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.
Economic Profit
Exxon Mobil Corp., economic profit 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 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
= 28,426 – 9.65% × 371,757 = -7,464
The financial trajectory from 2021 to 2025 indicates a transition from significant value creation to a state of value destruction, as evidenced by the shift in economic profit from positive to negative territory.
- Net Operating Profit After Taxes (NOPAT)
- A substantial increase in NOPAT was observed in 2022, peaking at 62,749 million US$. Following this peak, a consistent downward trend occurred over the subsequent three years, with NOPAT declining to 37,855 million US$ in 2023, 31,476 million US$ in 2024, and reaching a period low of 28,426 million US$ by the end of 2025.
- Invested Capital and Cost of Capital
- Invested capital exhibited a steady upward trend for most of the period, rising from 272,673 million US$ in 2021 to a peak of 378,995 million US$ in 2024, before a slight contraction to 371,757 million US$ in 2025. Concurrently, the cost of capital showed a gradual increase, moving from 8.98% in 2021 to 9.65% in 2025, which elevated the threshold for generating positive economic value.
- Economic Profit Trends
- Economic profit mirrored the volatility of NOPAT but was further pressured by the expanding capital base. A peak in value creation was recorded in 2022 at 34,582 million US$. However, the combination of falling operating profits and rising invested capital led to a sharp decline in 2023. By 2024, the economic profit turned negative at -4,679 million US$, a deficit that widened to -7,464 million US$ by December 31, 2025.
The overall analysis suggests that while the entity benefited from a high-profit environment in 2022, the subsequent decline in operating efficiency, paired with an increased capital investment and a rising cost of capital, has resulted in the company failing to generate returns above its cost of capital in the final two years of the period.
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Net Operating Profit after Taxes (NOPAT)
Exxon Mobil 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 reserves.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in restructuring reserves.
5 Addition of increase (decrease) in equity equivalents to net income attributable to ExxonMobil.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 6,834 × 4.70% = 321
7 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 924 × 21.00% = 194
8 Addition of after taxes interest expense to net income attributable to ExxonMobil.
Net income attributable to ExxonMobil and Net Operating Profit After Taxes (NOPAT) both exhibited significant fluctuations between 2021 and 2025. NOPAT demonstrated a substantial increase in 2022, followed by declines in subsequent years. Net income mirrored this pattern, though with differing magnitudes of change.
- NOPAT Trend
- NOPAT increased markedly from US$32,736 million in 2021 to US$62,749 million in 2022, representing a growth of approximately 92%. This was followed by a decrease to US$37,855 million in 2023, a decline of roughly 40%. The downward trend continued into 2024, with NOPAT falling to US$31,476 million, and further decreased to US$28,426 million in 2025. This represents an overall decline of approximately 13% from 2022 to 2025.
- Relationship between NOPAT and Net Income
- While both metrics generally moved in the same direction, the proportional changes differed. The increase in NOPAT from 2021 to 2022 was larger than the increase in net income. Conversely, the declines from 2022 onwards were less pronounced for net income compared to NOPAT. This suggests that factors beyond core operating profitability, such as financing costs or non-operating items, may have influenced net income.
- Peak and Subsequent Decline
- The peak NOPAT value of US$62,749 million in 2022 suggests a period of exceptionally strong operating performance. The subsequent declines in both 2023 and 2024, and continuing into 2025, indicate a potential shift in market conditions, increased operating costs, or a combination of both. Further investigation would be required to determine the specific drivers of this decline.
The observed trends in NOPAT are crucial for assessing the company’s ability to generate profits from its core operations. The substantial decrease from the 2022 peak warrants further scrutiny to understand the underlying causes and potential implications for future performance.
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Cash Operating Taxes
Exxon Mobil Corp., cash operating taxes calculation
US$ 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 observed five-year period. A substantial increase in both metrics is evident from 2021 to 2022, followed by a decrease in 2023, and a relatively stable period before another decline in 2025.
- Income Tax Expense Trend
- Income tax expense increased markedly from US$7.636 billion in 2021 to US$20.176 billion in 2022. This represents a more than doubling of the expense. Subsequently, income tax expense decreased to US$15.429 billion in 2023 and US$13.810 billion in 2024, indicating a moderation of the prior year’s increase. A further decrease is observed in 2025, with income tax expense reaching US$11.504 billion.
- Cash Operating Taxes Trend
- Cash operating taxes mirrored the trend in income tax expense, rising from US$7.904 billion in 2021 to US$16.789 billion in 2022. A decline followed in 2023 to US$14.713 billion, and a slight increase to US$14.916 billion in 2024. Similar to income tax expense, cash operating taxes decreased in 2025, reaching US$10.730 billion.
- Relationship between Income Tax Expense and Cash Operating Taxes
- The values for income tax expense and cash operating taxes are consistently close throughout the period. The difference between the two metrics remains relatively small each year, suggesting a limited amount of timing differences impacting the reported tax figures. The correlation between the two suggests that changes in underlying profitability are a primary driver of changes in both expense types.
The substantial increase in both income tax expense and cash operating taxes in 2022 warrants further investigation to understand the underlying factors contributing to this change, such as increased profitability, changes in tax rates, or adjustments to tax credits. The subsequent declines in 2023, 2024, and 2025 suggest a potential normalization of these factors.
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Invested Capital
Exxon Mobil Corp., invested capital calculation (financing approach)
US$ 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 restructuring reserves.
6 Addition of equity equivalents to total ExxonMobil share of equity.
7 Removal of accumulated other comprehensive income.
Over the five-year period examined, invested capital demonstrated a consistent upward trajectory, albeit with some fluctuation. Total reported debt & leases exhibited initial decline followed by moderate increases, while total ExxonMobil share of equity showed substantial growth, particularly in 2024. These movements collectively influenced the overall trend in invested capital.
- Invested Capital Trend
- Invested capital increased from US$272,673 million in 2021 to US$297,049 million in 2022, representing a growth of approximately 9.0%. Further increases were observed in 2023, reaching US$307,196 million. A significant jump occurred in 2024, with invested capital reaching US$378,995 million, before experiencing a slight decrease to US$371,757 million in 2025. The 2024 increase appears to be the most substantial within the observed period.
- Debt & Lease Evolution
- Total reported debt & leases decreased from US$52,894 million in 2021 to US$46,787 million in 2022, a reduction of approximately 11.3%. Subsequently, debt levels experienced modest increases, reaching US$47,583 million in 2023, US$48,188 million in 2024, and US$50,371 million in 2025. While the overall trend is relatively stable after 2022, a consistent, albeit slow, increase in debt is apparent.
- Equity Shareholder Investment
- Total ExxonMobil share of equity increased steadily throughout the period. From US$168,577 million in 2021, it rose to US$195,049 million in 2022, and US$204,802 million in 2023. A considerable increase was noted in 2024, reaching US$263,705 million, followed by a slight decrease to US$259,386 million in 2025. The growth in equity appears to be a primary driver of the overall increase in invested capital, particularly in 2024.
The interplay between debt and equity financing has resulted in a net increase in invested capital over the five-year period. The substantial growth in equity in 2024 significantly contributed to the overall rise in invested capital, despite a concurrent increase in debt. The slight decrease in invested capital in 2025 is attributable to a corresponding decrease in equity, while debt continued to rise.
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Cost of Capital
Exxon Mobil Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 627,848) | 627,848) | ÷ | 674,971) | = | 0.93 | 0.93 | × | 10.16% | = | 9.45% | ||
| Debt3 | 40,289) | 40,289) | ÷ | 674,971) | = | 0.06 | 0.06 | × | 3.51% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 6,834) | 6,834) | ÷ | 674,971) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 674,971) | 1.00 | 9.65% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 478,608) | 478,608) | ÷ | 522,861) | = | 0.92 | 0.92 | × | 10.16% | = | 9.30% | ||
| Debt3 | 37,775) | 37,775) | ÷ | 522,861) | = | 0.07 | 0.07 | × | 3.35% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 6,478) | 6,478) | ÷ | 522,861) | = | 0.01 | 0.01 | × | 4.90% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 522,861) | 1.00 | 9.54% | ||||||||||
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 | 413,926) | 413,926) | ÷ | 458,407) | = | 0.90 | 0.90 | × | 10.16% | = | 9.17% | ||
| Debt3 | 38,471) | 38,471) | ÷ | 458,407) | = | 0.08 | 0.08 | × | 3.44% × (1 – 21.00%) | = | 0.23% | ||
| Operating lease liability4 | 6,010) | 6,010) | ÷ | 458,407) | = | 0.01 | 0.01 | × | 3.90% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 458,407) | 1.00 | 9.44% | ||||||||||
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 | 446,709) | 446,709) | ÷ | 489,324) | = | 0.91 | 0.91 | × | 10.16% | = | 9.28% | ||
| Debt3 | 37,021) | 37,021) | ÷ | 489,324) | = | 0.08 | 0.08 | × | 3.10% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 5,594) | 5,594) | ÷ | 489,324) | = | 0.01 | 0.01 | × | 2.40% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 489,324) | 1.00 | 9.48% | ||||||||||
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 | 325,013) | 325,013) | ÷ | 380,785) | = | 0.85 | 0.85 | × | 10.16% | = | 8.67% | ||
| Debt3 | 50,582) | 50,582) | ÷ | 380,785) | = | 0.13 | 0.13 | × | 2.67% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 5,190) | 5,190) | ÷ | 380,785) | = | 0.01 | 0.01 | × | 2.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 380,785) | 1.00 | 8.98% | ||||||||||
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
Exxon Mobil 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 | (7,464) | (4,679) | 8,846) | 34,582) | 8,258) | |
| Invested capital2 | 371,757) | 378,995) | 307,196) | 297,049) | 272,673) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -2.01% | -1.23% | 2.88% | 11.64% | 3.03% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | -8.04% | -3.25% | -3.87% | 6.63% | -2.48% | |
| ConocoPhillips | -0.23% | 0.72% | 6.35% | 19.09% | 4.79% | |
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 × -7,464 ÷ 371,757 = -2.01%
4 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of significant volatility characterized by a sharp peak in 2022 followed by a consistent decline into value destruction by 2025. The transition from substantial positive economic profit to negative returns indicates a failure to generate returns exceeding the cost of capital in the latter part of the period.
- Economic Profit Trends
- Economic profit exhibited extreme fluctuations, starting at 8,258 million USD in 2021 and surging to a peak of 34,582 million USD in 2022. This was followed by a rapid contraction to 8,846 million USD in 2023, eventually shifting to negative values of -4,679 million USD in 2024 and -7,464 million USD in 2025.
- Invested Capital Expansion
- Invested capital demonstrated a steady upward trajectory for the majority of the period, increasing from 272,673 million USD in 2021 to a maximum of 378,995 million USD in 2024. A marginal reduction was observed in 2025, with the balance settling at 371,757 million USD.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrored the trend of economic profit, peaking at 11.64% in 2022. This ratio declined sharply to 2.88% in 2023 and entered negative territory in 2024 (-1.23%) and 2025 (-2.01%), confirming that the return on invested capital fell below the required cost of capital during the final two years.
The divergence between the growth in invested capital and the decline in economic profit suggests that the capital expansions implemented between 2021 and 2024 did not yield proportional increases in value. The negative spread ratios in the final two years indicate a period of economic value erosion.
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Economic Profit Margin
Exxon Mobil 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 | (7,464) | (4,679) | 8,846) | 34,582) | 8,258) | |
| Sales and other operating revenue | 323,905) | 339,247) | 334,697) | 398,675) | 276,692) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -2.30% | -1.38% | 2.64% | 8.67% | 2.98% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | -11.96% | -3.50% | -4.18% | 5.97% | -3.09% | |
| ConocoPhillips | -0.42% | 1.39% | 9.20% | 18.36% | 7.98% | |
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 revenue
= 100 × -7,464 ÷ 323,905 = -2.30%
3 Click competitor name to see calculations.
The financial performance over the analyzed period is characterized by a significant peak in economic value creation followed by a consistent decline into negative territory. A period of substantial economic profit was observed between 2021 and 2023, with a distinct apex in 2022, before the company transitioned to economic value destruction in 2024 and 2025.
- Economic Profit Trends
- A sharp increase in economic profit occurred between 2021 and 2022, rising from US$ 8,258 million to a peak of US$ 34,582 million. However, this gain was not sustained, as profit fell to US$ 8,846 million in 2023. A critical inflection point was reached in 2024, where economic profit became negative at -US$ 4,679 million, further deteriorating to -US$ 7,464 million by 2025.
- Revenue Performance
- Sales and other operating revenue mirrored the volatility of economic profit, peaking in 2022 at US$ 398,675 million. Following this peak, revenue experienced a correction in 2023 to US$ 334,697 million and remained relatively stagnant through 2024 and 2025, ending the period at US$ 323,905 million. The stability in revenue during the final two years contrasts with the accelerating decline in economic profit.
- Economic Profit Margin Analysis
- The economic profit margin demonstrates a clear downward trajectory after 2022. The margin expanded from 2.98% in 2021 to a high of 8.67% in 2022, then contracted to 2.64% in 2023. The transition to negative margins in 2024 (-1.38%) and 2025 (-2.30%) indicates that the returns generated by the company's assets are no longer sufficient to cover its cost of capital.
The divergence between relatively stable revenues and plummeting economic profit suggests that the decline in value creation is driven by factors beyond simple top-line revenue loss, such as increasing operational costs or a rising cost of capital. The shift from an 8.67% margin to a -2.30% margin over three years represents a significant erosion of economic value.
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