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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Marathon Petroleum Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2011
- Price to Earnings (P/E) since 2011
- Aggregate Accruals
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Economic Profit
Marathon Petroleum Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The analysis of the annual financial data reveals several noteworthy trends and fluctuations in key performance indicators over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT figures exhibit significant volatility. Beginning with a positive value of $6,182 million in 2019, the company experienced a substantial loss in 2020, recording -$10,978 million. This negative turnaround was followed by a recovery in 2021 with NOPAT returning to positive territory at $6,187 million. The upward trend continued more robustly in 2022, reaching $17,951 million, before declining to $10,783 million in 2023. This pattern suggests exposure to considerable operational challenges in 2020, followed by a recovery phase, yet with some reduced profitability in the most recent year compared to 2022.
- Cost of Capital
- The cost of capital has steadily increased each year, starting from 11.6% in 2019 and rising consistently through the period to 15.02% in 2023. This upward trend indicates an increasing cost burden for financing the company's invested capital, which could reflect changes in market conditions, risk profile, or capital structure.
- Invested Capital
- Invested capital showed a decreasing trend from $82,004 million in 2019 down to $63,897 million in 2023, with some fluctuations. The lowest point was observed in 2021 with $63,579 million, then a slight rebound in 2022 at $69,547 million before declining again in 2023. This overall reduction in invested capital suggests a possible strategic move towards asset optimization or divestments over the analyzed period.
- Economic Profit
- Economic profit fluctuated markedly over the five years. It was negative in 2019 (-$3,332 million), deepened further into negative territory in 2020 (-$19,161 million), then partially recovered to -$2,205 million in 2021. Notably, 2022 marked a turning point with a positive economic profit of $7,572 million, indicating value creation exceeding the cost of capital. However, this positive momentum decreased significantly in 2023, with economic profit dropping to $1,188 million. This volatility aligns closely with both the fluctuations in NOPAT and the rising cost of capital.
In summary, the period under review reflects a company facing significant operational and financial challenges around 2020, followed by recovery and attempts at value creation in subsequent years. The rising cost of capital pressure, coupled with decreasing invested capital levels, point to evolving financial conditions that may influence strategic decisions. The decline in economic profit in 2023 compared to the prior year suggests that sustaining value creation remains a critical focus area going forward.
Net Operating Profit after Taxes (NOPAT)
Marathon Petroleum Corp., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in restructuring reserve.
5 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to MPC.
6 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
7 2023 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= × 21.00% =
8 Addition of after taxes interest expense to net income (loss) attributable to MPC.
9 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
10 Elimination of after taxes investment income.
11 Elimination of discontinued operations.
The analyzed financial data reveals significant fluctuations in key profitability indicators over the five-year period ending December 31, 2023.
- Net Income (Loss) Attributable to MPC
- Net income exhibited pronounced volatility. The figure fell from a positive $2,637 million in 2019 to a substantial loss of $9,826 million in 2020, indicating a severe downturn, likely driven by adverse market or operational factors during that year. Recovery occurred in 2021 with net income rising sharply to $9,738 million, surpassing the 2019 level. This upward momentum continued into 2022, reaching a peak of $14,516 million, followed by a decline in 2023 to $9,681 million. Overall, the net income reflected substantial cyclical variation, with a drastic loss followed by strong recovery and subsequent moderation.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT mirrored the pattern shown by net income, experiencing a significant negative shift in 2020 where it dropped to -$10,978 million from $6,182 million in 2019. The following years saw a robust recovery with NOPAT increasing to $6,187 million in 2021, nearly returning to the 2019 level, and then peaking at $17,951 million in 2022, which notably exceeded prior peaks in both net income and NOPAT. In 2023, NOPAT decreased to $10,783 million, indicating a moderation but remaining well above pre-2020 levels.
These trends suggest that the company was affected by a significant adverse event or market condition in 2020 leading to large losses and negative operating profit. However, the subsequent two years showed a robust rebound and profitability expansion beyond pre-2020 figures, implying possible operational improvements or favorable market conditions. The slight decline in both net income and NOPAT in 2023 could indicate some normalization or emerging challenges following exceptional performance in 2022.
Cash Operating Taxes
Marathon Petroleum Corp., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
- Income Tax Provision (Benefit)
- The income tax provision experienced significant volatility over the analyzed period. It started with a positive provision of 1,074 million USD at the end of 2019, followed by a substantial tax benefit of -2,430 million USD in 2020, indicating a reversal or tax credit situation. In 2021, the provision reverted to a modest positive value of 264 million USD. A notable increase occurred in 2022, reaching 4,491 million USD, before declining to 2,817 million USD at the end of 2023. This pattern suggests considerable fluctuations in taxable income or tax planning strategies leading to large swings in tax expense provisions.
- Cash Operating Taxes
- Cash operating taxes mirrored the overall trend of the income tax provision but with more pronounced changes. The 2019 figure stood at 324 million USD, then sharply decreased to a cash inflow (negative tax payment) of -1,899 million USD in 2020, reflecting adjustments or refunds. In 2021, cash taxes surged to 705 million USD, climbed dramatically to 4,421 million USD in 2022—the peak value in the period—and subsequently dropped to 3,010 million USD in 2023. These fluctuations align with variations in operational profitability and tax settlement timings, indicating an erratic but generally increasing cash tax burden post-2020.
Invested Capital
Marathon Petroleum Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2019-12-31).
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 reserve.
6 Addition of equity equivalents to total MPC stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of short-term investments.
The financial data reveals several key trends in the capital structure and investment base over the five-year period ending in 2023.
