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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Occidental 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	5,524)	12,526)	4,213)	(14,889)	(672)
Cost of capital²	14.76%	14.88%	11.96%	10.16%	9.99%
Invested capital³	56,860)	56,295)	58,059)	63,270)	84,184)

Economic profit⁴	(2,869)	4,149)	(2,731)	(21,320)	(9,078)

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
= 5,524 – 14.76% × 56,860 = -2,869

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Occidental Petroleum Corp. economic profit increased from 2021 to 2022 but then decreased significantly from 2022 to 2023.

Occidental Petroleum Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to Occidental	4,696)	13,304)	2,322)	(14,831)	(667)
Deferred income tax expense (benefit)¹	57)	(1,644)	46)	(2,517)	(1,027)
Increase (decrease) in allowance for doubtful accounts²	(8)	2)	11)	5)	(2)
Increase (decrease) in LIFO reserve³	(13)	22)	70)	(11)	(7)
Increase (decrease) in equity equivalents⁴	36)	(1,620)	127)	(2,523)	(1,036)
Interest and debt expense, net	945)	1,030)	1,614)	1,424)	1,066)
Interest expense, operating lease liability⁵	58)	36)	26)	53)	36)
Adjusted interest and debt expense, net	1,003)	1,066)	1,640)	1,477)	1,102)
Tax benefit of interest and debt expense, net⁶	(211)	(224)	(344)	(310)	(231)
Adjusted interest and debt expense, net, after taxes⁷	792)	842)	1,296)	1,167)	871)
(Income) loss from discontinued operations, net of tax⁸	—)	—)	468)	1,298)	15)
Net income (loss) attributable to noncontrolling interest	—)	—)	—)	—)	145)
Net operating profit after taxes (NOPAT)	5,524)	12,526)	4,213)	(14,889)	(672)

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 equity equivalents to net income (loss) attributable to Occidental.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,173 × 4.94% = 58

⁶ 2023 Calculation
Tax benefit of interest and debt expense, net = Adjusted interest and debt expense, net × Statutory income tax rate
= 1,003 × 21.00% = 211

⁷ Addition of after taxes interest expense to net income (loss) attributable to Occidental.

⁸ Elimination of discontinued operations.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Occidental Petroleum Corp. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Occidental Petroleum Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax expense (benefit)	1,733)	813)	915)	(2,172)	693)
Less: Deferred income tax expense (benefit)	57)	(1,644)	46)	(2,517)	(1,027)
Add: Tax savings from interest and debt expense, net	211)	224)	344)	310)	231)
Cash operating taxes	1,887)	2,681)	1,213)	655)	1,951)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Occidental Petroleum Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Occidental Petroleum Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current maturities of long-term debt	1,202)	165)	186)	440)	51)
Long-term debt, net, excluding current maturities	18,536)	19,670)	29,431)	35,745)	38,537)
Operating lease liability¹	1,173)	930)	771)	1,114)	1,423)
Total reported debt & leases	20,911)	20,765)	30,388)	37,299)	40,011)
Stockholders’ equity	30,250)	30,085)	20,327)	18,573)	34,232)
Net deferred tax (assets) liabilities²	5,738)	5,482)	7,002)	7,057)	9,661)
Allowance for doubtful accounts³	29)	37)	35)	24)	19)
LIFO reserve⁴	108)	121)	99)	29)	40)
Equity equivalents⁵	5,875)	5,640)	7,136)	7,110)	9,720)
Accumulated other comprehensive (income) loss, net of tax⁶	(275)	(195)	208)	288)	221)
Non-controlling interest	99)	—)	—)	—)	—)
Adjusted stockholders’ equity	35,949)	35,530)	27,671)	25,971)	44,173)
Invested capital	56,860)	56,295)	58,059)	63,270)	84,184)

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 equity equivalents to stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Occidental Petroleum Corp. invested capital decreased from 2021 to 2022 but then slightly increased from 2022 to 2023.

