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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Sherwin-Williams Co. pages available for free this week:
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Analysis of Revenues
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Economic Profit
Sherwin-Williams Co., economic profit calculation
US$ in thousands
| 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
= – × =
Net Operating Profit after Taxes (NOPAT)
Sherwin-Williams Co., NOPAT calculation
US$ in thousands
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 allowance for current expected credit losses.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrual for product warranty claims.
5 Addition of increase (decrease) in restructuring Plan.
6 Addition of increase (decrease) in equity equivalents to net income.
7 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
8 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
9 Addition of after taxes interest expense to net income.
10 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
11 Elimination of after taxes investment income.
- Net Income Trend Analysis
- The net income shows a fluctuating yet overall upward trend over the five-year period. Beginning in 2020 at approximately 2.03 billion US dollars, there is a noticeable decline in 2021 to about 1.86 billion US dollars. However, this decline appears temporary as net income recovers in 2022 to just over 2.02 billion US dollars. The upward trajectory continues more strongly in the subsequent years, with net income rising to nearly 2.39 billion in 2023 and further to approximately 2.68 billion in 2024. These figures suggest improving profitability and potential operational efficiency gains or favorable market conditions beginning in 2022 and sustaining growth through 2024.
- Net Operating Profit After Taxes (NOPAT) Analysis
- NOPAT exhibits a consistent and steady increase throughout the five-year span. Starting from about 2.19 billion US dollars in 2020, it increases each year without decline, reaching around 2.36 billion in 2021, then 2.48 billion in 2022, 2.51 billion in 2023, and culminating at nearly 2.96 billion in 2024. This steady growth indicates progressively efficient core operations and suggests successful management of operating expenses and taxes. The more pronounced increase in later years aligns with the increasing net income, reinforcing the positive operational and financial performance trend.
- Comparative Insights
- While net income experienced a dip in 2021, the continual growth of NOPAT during this period underscores that the core operational profitability remained robust, indicating that the net income downturn may have resulted from non-operational factors or extraordinary items. The consistent rise in NOPAT emphasizes improved operational effectiveness, which appears to translate into increasing net income from 2022 onwards. Overall, the financial data reflect strengthening company profitability and operational efficiency, particularly evident from 2022 through 2024.
Cash Operating Taxes
Sherwin-Williams Co., cash operating taxes calculation
US$ in thousands
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).
The analysis of the financial data reveals significant trends relating to the provisions for income taxes and cash operating taxes over the five-year period from 2020 to 2024.
- Provisions for Income Taxes
- The provisions for income taxes exhibited notable fluctuations throughout the years. Starting at 488,800 thousand US dollars in 2020, there was a decrease in 2021 to 384,200 thousand US dollars, representing a drop of approximately 21.4%. However, this was followed by a substantial increase in 2022, reaching 553,000 thousand US dollars, which is roughly a 44% rise from the previous year. The upward trend continued into 2023 and 2024, with values rising to 721,100 and 770,400 thousand US dollars respectively. Between 2022 and 2024, the provisions grew by about 39.3%, indicating increasing tax liabilities or adjustments potentially tied to revenue or profit growth.
- Cash Operating Taxes
- Cash operating taxes displayed a similar upward trajectory, despite some fluctuations. The value started at 717,833 thousand US dollars in 2020 and decreased in 2021 to 545,605 thousand US dollars, a reduction of approximately 24%. In 2022, cash operating taxes increased sharply to 791,620 thousand US dollars, exceeding the 2020 level by roughly 10.3%. This growth continued, with values rising to 908,014 in 2023 and 948,147 thousand US dollars in 2024. From 2022 to 2024, there was an incremental increase of around 19.8%, reflecting higher tax payments possibly associated with improved operational results or changes in tax regulations.
Overall, both provisions for income taxes and cash operating taxes show a pattern of initial decline between 2020 and 2021, followed by a consistent and significant increase through 2024. This suggests a possible recovery or expansion phase after 2021, with increasing taxable income or shifts in tax policies impacting the tax expenses.
Invested Capital
Sherwin-Williams Co., invested capital calculation (financing approach)
US$ in thousands
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 LIFO reserve. See details »
5 Addition of accrual for product warranty claims.
6 Addition of restructuring Plan.
7 Addition of equity equivalents to shareholders’ equity.
8 Removal of accumulated other comprehensive income.
9 Subtraction of construction in progress.
- Total reported debt & leases
- The total reported debt and leases have generally increased over the years, starting from approximately $10.11 billion in 2020 and reaching about $12.10 billion by 2024. Notably, there was a steady rise from 2020 to 2022, peaking at around $12.51 billion. Following this peak, a slight decrease was observed in 2023, with a minor uptick again in 2024. This pattern suggests a tendency toward increasing leverage, with some adjustments made after 2022.
- Shareholders’ equity
- Shareholders’ equity exhibited volatility during the period analyzed. It decreased markedly from approximately $3.61 billion in 2020 to $2.44 billion in 2021, indicating a significant reduction in net assets. However, from 2021 onwards, equity increased steadily, rising to about $4.05 billion by 2024. This recovery and growth imply a restoration of financial strength and potentially improved profitability or capital infusion after the initial decline.
- Invested capital
- The invested capital demonstrated an overall upward trend, increasing from around $15.49 billion in 2020 to approximately $16.71 billion in 2024. There was a peak in 2022 at $17.35 billion, followed by a decline in 2023, and a slight recovery in 2024. The fluctuations in invested capital reflect changes in the company's operational investments and financing structure, consistent with the movements seen in debt and equity during the same periods.
Cost of Capital
Sherwin-Williams Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (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 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt and finance lease liabilities3 | ÷ | = | × | × (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 Debt and finance lease liabilities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Sherwin-Williams Co., 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 thousands) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Linde plc | ||||||
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 Margin
Sherwin-Williams Co., 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 thousands) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Linde plc | ||||||
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 sales
= 100 × ÷ =
3 Click competitor name to see calculations.