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 – 9.40% × 371,757 = -6,525
The financial trajectory from 2021 to 2025 indicates a significant transition from value creation to value destruction. While a substantial peak in profitability was recorded in 2022, the subsequent years show a consistent decline in economic profit, ultimately resulting in negative values by 2024 and 2025.
- Net Operating Profit After Taxes (NOPAT)
- A sharp increase in NOPAT is observed between 2021 and 2022, where figures rose from 32,736 million US$ to a peak of 62,749 million US$. However, this growth was not sustained; NOPAT declined steadily thereafter, reaching 28,426 million US$ by 2025. This represents a contraction in operating profitability that offsets the gains achieved during the 2022 peak.
- Invested Capital and Cost of Capital
- The capital base expanded consistently from 272,673 million US$ in 2021 to a peak of 378,995 million US$ in 2024, before a slight reduction to 371,757 million US$ in 2025. Simultaneously, the cost of capital exhibited a gradual upward trend, increasing from 8.75% in 2021 to 9.40% in 2025. The combination of a larger capital base and a higher cost of capital increased the total capital charge required to justify the investments.
- Economic Profit Trends
- Economic profit followed a volatile path, peaking at 35,318 million US$ in 2022. The subsequent decline was precipitous, falling to 9,600 million US$ in 2023. By 2024, economic profit turned negative at -3,737 million US$, further deteriorating to -6,525 million US$ in 2025. This shift suggests that the NOPAT generated in the final two years of the period was insufficient to cover the cost of the capital employed.
The overall analysis reveals a divergence between capital investment and operating returns. The increase in invested capital, coupled with a rising cost of capital and declining NOPAT, led to the erosion of economic value. The transition to negative economic profit indicates that the company failed to generate returns above its weighted average cost of capital in the 2024 and 2025 fiscal periods.
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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$259,386 million in 2025. The growth in equity appears to be a primary driver of the overall increase in invested capital, particularly in 2024.
The interplay between debt and equity financing has resulted in a net increase in invested capital over the five-year period. The substantial growth in equity in 2024 significantly contributed to the overall rise in invested capital, despite a concurrent increase in debt. The slight decrease in invested capital in 2025 is attributable to a corresponding decrease in equity, while debt continued to rise.
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Cost of Capital
Exxon Mobil Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 627,848) | 627,848) | ÷ | 674,971) | = | 0.93 | 0.93 | × | 9.89% | = | 9.20% | ||
| Debt3 | 40,289) | 40,289) | ÷ | 674,971) | = | 0.06 | 0.06 | × | 3.51% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 6,834) | 6,834) | ÷ | 674,971) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 674,971) | 1.00 | 9.40% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 9.89% | = | 9.05% | ||
| 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 | 9.29% | ||||||||||
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 | × | 9.89% | = | 8.93% | ||
| 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 | 9.20% | ||||||||||
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 | × | 9.89% | = | 9.03% | ||
| 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 | 9.23% | ||||||||||
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 | × | 9.89% | = | 8.44% | ||
| 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 | 8.75% | ||||||||||
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 | (6,525) | (3,737) | 9,600) | 35,318) | 8,890) | |
| Invested capital2 | 371,757) | 378,995) | 307,196) | 297,049) | 272,673) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.76% | -0.99% | 3.12% | 11.89% | 3.26% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | -7.93% | -3.13% | -3.75% | 6.75% | -2.37% | |
| ConocoPhillips | 0.01% | 0.96% | 6.61% | 19.35% | 5.03% | |
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 × -6,525 ÷ 371,757 = -1.76%
4 Click competitor name to see calculations.
An analysis of the financial performance from 2021 through 2025 reveals a trajectory of initial value creation followed by a transition into value destruction. While there was a significant peak in profitability and efficiency in 2022, the subsequent years demonstrate a consistent decline in the ability to generate returns exceeding the cost of capital.
- Economic Profit Trends
- Economic profit experienced extreme volatility, peaking at 35,318 million USD in 2022 before declining sharply to 9,600 million USD in 2023. A critical shift occurred in 2024 and 2025, where the figures turned negative, reaching -3,737 million USD and -6,525 million USD respectively. This progression indicates that the company ceased to generate surplus value above its required return on capital starting in 2024.
- Invested Capital Dynamics
- Invested capital showed a general upward trend for most of the period, rising from 272,673 million USD in 2021 to a peak of 378,995 million USD in 2024. A slight contraction is noted in 2025 to 371,757 million USD. The expansion of the capital base during a period of declining economic profit suggests that capital deployment did not yield proportional increases in earnings.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit, reaching a high of 11.89% in 2022. This ratio reverted to 3.12% in 2023 and collapsed into negative territory in 2024 (-0.99%) and 2025 (-1.76%). The negative spread indicates that the return on invested capital fell below the weighted average cost of capital, signifying a period of economic value erosion.
The convergence of increasing invested capital and decreasing economic profit suggests a diminishing marginal return on investment. The shift to a negative economic spread ratio highlights a systemic inability to maintain value creation in the latter half of the analyzed period.
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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 | (6,525) | (3,737) | 9,600) | 35,318) | 8,890) | |
| Sales and other operating revenue | 323,905) | 339,247) | 334,697) | 398,675) | 276,692) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -2.01% | -1.10% | 2.87% | 8.86% | 3.21% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | -11.78% | -3.38% | -4.05% | 6.08% | -2.95% | |
| ConocoPhillips | 0.02% | 1.86% | 9.56% | 18.61% | 8.39% | |
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 × -6,525 ÷ 323,905 = -2.01%
3 Click competitor name to see calculations.
An analysis of the financial performance from 2021 through 2025 reveals a period of significant volatility in value creation, characterized by a sharp peak in 2022 followed by a sustained decline into negative economic territory.
- Economic Profit Trends
- Economic profit experienced a substantial increase between 2021 and 2022, rising from 8,890 million USD to a peak of 35,318 million USD. However, this growth was not sustained, as a sharp contraction occurred in 2023, with profit falling to 9,600 million USD. This downward trajectory continued into 2024 and 2025, resulting in economic losses of 3,737 million USD and 6,525 million USD, respectively. This shift indicates a transition from creating value above the cost of capital to destroying economic value in the final two years of the period.
- Revenue Performance
- Sales and other operating revenue followed a similar peak-and-decline pattern, reaching a maximum of 398,675 million USD in 2022, up from 276,692 million USD in 2021. While revenue stabilized somewhat between 2023 and 2024, hovering around 334,000 to 339,000 million USD, a further decrease to 323,905 million USD was observed in 2025. The stability of revenue in the later years contrasts with the accelerating decline in economic profit, suggesting that the erosion of value is driven by factors beyond mere top-line revenue fluctuations.
- Economic Profit Margin Analysis
- The economic profit margin reflects the efficiency of value creation relative to revenue. The margin expanded from 3.21% in 2021 to 8.86% in 2022, marking the period of highest efficiency. A rapid compression followed, with the margin dropping to 2.87% in 2023. The margin subsequently turned negative, reaching -1.10% in 2024 and deepening to -2.01% by 2025. The transition to a negative margin confirms that the returns generated are insufficient to cover the opportunity cost of the capital employed.
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