Occidental Petroleum Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	50,395)	50,395)	÷	77,955)	=	0.65	0.65	×	19.77%	=	12.78%
Preferred stock, at $1.00 per share par value (book value)	8,287)	8,287)	÷	77,955)	=	0.11	0.11	×	8.00%	=	0.85%
Long-term debt, including current maturities³	18,100)	18,100)	÷	77,955)	=	0.23	0.23	×	5.86% × (1 – 21.00%)	=	1.07%
Operating lease liability⁴	1,173)	1,173)	÷	77,955)	=	0.02	0.02	×	4.94% × (1 – 21.00%)	=	0.06%
Total:	77,955)					1.00					14.76%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	53,068)	53,068)	÷	81,360)	=	0.65	0.65	×	19.77%	=	12.89%
Preferred stock, at $1.00 per share par value (book value)	9,762)	9,762)	÷	81,360)	=	0.12	0.12	×	8.00%	=	0.96%
Long-term debt, including current maturities³	17,600)	17,600)	÷	81,360)	=	0.22	0.22	×	5.81% × (1 – 21.00%)	=	0.99%
Operating lease liability⁴	930)	930)	÷	81,360)	=	0.01	0.01	×	3.84% × (1 – 21.00%)	=	0.03%
Total:	81,360)					1.00					14.88%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	36,354)	36,354)	÷	77,987)	=	0.47	0.47	×	19.77%	=	9.21%
Preferred stock, at $1.00 per share par value (book value)	9,762)	9,762)	÷	77,987)	=	0.13	0.13	×	8.00%	=	1.00%
Long-term debt, including current maturities³	31,100)	31,100)	÷	77,987)	=	0.40	0.40	×	5.45% × (1 – 21.00%)	=	1.72%
Operating lease liability⁴	771)	771)	÷	77,987)	=	0.01	0.01	×	3.40% × (1 – 21.00%)	=	0.03%
Total:	77,987)					1.00					11.96%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	24,789)	24,789)	÷	69,465)	=	0.36	0.36	×	19.77%	=	7.05%
Preferred stock, at $1.00 per share par value (book value)	9,762)	9,762)	÷	69,465)	=	0.14	0.14	×	8.00%	=	1.12%
Long-term debt, including current maturities³	33,800)	33,800)	÷	69,465)	=	0.49	0.49	×	5.01% × (1 – 21.00%)	=	1.93%
Operating lease liability⁴	1,114)	1,114)	÷	69,465)	=	0.02	0.02	×	4.73% × (1 – 21.00%)	=	0.06%
Total:	69,465)					1.00					10.16%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	29,310)	29,310)	÷	79,295)	=	0.37	0.37	×	19.77%	=	7.31%
Preferred stock, at $1.00 per share par value (book value)	9,762)	9,762)	÷	79,295)	=	0.12	0.12	×	8.00%	=	0.98%
Long-term debt, including current maturities³	38,800)	38,800)	÷	79,295)	=	0.49	0.49	×	4.29% × (1 – 21.00%)	=	1.66%
Operating lease liability⁴	1,423)	1,423)	÷	79,295)	=	0.02	0.02	×	2.53% × (1 – 21.00%)	=	0.04%
Total:	79,295)					1.00					9.99%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Long-term debt, including current maturities. See details »

⁴ Operating lease liability. See details »

Occidental 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	(2,869)	4,149)	(2,731)	(21,320)	(9,078)
Invested capital²	56,860)	56,295)	58,059)	63,270)	84,184)
Performance Ratio
Economic spread ratio³	-5.05%	7.37%	-4.70%	-33.70%	-10.78%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	-4.85%	5.64%	-3.42%	-17.57%	-12.86%
ConocoPhillips	0.71%	13.32%	-0.62%	-19.26%	-0.61%
Exxon Mobil Corp.	-0.15%	8.58%	0.16%	-23.07%	-5.91%
Marathon Petroleum Corp.	3.01%	12.03%	-2.50%	-26.49%	-3.26%
Valero Energy Corp.	-0.16%	11.46%	-1.28%	-17.10%	-3.43%

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 × -2,869 ÷ 56,860 = -5.05%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Occidental Petroleum Corp. economic spread ratio improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023.

Occidental 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	(2,869)	4,149)	(2,731)	(21,320)	(9,078)
Net sales	28,257)	36,634)	25,956)	17,809)	20,393)
Performance Ratio
Economic profit margin²	-10.15%	11.33%	-10.52%	-119.71%	-44.52%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	-5.23%	5.08%	-4.26%	-36.70%	-18.00%
ConocoPhillips	1.03%	12.82%	-1.03%	-52.15%	-1.08%
Exxon Mobil Corp.	-0.14%	6.39%	0.16%	-35.39%	-7.01%
Marathon Petroleum Corp.	1.29%	4.71%	-1.32%	-26.64%	-2.16%
Valero Energy Corp.	-0.06%	3.23%	-0.50%	-10.79%	-1.29%

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 ÷ Net sales
= 100 × -2,869 ÷ 28,257 = -10.15%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Occidental Petroleum Corp. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Occidental Petroleum Corp. (NYSE:OXY)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin