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.
Paying user area
Try for free
Freeport-McMoRan Inc. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Dividend Discount Model (DDM)
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Freeport-McMoRan Inc. for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Economic Profit
Freeport-McMoRan Inc., economic profit calculation
US$ 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
= – × =
The financial data indicates varying performance metrics over the five-year period under review. A detailed examination of each key financial indicator is presented below.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a sharp increase from 2020 to 2021, rising from 1,698 million USD to 6,188 million USD. However, this was followed by a decline in subsequent years, decreasing to 5,116 million USD in 2022, 4,632 million USD in 2023, and further to 4,538 million USD in 2024. Although NOPAT remains significantly higher than the 2020 baseline, the downward trend after 2021 suggests challenges in maintaining the peak profitability achieved during that year.
- Cost of Capital
- The cost of capital remained relatively stable over the period, with slight fluctuations between 19.98% and 20.92%. This consistency in the cost of capital implies a steady benchmark for evaluating invested capital and economic profit, with only minor variations likely due to market or risk profile changes.
- Invested Capital
- Invested capital showed a gradual increase from 32,173 million USD in 2020 to a peak of 36,035 million USD in 2022. It then decreased moderately to 35,126 million USD in 2023 and further to 33,889 million USD in 2024. The initial increase indicates expansion or additional investments, while the reduction in later years may reflect divestitures, asset write-downs, or capital efficiency measures.
- Economic Profit
- Economic profit remained negative throughout the period, indicating that, after accounting for the cost of capital, the company did not generate value beyond its capital costs. The economic loss narrowed significantly from -4,731 million USD in 2020 to -1,114 million USD in 2021, showing improvement. However, it deteriorated again afterward, with values of -2,399 million USD in 2022, -2,682 million USD in 2023, and -2,553 million USD in 2024. This pattern suggests that although profitability improved sharply in 2021, the company struggled to sustain economic profit gains in the following years.
In summary, while operating profit surged in 2021, subsequent years showed a decline in profitability and economic value creation. The stability of the cost of capital contrasts with fluctuating invested capital, reflecting dynamic capital management. Persistently negative economic profits underline ongoing challenges in generating returns exceeding capital costs over the analyzed timeframe.
Net Operating Profit after Taxes (NOPAT)
Freeport-McMoRan Inc., 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 deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income attributable to common stockholders.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to common stockholders.
- Net Income Attributable to Common Stockholders
- The net income attributable to common stockholders showed a significant increase from 599 million USD in 2020 to a peak of 4306 million USD in 2021. However, after this peak, net income declined to 3468 million USD in 2022 and continued to decrease further to 1848 million USD in 2023. There was a slight recovery in 2024, with net income rising marginally to 1889 million USD. Overall, the data indicates a pronounced volatility with a substantial peak in 2021 followed by a consistent downward trend in the subsequent years through 2024.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes also demonstrated a strong upward movement from 1698 million USD in 2020 to 6188 million USD in 2021. Following this, NOPAT experienced a decline to 5116 million USD in 2022 and a further decrease to 4632 million USD in 2023. By 2024, NOPAT slightly decreased again to 4538 million USD. Despite the reductions after 2021, NOPAT levels remained substantially higher than the 2020 baseline, signifying an overall improved operating profitability compared to the start of the period.
- General Observations
- Both net income and NOPAT peaked in 2021, indicating a year of exceptional profitability. Post-2021, both metrics declined, with net income showing a sharper drop compared to NOPAT. This divergence suggests that factors affecting net income beyond operating performance, such as non-operating expenses or one-time gains/losses, could have influenced net income volatility. Despite declines, the company maintained profitability above initial 2020 levels over the five-year span. The slight uptick in net income in 2024 may hint at stabilization or recovering profitability after several years of decrease.
Cash Operating Taxes
Freeport-McMoRan Inc., 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).
The financial data reveals trends in the provision for income taxes and cash operating taxes over a five-year period ending December 31, 2024.
- Provision for Income Taxes
- There is a notable increase from 944 million US dollars in 2020 to 2299 million in 2021, indicating a sharp rise in tax provisions. The figures then remain relatively stable around the 2200-2270 million range for the years 2022 and 2023. In 2024, a further increase to 2523 million is observed, suggesting continuing growth in tax obligations.
- Cash Operating Taxes
- This category exhibits a significant surge from 774 million US dollars in 2020 to 2217 million in 2021, reflecting a major increase in cash tax payments. There is a slight downward trend in 2022 and 2023, with cash operating taxes recorded at 2088 million and 2009 million respectively. However, in 2024, a sharp rise occurs, reaching 2672 million, surpassing previous years' levels.
Overall, the trends indicate a substantial increase in both provision for income taxes and cash operating taxes starting in 2021. While the provision for income taxes shows a steady upward trend after 2021, cash operating taxes display more variability with a dip in the middle years followed by a significant rebound in 2024. This pattern may reflect changes in the company's profitability, tax strategies, or external tax environment impacting its tax liabilities and payments.
