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
Sysco Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
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
= 2,500 – 14.79% × 16,003 = 134
The financial trajectory over the analyzed period reveals a significant recovery phase, transitioning from a period of substantial value destruction to the generation of positive economic profit. A critical inflection point occurred between 2020 and 2023, where the company moved from severe deficits in economic value added toward a state of value creation.
- Net Operating Profit After Taxes (NOPAT) Trends
- A sharp decline in NOPAT is observed in 2020, falling to 665 million from 1,850 million in the previous year. This contraction initiated a period of volatility, followed by a consistent and aggressive upward trend from 2021 through 2024. By June 29, 2024, NOPAT reached a peak of 2,500 million, indicating a strong recovery in operational profitability and an ability to scale earnings significantly above pre-crisis levels.
- Invested Capital and Cost of Capital Dynamics
- Invested capital saw a substantial spike in 2020, increasing to 18,092 million, which coincided with the lowest NOPAT levels. This increase in the capital base, paired with a cost of capital that remained relatively stable between 12.83% and 15.40%, exerted significant downward pressure on economic profit. Following 2020, invested capital was reduced and stabilized around 14,000 million before rising again to 16,003 million in 2024.
- Economic Profit Analysis
- Economic profit exhibited a deep trough in 2020, reaching a deficit of 1,657 million. This represents a period where the return on invested capital was insufficient to cover the cost of capital. A steady recovery followed, with losses narrowing in 2021 and 2022. The transition to positive economic profit was achieved in 2023 (26 million) and further strengthened in 2024 (134 million). This shift confirms that the growth in NOPAT has outpaced the growth in the cost of capital charges associated with the invested capital base.
The overall pattern suggests an effective operational turnaround. The company successfully managed to increase its operating profits while stabilizing its capital structure, ultimately reversing a trend of value erosion to achieve a positive economic profit by the end of the observed period.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Sysco Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for credit losses.
3 Addition of increase (decrease) in equity equivalents to net earnings.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 963 × 4.19% = 40
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 647 × 21.00% = 136
6 Addition of after taxes interest expense to net earnings.
The financial data reveals significant fluctuations in the profitability metrics over the examined periods. Net earnings decreased sharply from 1674 million USD in June 2019 to 215 million USD in June 2020, reflecting a substantial decline likely influenced by external challenges. This was followed by a partial recovery to 524 million USD in July 2021 and a more pronounced increase to 1359 million USD in July 2022. The upward trend continued with net earnings reaching 1770 million USD in July 2023 and further rising to 1955 million USD by June 2024, indicating a steady restoration and growth in earnings performance.
Similarly, Net Operating Profit After Taxes (NOPAT) demonstrated a comparable trajectory. It declined from 1850 million USD in June 2019 to 665 million USD in June 2020, evidencing a significant contraction in operating profitability. Subsequently, NOPAT showed a moderate increase to 861 million USD in July 2021, followed by a substantial recovery and growth to 1757 million USD in July 2022. This positive momentum persisted with NOPAT rising to 2164 million USD in July 2023 and reaching 2500 million USD by June 2024.
Overall, the data indicates that while profitability metrics experienced a notable downturn around mid-2020, the company has since achieved a strong and consistent rebound in operating and net earnings. The improvement in NOPAT outpaces the growth in net earnings, suggesting enhanced operational efficiency or favorable tax impacts in the more recent periods. The upward trajectory in both measures over the last few reported years points to robust financial recovery and strengthening profitability.
AI Ask an analyst for more
Cash Operating Taxes
Sysco Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
The analysis of the annual financial data reveals significant fluctuations and trends in both the income tax provision and cash operating taxes over the six-year period.
