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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Royal Caribbean Cruises Ltd., 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	(3,961,280)	(4,923,029)	2,326,210)	2,134,817)	1,898,873)
Cost of capital²	15.34%	16.80%	18.22%	20.23%	22.25%
Invested capital³	26,323,667)	28,435,034)	24,165,583)	22,762,454)	18,110,618)

Economic profit⁴	(7,999,266)	(9,698,826)	(2,076,865)	(2,470,989)	(2,131,424)

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
= -3,961,280 – 15.34% × 26,323,667 = -7,999,266

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Royal Caribbean Cruises Ltd. economic profit decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Royal Caribbean Cruises Ltd., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net income (loss) attributable to Royal Caribbean Cruises Ltd.	(5,260,499)	(5,797,462)	1,878,887)	1,811,042)	1,625,133)
Deferred income tax expense (benefit)¹	—)	—)	—)	—)	—)
Increase (decrease) in credit loss allowance²	9,544)	(1,768)	—)	—)	—)
Increase (decrease) in restructuring³	(13,491)	2,292)	11,512)	—)	—)
Increase (decrease) in equity equivalents⁴	(3,947)	524)	11,512)	—)	—)
Interest expense, net of interest capitalized	1,291,753)	844,238)	408,513)	333,672)	299,982)
Interest expense, operating lease liability⁵	39,358)	30,595)	32,486)	21,832)	6,932)
Adjusted interest expense, net of interest capitalized	1,331,111)	874,833)	440,999)	355,504)	306,914)
Tax benefit of interest expense, net of interest capitalized⁶	(11,314)	(2,275)	(7,409)	(4,053)	(3,407)
Adjusted interest expense, net of interest capitalized, after taxes⁷	1,319,796)	872,558)	433,590)	351,451)	303,507)
Interest income	(16,773)	(21,036)	(26,945)	(32,800)	(30,101)
Investment income, before taxes	(16,773)	(21,036)	(26,945)	(32,800)	(30,101)
Tax expense (benefit) of investment income⁸	143)	55)	453)	374)	334)
Investment income, after taxes⁹	(16,630)	(20,981)	(26,492)	(32,426)	(29,767)
Net income (loss) attributable to noncontrolling interest	—)	22,332)	28,713)	4,750)	—)
Net operating profit after taxes (NOPAT)	(3,961,280)	(4,923,029)	2,326,210)	2,134,817)	1,898,873)

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 credit loss allowance.

³ Addition of increase (decrease) in restructuring.

⁴ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Royal Caribbean Cruises Ltd..

⁵ 2021 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 603,648 × 6.52% = 39,358

⁶ 2021 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= 1,331,111 × 0.85% = 11,314

⁷ Addition of after taxes interest expense to net income (loss) attributable to Royal Caribbean Cruises Ltd..

⁸ 2021 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 16,773 × 0.85% = 143

⁹ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Royal Caribbean Cruises Ltd. NOPAT decreased from 2019 to 2020 but then slightly increased from 2020 to 2021.

Royal Caribbean Cruises Ltd., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Income tax (expense) benefit	(45,200)	(15,000)	32,600)	20,900)	18,300)
Less: Deferred income tax expense (benefit)	—)	—)	—)	—)	—)
Add: Tax savings from interest expense, net of interest capitalized	11,314)	2,275)	7,409)	4,053)	3,407)
Less: Tax imposed on investment income	143)	55)	453)	374)	334)
Cash operating taxes	(34,028)	(12,780)	39,556)	24,579)	21,373)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Royal Caribbean Cruises Ltd. cash operating taxes decreased from 2019 to 2020 and from 2020 to 2021.

Royal Caribbean Cruises Ltd., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Current portion of long-term debt	2,243,131)	961,768)	1,186,586)	1,646,841)	1,188,514)
Commercial paper	—)	409,319)	1,434,180)	775,488)	—)
Long-term debt, excluding current portion	18,847,209)	17,957,956)	8,414,110)	8,355,370)	6,350,937)
Operating lease liability¹	603,648)	666,553)	698,617)	527,340)	176,834)
Total reported debt & leases	21,693,988)	19,995,596)	11,733,493)	11,305,039)	7,716,285)
Shareholders’ equity	5,085,556)	8,760,669)	12,163,846)	11,105,461)	10,702,303)
Net deferred tax (assets) liabilities²	—)	—)	—)	—)	—)
Credit loss allowance³	13,411)	3,867)	—)	—)	—)
Restructuring⁴	313)	13,804)	11,512)	—)	—)
Equity equivalents⁵	13,724)	17,671)	11,512)	—)	—)
Accumulated other comprehensive (income) loss, net of tax⁶	710,885)	739,341)	797,713)	627,734)	334,265)
Redeemable noncontrolling interest	—)	—)	569,981)	542,020)	—)
Adjusted shareholders’ equity	5,810,165)	9,517,681)	13,543,052)	12,275,215)	11,036,568)
Ships under construction⁷	(1,180,486)	(1,078,243)	(1,110,962)	(817,800)	(642,235)
Invested capital	26,323,667)	28,435,034)	24,165,583)	22,762,454)	18,110,618)

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 restructuring.

⁵ Addition of equity equivalents to shareholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of ships under construction.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Royal Caribbean Cruises Ltd. invested capital increased from 2019 to 2020 but then slightly decreased from 2020 to 2021.

