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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Economic Profit
Mosaic Co., economic profit calculation
US$ in thousands
| 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 exhibited a declining trend from 2017 to 2019, shifting from a positive value of 610,470 thousand US dollars in 2017 to a negative value of -1,197,855 thousand US dollars in 2019. Subsequently, NOPAT rebounded in 2020 to 136,357 thousand US dollars and further increased significantly in 2021 to 1,881,191 thousand US dollars, indicating recovery and strong profitability improvement in the last two years.
- Cost of Capital
- The cost of capital showed a gradual upward trend over the period, starting at 15.58% in 2017 and rising to 17.91% in 2021. There were slight fluctuations in the interim years, with a dip to 14.12% in 2019 followed by an increase each subsequent year. The rising cost of capital suggests increased expenses related to financing or higher perceived risk of investment over time.
- Invested Capital
- Invested capital remained relatively stable throughout the period, fluctuating slightly between 14,653,500 and 15,889,131 thousand US dollars. The lowest value was observed in 2020, while the highest was in 2018. Overall, the invested capital shows no significant upward or downward trend, implying consistent capital investment levels.
- Economic Profit
- Economic profit showed persistent negative values across all years, indicating that the company did not generate returns exceeding its cost of capital. The loss widened when moving from 2017 (-1,730,436 thousand US dollars) to a trough in 2019 (-3,328,519 thousand US dollars). A gradual improvement occurred after 2019, but negative economic profit persisted through 2021 (-957,040 thousand US dollars). This trend suggests ongoing challenges in generating sufficient value over the cost of capital despite the improved NOPAT in recent years.
- Summary of Trends
- Despite fluctuations and a significant dip in profitability during 2019, the company showed signs of recovery in NOPAT from 2020 onwards, reaching its highest level in 2021. Meanwhile, the rising cost of capital may have placed additional pressure on financial performance. The relatively stable invested capital base indicates steady investment levels. However, the continued negative economic profit suggests that profitability improvements have yet to fully surpass capital costs, indicating room for further efficiency or value creation to meet shareholders' expectations.
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
= × =
5 2021 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
8 Elimination of after taxes investment income.
The financial performance displayed over the reported periods reveals significant volatility in key profitability measures.
- Net Earnings (Loss) Attributable to Mosaic
- The net earnings figures exhibit substantial fluctuations across the five-year span. In 2017, the company recorded a net loss of approximately $107.2 million. This shifted positively in 2018, showing a net profit of $470 million. However, this trend reversed sharply in 2019, with net losses deepening to roughly $1.067 billion. The year 2020 marked a recovery with net earnings rising to $666.1 million, followed by further strong gains in 2021, reaching about $1.63 billion. This pattern indicates a high degree of instability in profitability, with pronounced losses in 2017 and 2019 contrasted by substantial profits in 2018, 2020, and 2021.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values similarly demonstrate marked variability. In 2017, NOPAT was approximately $610.5 million, followed by a decline to $515.1 million in 2018. The most notable change occurred in 2019, with NOPAT plunging to a negative $1.198 billion, signaling operational challenges. In 2020, NOPAT rebounded to $136.4 million, and then grew significantly to about $1.88 billion in 2021. The results suggest a recovery in operational efficiency beginning in 2020 after a considerable downturn in 2019, with 2021 marking the highest operational profitability within the period.
Overall, the data demonstrates a pattern of extreme fluctuations in both net earnings and operating profitability. The year 2019 represents a significant downturn in both measures, followed by a phased recovery in the subsequent years. The company’s financial results reflect considerable volatility possibly driven by external market conditions or internal operational factors that affected profitability during the reviewed timeframe.
Cash Operating Taxes
Mosaic Co., cash operating taxes calculation
US$ 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).
- Provision for (benefit from) income taxes
- The provision for income taxes exhibited considerable volatility over the five-year period. In 2017, the provision was a positive amount close to $495 million, indicating a tax expense. This sharply declined in 2018 to approximately $77 million, followed by a notable shift into a tax benefit in 2019 and 2020, with negative amounts of roughly $225 million and $579 million respectively. However, in 2021, the provision reverted to a tax expense of around $598 million. This fluctuation suggests significant changes in taxable income or tax-related adjustments during these years.
- Cash operating taxes
- Cash operating taxes demonstrated an increasing trend with some fluctuations. In 2017, a negative value near -$69 million indicates a tax benefit or refund during that year. From 2018 onwards, cash operating taxes were positive and generally growing, rising from about $211 million in 2018 to over $526 million in 2021. This progressive increase in cash taxes paid corresponds with a return to a positive tax provision in 2021, reflecting higher tax payments aligning with increased taxable earnings or changes in tax liabilities.
Invested Capital
Mosaic Co., invested capital calculation (financing approach)
US$ 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.
