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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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Return on Equity (ROE) since 2005
- Current Ratio 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 demonstrated a significant recovery and growth from 2020 to 2022, increasing from a negative value of -2,991 million US dollars in 2020 to a peak of 21,159 million US dollars in 2022. However, this upward trend reversed in the following years, declining to 12,357 million in 2023 and further to 9,976 million in 2024. Despite the decline post-2022, NOPAT values remained positive and substantially higher than the 2020 figure, indicating overall improved profitability compared to the initial year presented.
- Cost of Capital (%)
- The cost of capital showed a gradual upward trend from 13.92% in 2020 to a peak of 15.37% in 2022, followed by a slight decrease in 2023 and 2024, settling at 14.74%. This pattern suggests a period of increasing capital costs that slightly eased in the later years but remained above the 2020 level, potentially reflecting changing market conditions and risk perceptions.
- Invested Capital
- Invested capital increased overall during the period analysed, starting at 50,870 million US dollars in 2020 and rising to 106,371 million by 2024. While there was a slight decline observed from 2021 (76,355 million) to 2022 (75,520 million), the broader trend was upward, notably accelerating from 2023 to 2024. This expansion indicates ongoing investment and capital deployment in the company's operations.
- Economic Profit
- Economic profit exhibited substantial variability and was negative at the start, with a sharp loss of 10,071 million US dollars in 2020. This loss narrowed significantly to -960 million in 2021 and turned positive in 2022, achieving 9,548 million. However, the economic profit sharply declined afterward, almost nullifying in 2023 (38 million) and returning to a negative territory (-5,697 million) in 2024. This volatility suggests that despite improvements in operating profit, the cost of capital and capital employed influenced economic profit unfavorably in recent years.
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 volatility over the observed period. Starting with a substantial loss of $10,071 million at the end of 2020, it markedly improved to a near break-even point with a loss of $960 million by the end of 2021. The company then experienced a notable turnaround in 2022, achieving a positive economic profit of $9,548 million. However, this gain sharply declined in 2023, dropping to a marginal positive value of $38 million, before deteriorating again to a loss of $5,697 million in 2024. This trend suggests fluctuations in profitability and challenges in maintaining consistent value creation over the years.
- Invested Capital
- Invested capital showed a general upward trend throughout the period. It increased from $50,870 million at the end of 2020 to $76,355 million in 2021, then slightly decreased to $75,520 million in 2022. Following this, the capital base expanded again to $81,278 million in 2023 and reached $106,371 million by the end of 2024. The overall increase in invested capital indicates ongoing asset growth and possibly increased operational scale or capital expenditures.
- Economic Spread Ratio
- The economic spread ratio, which measures the difference between return on invested capital and cost of capital, mirrored the fluctuations in economic profit. It started with a strongly negative ratio of -19.8% in 2020, improving significantly to near zero at -1.26% in 2021. In 2022, it turned positive, reaching 12.64%, indicating efficient capital use and value generation. However, the ratio declined sharply thereafter to 0.05% in 2023 and further to -5.36% in 2024, suggesting a reduction in the spread between returns and costs, consistent with the regression in economic profit during this period.
- Summary
- The financial data reveals a pattern of recovery and subsequent decline in value creation metrics over the five-year span. While invested capital generally increased, the ability to convert this capital into economic profit and maintain a positive economic spread ratio proved inconsistent. The 2022 fiscal year stands out as an exceptional performance year, but subsequent years indicate difficulties in sustaining that level of economic profitability.
Economic Profit Margin
ConocoPhillips, economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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.
- Economic Profit Trends
- The economic profit fluctuated significantly over the five-year period. In 2020, the company reported a substantial economic loss of 10,071 million US dollars. This loss drastically reduced in 2021 to 960 million US dollars, indicating an improvement. In 2022, there was a notable turnaround, with the company achieving a positive economic profit of 9,548 million US dollars, suggesting effective cost management or increased profitability. However, in 2023, economic profit sharply declined to 38 million US dollars, nearly breaching zero. The following year, 2024, saw a return to negative economic profit of 5,697 million US dollars, highlighting renewed challenges in generating value over the cost of capital.
- Revenue Patterns
- Sales and other operating revenues showed an overall upward trend from 2020 to 2022. Revenues more than quadrupled from approximately 18,784 million US dollars in 2020 to 78,494 million in 2022, indicating significant growth in operating activities or favorable market conditions. However, revenue decreased noticeably in 2023 to 56,141 million US dollars and continued to slightly decline in 2024 to 54,745 million US dollars, suggesting either a reduction in selling prices, volumes, or other operational challenges in the later years.
- Economic Profit Margin Analysis
- The economic profit margin, which measures economic profit as a percentage of sales, mirrored the fluctuations in economic profit despite increasing revenues in early years. It started very negative at -53.61% in 2020, improved sharply to nearly breakeven at -2.1% in 2021, and turned positive at 12.16% in 2022, indicating that the company generated value over its cost of capital that year. However, in 2023, the margin fell back to a marginal 0.07%, nearly zero, reflecting the minimal economic profit despite still significant revenue. By 2024, the margin worsened again to -10.41%, reflecting a return to economic loss despite moderate revenues, pointing to increased costs or lower operational efficiency.
- Overall Insights
- The financial data reveals a volatile performance trajectory. The company improved significantly from heavy losses in 2020 to strong profitability in 2022, driven by substantial revenue growth. Nevertheless, the gains were not sustained, as economic profit and margins declined sharply from 2023 onwards, despite maintaining relatively high revenue levels. This suggests that profitability issues, possibly from cost pressures or declining operational efficiency, emerged in the latter years. Careful attention to controlling costs and sustaining revenue growth will be crucial for improving economic profitability in future periods.