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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Economic Profit
Chevron Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited substantial volatility, while the cost of capital remained relatively stable. Invested capital showed an increasing trend overall, with a notable surge in the final year. These factors combined to produce a dynamic pattern in economic profit.
- NOPAT Trend
- Net operating profit after taxes increased markedly from 2021 to 2022, more than doubling. However, NOPAT then decreased significantly in 2023, followed by a modest increase in 2024, and a substantial decline in 2025. This suggests a sensitivity to external factors or internal operational changes impacting profitability.
- Cost of Capital
- The cost of capital remained consistently above 12% throughout the period. A slight decreasing trend is observable from 2022 to 2025, though the changes are minimal. This indicates a stable financing environment for the company.
- Invested Capital
- Invested capital increased from 2021 to 2024, indicating expansion or reinvestment activities. A considerable increase is observed in 2025, potentially reflecting significant capital expenditures or acquisitions. This growth in invested capital did not translate into corresponding profit growth.
- Economic Profit
- Economic profit was negative in 2021 and 2023, and 2024, indicating that the company’s returns did not exceed its cost of capital in those years. A peak in economic profit occurred in 2022, coinciding with the highest NOPAT. However, economic profit declined sharply in 2025, becoming significantly negative, driven by the combination of lower NOPAT and higher invested capital. The trend suggests a weakening ability to generate returns above the cost of capital, particularly in the most recent year.
Overall, the analysis reveals a period of fluctuating performance. While the company demonstrated the ability to generate substantial economic profit in 2022, the subsequent years show a concerning trend of declining profitability and increasing capital investment without commensurate returns. Further investigation into the drivers of NOPAT and invested capital is warranted.
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
= × =
7 2025 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 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$12,299 million), resulting in a final value that is lower than the 2021 level.
- Relationship between NOPAT and Net Income
- While both metrics moved in the same direction over the period, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for NOPAT than for net income. Conversely, the declines from 2022 to 2025 were relatively more significant for net income. This suggests that factors impacting net income beyond core operating profitability, such as non-operating items or tax provisions, may have played a more substantial role in the latter part of the period.
The observed trends indicate a period of high profitability in 2022, followed by a consistent decline in both NOPAT and net income. The decrease in NOPAT from 2022 to 2025 warrants further investigation to determine the underlying drivers, such as changes in revenue, operating costs, or tax rates.
Cash Operating Taxes
Chevron Corp., cash operating taxes calculation
US$ 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$6,579 million in 2025. The close alignment between cash operating taxes and income tax expense indicates that the company’s actual cash outflows for taxes are closely tied to its reported taxable income.
The difference between income tax expense and cash operating taxes, while generally small, suggests the presence of deferred tax items or other non-cash tax effects. The consistency of this difference across the period indicates a stable approach to tax accounting. The fluctuations in both measures highlight the sensitivity of the company’s tax burden to changes in earnings and external tax factors.
Invested Capital
Chevron Corp., invested capital calculation (financing approach)
US$ 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$186,450 million in 2025.
The substantial increase in invested capital in 2025 appears to be driven by concurrent increases in both debt & leases and stockholders’ equity. The decrease in invested capital from 2023 to 2024 is attributable to a decrease in stockholders’ equity, partially offset by a slight increase in debt & leases. The earlier increases in invested capital from 2021 to 2023 were supported by increases in both components, though stockholders’ equity contributed more significantly to the growth.
Cost of Capital
Chevron Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| 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 »
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The economic spread ratio exhibited significant fluctuations over the five-year period. Initially negative, it became positive in 2022 before reverting to negative values in subsequent years, culminating in a substantial decline by 2025. This pattern mirrors the volatility observed in economic profit, though the magnitude of change in the spread ratio is more pronounced.
- Economic Spread Ratio
- In 2021, the economic spread ratio was -2.14%, indicating that the company’s return on invested capital was below its weighted average cost of capital. A dramatic shift occurred in 2022, with the ratio increasing to 6.98%, signifying a period where the company generated returns exceeding its cost of capital. However, this positive trend was short-lived. The ratio declined to -3.52% in 2023 and further to -2.90% in 2024. By 2025, the economic spread ratio reached -7.70%, representing the largest negative spread observed during the analyzed period.
The economic spread ratio’s movement is closely tied to the fluctuations in economic profit. The positive spread in 2022 corresponds with the peak in economic profit for that year. Conversely, the increasing negative spreads in 2023, 2024, and 2025 align with the declining and ultimately negative economic profit figures. The invested capital remained relatively stable between 2021 and 2024, with a notable increase in 2025, which likely exacerbated the negative economic spread due to the larger capital base against which returns were measured.
- Invested Capital & Economic Profit Relationship
- While invested capital increased in 2022 and significantly in 2025, the economic profit did not follow suit. The increase in invested capital in 2025, coupled with a substantial decrease in economic profit, contributed to the most negative economic spread ratio of the period. This suggests that the company’s investments in 2025 did not generate sufficient returns to cover the cost of capital.
The observed trend suggests a weakening ability to generate returns above the cost of capital. The substantial decline in the economic spread ratio in the later years warrants further investigation into the factors driving the decrease in economic profit and the efficiency of capital allocation.
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 | ||||||
| Sales and other operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The economic profit margin exhibited significant fluctuations over the five-year period. Initial observations reveal a substantial swing from a negative value in 2021 to a positive value in 2022, followed by a return to negative values in subsequent years, culminating in a markedly negative margin in 2025.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at -2.67%. A considerable improvement was noted in 2022, with the margin increasing to 6.29%. However, this positive trend was short-lived. The margin decreased to -3.79% in 2023 and further declined to -3.13% in 2024. By 2025, the economic profit margin experienced a substantial deterioration, reaching -11.45%.
The economic profit margin’s movement closely mirrors the changes in economic profit. The positive margin in 2022 corresponds with the highest reported economic profit during the period. Conversely, the increasingly negative margins in 2023, 2024, and 2025 align with decreasing and ultimately negative economic profit figures. This suggests a strong correlation between overall profitability and the ability to generate returns exceeding the cost of capital.
- Sales and Revenue Context
- While sales and other operating revenues increased from 2021 to 2022, they subsequently decreased in each of the following years. This decrease in revenue occurred concurrently with the decline in economic profit margin, potentially contributing to the observed negative trend. The largest revenue decrease occurred between 2024 and 2025.
The substantial decline in the economic profit margin in 2025 warrants further investigation. The combination of decreasing revenues and negative economic profit suggests potential challenges in maintaining profitability and generating value for investors. The trend indicates a weakening of the company’s ability to translate sales into economic profit over the observed timeframe.