Economic Value Added (EVA)
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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.
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Chevron Corp. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Analysis of Revenues
- Aggregate Accruals
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Economic Profit
Chevron Corp., economic profit calculation
US$ in millions
| 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
= – × =
The financial data exhibits notable fluctuations in key performance metrics over the five-year period. The net operating profit after taxes (NOPAT) demonstrates significant volatility, with a substantial loss recorded in 2020, followed by a sharp recovery peaking in 2022, and then declining again in the subsequent two years while remaining positive.
- Net Operating Profit After Taxes (NOPAT)
- Initially, NOPAT was negative in 2020 at approximately -10.3 billion US dollars. This was followed by a strong rebound to over 19.4 billion US dollars in 2021, and a further substantial increase to approximately 41.8 billion US dollars in 2022. However, the profitability contracted sharply thereafter, with 2023 and 2024 figures declining to roughly 19.5 billion and 20.1 billion US dollars respectively. Despite this decline, NOPAT remained positive in the latter years.
- Cost of Capital
- The cost of capital steadily increased from 13.04% in 2020 to a peak of 14.83% in 2022, followed by a slight decrease in 2023 and 2024 to 14.82% and 14.64% respectively. This gradual increase indicates a rising expense associated with capital over the period, with a marginal easing in the final two years.
- Invested Capital
- Invested capital showed a moderate but consistent upward trend from 197.3 billion US dollars in 2020 to a peak of 212.3 billion US dollars in both 2022 and 2023, before slightly decreasing to 208.4 billion US dollars in 2024. This suggests an overall increase in the asset base over the period, with a minor reduction in the final year.
- Economic Profit
- Economic profit was deeply negative in 2020 at approximately -36.0 billion US dollars and improved substantially in 2021 to a loss of about -8.1 billion US dollars, reflecting narrowing deficiencies. 2022 marked a positive economic profit of roughly 10.3 billion US dollars, reflecting value creation during that year. However, this positive trend was not sustained, with economic profit reverting to negative territory in 2023 and 2024, at approximately -12.0 billion and -10.4 billion US dollars respectively, indicating destruction of economic value in these years despite positive NOPAT figures.
Overall, while operating profit after taxes recovered sharply after 2020, the economic profit trend highlights challenges in generating value above the cost of capital in most years, except for 2022. The increasing cost of capital combined with fluctuating profitability underscores pressure on value creation. Invested capital expanded over the period but did not consistently translate into positive economic profit, raising concerns about capital efficiency or return on investment during the later years.
Net Operating Profit after Taxes (NOPAT)
Chevron Corp., NOPAT calculation
US$ in millions
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.
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 (loss) attributable to Chevron Corporation.
6 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2024 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss) attributable to Chevron Corporation.
The data reveals notable fluctuations in profitability metrics over the observed five-year period. Initially, both net income and net operating profit after taxes (NOPAT) were negative in 2020, indicating a challenging financial environment or operational difficulties that year.
A significant turnaround is apparent in 2021, where both net income and NOPAT transition to positive figures. Net income improves markedly from a loss of 5,543 million US dollars in 2020 to a gain of 15,625 million US dollars in 2021. Similarly, NOPAT moves from a negative 10,295 million US dollars to a positive 19,443 million US dollars. This change suggests improved operational performance and profitability.
The positive trend continues into 2022, with net income reaching its highest point at 35,465 million US dollars and NOPAT following suit with 41,794 million US dollars. This peak indicates a period of especially strong financial results, likely driven by favorable market conditions or operational efficiencies.
Subsequently, both metrics decrease in 2023 but remain positive, with net income declining to 21,369 million US dollars and NOPAT dropping to 19,473 million US dollars. Although reduced from the previous year, these levels still reflect solid profitability.
In 2024, the trend stabilizes with a slight decrease in net income to 17,661 million US dollars, while NOPAT marginally rises to 20,090 million US dollars. The relatively stable results in the final year suggest an adjustment phase or normalization after the previous years' volatility.
- Overall Trend
- Initially negative performance in 2020, followed by a significant recovery and peak in 2022, then a moderated but stable profitability in subsequent years.
- Net Income
- Shifted from a substantial loss in 2020 to a peak in 2022, followed by a decline though maintaining positive levels through 2024.
- Net Operating Profit After Taxes (NOPAT)
- Mirrored the net income pattern with negative values in 2020, peaking in 2022, and settling at stable positive levels thereafter.
- Financial Implications
- The significant improvements from 2020 to 2022 imply successful management initiatives or external factors favoring profitability, while the subsequent moderate decrease points to normalization or increased market pressures.
Cash Operating Taxes
Chevron Corp., cash operating taxes calculation
US$ in millions
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 financial data reveals a significant fluctuation in the income tax expense (benefit) over the five-year period ending December 31, 2024. In 2020, a negative income tax expense value indicates a tax benefit, contrasting sharply with subsequent years where the figures show a tax expense. The income tax expense rose markedly from 5,950 million USD in 2021 to a peak of 14,066 million USD in 2022. This was followed by a decline to 8,173 million USD in 2023, and then a slight increase to 9,757 million USD in 2024.
Cash operating taxes exhibit a broadly similar trend to income tax expense, with amounts generally increasing over the period. Starting from 1,885 million USD in 2020, cash operating taxes rose substantially to 5,416 million USD in 2021, nearly doubling to 12,067 million USD in 2022. Thereafter, cash operating taxes decreased to 7,986 million USD in 2023, before modestly rising again to 8,681 million USD in 2024.
- Income Tax Expense (Benefit)
- Displayed volatility between 2020 and 2024, with a reversal from a tax benefit in 2020 to substantial tax expenses in following years. This indicates varied taxable income or changes in tax-related factors.
- Cash Operating Taxes
- Demonstrated a consistent upward trajectory from 2020 to 2022, peaking in 2022, followed by a notable decline in 2023 and a partial rebound in 2024, reflecting fluctuations in operational taxable activities or possibly changes in tax rates or policy implementations.
- General Observation
- The parallel movement of income tax expense and cash operating taxes suggests alignment between accounting reported tax obligations and actual cash tax payments. Both measures peaked in 2022, indicating possibly the highest taxable earnings or less favorable tax conditions during that year, before adjusting downward in 2023 and slightly increasing thereafter.
Invested Capital
Chevron Corp., invested capital calculation (financing approach)
US$ in millions
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 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 data reveals several noteworthy trends across the financial metrics over the five-year period ending December 31, 2024.
- Total reported debt & leases
- There was a significant reduction in total reported debt and leases from 48,221 million US dollars in 2020 to 27,370 million in 2022. This downward trend continued in 2023 reaching 26,070 million, but there was a slight increase to 29,611 million in 2024. Overall, the company appears to have actively managed its debt, substantially lowering its obligations in the earlier years before a moderate rise in the final year.
- Total Chevron Corporation stockholders’ equity
- Stockholders' equity showed a consistent upward trajectory from 131,688 million US dollars in 2020 to a peak of 160,957 million in 2023. However, in 2024, equity decreased slightly to 152,318 million. This pattern suggests a generally healthy growth in equity, reflecting retained earnings or increases in capital, with a minor decline in the most recent year which could warrant further examination.
- Invested capital
- Invested capital experienced fluctuations during the period studied. It started at 197,314 million US dollars in 2020, saw a marginal decline to 193,606 million in 2021, followed by an increase to 212,342 million in 2022. The figure remained virtually unchanged in 2023 at 212,337 million, before slightly decreasing to 208,395 million in 2024. This indicates an overall stable level of capital investment, with periods of both expansion and modest contraction.
In summary, while debt levels decreased significantly in the initial years, there was a rebound in the latest year. Shareholders’ equity grew steadily until a slight pullback in the last year. Invested capital remained relatively stable with minor variations. These trends imply active financial management focusing on reducing leverage and maintaining shareholder value, with some adjustments apparent in the most recent period.
Cost of Capital
Chevron Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
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, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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
- The economic profit demonstrated significant volatility during the observed periods. In 2020, a substantial negative value of -36,026 million US dollars was recorded, improving notably to -8,095 million in 2021. The trend reversed positively in 2022 with an economic profit of 10,293 million US dollars. However, negative economic profits reappeared in 2023 and 2024, with values of -11,990 million and -10,421 million US dollars respectively, indicating ongoing challenges in generating excess returns above the cost of capital.
- Invested Capital
- Invested capital showed a general increase from 197,314 million US dollars in 2020 to a peak of 212,342 million in 2022. The capital stock stabilized around 212,337 million in 2023 but slightly decreased to 208,395 million US dollars by the end of 2024. This relatively stable capital base suggests moderate adjustments in investment levels after a period of growth.
- Economic Spread Ratio
- The economic spread ratio, reflecting the differential between return on invested capital and cost of capital, mirrored the economic profit trend. It was negative in 2020 and 2021 at -18.26% and -4.18% respectively, then turned positive to 4.85% in 2022. The ratio returned to negative territory in 2023 and 2024, with -5.65% and -5.00% respectively. This pattern indicates fluctuating efficiency in capital utilization and profitability relative to cost of capital over the five-year period.
Economic Profit Margin
Chevron Corp., 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 millions) | ||||||
| Economic profit1 | ||||||
| Sales and other operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 ÷ Sales and other operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited a significant fluctuation over the analyzed periods. In 2020, the economic profit was deeply negative at -36,026 million US dollars, showing a substantial loss. This loss sharply improved in 2021 to -8,095 million US dollars, indicating a reduction in economic loss. The company then experienced a positive economic profit of 10,293 million US dollars in 2022, demonstrating a strong recovery and profitable performance. However, the trend reversed in the following years, with negative values reported again: -11,990 million US dollars in 2023 and -10,421 million US dollars in 2024, signaling renewed economic challenges.
- Sales and Other Operating Revenues
- Sales and other operating revenues showed a generally upward trend from 2020 to 2022, increasing from 94,471 million US dollars in 2020 to 235,717 million US dollars in 2022. This represents a substantial growth in revenue during this period. Nevertheless, a decline was observed in the subsequent years, with revenues falling to 196,913 million US dollars in 2023 and slightly further to 193,414 million US dollars in 2024. Despite the decline, the revenue levels in 2023 and 2024 remained significantly higher than those seen in 2020 and 2021.
- Economic Profit Margin
- The economic profit margin mirrored the fluctuations observed in economic profit. Initially, there was a considerable negative margin of -38.13% in 2020, which improved markedly to -5.2% in 2021. In 2022, the margin turned positive at 4.37%, aligning with the positive economic profit of that year. However, the margin decreased again to negative figures in the subsequent years, -6.09% in 2023 and -5.39% in 2024, indicating reduced profitability relative to revenues.
- Summary
- The data reveals a volatile economic performance characterized by a strong recovery in 2022 amid rising revenues, followed by declines in profitability despite maintaining higher revenue levels than the earlier period. The fluctuations in economic profit and its margin suggest that while increases in sales contributed positively at times, other cost or economic factors likely impacted overall profitability negatively in the most recent years.