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 – 14.78% × 16,003 = 135
The financial trajectory from 2019 to 2024 reveals a significant cycle of value erosion followed by a strategic recovery, culminating in the achievement of positive economic profit. The period was marked by an initial phase of volatility and substantial losses in economic value, which transitioned into a steady upward trend in operational profitability and capital efficiency.
- Net Operating Profit After Taxes (NOPAT)
- A sharp contraction in NOPAT occurred in 2020, falling from 1,850 million USD to 665 million USD. This decline was followed by a consistent year-over-year increase, reaching a peak of 2,500 million USD by June 2024. This trajectory indicates a robust recovery of operational earning power, with 2024 figures significantly exceeding the 2019 baseline.
- Invested Capital
- Invested capital experienced a significant surge in 2020, peaking at 18,092 million USD. Following this peak, a period of contraction and stabilization occurred between 2021 and 2023, with values hovering around 14 billion USD. A renewed increase is observed in 2024, with invested capital rising to 16,003 million USD, suggesting a recent expansion of the asset base.
- Cost of Capital
- The cost of capital remained relatively stable throughout the analyzed period, fluctuating within a range of 12.83% to 15.39%. The absence of a strong directional trend suggests a consistent cost of funding and a stable risk profile over the six-year horizon.
- Economic Profit
- Economic profit exhibited a profound turnaround from value destruction to value creation. After reaching a nadir of -1,656 million USD in 2020, the figure improved steadily as NOPAT grew and invested capital stabilized. The transition to positive economic profit was achieved in 2023 at 27 million USD and strengthened to 135 million USD in 2024, signaling that the return on invested capital has successfully surpassed the cost of capital.
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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.
A comprehensive review of the financial performance between June 2019 and June 2024 reveals a distinct V-shaped recovery pattern in both net earnings and net operating profit after taxes (NOPAT).
- Net Earnings Trends
- A significant contraction occurred in 2020, where net earnings fell from 1,674 million US$ to 215 million US$. Following this trough, a consistent upward trajectory is observed, with values increasing each subsequent year to reach a peak of 1,955 million US$ by June 2024.
- NOPAT Performance
- The NOPAT followed a similar trajectory, dropping from 1,850 million US$ in 2019 to 665 million US$ in 2020. However, the subsequent recovery was robust, with NOPAT increasing from 861 million US$ in 2021 to 2,500 million US$ in 2024, indicating a strong restoration and expansion of core operational profitability.
- Comparative Analysis of Earnings and Operating Profit
- Throughout the entire reporting period, NOPAT consistently remained higher than net earnings. This variance is most pronounced in 2024, where NOPAT exceeded net earnings by 545 million US$. The persistent gap between the two metrics suggests that non-operating items, such as interest expenses or other non-core financial costs, have consistently reduced the final net income relative to the operational profit generated.
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Cash Operating Taxes
Sysco Corp., cash operating taxes calculation
US$ 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).
An analysis of tax expenditures from 2019 to 2024 reveals a period of initial volatility followed by a sustained upward trajectory in both tax provisions and actual cash outflows. While both metrics experienced a decline in the early part of the period, they have since ascended to levels that exceed the initial 2019 figures.
- Cash Operating Taxes Trend
- Cash operating taxes decreased from 538 million US$ in 2019 to 358 million US$ in 2020. Subsequently, a consistent year-over-year increase is observed, with values rising from 408 million US$ in 2021 to a peak of 720 million US$ in 2024. This indicates a steady growth in actual cash tax outflows over the final four years of the analyzed period.
- Income Tax Provision Volatility
- The income tax provision exhibited more pronounced fluctuations than the cash taxes. A sharp decline occurred between 2019 and 2021, reaching a minimum of 61 million US$. This trough was followed by a rapid acceleration starting in 2022, where the provision rose to 388 million US$, eventually climbing to 610 million US$ by 2024.
- Comparative Analysis of Tax Metrics
- Cash operating taxes remained consistently higher than the income tax provision throughout the entire six-year period. The divergence was most acute in 2020 and 2021, during which cash tax payments significantly exceeded the accrued tax expenses recognized in the financial statements. By 2024, although both figures reached their period highs, the relative gap between cash payments and provisions tightened compared to the 2021 period.
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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.
Invested capital exhibited significant volatility between 2019 and 2024, characterized by a sharp peak in 2020 followed by a period of stabilization and a subsequent upward trend in the final fiscal year. The total invested capital rose from 12,842 million US dollars in 2019 to a peak of 18,092 million US dollars in 2020, before correcting to a range between 14,109 million and 14,339 million US dollars from 2021 to 2023. By June 29, 2024, invested capital increased again to 16,003 million US dollars.
- Debt and Lease Obligations
- Total reported debt and leases served as the primary driver for the fluctuations in invested capital. A substantial increase occurred between 2019 and 2020, where obligations grew from 8,704 million US dollars to 15,078 million US dollars. This was followed by a consistent deleveraging phase from 2021 through 2023, with debt levels declining to 11,166 million US dollars. However, this downward trend reversed in 2024, with debt and leases rising to 12,945 million US dollars.
- Shareholders' Equity Trends
- Shareholders' equity demonstrated an inverse relationship with debt during the initial period of volatility. Equity dropped sharply from 2,503 million US dollars in 2019 to 1,159 million US dollars in 2020. A recovery period ensued, peaking at 2,009 million US dollars in 2023, before a slight contraction to 1,860 million US dollars in 2024. The equity component remains significantly smaller than the debt component in the overall capital structure.