Invested Capital
Freeport-McMoRan Inc., 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 deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of investment securities.
The financial data reveals several key trends regarding the company’s capital structure and equity position over the five-year period.
- Total Reported Debt & Leases
- The total reported debt and leases show fluctuation but overall a slight decrease from 2020 to 2024. After peaking in 2022 at 10,952 million USD, the debt level declines to 9,738 million USD by the end of 2024. This suggests an effort to reduce debt or improve debt management after a temporary increase in 2022.
- Stockholders’ Equity
- Stockholders’ equity demonstrates consistent growth year over year. Starting at 10,174 million USD in 2020, it rises steadily to reach 17,581 million USD in 2024. This upward trend indicates strengthening equity, possibly due to retained earnings growth, issuing equity, or increased profitability enhancing the company’s net asset base.
- Invested Capital
- Invested capital increases from 32,173 million USD in 2020 to a peak of 36,035 million USD in 2022, followed by a decline to 33,889 million USD in 2024. The increase up to 2022 may reflect expanded operational assets or investment in capital projects, while the subsequent decline suggests divestitures, asset sales, or depreciation outpacing new investments.
Overall, the data reflects a company focused on strengthening equity while managing debt levels relatively stable after a notable increase in 2022. Investment in capital assets has peaked and begun to recede moderately, indicating possible strategic shifts in capital allocation or operational adjustments during the latter years.
Cost of Capital
Freeport-McMoRan Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Freeport-McMoRan Inc., economic spread ratio calculation
| 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 | ||||||
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 × ÷ =
The financial data reveals several notable trends regarding the company's economic profit, invested capital, and economic spread ratio over the five-year period ending December 31, 2024.
- Economic Profit
- Economic profit shows a pattern of significant negative values throughout the period, indicating that the company's returns have consistently been below the required cost of capital. There was a marked improvement in 2021, where the economic loss narrowed substantially from -4,731 million US dollars in 2020 to -1,114 million US dollars. However, this improvement was not sustained, as economic profit deteriorated again in 2022 and remained at similarly negative levels in 2023 and 2024, with losses of approximately -2,399 million, -2,682 million, and -2,553 million US dollars respectively.
- Invested Capital
- The invested capital shows a gradual increase from 32,173 million US dollars in 2020 to a peak of 36,035 million US dollars in 2022. After 2022, the invested capital demonstrates a slight decline, decreasing to 35,126 million in 2023 and further down to 33,889 million US dollars in 2024. This suggests the company initially increased its asset base but has been slightly divesting or reducing its capital investment in the most recent years.
- Economic Spread Ratio
- The economic spread ratio, which measures the difference between return on invested capital and cost of capital, has remained negative throughout the analyzed period. While the ratio improved significantly from -14.71% in 2020 to -3.18% in 2021, this positive movement was reversed in subsequent years. The spread worsened to -6.66% in 2022, then to -7.64% in 2023, and slightly improved but stayed negative at -7.53% in 2024. This pattern suggests that although the company managed to narrow the gap in 2021, it struggled to generate returns adequate to cover its cost of capital consistently afterward.
Overall, the data indicates the company has faced challenges in creating positive economic profit and maintaining a favorable economic spread ratio despite changes in its invested capital. The temporary improvement in 2021 was not sustained, highlighting underlying operational or market conditions that have constrained profitability relative to capital costs in recent years.
Economic Profit Margin
Freeport-McMoRan Inc., economic profit margin calculation
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 ÷ Adjusted revenues
= 100 × ÷ =
- Economic Profit
- The economic profit exhibited significant improvement from 2020 to 2021, increasing from a large negative value of -4731 million US dollars to -1114 million US dollars. However, this was followed by a decline in subsequent years, reaching -2399 million US dollars in 2022, -2682 million US dollars in 2023, and slightly improving to -2553 million US dollars in 2024. Despite the initial recovery, economic profit remained negative throughout the observed periods, indicating persistent economic losses.
- Adjusted Revenues
- Adjusted revenues showed a strong upward trend over the period. Starting at 14251 million US dollars in 2020, revenues increased sharply to 22971 million US dollars in 2021. The values maintained relative stability in 2022 and 2023, around 22665 and 22940 million US dollars respectively, before rising further to 25385 million US dollars in 2024. This consistent growth signals expansion in the company's operational scale or sales capabilities.
- Economic Profit Margin
- The economic profit margin followed a pattern consistent with economic profit figures. In 2020, the margin was deeply negative at -33.2%, indicating significant losses relative to revenues. There was noticeable improvement in 2021 where the margin approached a less negative -4.85%. However, the margin deteriorated again in the following years, declining to -10.59% in 2022, -11.69% in 2023, and slightly improving to -10.06% in 2024. This trend suggests fluctuating profitability challenges despite increasing revenues.