- Total reported debt & leases
- The total reported debt and leases exhibit a general declining trend over the period analyzed. Starting at approximately 5.88 billion USD at the end of 2017, the liabilities decreased to about 5.15 billion USD by the end of 2021. This represents a consistent reduction in debt levels during the timeframe, with the most notable year-on-year decrease occurring between 2019 and 2021, indicating potential efforts to deleverage or optimize debt management.
- Total Mosaic stockholders’ equity
- Stockholders’ equity showed fluctuations but overall an increasing trend. It grew from roughly 9.62 billion USD at the end of 2017 to about 10.60 billion USD by the end of 2021. After peaking above 10.39 billion USD in 2018, equity declined somewhat in 2019 but rebounded in the following years, suggesting periods of both capital accretion and consolidation. The equity levels at the end of the period are the highest reported and indicate strengthening shareholders' financial interest in the company.
- Invested capital
- Invested capital remained relatively stable with minor fluctuations, beginning at approximately 15.02 billion USD in 2017 and ending at about 15.84 billion USD in 2021. The values show a slight increase overall but include periods of decline, notably between 2018 and 2020. The general stability of invested capital indicates consistent asset or business investments relative to the company's size, without extreme expansions or contractions.
- Summary of trends and insights
- The data reflect a company progressively reducing its total debt and lease obligations over the five-year span, positively impacting financial leverage and possibly credit risk. Concurrently, the rise in stockholders’ equity suggests that the company has successfully maintained or increased its capital base, which may result from retained earnings or additional equity infusion. The sturdiness of invested capital further reinforces a stable investment footing. Taken together, these patterns imply a strategic emphasis on strengthening the balance sheet and maintaining capital adequacy while potentially streamlining debt exposure.
Cost of Capital
Mosaic Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Total debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Total debt3 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 35.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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.
- Economic Profit
- The economic profit has shown a consistent negative trend across the five-year period, indicating that the company incurred losses exceeding its cost of capital each year. The loss intensified from -1,730,436 thousand US$ in 2017 to a peak loss of -3,328,519 thousand US$ in 2019. Subsequently, the losses began to decrease in magnitude, falling to -957,040 thousand US$ by 2021, suggesting improvement though the figure remained negative.
- Invested Capital
- The invested capital exhibited moderate fluctuations over the years. Starting at 15,024,306 thousand US$ in 2017, it increased slightly to 15,589,131 thousand US$ in 2018 before decreasing to 14,653,500 thousand US$ by 2020. In 2021, invested capital rose again to 15,843,300 thousand US$, reflecting some reinvestment activity or capital expansion after a period of relative contraction.
- Economic Spread Ratio
- The economic spread ratio, representing the spread between the return on invested capital and the cost of capital, remained negative throughout the analysis period. It deepened from -11.52% in 2017 to its most adverse level at -22.05% in 2019. Similar to economic profit, this ratio improved thereafter, reaching -6.04% in 2021. Despite the improvement, the negative values indicate the returns did not cover the cost of capital during these years.
- Overall Analysis
- The data indicates a period of financial difficulty highlighted by substantial negative economic profits and economic spreads, particularly peaking in 2019. However, from 2020 onwards, a positive trend is observed as losses shrink and economic spread losses lessen. Invested capital trends suggest cautious capital management with some reinvestment or capital increases in the later years. The improvement in economic profit and spread ratio may signal operational improvements or better cost management, although the company had not yet reached positive economic profitability by 2021.
Economic Profit Margin
Mosaic Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit shows a consistent negative value throughout the period from 2017 to 2021, indicating sustained economic losses. The loss deepened from -1,730,436 thousand US dollars in 2017 to a peak negative of -3,328,519 thousand US dollars in 2019, followed by a reduction in losses to -957,040 thousand US dollars by 2021. This suggests some improvement in controlling economic losses in the later years, particularly in 2021.
- Net Sales
- Net sales exhibit a generally increasing trend over the five-year period. Sales increased from 7,409,400 thousand US dollars in 2017 to 12,357,400 thousand US dollars in 2021, despite a slight decline during 2019 and 2020. The most significant growth occurred between 2020 and 2021, indicating a strong recovery or expansion in sales volume or pricing.
- Economic Profit Margin
- The economic profit margin, expressed as a percentage, mirrors the trend in economic profit. Margins are negative across all years, starting at -23.35% in 2017, worsening to a low of -37.37% in 2019, then improving to -7.74% in 2021. The improvement in margin post-2019 indicates better efficiency or profitability relative to sales revenues, though profitability remains below breakeven.
- Overall Insights
- The company faces ongoing challenges in generating positive economic profit despite increasing net sales, reflecting pressure on costs or capital charges. The peak economic losses in 2019 and subsequent recovery by 2021 suggest effective actions taken to improve financial performance, yet profitability has not reached positive territory. Continued sales growth combined with margin improvement shows potential for future economic profit if trends persist or are enhanced.