- Income Tax Provision
- The income tax provision exhibits a notable decline from 332 million USD in 2019 to 78 million USD in 2020, followed by a further decrease to 61 million USD in 2021. However, there is a marked reversal in this trend starting in 2022, with the provision rising sharply to 388 million USD, and continuing to increase in subsequent years, reaching 515 million USD in 2023 and 610 million USD in 2024. This pattern suggests an initial reduction in tax obligations or tax-related benefits during the 2020 and 2021 periods, potentially related to external economic factors or tax law changes, followed by a substantial increase in tax liability or accrual in more recent years.
- Cash Operating Taxes
- Cash operating taxes show a different trajectory. Beginning at 538 million USD in 2019, these amounts decline to 358 million USD in 2020, indicating a reduction in actual tax payments. However, starting in 2021, cash operating taxes increase to 408 million USD, continuing an upward trend to 588 million USD in 2022, 648 million USD in 2023, and reaching 720 million USD in 2024. This consistent rise from 2021 onwards points to increasing cash tax outflows, which may be linked to higher taxable income, changes in tax regulations, or improved cash management strategies aimed at timely tax payments.
Overall, the data suggest a period of reduced income tax provision and cash tax payments during the early years, particularly around 2020 and 2021, possibly reflecting the impact of economic disruptions or tax relief measures during this time. From 2022 onward, both the income tax provision and cash operating taxes have increased significantly, which may indicate recovery and higher profitability, as well as evolving tax obligations. The divergence and subsequent convergence of these two metrics highlight important dynamics in tax accounting and cash flow management over the analyzed period.
AI Ask an analyst for more
Invested Capital
Sysco Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
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 shareholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The financial data indicates notable fluctuations and trends in the company's capital structure and financial position over the six-year period.
- Total Reported Debt & Leases
- The company experienced a significant increase in total reported debt and leases from US$8,704 million in 2019 to a peak of US$15,078 million in 2020. This was followed by a declining trend over the next three years, dropping to US$11,166 million by 2023. However, in 2024, debt levels rose again to US$12,945 million. The initial sharp rise may reflect increased borrowing or lease commitments possibly linked to strategic investments or market conditions, while the subsequent decline suggests deleveraging efforts or repayment activities. The rise in 2024 indicates renewed leverage or financing needs.
- Shareholders’ Equity
- Shareholders' equity displayed considerable volatility during the period. It drastically decreased from US$2,503 million in 2019 to a low of US$1,159 million in 2020. This was followed by a recovery phase with equity rising to US$2,009 million in 2023, before slightly declining to US$1,860 million in 2024. The sharp drop in 2020 could be indicative of losses incurred, dividend distributions exceeding earnings, or other equity-reducing events. The subsequent recovery implies profitability improvements or capital injections, but the decrease in 2024 suggests some reduction in equity possibly due to changes in retained earnings or other comprehensive income.
- Invested Capital
- Invested capital saw a marked increase from US$12,842 million in 2019 to a high of US$18,092 million in 2020. After this peak, it decreased to around US$14,100-14,300 million in the following three years before increasing again to US$16,003 million in 2024. This pattern mirrors the debt trends, suggesting that invested capital is largely influenced by changes in financing levels, particularly debt components. The peak in 2020 likely reflects significant capital deployment or acquisition activity, while the partial decline afterward suggests consolidation or divestiture activities. The increase in 2024 points to renewed investment or asset growth.
Overall, the data suggest a period of heightened leverage and capital investment around 2020, followed by a phase of stabilization and partial deleveraging. Equity experienced notable volatility, reflecting changes in company profitability and capital management practices. The recent uptick in debt and invested capital in 2024 may indicate strategic initiatives or market responses requiring increased financing.
