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
Chevron Corp., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 13,042 – 12.54% × 274,202 = -21,344
The analysis of economic profit reveals a volatile trend characterized by a significant outlier in 2022 and a sharp deterioration in value creation toward 2025. For the majority of the analyzed period, the entity failed to generate returns exceeding its cost of capital, indicating a consistent destruction of economic value.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited extreme volatility, peaking at 41,794 million in 2022 before retreating to 19,473 million in 2023. A further decline is observed in 2025, where profit dropped to 13,042 million, representing the lowest level within the period.
- Cost of Capital
- The cost of capital remained relatively stable throughout the five-year span, fluctuating within a narrow range between 12.27% and 12.79%. This stability suggests that the fluctuations in economic profit were driven by operational performance and capital allocation rather than changes in the required rate of return.
- Invested Capital
- Invested capital showed moderate growth between 2021 and 2024, holding steady between 193,606 million and 212,342 million. However, a substantial increase is noted in 2025, with invested capital rising to 274,202 million.
- Economic Profit
- Economic profit was negative in 2021, 2023, 2024, and 2025. The sole positive outcome occurred in 2022, reaching 14,643 million, directly correlating with the spike in NOPAT. The most severe economic loss occurred in 2025, with economic profit falling to -21,344 million, a result of the simultaneous decline in NOPAT and the sharp increase in the capital base.
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Net Operating Profit after Taxes (NOPAT)
Chevron Corp., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrued severance liability.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Chevron Corporation.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 5,985 × 4.00% = 239
7 2025 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 1,456 × 21.00% = 306
8 Addition of after taxes interest expense to net income attributable to Chevron Corporation.
Net income attributable to Chevron Corporation and Net Operating Profit After Taxes (NOPAT) exhibited significant fluctuations between 2021 and 2025. NOPAT demonstrated a substantial increase in 2022, followed by a decline in subsequent years, while net income mirrored this pattern, albeit with differing magnitudes.
- NOPAT Trend
- NOPAT increased markedly from US$19,443 million in 2021 to US$41,794 million in 2022, representing a growth of over 115%. This was followed by a decrease to US$19,473 million in 2023, nearly returning to the 2021 level. A slight increase to US$20,090 million occurred in 2024, but NOPAT then decreased again in 2025, reaching US$13,042 million. This final value represents a substantial decline from the 2022 peak and is the lowest value observed within the analyzed period.
- Net Income Trend
- Net income attributable to Chevron Corporation showed a similar pattern of volatility. It rose significantly from US$15,625 million in 2021 to US$35,465 million in 2022, a more than doubling of the prior year’s result. A substantial decrease was then observed in 2023, with net income falling to US$21,369 million. Further declines occurred in 2024 (US$17,661 million) and 2025 (US$12,299 million), resulting in a final value that is lower than the 2021 level.
- Relationship between NOPAT and Net Income
- While both metrics moved in the same direction over the period, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for NOPAT than for net income. Conversely, the declines from 2022 to 2025 were relatively more significant for net income. This suggests that factors impacting net income beyond core operating profitability, such as non-operating items or tax provisions, may have played a more substantial role in the latter part of the period.
The observed trends indicate a period of high profitability in 2022, followed by a consistent decline in both NOPAT and net income. The decrease in NOPAT from 2022 to 2025 warrants further investigation to determine the underlying drivers, such as changes in revenue, operating costs, or tax rates.
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Cash Operating Taxes
Chevron Corp., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported income tax expense and cash operating taxes exhibit significant fluctuations over the five-year period. A substantial increase in both metrics is observed between 2021 and 2022, followed by a decrease in 2023, and a moderate increase in 2024 before declining again in 2025.
- Income Tax Expense
- Income tax expense increased markedly from US$5,950 million in 2021 to US$14,066 million in 2022. This represents a more than 136% increase. A subsequent decrease to US$8,173 million occurred in 2023, followed by a rise to US$9,757 million in 2024. The final year, 2025, saw a further reduction to US$7,258 million. The volatility suggests a strong correlation with underlying profitability and potentially changes in applicable tax rates or tax planning strategies.