- Capital Composition and Stability
- The overall capital structure is heavily weighted toward debt. The surge in invested capital in 2020 was almost exclusively funded by increased debt and leases, as shareholders' equity decreased simultaneously. The stabilization of invested capital between 2021 and 2023 suggests a period of balanced capital management, while the 2024 increase indicates a renewed expansion of the capital base, driven primarily by a 16% increase in reported debt and leases compared to the previous year.
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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 | × | 18.44% | = | 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 | 14.78% | ||||||||||
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 | × | 18.44% | = | 14.19% | ||
| 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 | 14.98% | ||||||||||
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 | × | 18.44% | = | 14.57% | ||
| 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 | 15.26% | ||||||||||
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 | × | 18.44% | = | 13.69% | ||
| 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 | × | 18.44% | = | 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 | × | 18.44% | = | 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 | 15.39% | ||||||||||
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 | 135) | 27) | (396) | (1,228) | (1,656) | (126) | |
| Invested capital2 | 16,003) | 14,268) | 14,109) | 14,339) | 18,092) | 12,842) | |
| Performance Ratio | |||||||
| Economic spread ratio3 | 0.84% | 0.19% | -2.81% | -8.56% | -9.15% | -0.98% | |
| Benchmarks | |||||||
| Economic Spread Ratio, Competitors4 | |||||||
| Costco Wholesale Corp. | 5.78% | 0.98% | 5.07% | 3.48% | — | — | |
| Target Corp. | -2.07% | -3.85% | 8.83% | -0.64% | — | — | |
| Walmart Inc. | 1.02% | -1.39% | -0.85% | 0.61% | — | — | |
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 × 135 ÷ 16,003 = 0.84%
4 Click competitor name to see calculations.
The financial performance from June 2019 to June 2024 indicates a significant transition from value destruction to value creation. The company experienced a period of substantial economic loss and negative spreads before achieving a trend of consistent recovery and returning to positive economic profitability in the final two years of the analyzed period.
- Economic Profit Trends
- A sharp decline in economic profit is observed between 2019 and 2020, falling from -126 million US$ to a peak deficit of -1,656 million US$. Following this trough, a steady recovery trajectory is evident, with losses narrowing to -1,228 million US$ in 2021 and -396 million US$ in 2022. The trend culminated in a shift to positive territory, recording 27 million US$ in 2023 and increasing to 135 million US$ by June 2024.
- Invested Capital Dynamics
- Invested capital exhibited notable volatility, peaking at 18,092 million US$ in 2020. This was followed by a contraction and period of relative stability between 2021 and 2023, where capital hovered between 14,109 million US$ and 14,339 million US$. In 2024, invested capital increased to 16,003 million US$, indicating a renewed expansion of the capital base coinciding with improved profitability.
- Economic Spread Ratio Evolution
- The economic spread ratio reflects a mirrored pattern to economic profit, plummeting to -9.15% in 2020. The ratio showed consistent improvement over the subsequent years, moving to -8.56% in 2021 and -2.81% in 2022. The break-even point was surpassed in 2023 with a ratio of 0.19%, reaching 0.84% in 2024. This progression signifies that the return on invested capital began to exceed the weighted average cost of capital starting in 2023.
The correlation between the increasing economic spread ratio and the positive shift in economic profit suggests an improvement in operational efficiency and capital allocation. The ability to maintain a positive spread while increasing invested capital in 2024 indicates a sustainable trajectory of economic value addition.
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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 | 135) | 27) | (396) | (1,228) | (1,656) | (126) | |
| Sales | 78,844) | 76,325) | 68,636) | 51,298) | 52,893) | 60,114) | |
| Performance Ratio | |||||||
| Economic profit margin2 | 0.17% | 0.03% | -0.58% | -2.39% | -3.13% | -0.21% | |
| Benchmarks | |||||||
| Economic Profit Margin, Competitors3 | |||||||
| Costco Wholesale Corp. | 0.76% | 0.14% | 0.72% | 0.52% | — | — | |
| Target Corp. | -0.66% | -1.07% | 2.51% | -0.21% | — | — | |
| Walmart Inc. | 0.25% | -0.34% | -0.23% | 0.18% | — | — | |
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 × 135 ÷ 78,844 = 0.17%
3 Click competitor name to see calculations.
The financial performance from 2019 to 2024 is characterized by a significant period of economic value destruction followed by a sustained recovery and a transition into positive value creation.
- Economic Profit Trends
- Economic profit experienced a severe contraction between 2019 and 2020, dropping from -126 million USD to a trough of -1,656 million USD. A consistent recovery trend emerged thereafter, with losses narrowing to -1,228 million USD in 2021 and -396 million USD in 2022. The company achieved a critical pivot in 2023, posting a positive economic profit of 27 million USD, which further expanded to 135 million USD by June 2024.
- Sales Volume and Revenue Growth
- Revenue trajectories closely align with the economic profit recovery. Sales declined from 60,114 million USD in 2019 to a low of 51,298 million USD in 2021. A strong rebound followed, with sales increasing to 68,636 million USD in 2022 and continuing an upward trend to reach 78,844 million USD by 2024.
- Economic Profit Margin Analysis
- The economic profit margin reflects the company's ability to generate returns above its cost of capital. The margin deteriorated sharply to -3.13% in 2020, indicating substantial value destruction. Subsequent improvements saw the margin rise to -2.39% in 2021 and -0.58% in 2022. The transition to value creation was finalized in 2023 with a margin of 0.03%, culminating in a margin of 0.17% in 2024.
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