Royal Caribbean Cruises Ltd., cost of capital calculations

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,786,054)	18,786,054)	÷	42,238,457)	=	0.44	0.44	×	27.69%	=	12.31%
Debt³	22,848,755)	22,848,755)	÷	42,238,457)	=	0.54	0.54	×	5.47% × (1 – 0.85%)	=	2.93%
Operating lease liability⁴	603,648)	603,648)	÷	42,238,457)	=	0.01	0.01	×	6.52% × (1 – 0.85%)	=	0.09%
Total:	42,238,457)					1.00					15.34%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	22,154,902)	22,154,902)	÷	44,425,179)	=	0.50	0.50	×	27.69%	=	13.81%
Debt³	21,603,724)	21,603,724)	÷	44,425,179)	=	0.49	0.49	×	6.02% × (1 – 0.26%)	=	2.92%
Operating lease liability⁴	666,553)	666,553)	÷	44,425,179)	=	0.02	0.02	×	4.59% × (1 – 0.26%)	=	0.07%
Total:	44,425,179)					1.00					16.80%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	18,715,951)	18,715,951)	÷	31,138,061)	=	0.60	0.60	×	27.69%	=	16.64%
Debt³	11,723,493)	11,723,493)	÷	31,138,061)	=	0.38	0.38	×	3.99% × (1 – 1.68%)	=	1.48%
Operating lease liability⁴	698,617)	698,617)	÷	31,138,061)	=	0.02	0.02	×	4.65% × (1 – 1.68%)	=	0.10%
Total:	31,138,061)					1.00					18.22%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2018

	Capital (fair value)¹	Weights					Cost of capital
Equity²	25,296,935)	25,296,935)	÷	36,974,922)	=	0.68	0.68	×	27.69%	=	18.94%
Debt³	11,150,646)	11,150,646)	÷	36,974,922)	=	0.30	0.30	×	4.14% × (1 – 1.14%)	=	1.23%
Operating lease liability⁴	527,340)	527,340)	÷	36,974,922)	=	0.01	0.01	×	4.14% × (1 – 1.14%)	=	0.06%
Total:	36,974,922)					1.00					20.23%

Based on: 10-K (reporting date: 2018-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2017

	Capital (fair value)¹	Weights					Cost of capital
Equity²	27,904,933)	27,904,933)	÷	36,152,998)	=	0.77	0.77	×	27.69%	=	21.37%
Debt³	8,071,231)	8,071,231)	÷	36,152,998)	=	0.22	0.22	×	3.92% × (1 – 1.11%)	=	0.87%
Operating lease liability⁴	176,834)	176,834)	÷	36,152,998)	=	0.00	0.00	×	3.92% × (1 – 1.11%)	=	0.02%
Total:	36,152,998)					1.00					22.25%

Based on: 10-K (reporting date: 2017-12-31).

¹ US$ in thousands

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Royal Caribbean Cruises Ltd., 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	(7,999,266)	(9,698,826)	(2,076,865)	(2,470,989)	(2,131,424)
Invested capital²	26,323,667)	28,435,034)	24,165,583)	22,762,454)	18,110,618)
Performance Ratio
Economic spread ratio³	-30.39%	-34.11%	-8.59%	-10.86%	-11.77%
Benchmarks
Economic Spread Ratio, Competitors⁴
Airbnb Inc.	-7.27%	-113.57%	—	—	—
Booking Holdings Inc.	-10.95%	-10.64%	31.01%	—	—
Carnival Corp. & plc	-30.23%	-33.61%	-10.33%	-11.06%	—
Chipotle Mexican Grill Inc.	-0.62%	-2.64%	-2.42%	—	—
McDonald’s Corp.	8.66%	4.39%	8.64%	—	—
Starbucks Corp.	8.49%	-4.25%	0.18%	36.53%	—

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 × -7,999,266 ÷ 26,323,667 = -30.39%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Royal Caribbean Cruises Ltd. economic spread ratio deteriorated from 2019 to 2020 but then slightly improved from 2020 to 2021.

Royal Caribbean Cruises Ltd., 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	(7,999,266)	(9,698,826)	(2,076,865)	(2,470,989)	(2,131,424)
Revenues	1,532,133)	2,208,805)	10,950,661)	9,493,849)	8,777,845)
Performance Ratio
Economic profit margin²	-522.10%	-439.10%	-18.97%	-26.03%	-24.28%
Benchmarks
Economic Profit Margin, Competitors³
Airbnb Inc.	-6.54%	-173.89%	—	—	—
Booking Holdings Inc.	-14.99%	-22.80%	22.69%	—	—
Carnival Corp. & plc	-737.05%	-294.43%	-19.01%	-20.55%	—
Chipotle Mexican Grill Inc.	-0.45%	-2.16%	-1.82%	—	—
McDonald’s Corp.	17.80%	10.69%	17.46%	—	—
Starbucks Corp.	6.92%	-4.14%	0.14%	30.67%	—

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 × -7,999,266 ÷ 1,532,133 = -522.10%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Royal Caribbean Cruises Ltd. economic profit margin deteriorated from 2019 to 2020 and from 2020 to 2021.

Royal Caribbean Cruises Ltd. (NYSE:RCL)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin