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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.

Economic Profit
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Chevron Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	19,473)	41,794)	19,443)	(10,295)	852)
Cost of capital²	14.02%	14.04%	13.47%	12.35%	13.29%
Invested capital³	212,337)	212,342)	193,606)	197,314)	195,769)

Economic profit⁴	(10,305)	11,984)	(6,626)	(34,670)	(25,175)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 19,473 – 14.02% × 212,337 = -10,305

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Chevron Corp. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Chevron Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to Chevron Corporation	21,369)	35,465)	15,625)	(5,543)	2,924)
Deferred income tax expense (benefit)¹	322)	2,123)	700)	(3,608)	(1,966)
Increase (decrease) in allowance²	(156)	154)	19)	(462)	(123)
Increase (decrease) in LIFO reserve³	(2,606)	3,473)	2,839)	(1,764)	(621)
Increase (decrease) in employee termination benefits⁴	(5)	(32)	(427)	463)	(12)
Increase (decrease) in equity equivalents⁵	(2,445)	5,718)	3,131)	(5,371)	(2,722)
Interest and debt expense	469)	516)	712)	697)	798)
Interest expense, operating lease liability⁶	173)	77)	77)	109)	124)
Adjusted interest and debt expense	642)	593)	789)	806)	922)
Tax benefit of interest and debt expense⁷	(135)	(124)	(166)	(169)	(194)
Adjusted interest and debt expense, after taxes⁸	507)	468)	623)	637)	729)
Net income (loss) attributable to noncontrolling interest	42)	143)	64)	(18)	(79)
Net operating profit after taxes (NOPAT)	19,473)	41,794)	19,443)	(10,295)	852)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 employee termination benefits.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Chevron Corporation.

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 5,234 × 3.30% = 173

⁷ 2023 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 642 × 21.00% = 135

⁸ Addition of after taxes interest expense to net income (loss) attributable to Chevron Corporation.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Chevron Corp. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Chevron Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense (benefit)	8,173)	14,066)	5,950)	(1,892)	2,691)
Less: Deferred income tax expense (benefit)	322)	2,123)	700)	(3,608)	(1,966)
Add: Tax savings from interest and debt expense	135)	124)	166)	169)	194)
Cash operating taxes	7,986)	12,067)	5,416)	1,885)	4,851)

Based on: 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), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Chevron Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Chevron Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term debt	529)	1,964)	256)	1,548)	3,282)
Long-term debt, excluding debt due within one year	20,307)	21,375)	31,113)	42,767)	23,691)
Operating lease liability¹	5,234)	4,031)	3,503)	3,906)	3,885)
Total reported debt & leases	26,070)	27,370)	34,872)	48,221)	30,858)
Total Chevron Corporation stockholders’ equity	160,957)	159,282)	139,067)	131,688)	144,213)
Net deferred tax (assets) liabilities²	14,661)	12,626)	9,006)	7,283)	9,510)
Allowance³	301)	457)	303)	284)	746)
LIFO reserve⁴	6,455)	9,061)	5,588)	2,749)	4,513)
Employee termination benefits⁵	6)	11)	43)	470)	7)
Equity equivalents⁶	21,423)	22,155)	14,940)	10,786)	14,776)
Accumulated other comprehensive (income) loss, net of tax⁷	2,960)	2,798)	3,889)	5,612)	4,990)
Redeemable noncontrolling interest	166)	142)	135)	120)	—)
Noncontrolling interests	806)	818)	738)	918)	995)
Adjusted total Chevron Corporation stockholders’ equity	186,312)	185,195)	158,769)	149,124)	164,974)
Marketable securities⁸	(45)	(223)	(35)	(31)	(63)
Invested capital	212,337)	212,342)	193,606)	197,314)	195,769)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 employee termination benefits.

⁶ Addition of equity equivalents to total Chevron Corporation stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of marketable securities.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Chevron Corp. invested capital increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Chevron Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	286,855)	286,855)	÷	311,444)	=	0.92	0.92	×	15.02%	=	13.84%
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					14.02%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	308,748)	308,748)	÷	334,155)	=	0.92	0.92	×	15.02%	=	13.88%
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					14.04%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	262,628)	262,628)	÷	298,265)	=	0.88	0.88	×	15.02%	=	13.23%
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					13.47%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	197,165)	197,165)	÷	247,281)	=	0.80	0.80	×	15.02%	=	11.98%
Debt³	46,210)	46,210)	÷	247,281)	=	0.19	0.19	×	2.31% × (1 – 21.00%)	=	0.34%
Operating lease liability⁴	3,906)	3,906)	÷	247,281)	=	0.02	0.02	×	2.80% × (1 – 21.00%)	=	0.03%
Total:	247,281)					1.00					12.35%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	204,865)	204,865)	÷	236,390)	=	0.87	0.87	×	15.02%	=	13.02%
Debt³	27,640)	27,640)	÷	236,390)	=	0.12	0.12	×	2.54% × (1 – 21.00%)	=	0.23%
Operating lease liability⁴	3,885)	3,885)	÷	236,390)	=	0.02	0.02	×	3.20% × (1 – 21.00%)	=	0.04%
Total:	236,390)					1.00					13.29%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Chevron Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(10,305)	11,984)	(6,626)	(34,670)	(25,175)
Invested capital²	212,337)	212,342)	193,606)	197,314)	195,769)
Performance Ratio
Economic spread ratio³	-4.85%	5.64%	-3.42%	-17.57%	-12.86%
Benchmarks
Economic Spread Ratio, Competitors⁴
ConocoPhillips	0.71%	13.32%	-0.62%	-19.26%	-0.61%
Exxon Mobil Corp.	-0.15%	8.58%	0.16%	-23.07%	-5.91%
Marathon Petroleum Corp.	3.01%	12.03%	-2.50%	-26.49%	-3.26%
Occidental Petroleum Corp.	-5.05%	7.37%	-4.70%	-33.70%	-10.78%
Valero Energy Corp.	-0.16%	11.46%	-1.28%	-17.10%	-3.43%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -10,305 ÷ 212,337 = -4.85%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Chevron Corp. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Chevron Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(10,305)	11,984)	(6,626)	(34,670)	(25,175)
Sales and other operating revenues	196,913)	235,717)	155,606)	94,471)	139,865)
Performance Ratio
Economic profit margin²	-5.23%	5.08%	-4.26%	-36.70%	-18.00%
Benchmarks
Economic Profit Margin, Competitors³
ConocoPhillips	1.03%	12.82%	-1.03%	-52.15%	-1.08%
Exxon Mobil Corp.	-0.14%	6.39%	0.16%	-35.39%	-7.01%
Marathon Petroleum Corp.	1.29%	4.71%	-1.32%	-26.64%	-2.16%
Occidental Petroleum Corp.	-10.15%	11.33%	-10.52%	-119.71%	-44.52%
Valero Energy Corp.	-0.06%	3.23%	-0.50%	-10.79%	-1.29%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × -10,305 ÷ 196,913 = -5.23%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Chevron Corp. economic profit margin improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Chevron Corp. (NYSE:CVX)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin