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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Philip Morris International Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to Book Value (P/BV) since 2008
- Analysis of Revenues
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Economic Profit
Philip Morris International Inc., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals several key trends in the company's performance over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from 8,950 million USD in 2020 to a peak of 10,188 million USD in 2021. Subsequently, it declined gradually to 8,281 million USD by 2024. This indicates an initial improvement followed by a consistent reduction in profitability from core operations over the latter years.
- Cost of Capital
- The cost of capital exhibited moderate fluctuations, starting at 8.45% in 2020 and reaching a high of 8.99% in 2024. Although it peaked in 2021 at 8.93%, it slightly decreased and then increased again, suggesting variability in the company's capital expenses and potentially reflecting changes in market conditions or risk profile.
- Invested Capital
- Invested capital initially decreased from 31,958 million USD in 2020 to 29,268 million USD in 2021. However, from 2022 onwards, it grew significantly to 51,440 million USD in 2023 before a modest decline to 48,390 million USD in 2024. This trend indicates substantial capital investment or acquisitions during 2022 and 2023, followed by a slight reduction or asset disposals in the latest year.
- Economic Profit
- Economic profit increased from 6,251 million USD in 2020 to a peak of 7,575 million USD in 2021. Thereafter, it declined steadily to 3,930 million USD in 2024. This downward trend suggests that despite increased investments, the returns above the cost of capital diminished, highlighting challenges in generating excess value from the invested capital in recent years.
Overall, the data reflects a period of strong operational profitability and economic profit growth through 2021, followed by a downward trend in both metrics despite increased invested capital. The rising cost of capital in the latter years could have contributed to the reduction in economic profit, emphasizing the importance of effectively managing both operational efficiency and investment returns going forward.
Net Operating Profit after Taxes (NOPAT)
Philip Morris International Inc., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowances.
3 Addition of increase (decrease) in accrued product warranty.
4 Addition of increase (decrease) in restructuring related liabilities.
5 Addition of increase (decrease) in equity equivalents to net earnings attributable to PMI.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net earnings attributable to PMI.
9 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
The financial data indicates a fluctuating but generally declining trend in the profitability metrics over the analyzed periods. Both net earnings attributable to the company and net operating profit after taxes (NOPAT) show variations that merit close attention.
- Net Earnings Attributable to PMI
- Starting at $8,056 million in 2020, net earnings increased to a peak of $9,109 million in 2021, reflecting a strong growth phase. However, subsequent years show a downward trajectory, with earnings declining to $9,048 million in 2022, then more sharply to $7,813 million in 2023, and further down to $7,057 million in 2024. This sequence suggests a notable slowdown in profitability, especially from 2022 onwards.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT follows a similar pattern, beginning at $8,950 million in 2020 and rising to a high of $10,188 million in 2021. A decline ensues thereafter, decreasing to $9,635 million in 2022, $8,804 million in 2023, and finally $8,281 million in 2024. The reduction in operating profit after tax signals that operational efficiency or operating conditions may have deteriorated during the latter period.
Overall, the data reflects a peak in both earnings and operating profits in 2021, followed by a consistent downward trend through 2024. This pattern could indicate emerging challenges in sustaining profitability, necessitating further analysis of operational factors, market conditions, or cost structures contributing to this decline.
Cash Operating Taxes
Philip Morris International Inc., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
- Provision for income taxes
- The provision for income taxes exhibited fluctuations over the observed periods. Starting at $2,377 million in 2020, the figure increased to $2,671 million in 2021, representing a notable rise. However, it subsequently decreased to $2,244 million in 2022, indicating a reduction in tax provisions that year. Following this dip, provisions increased again in 2023 to $2,339 million and continued the upward trend more sharply in 2024, reaching $3,017 million. Overall, the pattern shows variability with a significant increase in the most recent year.
- Cash operating taxes
- Cash operating taxes displayed an overall upward trend from 2020 to 2024. The amount was $2,656 million in 2020 and increased steadily to $2,825 million in 2021. A slight decline occurred in 2022 to $2,606 million, but this was followed by substantial increases in 2023 and 2024, reaching $2,899 million and $3,381 million respectively. The consistent growth, especially in the final two years, reflects an increasing cash tax burden despite minor fluctuations earlier.