- Total reported debt & leases
- The total reported debt and leases experienced some fluctuations. Initially, it increased from 31,317 million USD in 2019 to a peak of 33,095 million USD in 2020. This was followed by a notable decline in 2021 to 26,904 million USD. Subsequently, a moderate rise occurred over the next two years, reaching 28,501 million USD in 2023. Overall, the debt levels show some volatility but remained below the 2019 level by the end of 2023.
- Total MPC stockholders’ equity
- Stockholders’ equity showed a declining trend over the period. Starting at 33,694 million USD in 2019, equity sharply decreased to 22,199 million USD in 2020. Although it buoyantly recovered to 26,206 million USD in 2021 and further increased to 27,715 million USD in 2022, equity declined again to 24,404 million USD in 2023. Despite recovery attempts, equity in 2023 remained significantly below the 2019 level, indicating possible challenges affecting retained earnings or other components of equity.
- Invested capital
- The invested capital consistently trended downward from 82,004 million USD in 2019 to 63,897 million USD in 2023, with intermediate fluctuations. It dropped to 70,186 million USD in 2020 and further to 63,579 million USD in 2021. A recovery occurred in 2022, reaching 69,547 million USD, followed by a decline again to 63,897 million USD in 2023. This pattern suggests variability in capital investment levels or changes in capital employed over the timeframe.
In summary, the data indicates that the company experienced a general reduction in invested capital and equity levels over the five years, paired with fluctuating debt levels that ultimately ended slightly below the initial value. The changes in equity and invested capital might reflect operational or strategic adjustments impacting the capital structure.
Cost of Capital
Marathon Petroleum 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: 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 »
| 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: 2020-12-31).
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: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Marathon Petroleum Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits considerable volatility across the five-year span. Initially, it registers a negative value of -3,332 million USD in 2019, which worsens sharply to -19,161 million USD in 2020. This severe decline is followed by a partial recovery in 2021, with the loss shrinking to -2,205 million USD. The trend reverses positively in 2022, achieving a substantial economic profit of 7,572 million USD, before declining again to 1,188 million USD in 2023. This pattern indicates significant fluctuations in profitability, with the company overcoming difficult conditions in 2020 and 2021 to achieve a positive economic profit in the subsequent years, although with reduced momentum in 2023.
- Invested Capital
- The invested capital shows a general downward trajectory from 2019 to 2023, starting at 82,004 million USD in 2019 and declining to 63,897 million USD by the end of 2023. The most pronounced reduction occurs between 2019 and 2021, falling from 82,004 to 63,579 million USD. There is a temporary increase to 69,547 million USD in 2022, followed by another decrease in 2023. This overall decline may suggest strategic divestments, asset sales, or capital efficiency improvements, coinciding with the fluctuations observed in economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility and shifts seen in economic profit. This ratio is negative in 2019 (-4.06%) and further deteriorates substantially in 2020 to -27.3%. A recovery phase starts in 2021 with an improvement to -3.47%, turning positive in 2022 at 10.89%, before declining sharply to 1.86% in 2023. The positive values in 2022 and 2023 imply that the company achieved returns exceeding its cost of capital during these years, although the sharp drop in 2023 suggests decreased efficiency or profitability relative to capital employed compared to the previous year.
- Overall Insights
- The data reveals a period of significant financial stress in 2020, potentially linked to external macroeconomic factors affecting profitability. The subsequent recovery in 2021 and strong economic profit and spread ratio in 2022 demonstrate a successful turnaround or operational improvement. However, the decline in economic profit and spread ratio in 2023, alongside a continued reduction in invested capital, suggests caution as the company faces decreased profitability and efficiency relative to its capital base. Strategic adjustments in capital deployment and efforts to sustain positive economic profit will likely be essential moving forward.
Economic Profit Margin
Marathon Petroleum Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Sales and other operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit Trend
- The economic profit experienced significant fluctuations over the analyzed period. Starting with a negative value of -3,332 million US dollars at the end of 2019, it further declined sharply in 2020 reaching -19,161 million US dollars, indicating substantial economic losses during that year. In 2021, the figure improved markedly to -2,205 million US dollars, signaling a reduction in losses. The trend reversed positively in 2022 with a notable economic profit of 7,572 million US dollars, demonstrating strong economic performance. However, in 2023, economic profit decreased to 1,188 million US dollars, showing a reduction from the previous year's peak but maintaining profitability.
- Sales and Other Operating Revenues
- Sales and other operating revenues showed considerable volatility during the period. Revenues were 123,949 million US dollars in 2019 but dropped dramatically to 69,779 million US dollars in 2020, reflecting a significant contraction. In 2021, revenues rebounded to 119,983 million US dollars and then surged to 177,453 million US dollars in 2022, marking the highest point within the period. There was a decline in 2023 to 148,379 million US dollars, though this level remained substantially higher than the early years of the period.
- Economic Profit Margin Performance
- The economic profit margin mirrored the changes observed in economic profit. It started at -2.69% in 2019 and dropped sharply to -27.46% in 2020, indicating increased inefficiency or loss relative to revenues. In 2021, there was a recovery to -1.84%, followed by a positive margin of 4.27% in 2022, signifying improved profitability. The margin declined to 0.8% in 2023, suggesting a reduced level of profit relative to sales but still maintaining a positive margin.
- Overall Financial Insights
- The period reviewed reveals a company characterized by significant volatility in both profitability and revenues. The year 2020 appears as an exceptional trough with steep declines in revenues, economic profit, and profit margin, likely due to external adverse factors. The strong recovery in 2021 and 2022 highlights resilience and an ability to capture improved market conditions. Despite the decline in 2023 across key indicators compared to 2022, economic profitability and margins remained positive, underpinning a generally stable financial position relative to the earlier years.