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:
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2011
- Return on Equity (ROE) since 2011
- Debt to Equity since 2011
- Price to Sales (P/S) since 2011
- Analysis of Debt
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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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT experienced significant fluctuations over the analyzed periods. It decreased sharply from a positive 6182 million USD in 2019 to a negative 10978 million USD in 2020, indicating a substantial downturn. This was followed by a recovery in 2021, returning to a level comparable to 2019 at 6187 million USD. The upward trend continued in 2022, with a marked increase to 17951 million USD, before dropping again to 10783 million USD in 2023. Overall, the data depict volatility with a rapid decline followed by a peak and a slight pullback.
- Cost of Capital
- The cost of capital shows a steady upward trajectory across the periods. Starting at 11.58% in 2019, there is a gradual increase each year, reaching 14.99% in 2023. This consistent rise suggests an increasing cost burden for the company to finance its investments, which could affect profitability and investment decisions.
- Invested Capital
- Invested capital demonstrates a declining trend from 82004 million USD in 2019 down to 63579 million USD in 2021. There is a rebound in 2022 to 69547 million USD, followed by another decline to 63897 million USD in 2023. The fluctuations indicate adjustments in the company’s asset base or capital structure, with a general reduction over the period under review after a brief recovery.
- Economic Profit
- Economic profit reveals considerable variability. It begins at a negative 3316 million USD in 2019, deteriorates further to negative 19148 million USD in 2020, reflecting the period's operational challenges or high capital costs. A recovery phase is noted in 2021, reducing the negative amount to 2191 million USD. In 2022, economic profit turns positive to 7591 million USD, highlighting improved operational efficiency and value creation. However, in 2023 it declines again to a positive but modest 1205 million USD, suggesting challenges in sustaining the higher performance level from the prior year.
- Summary
- The overall financial performance is characterized by notable volatility, especially evident in NOPAT and economic profit. The sharp downturn in 2020 followed by a substantial recovery indicates susceptibility to external factors affecting operational outcomes. Increasing cost of capital throughout the period potentially places pressure on profitability and investment returns. The invested capital figures imply a cautious approach to asset investments or structural changes. The positive shift in economic profit in 2022 suggests a temporary phase of value creation that was not fully sustained in 2023, indicating a need for ongoing focus on operational efficiency and capital cost management.
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
- Economic profit exhibited significant volatility over the five-year period. The company experienced substantial negative economic profit in 2019 and 2020, with the lowest point in 2020 at -19,148 million US dollars. There was a marked improvement in 2021 as losses diminished markedly to -2,191 million US dollars. The situation reversed positively in 2022, with economic profit turning positive to 7,591 million US dollars, indicating a strong recovery. However, in 2023, economic profit declined again to 1,205 million US dollars, though it remained positive, suggesting some instability but overall improvement compared to the earlier negative years.
- Invested Capital
- The invested capital showed a general downward trend across the period. Starting at 82,004 million US dollars in 2019, it decreased steadily through 2021 to 63,579 million US dollars. There was a slight increase in 2022 to 69,547 million US dollars, followed by a decrease again in 2023 to 63,897 million US dollars. This pattern suggests some fluctuations in asset base or capital deployment, but the overall tendency points towards capital reduction or optimization efforts over the period.
- Economic Spread Ratio
- The economic spread ratio, which reflects the company’s return over its cost of capital, moved closely in line with economic profit trends. It was negative and deteriorated significantly in 2020, reaching -27.28%, indicating returns well below cost of capital. There was an improvement in 2021 to -3.45%, followed by a positive spread in 2022 at 10.91%, reflecting value creation above the capital cost. In 2023, the spread dropped to 1.89%, remaining positive but diminishing, indicating a reduced margin over the cost of capital compared to the prior year.
Overall, the financial data reveals a recovery trajectory after significant strain in 2019 and 2020, with improving profitability and returns above capital costs starting 2022. However, the decline in economic profit and spread ratio in 2023 suggests caution, as gains made earlier were partially offset. Changes in invested capital imply ongoing adjustments in capital deployment, possibly in response to market conditions or strategic realignments.
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.
- Sales and Other Operating Revenues
- The sales and other operating revenues exhibited significant volatility over the period. Starting from approximately $123.9 billion in 2019, revenues dropped sharply to around $69.8 billion in 2020. This was followed by a substantial recovery and growth to nearly $120.0 billion in 2021 and a further increase to approximately $177.5 billion in 2022. In 2023, revenues declined to about $148.4 billion. Overall, the trend indicates a sharp contraction in 2020, a rapid rebound in the subsequent two years, and a moderate decline in the latest period.
- Economic Profit
- The economic profit figures demonstrated considerable fluctuations within the examined timeframe. In 2019, the company experienced a negative economic profit of approximately -$3.3 billion, which worsened substantially to nearly -$19.1 billion in 2020. The following year saw a significant improvement with a reduction in losses to around -$2.2 billion. In 2022, the economic profit turned positive, reaching about $7.6 billion, indicating a strong recovery. However, in 2023, economic profit decreased to roughly $1.2 billion, suggesting a slowdown in profit generation but remaining positive.
- Economic Profit Margin
- The economic profit margin mirrored the trends observed in economic profit. It was negative in 2019 at -2.68%, deteriorated substantially in 2020 to -27.44%, reflecting significant economic losses relative to sales. The margin improved considerably in 2021 to -1.83% and turned positive in 2022 at 4.28%. In 2023, the margin decreased to 0.81%, indicating reduced profitability but maintained above the break-even mark.
- Overall Insights
- The data reveal a challenging period in 2020, marked by a sharp decline in revenues and considerable economic losses. The subsequent years demonstrated a robust recovery in both sales and profitability metrics, with the company achieving positive economic profits and margins in 2022. Despite this recovery, the latest figures for 2023 show a decrease in both revenue and economic profit margin compared to the previous year, suggesting potential emerging pressures or a normalization after a peak performance in 2022. The overall trend underscores significant volatility but an ability to recover from adverse conditions.