AI Ask an analyst for more
Cost of Capital
Sysco Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,685) | 37,685) | ÷ | 50,048) | = | 0.75 | 0.75 | × | 18.45% | = | 13.89% | ||
| Debt3 | 11,400) | 11,400) | ÷ | 50,048) | = | 0.23 | 0.23 | × | 4.62% × (1 – 21.00%) | = | 0.83% | ||
| Operating lease liability4 | 963) | 963) | ÷ | 50,048) | = | 0.02 | 0.02 | × | 4.19% × (1 – 21.00%) | = | 0.06% | ||
| Total: | 50,048) | 1.00 | 14.79% | ||||||||||
Based on: 10-K (reporting date: 2024-06-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,224) | 35,224) | ÷ | 45,779) | = | 0.77 | 0.77 | × | 18.45% | = | 14.20% | ||
| Debt3 | 9,800) | 9,800) | ÷ | 45,779) | = | 0.21 | 0.21 | × | 4.44% × (1 – 21.00%) | = | 0.75% | ||
| Operating lease liability4 | 755) | 755) | ÷ | 45,779) | = | 0.02 | 0.02 | × | 3.31% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 45,779) | 1.00 | 14.99% | ||||||||||
Based on: 10-K (reporting date: 2023-07-01).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 42,326) | 42,326) | ÷ | 53,568) | = | 0.79 | 0.79 | × | 18.45% | = | 14.58% | ||
| Debt3 | 10,500) | 10,500) | ÷ | 53,568) | = | 0.20 | 0.20 | × | 4.26% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 742) | 742) | ÷ | 53,568) | = | 0.01 | 0.01 | × | 2.85% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 53,568) | 1.00 | 15.27% | ||||||||||
Based on: 10-K (reporting date: 2022-07-02).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 40,449) | 40,449) | ÷ | 54,486) | = | 0.74 | 0.74 | × | 18.45% | = | 13.70% | ||
| Debt3 | 13,300) | 13,300) | ÷ | 54,486) | = | 0.24 | 0.24 | × | 4.40% × (1 – 21.00%) | = | 0.85% | ||
| Operating lease liability4 | 737) | 737) | ÷ | 54,486) | = | 0.01 | 0.01 | × | 2.84% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 54,486) | 1.00 | 14.57% | ||||||||||
Based on: 10-K (reporting date: 2021-07-03).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 29,241) | 29,241) | ÷ | 46,171) | = | 0.63 | 0.63 | × | 18.45% | = | 11.68% | ||
| Debt3 | 16,300) | 16,300) | ÷ | 46,171) | = | 0.35 | 0.35 | × | 4.03% × (1 – 21.00%) | = | 1.12% | ||
| Operating lease liability4 | 631) | 631) | ÷ | 46,171) | = | 0.01 | 0.01 | × | 2.37% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 46,171) | 1.00 | 12.83% | ||||||||||
Based on: 10-K (reporting date: 2020-06-27).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 37,642) | 37,642) | ÷ | 46,782) | = | 0.80 | 0.80 | × | 18.45% | = | 14.84% | ||
| Debt3 | 8,600) | 8,600) | ÷ | 46,782) | = | 0.18 | 0.18 | × | 3.58% × (1 – 21.00%) | = | 0.52% | ||
| Operating lease liability4 | 541) | 541) | ÷ | 46,782) | = | 0.01 | 0.01 | × | 3.58% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 46,782) | 1.00 | 15.40% | ||||||||||
Based on: 10-K (reporting date: 2019-06-29).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Sysco Corp., economic spread ratio calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 134) | 26) | (397) | (1,229) | (1,657) | (127) | |
| Invested capital2 | 16,003) | 14,268) | 14,109) | 14,339) | 18,092) | 12,842) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 0.84% | 0.18% | -2.82% | -8.57% | -9.16% | -0.99% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 6.50% | 1.70% | 5.78% | 4.18% | 0.42% | — | |
| Target Corp. | -2.09% | -3.86% | 8.82% | -0.66% | — | — | |
| Walmart Inc. | 1.06% | -1.35% | -0.81% | 0.65% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 134 ÷ 16,003 = 0.84%
4 Click competitor name to see calculations.
An analysis of the financial performance between June 2019 and June 2024 reveals a significant recovery cycle, transitioning from a period of substantial value destruction to consistent value creation. The trajectory is characterized by a sharp decline in economic performance peaking in 2020, followed by a multi-year recovery phase that culminated in positive economic outcomes by 2023.
