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.
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Exxon Mobil Corp. pages available for free this week:
- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Common Stock Valuation Ratios
- Dividend Discount Model (DDM)
- Debt to Equity since 2005
- Price to Book Value (P/BV) since 2005
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Economic Profit
Exxon Mobil Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The analysis of economic profit reveals a significant transition from value creation to value destruction over the five-year period. While the organization achieved a substantial peak in economic performance in 2022, there is a subsequent and consistent deterioration in the ability to generate returns above the cost of capital, culminating in negative economic profit by 2024 and 2025.
- Net Operating Profit After Taxes (NOPAT)
- A highly volatile trend is observed in NOPAT, which spiked to 62,749 million in 2022 before entering a multi-year decline. By 2025, NOPAT decreased to 28,426 million, representing a significant reduction in operational earnings compared to both the 2022 peak and the 2021 baseline.
- Invested Capital and Cost of Capital
- Invested capital followed a general upward trajectory, increasing from 272,673 million in 2021 to 371,757 million in 2025, with a notable expansion occurring in 2024. Simultaneously, the cost of capital exhibited a gradual increase from 8.58% to 9.23%. The simultaneous growth of the capital base and the cost of funding heightened the total capital charge required to justify investments.
- Economic Profit Dynamics
- The convergence of declining operating profits and an expanding capital base led to a sharp reversal in economic profit. After reaching a maximum of 35,833 million in 2022, economic profit collapsed to 10,126 million in 2023 and transitioned into negative territory in 2024 (-3,079 million) and 2025 (-5,869 million). This shift indicates that the organization's operating returns became insufficient to cover the cost of the capital employed.
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
= × =
7 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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$62,749 million in 2022 suggests a period of exceptionally strong operating performance. The subsequent declines in both 2023 and 2024, and continuing into 2025, indicate a potential shift in market conditions, increased operating costs, or a combination of both. Further investigation would be required to determine the specific drivers of this decline.
The observed trends in NOPAT are crucial for assessing the company’s ability to generate profits from its core operations. The substantial decrease from the 2022 peak warrants further scrutiny to understand the underlying causes and potential implications for future performance.
Cash Operating Taxes
Exxon Mobil Corp., cash operating taxes calculation
US$ 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$10.730 billion.
- Relationship between Income Tax Expense and Cash Operating Taxes
- The values for income tax expense and cash operating taxes are consistently close throughout the period. The difference between the two metrics remains relatively small each year, suggesting a limited amount of timing differences impacting the reported tax figures. The correlation between the two suggests that changes in underlying profitability are a primary driver of changes in both expense types.
The substantial increase in both income tax expense and cash operating taxes in 2022 warrants further investigation to understand the underlying factors contributing to this change, such as increased profitability, changes in tax rates, or adjustments to tax credits. The subsequent declines in 2023, 2024, and 2025 suggest a potential normalization of these factors.
Invested Capital
Exxon Mobil Corp., invested capital calculation (financing approach)
US$ 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$259,386 million in 2025. The growth in equity appears to be a primary driver of the overall increase in invested capital, particularly in 2024.
The interplay between debt and equity financing has resulted in a net increase in invested capital over the five-year period. The substantial growth in equity in 2024 significantly contributed to the overall rise in invested capital, despite a concurrent increase in debt. The slight decrease in invested capital in 2025 is attributable to a corresponding decrease in equity, while debt continued to rise.
Cost of Capital
Exxon Mobil Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. 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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by a significant peak in value creation followed by a persistent decline into value destruction. The trajectory shows a sharp reversal in the ability to generate returns exceeding the cost of capital, coinciding with a general expansion of the capital base.
- Economic Profit
- A volatile trend is observed in economic profit, which rose from US$ 9,332 million in 2021 to a peak of US$ 35,833 million in 2022. This growth was followed by a sharp contraction to US$ 10,126 million in 2023. By 2024, the figure shifted to a negative value of US$ -3,079 million, further deteriorating to US$ -5,869 million by the end of 2025, indicating that the company failed to cover its cost of capital in the final two years of the period.
- Invested Capital
- Invested capital demonstrated a consistent upward trend for the majority of the period, increasing from US$ 272,673 million in 2021 to a peak of US$ 378,995 million in 2024. A slight reduction occurred in 2025, with capital settling at US$ 371,757 million. The overall expansion of the capital base occurred despite the simultaneous decline in economic profitability.
- Economic Spread Ratio
- The economic spread ratio mirrors the trajectory of economic profit, peaking at 12.06% in 2022 before dropping to 3.30% in 2023. The ratio turned negative in 2024 at -0.81% and continued to decline to -1.58% in 2025. This downward trend signifies a transition from substantial value creation to a state where the return on invested capital is lower than the weighted average cost of capital.
The correlation between increasing invested capital and decreasing economic spread suggests that recent capital deployments have not yielded returns sufficient to justify the cost of funding. The shift from a positive spread in 2023 to negative spreads in 2024 and 2025 highlights a period of diminishing economic efficiency.
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 | ||||||
| Sales and other operating revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
An analysis of the economic performance from 2021 to 2025 reveals a period of significant volatility in value creation, characterized by a sharp peak in 2022 followed by a steady decline into negative economic profit.
- Economic Profit Trends
- Economic profit exhibited substantial growth between 2021 and 2022, rising from US$ 9,332 million to a peak of US$ 35,833 million. This upward trajectory reversed sharply in 2023, with profit falling to US$ 10,126 million. The trend continued downward into negative territory, with losses of US$ 3,079 million in 2024 and US$ 5,869 million in 2025, indicating a transition from value creation to value destruction.
- Revenue Performance and Correlation
- Sales and other operating revenue peaked in 2022 at US$ 398,675 million, aligning with the peak in economic profit. However, while revenue experienced a correction in 2023 to US$ 334,697 million, it remained relatively stable through 2024 and 2025, ending at US$ 323,905 million. The divergence between stable revenue and plummeting economic profit suggests that the decline in value was driven by increasing capital charges or rising operating costs rather than a collapse in top-line sales.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute profits, expanding from 3.37% in 2021 to 8.99% in 2022. A significant contraction occurred in 2023, bringing the margin down to 3.03%. The margin turned negative in 2024 at -0.91% and further deteriorated to -1.81% by 2025. This progression indicates that by the end of the period, the company's operating returns were insufficient to cover its cost of capital.