Invested Capital
Philip Morris International Inc., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 accrued product warranty.
5 Addition of restructuring related liabilities.
6 Addition of equity equivalents to total PMI stockholders’ deficit.
7 Removal of accumulated other comprehensive income.
8 Subtraction of construction in progress.
- Total reported debt & leases
- The total reported debt and leases exhibit a fluctuating trend over the examined periods. Initially, there was a decrease from 32,243 million USD at the end of 2020 to 28,342 million USD in 2021. However, this was followed by a notable increase in 2022, reaching 43,737 million USD, and then a further rise to 48,562 million USD in 2023. In 2024, the figure slightly declined to 46,299 million USD. Overall, the debt levels have increased substantially after the initial drop, reflecting a significant rise in financial obligations in recent years.
- Total PMI stockholders’ deficit
- The stockholders’ deficit showed an improvement from -12,567 million USD in 2020 to -8,957 million USD in 2022, indicating a reduction in the deficit over these years. However, this improvement was reversed in 2023 and 2024, with the deficit increasing to -11,225 million USD and further to -11,750 million USD, respectively. This pattern suggests a temporary recovery in equity position was followed by a deterioration in the latest two years.
- Invested capital
- Invested capital decreased from 31,958 million USD in 2020 to 29,268 million USD in 2021, showing a contraction in invested resources. Subsequently, a sharp increase is observed in 2022, rising to 47,466 million USD, and further to 51,440 million USD in 2023. In 2024, there is a slight decrease to 48,390 million USD. The data indicates an expansion in invested capital after 2021, suggesting increased investment activities or asset base growth during this period, with a minor reduction in the most recent year.
Cost of Capital
Philip Morris International Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (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 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance lease obligations3 | ÷ | = | × | × (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 Debt, including finance lease obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Philip Morris International Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit showed an initial increase from 6,251 million USD in 2020 to a peak of 7,575 million USD in 2021. Subsequently, there was a declining trend over the next three years, reaching 3,930 million USD by 2024. This decline suggests a reduction in the company's ability to generate profit above its cost of capital during this period.
- Invested Capital
- Invested capital decreased from 31,958 million USD in 2020 to 29,268 million USD in 2021. However, there was a marked increase in 2022, rising sharply to 47,466 million USD and continuing to grow to 51,440 million USD in 2023 before a slight reduction to 48,390 million USD in 2024. This pattern indicates significant capital deployment beginning in 2022, followed by some capital rationalization in 2024.
- Economic Spread Ratio
- The economic spread ratio, which measures the return spread over the cost of capital, increased from 19.56% in 2020 to a high of 25.88% in 2021. Post-2021, the ratio declined significantly to 11.71% in 2022 and further to 8.76% in 2023, with a slight decrease to 8.12% in 2024. This decline in the economic spread ratio points to decreasing efficiency in generating returns relative to invested capital, consistent with the downward trend in economic profit despite increased capital.
Overall, the data reflect a phase of growth in profitability and capital efficiency culminating in 2021, followed by a period of reduced profitability amid increased capital investment. This suggests challenges in maintaining high returns on newly invested capital in subsequent years, resulting in a deteriorating economic spread and diminishing economic profit by 2024.
Economic Profit Margin
Philip Morris International Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Coca-Cola Co. | ||||||
| Mondelēz International Inc. | ||||||
| PepsiCo Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Net Revenues
- Net revenues exhibited a consistent upward trend over the five-year period, increasing from $28,694 million in 2020 to $37,878 million in 2024. This reflects sustained growth in the company's top-line performance, with the most notable rise occurring between 2022 and 2024.
- Economic Profit
- Economic profit demonstrated a different pattern compared to net revenues. Starting at $6,251 million in 2020, it increased to a peak of $7,575 million in 2021, followed by a consecutive decline each subsequent year, reaching $3,930 million in 2024. This decline despite rising revenues suggests increasing costs or diminishing returns on invested capital.
- Economic Profit Margin
- The economic profit margin mirrored the trend in economic profit, reaching its highest point at 24.12% in 2021 before decreasing significantly to 10.38% in 2024. This margin contraction signals a reduction in the efficiency of converting revenues into economic profit and may indicate margin pressures or increased expenditures relative to revenue growth.