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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ConocoPhillips pages available for free this week:
- Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
ConocoPhillips, 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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited significant volatility over the five-year period. It started with a substantial loss in 2020, followed by a strong recovery in 2021 and an even higher peak in 2022. After 2022, NOPAT declined notably in 2023 and further decreased in 2024, though it remained positive compared to the initial loss in 2020.
- Cost of Capital
- The cost of capital increased steadily from 2020 through 2022, reaching a peak in 2022. Thereafter, it experienced a slight decline in both 2023 and 2024, suggesting potential changes in the company’s risk profile or market conditions affecting the required return.
- Invested Capital
- Invested capital showed a generally upward trend over the analyzed period. There was a considerable increase from 2020 to 2021, followed by a slight decrease in 2022. From 2022 onwards, the invested capital expanded noticeably, reaching its highest level by the end of 2024, which may indicate ongoing investments or asset accumulation.
- Economic Profit
- Economic profit, which represents the value created above the cost of capital, transitioned from a large negative figure in 2020 to a near breakeven in 2021. In 2022, economic profit increased substantially, reflecting improved operational efficiency or profitability. However, this was followed by a sharp decline in 2023 to a marginally positive value, and a return to significant negative territory in 2024, indicating challenges in sustaining value creation despite rising invested capital.
Net Operating Profit after Taxes (NOPAT)
ConocoPhillips, 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 equity equivalents to net income (loss) attributable to ConocoPhillips.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss) attributable to ConocoPhillips.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
9 Elimination of after taxes investment income.
- Net Income (Loss) Attributable to ConocoPhillips
-
The net income attributable to the company demonstrated significant volatility over the analyzed period. In 2020, the figure was a substantial loss of 2,701 million US dollars, indicating a challenging financial year. However, a dramatic recovery occurred in 2021, with net income rising to 8,079 million US dollars, reflecting a strong turnaround.
The upward trend continued in 2022, with net income reaching a peak of 18,680 million US dollars, more than doubling the previous year's performance. Despite a notable decline in 2023 to 10,957 million US dollars, net income remained robust and significantly positive. In 2024, the figure further declined to 9,245 million US dollars, representing a tapering off of profitability but maintaining a solid profit level relative to earlier years.
- Net Operating Profit After Taxes (NOPAT)
-
The net operating profit after taxes followed a pattern similar to net income, though with some differences in magnitude. The company recorded a negative NOPAT of 2,991 million US dollars in 2020, aligning with the overall loss experienced that year.
A sharp improvement occurred in 2021, with NOPAT rising to 10,273 million US dollars. This growth trend accelerated in 2022, reaching a peak at 21,159 million US dollars, which was the highest point in the observed period. Subsequently, NOPAT decreased to 12,357 million US dollars in 2023 and then to 9,976 million US dollars in 2024.
Despite these declines in the last two years, NOPAT remained significantly positive, indicating continued operational profitability post-tax, though at a lower level than the peak in 2022.
- Overall Trend Summary
-
The financial results demonstrate a recovery from significant losses in 2020 to strong profitability in subsequent years. Both net income and NOPAT peaked in 2022, followed by decreases in the later years of 2023 and 2024, suggesting a potential moderation in earnings after a period of exceptional growth.
The alignment in trends between net income and NOPAT suggests consistent operational performance after tax impacts are considered. The decline after the peak year may indicate changing market conditions, operational challenges, or strategic shifts impacting profitability, but the company remains financially robust relative to 2020 lows.
Cash Operating Taxes
ConocoPhillips, 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).
- Income Tax Provision (Benefit)
- The income tax provision exhibited significant volatility over the five-year period. In 2020, the provision was a benefit amounting to -485 million USD, indicating a tax credit or refund. This trend reversed dramatically in 2021 with a substantial increase to 4633 million USD, followed by further escalation in 2022 reaching 9548 million USD. Thereafter, the provision declined notably in 2023 to 5331 million USD and continued to decrease in 2024 to 4427 million USD. This pattern suggests a shift from a net tax benefit to considerable tax expenses, peaking in 2022 before trending downward in subsequent years.
- Cash Operating Taxes
- Cash operating taxes demonstrated an overall upward trajectory from 2020 through 2022, increasing from 502 million USD in 2020 to 7594 million USD in 2022. However, after this peak, the amount decreased significantly to 4270 million USD in 2023 and saw a slight further reduction to 4150 million USD in 2024. This indicates that while the company’s cash tax payments rose sharply in the initial years, they moderated in the most recent periods.
- Comparative Insights
- Both the income tax provision and cash operating taxes followed similar trends with increases up to 2022 and subsequent declines. The notable spike in 2022 for both metrics may reflect higher taxable income or changes in tax rates or structures influencing the tax liabilities. The subsequent decline may indicate improved tax planning, tax rate reductions, or decreased taxable income in the latter years.
Invested Capital
ConocoPhillips, 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 equity equivalents to common stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a fluctuating yet overall increasing trend from 2020 through 2024. The debt rose significantly from 16,154 million in 2020 to a peak of 20,601 million in 2021, followed by a decline to 17,188 million in 2022. Subsequently, the debt increased again, reaching 19,634 million in 2023 and further escalating to 25,348 million by the end of 2024. This pattern indicates periods of both deleveraging and increased borrowing or lease obligations, with a notable surge in the final reported year.
- Common Stockholders’ Equity
- Common stockholders’ equity demonstrates a consistent upward trajectory across all years presented. Starting at 29,849 million in 2020, equity grew substantially each year, reaching 45,406 million in 2021, 48,003 million in 2022, and 49,279 million in 2023. The growth accelerates notably in 2024 with equity rising to 64,796 million. This steady increase reflects a strengthening equity base, likely supported by retained earnings growth and possibly additional equity issuance or valuation gains.
- Invested Capital
- Invested capital shows an overall growth trend with slight volatility. Beginning at 50,870 million in 2020, it increased sharply to 76,355 million in 2021 but then edged down marginally to 75,520 million in 2022. Afterwards, invested capital resumed growth, climbing to 81,278 million in 2023 and making a more pronounced leap to 106,371 million in 2024. The upward movement in invested capital corresponds with the increases in both equity and debt, indicating expanding asset bases or capital expenditures that may be financed through both debt and equity.
Cost of Capital
ConocoPhillips, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ConocoPhillips, 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 | ||||||
| Chevron Corp. | ||||||
| Exxon Mobil 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 exhibited significant fluctuations during the analyzed periods. Initially, there was a substantial negative economic profit of -10,063 million US dollars. This negative trend markedly improved by 2021, with economic profit nearing break-even at -948 million. In 2022, a pronounced positive economic profit was recorded at 9,561 million, indicating strong value creation. However, the figure declined sharply in 2023 to a modest profit of 52 million and turned negative again in 2024, with a loss of -5,680 million. This volatility points to varying levels of operational efficiency or market conditions affecting profitability.
- Invested Capital
- Invested capital demonstrated a steadily increasing trend over the period. Starting at 50,870 million US dollars in 2020, it rose substantially to 76,355 million by 2021. Although there was a slight dip in 2022 to 75,520 million, the overall trajectory remained upward, reaching 81,278 million in 2023 and accelerating further to 106,371 million in 2024. This persistent increase suggests continuous investment or capital deployment in business assets or projects.
- Economic Spread Ratio
- The economic spread ratio, representing the differential between returns on invested capital and the cost of capital, mirrored the trend in economic profit but with higher sensitivity. It was deeply negative at -19.78% in 2020, improved significantly to nearly neutral at -1.24% in 2021, and turned positive at 12.66% in 2022. However, it plunged back close to zero at 0.06% in 2023 before declining into negative territory again at -5.34% in 2024. These shifts indicate fluctuating efficiency in capital utilization and challenges in sustaining returns above the cost of capital.
Economic Profit Margin
ConocoPhillips, 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 | ||||||
| Chevron Corp. | ||||||
| Exxon Mobil 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.
- Sales and Other Operating Revenues
- Sales and other operating revenues exhibited significant volatility over the analyzed years. Revenue increased sharply from approximately 18.8 billion in 2020 to 45.8 billion in 2021, followed by a further rise to 78.5 billion in 2022. However, in subsequent years, revenue declined to 56.1 billion in 2023 and further to 54.7 billion in 2024, indicating a correction or reduced market activity after the peak in 2022.
- Economic Profit
- The economic profit showed considerable fluctuations and a general lack of consistent positive performance. In 2020, the company reported a substantial economic loss of over 10 billion. This loss considerably narrowed in 2021 to less than 1 billion. In 2022, economic profit turned positive with a substantial gain of approximately 9.6 billion, the highest over the period. However, the upward trend did not sustain as profit plummeted to 52 million in 2023 and shifted again to a loss exceeding 5.6 billion in 2024. This suggests that economic profitability was highly sensitive to underlying operational or external factors during these years.
- Economic Profit Margin
- The economic profit margin mirrored the fluctuations observed in economic profit, reflecting wide variability in profitability relative to revenues. It moved from a deeply negative margin of -53.57% in 2020 to near-breakeven at -2.07% in 2021. The margin reached a positive peak of 12.18% in 2022, aligning with the peak in economic profit. Subsequently, the margin sharply declined, nearly breaking even at 0.09% in 2023, before turning negative again to -10.37% in 2024. These shifts imply challenges in sustaining operational efficiency and profitability margins beyond 2022.
- Overall Trends and Insights
- The data indicates a cyclical pattern in both revenue generation and economic profitability, with 2022 marking a high point in financial performance. The subsequent decline in 2023 and 2024 suggests some adverse changes such as market conditions, cost structure issues, or external economic factors impacting the company’s performance. The inconsistent economic profit margin corroborates the volatility in profitability relative to revenues, underscoring potential risks and challenges in maintaining stable and positive financial outcomes over the period under review.