- Cash Operating Taxes
- Cash operating taxes mirrored the trend of income tax expense. An increase from US$5,416 million in 2021 to US$12,067 million in 2022 was observed, representing a 123% increase. A decrease to US$7,986 million followed in 2023, with a subsequent increase to US$8,681 million in 2024. Finally, cash operating taxes decreased to US$6,579 million in 2025. The close alignment between cash operating taxes and income tax expense indicates that the company’s actual cash outflows for taxes are closely tied to its reported taxable income.
The difference between income tax expense and cash operating taxes, while generally small, suggests the presence of deferred tax items or other non-cash tax effects. The consistency of this difference across the period indicates a stable approach to tax accounting. The fluctuations in both measures highlight the sensitivity of the company’s tax burden to changes in earnings and external tax factors.
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Invested Capital
Chevron Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 accrued severance liability.
6 Addition of equity equivalents to total Chevron Corporation stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
The invested capital of the corporation exhibited an overall increasing trend between 2021 and 2025, though with some fluctuation. Total reported debt & leases and total stockholders’ equity both contribute to the calculation of invested capital, and their individual movements influence the overall trend.
- Invested Capital Trend
- Invested capital began at US$193,606 million in 2021, increasing to US$212,342 million in 2022. It remained relatively stable in 2023 at US$212,337 million before decreasing slightly to US$208,395 million in 2024. A significant increase was then observed in 2025, reaching US$274,202 million.
- Debt & Leases
- Total reported debt & leases decreased from US$34,872 million in 2021 to US$27,370 million in 2022, continuing to US$26,070 million in 2023. An increase was noted in 2024, rising to US$29,611 million, followed by a substantial increase to US$46,743 million in 2025. This represents the largest single-year increase in this metric over the observed period.
- Stockholders’ Equity
- Total stockholders’ equity increased from US$139,067 million in 2021 to US$159,282 million in 2022, and further to US$160,957 million in 2023. A decrease was observed in 2024, falling to US$152,318 million, before rising significantly to US$186,450 million in 2025.
The substantial increase in invested capital in 2025 appears to be driven by concurrent increases in both debt & leases and stockholders’ equity. The decrease in invested capital from 2023 to 2024 is attributable to a decrease in stockholders’ equity, partially offset by a slight increase in debt & leases. The earlier increases in invested capital from 2021 to 2023 were supported by increases in both components, though stockholders’ equity contributed more significantly to the growth.
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Cost of Capital
Chevron Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 369,825) | 369,825) | ÷ | 415,997) | = | 0.89 | 0.89 | × | 13.67% | = | 12.15% | ||
| Debt3 | 40,187) | 40,187) | ÷ | 415,997) | = | 0.10 | 0.10 | × | 4.52% × (1 – 21.00%) | = | 0.34% | ||
| Operating lease liability4 | 5,985) | 5,985) | ÷ | 415,997) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 415,997) | 1.00 | 12.54% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 276,273) | 276,273) | ÷ | 304,336) | = | 0.91 | 0.91 | × | 13.67% | = | 12.41% | ||
| Debt3 | 22,993) | 22,993) | ÷ | 304,336) | = | 0.08 | 0.08 | × | 2.91% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 5,070) | 5,070) | ÷ | 304,336) | = | 0.02 | 0.02 | × | 3.70% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 304,336) | 1.00 | 12.63% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
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 | 286,855) | 286,855) | ÷ | 311,444) | = | 0.92 | 0.92 | × | 13.67% | = | 12.59% | ||
| Debt3 | 19,355) | 19,355) | ÷ | 311,444) | = | 0.06 | 0.06 | × | 2.94% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 5,234) | 5,234) | ÷ | 311,444) | = | 0.02 | 0.02 | × | 3.30% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 311,444) | 1.00 | 12.78% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
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 | 308,748) | 308,748) | ÷ | 334,155) | = | 0.92 | 0.92 | × | 13.67% | = | 12.63% | ||
| Debt3 | 21,376) | 21,376) | ÷ | 334,155) | = | 0.06 | 0.06 | × | 2.79% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 4,031) | 4,031) | ÷ | 334,155) | = | 0.01 | 0.01 | × | 1.90% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 334,155) | 1.00 | 12.79% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
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 | 262,628) | 262,628) | ÷ | 298,265) | = | 0.88 | 0.88 | × | 13.67% | = | 12.03% | ||
| Debt3 | 32,134) | 32,134) | ÷ | 298,265) | = | 0.11 | 0.11 | × | 2.56% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 3,503) | 3,503) | ÷ | 298,265) | = | 0.01 | 0.01 | × | 2.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 298,265) | 1.00 | 12.27% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Chevron Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (21,344) | (6,227) | (7,655) | 14,643) | (4,316) | |
| Invested capital2 | 274,202) | 208,395) | 212,337) | 212,342) | 193,606) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -7.78% | -2.99% | -3.61% | 6.90% | -2.23% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| ConocoPhillips | 0.22% | 1.16% | 6.82% | 19.56% | 5.24% | |
| Exxon Mobil Corp. | -1.54% | -0.77% | 3.34% | 12.10% | 3.46% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -21,344 ÷ 274,202 = -7.78%
4 Click competitor name to see calculations.
The analysis of economic value creation between 2021 and 2025 reveals a period of significant volatility and a general inability to consistently generate returns above the cost of capital. Economic profit remained negative for four of the five years analyzed, with a notable exception in 2022. This suggests that for the majority of the period, the company did not create economic value for its shareholders.
- Economic Spread Ratio Trends
- The economic spread ratio demonstrates extreme fluctuations, beginning at -2.23% in 2021 before surging to a peak of 6.90% in 2022. Following this peak, the ratio reverted to negative territory, recording -3.61% in 2023 and -2.99% in 2024. A sharp deterioration is observed in 2025, where the ratio reached its lowest point at -7.78%, indicating a substantial widening of the gap between the return on invested capital and the cost of capital.
- Economic Profit Volatility
- Economic profit shows a highly unstable trajectory. A significant positive spike to 14,643 million US$ occurred in 2022, contrasting sharply with the losses recorded in other years. The trend concludes with a severe decline in 2025, where economic profit fell to -21,344 million US$, representing the most significant loss in the observed timeframe.
- Invested Capital and Value Erosion
- Invested capital remained relatively stable between 2021 and 2024, fluctuating between approximately 193,606 million US$ and 212,342 million US$. However, a substantial increase in invested capital is observed in 2025, rising to 274,202 million US$. This increase in capital coincided with the sharpest decline in economic profit and the most negative economic spread ratio, suggesting that the additional capital deployed did not yield a proportional increase in returns, thereby accelerating the erosion of economic value.
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Economic Profit Margin
Chevron Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (21,344) | (6,227) | (7,655) | 14,643) | (4,316) | |
| Sales and other operating revenues | 184,432) | 193,414) | 196,913) | 235,717) | 155,606) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -11.57% | -3.22% | -3.89% | 6.21% | -2.77% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| ConocoPhillips | 0.39% | 2.26% | 9.87% | 18.82% | 8.72% | |
| Exxon Mobil Corp. | -1.77% | -0.86% | 3.06% | 9.02% | 3.41% | |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × -21,344 ÷ 184,432 = -11.57%
3 Click competitor name to see calculations.
The analysis of economic value added reveals a period of significant volatility, characterized by a singular year of positive economic profit followed by a progressive decline into deeper negative territory. The overall trend indicates an increasing inability to generate returns above the company's cost of capital over the five-year period.
- Economic Profit Performance
- Economic profit exhibited extreme fluctuations, beginning at -4,316 million US dollars in 2021 before spiking to a peak of 14,643 million US dollars in 2022. This positive trajectory was short-lived, as the figures returned to negative values in 2023 (-7,655 million US dollars) and 2024 (-6,227 million US dollars). A substantial deterioration occurred in 2025, with economic profit falling to its lowest point of -21,344 million US dollars.
- Revenue Correlation
- Sales and other operating revenues show a strong correlation with the economic profit peak. Revenues surged from 155,606 million US dollars in 2021 to a high of 235,717 million US dollars in 2022. Since that peak, there has been a consistent downward trajectory, with revenues declining to 196,913 million US dollars in 2023, 193,414 million US dollars in 2024, and 184,432 million US dollars in 2025.
- Economic Profit Margin Analysis
- The economic profit margin reflects the volatility observed in absolute profit figures. After starting at -2.77% in 2021, the margin shifted to a positive 6.21% in 2022, indicating that the company successfully created economic value during that fiscal year. However, the margin reverted to negative values in 2023 (-3.89%) and 2024 (-3.22%). The period concluded with a sharp contraction in 2025, where the margin dropped to -11.57%, signaling a significant widening gap between the operating returns and the required cost of capital.
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