,995,779) | ÷ | 12,892,979) | = | 0.54 | 0.54 | × | 26.91% | = | 14.60% | ||
| Total debt3 | 5,703,100) | 5,703,100) | ÷ | 12,892,979) | = | 0.44 | 0.44 | × | 5.00% × (1 – 21.00%) | = | 1.75% | ||
| Operating lease liability4 | 194,100) | 194,100) | ÷ | 12,892,979) | = | 0.02 | 0.02 | × | 6.10% × (1 – 21.00%) | = | 0.07% | ||
| Total: | 12,892,979) | 1.00 | 16.42% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 11,082,277) | 11,082,277) | ÷ | 16,505,608) | = | 0.67 | 0.67 | × | 26.91% | = | 18.07% | ||
| Total debt3 | 5,138,900) | 5,138,900) | ÷ | 16,505,608) | = | 0.31 | 0.31 | × | 5.06% × (1 – 21.00%) | = | 1.24% | ||
| Operating lease liability4 | 284,431) | 284,431) | ÷ | 16,505,608) | = | 0.02 | 0.02 | × | 5.06% × (1 – 21.00%) | = | 0.07% | ||
| Total: | 16,505,608) | 1.00 | 19.38% | ||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 10,578,312) | 10,578,312) | ÷ | 16,668,118) | = | 0.63 | 0.63 | × | 26.91% | = | 17.08% | ||
| Total debt3 | 5,824,100) | 5,824,100) | ÷ | 16,668,118) | = | 0.35 | 0.35 | × | 5.04% × (1 – 35.00%) | = | 1.14% | ||
| Operating lease liability4 | 265,706) | 265,706) | ÷ | 16,668,118) | = | 0.02 | 0.02 | × | 5.04% × (1 – 35.00%) | = | 0.05% | ||
| Total: | 16,668,118) | 1.00 | 18.28% | ||||||||||
Based on: 10-K (reporting date: 2017-12-31).
1 US$ in thousands
2 Equity. See details »
3 Total debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Mosaic Co., 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 thousands) | ||||||
| Economic profit1 | (1,458,687) | (2,637,125) | (3,676,381) | (2,506,567) | (2,135,474) | |
| Invested capital2 | 15,843,300) | 14,653,500) | 15,092,200) | 15,589,131) | 15,024,306) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -9.21% | -18.00% | -24.36% | -16.08% | -14.21% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Linde plc | -8.85% | — | — | — | — | |
| Sherwin-Williams Co. | -2.76% | — | — | — | — | |
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 × -1,458,687 ÷ 15,843,300 = -9.21%
4 Click competitor name to see calculations.
The financial performance over the five-year period indicates a consistent failure to generate positive economic value, as evidenced by negative economic profit and a negative economic spread ratio throughout. However, a notable recovery trend emerged following a trough in 2019, suggesting an improved trajectory in the company's ability to cover its cost of capital.
- Economic Profit
- Economic profit experienced a downward trend from 2017 to 2019, reaching a minimum of -3,676,381 thousand USD. This deterioration was followed by a significant recovery phase, with losses narrowing to -2,637,125 thousand USD in 2020 and further improving to -1,458,687 thousand USD by the end of 2021.
- Invested Capital
- Invested capital remained relatively stable throughout the period, fluctuating between a low of 14,653,500 thousand USD in 2020 and a high of 15,843,300 thousand USD in 2021. The relative constancy of the capital base suggests that the changes in economic profit were driven by operational performance or cost of capital shifts rather than significant divestitures or capital injections.
- Economic Spread Ratio
- The economic spread ratio mirrors the trend of economic profit, showing an increase in value destruction that peaked in 2019 at -24.36%. Subsequent years show a steady improvement, with the ratio rising to -18.00% in 2020 and -9.21% in 2021. While the ratio remains negative, indicating that returns continue to fall below the cost of capital, the narrowing spread reflects a positive shift in economic efficiency.
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Economic Profit Margin
Mosaic Co., 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 thousands) | ||||||
| Economic profit1 | (1,458,687) | (2,637,125) | (3,676,381) | (2,506,567) | (2,135,474) | |
| Net sales | 12,357,400) | 8,681,700) | 8,906,300) | 9,587,300) | 7,409,400) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -11.80% | -30.38% | -41.28% | -26.14% | -28.82% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Linde plc | -20.85% | — | — | — | — | |
| Sherwin-Williams Co. | -2.19% | — | — | — | — | |
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 ÷ Net sales
= 100 × -1,458,687 ÷ 12,357,400 = -11.80%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2017 to 2021 reveals that the organization consistently operated with a negative economic profit, indicating that returns were insufficient to cover the company's cost of capital. However, a notable trend of recovery is evident in the latter part of the period, particularly following a significant downturn in 2019.
- Economic Profit Trends
- Economic profit exhibited considerable volatility, reaching its lowest point in 2019 with a deficit of US$ 3,676,381 thousand. Following this trough, a consistent upward trajectory was observed, with the deficit narrowing to US$ 2,637,125 thousand in 2020 and further improving to US$ 1,458,687 thousand by December 31, 2021. This represents a substantial reduction in the economic loss over the final two years of the analyzed period.
- Net Sales Performance
- Net sales fluctuated throughout the period, initially rising from US$ 7,409,400 thousand in 2017 to a peak of US$ 9,587,300 thousand in 2018. A period of slight contraction followed in 2019 and 2020, with sales dipping to US$ 8,681,700 thousand. A sharp increase occurred in 2021, with net sales surging to US$ 12,357,400 thousand, marking the highest revenue level in the five-year sequence.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility of the absolute economic profit, reflecting the efficiency of value creation relative to sales. The margin deteriorated sharply in 2019, hitting a low of -41.28%. Subsequent years showed a strong recovery trend, with the margin improving to -30.38% in 2020 and reaching -11.80% in 2021. The significant improvement in 2021 suggests a narrowing gap between the company's operating returns and its cost of capital, driven by the substantial increase in net sales and improved economic profit.
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