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
Freeport-McMoRan Inc., 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
= 4,755 – 21.22% × 40,693 = -3,881
The company has consistently failed to generate positive economic profit over the analyzed five-year period, indicating that the operating returns are insufficient to cover the cost of the capital employed. A widening deficit in economic profit is observed, signaling an increase in economic value destruction over time.
- Net Operating Profit After Taxes (NOPAT)
- A general downward trend is observed from 2021 to 2024, with NOPAT declining from 6,188 million US$ to 4,538 million US$. While a slight recovery to 4,755 million US$ is noted in 2025, the figure remains significantly below the 2021 levels.
- Cost of Capital
- The cost of capital remained relatively stable between 20.37% and 20.47% from 2021 through 2024. However, an upward shift is observed in 2025, where the rate increases to 21.22%, thereby raising the minimum return required to achieve a positive economic profit.
- Invested Capital
- Invested capital fluctuated within a narrow range between 33,889 million US$ and 36,035 million US$ from 2021 to 2024. A substantial increase is recorded in 2025, with invested capital rising to 40,693 million US$, representing a significant expansion of the capital base.
- Economic Profit
- Economic profit remained negative throughout the entire period. The deficit expanded from -954 million US$ in 2021 to -2,523 million US$ by 2023. Although there was a marginal improvement in 2024, the economic profit dropped sharply to -3,881 million US$ in 2025. This acceleration in value destruction is primarily attributed to the simultaneous increase in both the cost of capital and the total amount of invested capital, which more than offset the modest gains in NOPAT.
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Net Operating Profit after Taxes (NOPAT)
Freeport-McMoRan Inc., 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 deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income attributable to common stockholders.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,113 × 5.00% = 56
5 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= 425 × 21.00% = 89
6 Addition of after taxes interest expense to net income attributable to common stockholders.
Net income attributable to common stockholders and net operating profit after taxes (NOPAT) exhibited distinct performance patterns between 2021 and 2025. NOPAT demonstrated relative stability compared to net income, while both metrics experienced fluctuations over the five-year period.
- NOPAT Trend
- NOPAT began at US$6,188 million in 2021, representing the highest value within the observed timeframe. A decline was noted in 2022, falling to US$5,116 million. This downward trend continued, albeit at a slower pace, reaching US$4,632 million in 2023. A slight decrease was observed in 2024, with NOPAT at US$4,538 million. Finally, NOPAT increased to US$4,755 million in 2025, indicating a potential stabilization or modest recovery.
- Net Income Trend
- Net income attributable to common stockholders started at US$4,306 million in 2021. A substantial decrease occurred in 2022, with net income reported at US$3,468 million. This decline was more pronounced in 2023, reaching US$1,848 million. A slight recovery was seen in 2024, with net income at US$1,889 million, followed by a further increase to US$2,204 million in 2025.
- Relationship between NOPAT and Net Income
- While both metrics moved in similar directions, the magnitude of change differed. The decrease in net income from 2021 to 2023 was more significant than the corresponding decrease in NOPAT. This suggests that factors beyond core operating profitability, such as financing costs or non-operating items, played a substantial role in influencing net income. The relative stabilization of NOPAT in the later years, coupled with the recovery in net income, indicates a potential improvement in the efficiency of translating operating profits into earnings attributable to common stockholders.
Overall, the period demonstrates a challenging environment initially, followed by signs of potential stabilization and recovery in the later years, particularly as evidenced by the 2025 figures for both NOPAT and net income.
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Cash Operating Taxes
Freeport-McMoRan Inc., cash operating taxes calculation
US$ 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 provision for income taxes and cash operating taxes exhibited fluctuations over the five-year period. While both metrics generally remained within a relatively narrow range, notable shifts occurred in specific years, particularly in 2024.
- Provision for Income Taxes
- The provision for income taxes remained relatively stable between 2021 and 2023, fluctuating around the $2,200 million to $2,300 million mark. A discernible increase was observed in 2024, reaching $2,523 million, before decreasing to $2,221 million in 2025. This suggests potential impacts from changes in tax regulations or profitability in 2024, followed by a partial reversion in the subsequent year.
- Cash Operating Taxes
- Cash operating taxes demonstrated a decreasing trend from 2021 to 2023, declining from $2,217 million to $2,009 million. Similar to the provision for income taxes, a substantial increase occurred in 2024, with cash operating taxes rising to $2,672 million. This was followed by a decrease to $2,057 million in 2025, mirroring the pattern observed in the provision for income taxes. The correlation between the two metrics suggests that changes in reported income taxes are largely reflected in actual cash outflows for taxes.
- Relationship between Provision and Cash Taxes
- The difference between the provision for income taxes and cash operating taxes remained relatively consistent across the period, generally ranging between $80 million and $200 million. This difference likely represents deferred tax items, such as changes in tax loss carryforwards or temporary differences between book and tax accounting methods. The consistency in this difference indicates a stable tax position regarding these deferred items.
- 2024 Anomaly
- The year 2024 stands out due to the significant increases in both the provision for income taxes and cash operating taxes. Further investigation would be required to determine the underlying drivers of this increase, such as a substantial rise in pre-tax income, changes in applicable tax rates, or the recognition of previously unrealized tax liabilities. The subsequent decrease in 2025 suggests the factors driving the 2024 increase were not sustained.
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Invested Capital
Freeport-McMoRan Inc., invested capital calculation (financing approach)
US$ 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 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 reported invested capital exhibited a generally stable pattern over the five-year period, with fluctuations observed. Total reported debt & leases and stockholders’ equity both contributed to the overall invested capital figure, and their individual trends influenced the invested capital’s trajectory.
- Invested Capital Trend
- Invested capital increased from US$35.043 billion in 2021 to US$36.035 billion in 2022, representing a growth of approximately 2.8%. A slight decrease followed in 2023, with invested capital reaching US$35.126 billion. This was further reduced in 2024 to US$33.889 billion, marking the lowest value within the observed period. However, a significant increase occurred in 2025, with invested capital rising to US$40.693 billion.
- Debt & Leases
- Total reported debt & leases increased from US$9.769 billion in 2021 to US$10.952 billion in 2022, a rise of approximately 12.1%. It then decreased in both 2023 and 2024, reaching US$9.853 billion and US$9.738 billion respectively. A subsequent increase was noted in 2025, with debt & leases reaching US$10.492 billion. The fluctuations in debt levels likely influenced the invested capital calculations.
- Stockholders’ Equity
- Stockholders’ equity demonstrated a consistent upward trend throughout the period. It increased from US$13.980 billion in 2021 to US$15.555 billion in 2022, US$16.693 billion in 2023, US$17.581 billion in 2024, and finally to US$18.899 billion in 2025. This continuous growth in equity contributed positively to the overall invested capital, particularly offsetting the decline observed in 2024.
The substantial increase in invested capital in 2025 is primarily attributable to the combined effect of a moderate increase in debt & leases and a more significant increase in stockholders’ equity. The decrease in invested capital in 2024 appears to be driven by a reduction in both debt and equity, although the decrease in debt was less pronounced.
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Cost of Capital
Freeport-McMoRan Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 90,314) | 90,314) | ÷ | 100,920) | = | 0.89 | 0.89 | × | 23.23% | = | 20.79% | ||
| Long-term debt, including current portion3 | 9,493) | 9,493) | ÷ | 100,920) | = | 0.09 | 0.09 | × | 5.23% × (1 – 21.00%) | = | 0.39% | ||
| Operating lease liability4 | 1,113) | 1,113) | ÷ | 100,920) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 100,920) | 1.00 | 21.22% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 56,721) | 56,721) | ÷ | 66,318) | = | 0.86 | 0.86 | × | 23.23% | = | 19.87% | ||
| Long-term debt, including current portion3 | 8,807) | 8,807) | ÷ | 66,318) | = | 0.13 | 0.13 | × | 5.23% × (1 – 21.00%) | = | 0.55% | ||
| Operating lease liability4 | 790) | 790) | ÷ | 66,318) | = | 0.01 | 0.01 | × | 4.90% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 66,318) | 1.00 | 20.47% | ||||||||||
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 | 55,698) | 55,698) | ÷ | 65,493) | = | 0.85 | 0.85 | × | 23.23% | = | 19.76% | ||
| Long-term debt, including current portion3 | 9,364) | 9,364) | ÷ | 65,493) | = | 0.14 | 0.14 | × | 5.18% × (1 – 21.00%) | = | 0.59% | ||
| Operating lease liability4 | 431) | 431) | ÷ | 65,493) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 65,493) | 1.00 | 20.37% | ||||||||||
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 | 60,533) | 60,533) | ÷ | 70,962) | = | 0.85 | 0.85 | × | 23.23% | = | 19.82% | ||
| Long-term debt, including current portion3 | 10,097) | 10,097) | ÷ | 70,962) | = | 0.14 | 0.14 | × | 5.04% × (1 – 21.00%) | = | 0.57% | ||
| Operating lease liability4 | 332) | 332) | ÷ | 70,962) | = | 0.00 | 0.00 | × | 4.10% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 70,962) | 1.00 | 20.40% | ||||||||||
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 | 63,530) | 63,530) | ÷ | 74,479) | = | 0.85 | 0.85 | × | 23.23% | = | 19.82% | ||
| Long-term debt, including current portion3 | 10,630) | 10,630) | ÷ | 74,479) | = | 0.14 | 0.14 | × | 4.88% × (1 – 21.00%) | = | 0.55% | ||
| Operating lease liability4 | 319) | 319) | ÷ | 74,479) | = | 0.00 | 0.00 | × | 4.20% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 74,479) | 1.00 | 20.38% | ||||||||||
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 »
Economic Spread Ratio
Freeport-McMoRan Inc., economic spread ratio calculation
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 × -3,881 ÷ 40,693 = -9.54%
The financial performance over the observed five-year period indicates a consistent inability to generate economic value, characterized by negative economic profit and a widening negative economic spread ratio. The trend suggests a sustained gap between the return on invested capital and the company's cost of capital, resulting in ongoing value destruction.
- Economic Profit Trend
- Economic profit remained negative throughout the entire period, exhibiting a general downward trajectory. From a deficit of 954 million US dollars in 2021, the losses deepened significantly to 2,523 million US dollars by 2023. Although a marginal recovery was noted in 2024 with losses narrowing to 2,398 million US dollars, a sharp decline occurred in 2025, with economic profit falling to its lowest point of 3,881 million US dollars.
- Invested Capital Movements
- Invested capital remained relatively stable between 2021 and 2024, fluctuating within a range of 33,889 million to 36,035 million US dollars. However, a significant increase was observed in 2025, where invested capital rose to 40,693 million US dollars. This expansion of the capital base occurred simultaneously with the steepest decline in economic profit, suggesting that the additional capital deployed did not yield a positive economic return.
- Economic Spread Ratio Analysis
- The economic spread ratio reflects a deteriorating trend in value creation efficiency. The ratio began at -2.72% in 2021 and widened to -7.18% by 2023. Following a period of relative stability in 2024 at -7.08%, the ratio reached its most critical level of -9.54% in 2025. The widening negative spread confirms that the operational returns are falling increasingly short of the required cost of capital, with the inefficiency peaking in the final year of the analysis.
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Economic Profit Margin
Freeport-McMoRan Inc., economic profit margin calculation
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 ÷ Adjusted revenues
= 100 × -3,881 ÷ 25,930 = -14.97%
A comprehensive analysis of the economic value added metrics reveals a consistent failure to generate economic profit over the five-year period from 2021 to 2025. The company has operated with negative economic profit throughout this duration, indicating that the returns generated are insufficient to cover the company's cost of capital.
- Economic Profit Trajectory
- Economic profit exhibited a significant downward trend, beginning at a deficit of US$ 954 million in 2021 and expanding to US$ 2,523 million by 2023. While a marginal recovery was noted in 2024 with a reduction in loss to US$ 2,398 million, the deficit widened sharply in 2025, reaching a peak loss of US$ 3,881 million.
- Revenue Growth and Economic Correlation
- Adjusted revenues remained relatively stagnant between 2021 and 2023, fluctuating around US$ 22.7 billion to US$ 22.9 billion. A growth phase was observed in 2024 and 2025, with revenues increasing to US$ 25.385 billion and US$ 25.930 billion, respectively. However, this increase in top-line revenue did not correlate with an improvement in economic value; instead, the largest revenue year in 2025 coincided with the deepest economic loss.
- Economic Profit Margin Volatility
- The economic profit margin reflects a deterioration in value creation efficiency. The margin declined from -4.15% in 2021 to -11.00% in 2023. A temporary improvement to -9.45% occurred in 2024, but this was followed by a substantial drop to -14.97% in 2025. The widening gap between revenue growth and economic profit suggests that the costs of capital or operational inefficiencies have increased disproportionately relative to revenue gains.
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