- Economic Spread Ratio Trends
- The economic spread ratio exhibited extreme volatility, dropping from -0.99% in 2019 to a trough of -9.16% in 2020. This indicates a period where the return on invested capital was significantly lower than the cost of capital. A consistent upward trend followed, with the ratio improving to -8.57% in 2021 and -2.82% in 2022. The ratio reached a critical inflection point in 2023, turning positive at 0.18%, and further strengthened to 0.84% by June 2024, signaling that the entity is now generating returns in excess of its cost of capital.
- Economic Profit Evolution
- Economic profit mirrored the spread ratio, recording a severe contraction to -1,657 million USD in 2020. The subsequent years demonstrate a steady reclamation of value, with losses narrowing to -1,229 million USD in 2021 and -397 million USD in 2022. The transition to positive economic profit occurred in 2023 at 26 million USD and expanded to 134 million USD in 2024, confirming a reversal in the trend of value erosion.
- Invested Capital Dynamics
- Invested capital experienced a sharp increase in 2020, rising to 18,092 million USD, which coincided with the lowest point of the economic spread ratio. This suggests that the increase in capital deployment during that period did not yield immediate proportional returns. Following this peak, invested capital stabilized between 14,109 million USD and 14,339 million USD from 2021 to 2023, before increasing to 16,003 million USD in 2024. The fact that economic profit turned positive despite this recent increase in capital suggests improved operational efficiency and a higher quality of capital deployment.
AI Ask an analyst for more
Economic Profit Margin
Sysco Corp., economic profit margin calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Economic profit1 | 134) | 26) | (397) | (1,229) | (1,657) | (127) | |
| Sales | 78,844) | 76,325) | 68,636) | 51,298) | 52,893) | 60,114) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.17% | 0.03% | -0.58% | -2.40% | -3.13% | -0.21% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.86% | 0.25% | 0.82% | 0.62% | 0.07% | — | |
| Target Corp. | -0.67% | -1.07% | 2.51% | -0.21% | — | — | |
| Walmart Inc. | 0.26% | -0.33% | -0.22% | 0.19% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales
= 100 × 134 ÷ 78,844 = 0.17%
3 Click competitor name to see calculations.
The financial performance between 2019 and 2024 exhibits a distinct V-shaped recovery, transitioning from a period of significant value destruction to a state of value creation. The data indicates a critical trough in 2020, followed by a sustained upward trajectory in both absolute economic profit and margins.
- Economic Profit Trends
- A substantial decline in economic profit is observed in 2020, where the figure dropped to negative US$1,657 million. This period of value erosion gradually diminished over the following two years, with losses narrowing to negative US$1,229 million in 2021 and negative US$397 million in 2022. A pivotal shift occurred in 2023 as economic profit turned positive at US$26 million, further increasing to US$134 million by June 2024.
- Revenue Correlation
- Sales demonstrated significant volatility, experiencing a contraction from US$60,114 million in 2019 to a low of US$51,298 million in 2021. This decline coincided with the period of maximum economic loss. Subsequently, a strong growth phase was initiated, with sales rising to US$68,636 million in 2022 and continuing an upward trend to reach US$78,844 million by 2024, providing the necessary scale to support the return to positive economic profit.
- Economic Profit Margin Evolution
- The economic profit margin mirrored the absolute profit trends, reaching a minimum of -3.13% in 2020. A consistent recovery pattern is evident from 2021 onward, with the margin improving to -2.40% in 2021 and -0.58% in 2022. The transition to positive value creation was finalized in 2023 with a margin of 0.03%, which expanded to 0.17% in 2024, signaling that the returns on capital have surpassed the company's cost of capital.
AI Ask an analyst for more