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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SLB N.V. pages available for free this week:
- Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
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Economic Profit
SLB N.V., 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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes showed a significant turnaround from a negative value of -11,275 million US dollars in 2020 to a positive and steadily increasing trend in the subsequent years. It rose to 2,298 million in 2021, further to 3,801 million in 2022, reaching 4,641 million in 2023, and slightly increasing to 4,815 million in 2024. This indicates a strong recovery and ongoing improvement in operational profitability.
- Cost of Capital
- The cost of capital increased notably from 13.14% in 2020 to a peak of 17.82% in 2022. It then showed a marginal decline to 17.61% in 2023 and to 17.08% in 2024. Although the cost of capital remained elevated in the later years compared to 2020, the slight reduction towards the end suggests a modest improvement in capital efficiency or market conditions impacting capital costs.
- Invested Capital
- Invested capital demonstrated a generally upward trajectory over the five-year period. After a small decrease from 33,428 million in 2020 to 32,896 million in 2021, the invested capital increased steadily to 33,931 million in 2022, then to 37,776 million in 2023, and further to 39,383 million in 2024. This trend implies continued investment in assets or business operations.
- Economic Profit
- Economic profit remained negative throughout the period but showed a consistent improvement. Starting at -15,667 million in 2020, it improved to -3,032 million in 2021 and continued to narrow the loss to -2,247 million in 2022, -2,012 million in 2023, and -1,913 million in 2024. Despite improvements, the company was still not generating positive economic profits, indicating that returns did not fully cover the cost of capital during these years.
- Summary
- The financial data suggests a period of significant operational recovery and profitability enhancement after 2020. The steady increase in NOPAT alongside rising invested capital points to growth and expansion efforts. However, the persistently high cost of capital and the continuation of negative economic profit indicate challenges in creating value above the capital costs. Efforts to improve capital efficiency and generate positive economic profit appear necessary to sustain long-term financial health.
Net Operating Profit after Taxes (NOPAT)
SLB N.V., 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 allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to SLB.
4 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income (loss) attributable to SLB.
7 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
8 Elimination of after taxes investment income.
The financial performance over the five-year period demonstrates a significant turnaround and continued improvement. Initially, there was a substantial net loss attributable to the company, followed by positive net income figures in subsequent years that increased steadily. This positive trend in net income is indicative of enhanced profitability and operational efficiency.
Similarly, the net operating profit after taxes (NOPAT) reflects a comparable trajectory. The initial negative value suggests operational challenges; however, subsequent values indicate recovery and growth. The NOPAT consistently increased year over year, suggesting improved operational management and a stronger ability to generate profit from core activities after accounting for taxes.
- Net Income (Loss) Attributable to the Company
- The net income was significantly negative in the initial year, reflecting considerable losses. From the following year onward, the company achieved positive net income that increased each year, reaching the highest value in the final reported year. This consistent growth highlights successful efforts in boosting profitability and possibly the impact of strategic initiatives or market conditions favoring the company.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT figures mirror the profit improvement seen in net income. Starting with a large operating loss, NOPAT turned positive in the second year and grew progressively each year. This metric suggests the company not only recovered from its operating losses but also enhanced its core operational efficiency, resulting in increased post-tax operating profits.
Overall, the data suggest a positive operational turnaround and financial strengthening over the period, with marked improvements in profitability and operational effectiveness. The upward trends in both net income and NOPAT indicate that the company has managed to overcome initial difficulties and establish a trajectory of sustainable growth.
Cash Operating Taxes
SLB N.V., 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).
- Tax Expense (Benefit) Trend
- The tax expense demonstrated a significant shift from a negative value of -812 million US dollars in 2020 to positive values in subsequent years. Specifically, it increased to 446 million in 2021, followed by a further rise to 779 million in 2022. This upward trajectory continued with 1,007 million in 2023 and reached 1,093 million in 2024. This trend indicates a transition from a tax benefit or credit situation in 2020 towards steadily increasing tax liabilities over the following periods.
- Cash Operating Taxes Trend
- Cash operating taxes exhibited a consistent upward trend across the five-year period. Beginning at 546 million US dollars in 2020, it increased moderately to 579 million in 2021. This increase became more pronounced in 2022 with a rise to 905 million. The subsequent years recorded further increases to 1,070 million in 2023 and 1,211 million in 2024. The data suggests growing cash outflows related to tax obligations, reflecting increasing taxable income or changes in tax regulations.
- Overall Tax Position
- Collectively, the data reveals a clear pattern of increasing tax-related expenses. The movement from a tax benefit in 2020 to steadily higher tax expenses and cash operating taxes over five years suggests improving profitability or changing tax circumstances that require greater tax payments. The consistent increase in cash operating taxes aligns with the growing tax expense, underscoring a heightened cash burden related to taxation.
Invested Capital
SLB N.V., 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 allowance for doubtful accounts receivable.
4 Addition of equity equivalents to total SLB stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The financial data reveals notable trends in key components of the company's capital structure and invested capital over a five-year period, from December 31, 2020, through December 31, 2024.
- Total reported debt & leases
- This figure shows a consistent decline from US$17,897 million at the end of 2020 to US$12,925 million by the end of 2022. Thereafter, it stabilizes with minimal fluctuations, holding steady at around US$12,775 to US$12,816 million through 2023 and 2024. This trend indicates a substantial reduction in leverage or debt obligations in the initial years, followed by a period of debt stabilization.
- Total SLB stockholders’ equity
- Equity exhibits a strong upward trajectory, increasing from US$12,071 million in 2020 to US$21,130 million in 2024. The progression is steady year-over-year, representing significant growth in the company’s net assets and possibly reflecting retained earnings, capital injections, or other equity-enhancing activities.
- Invested capital
- The invested capital metric shows a moderate increase from US$33,428 million in 2020 to US$39,383 million in 2024. There is a slight dip observed in 2021, but following that, the invested capital consistently increases year by year, with a notable rise from 2022 onward. This pattern indicates an overall expansion in the assets deployed in the business, suggesting ongoing investment activities and possible growth initiatives.
Overall, the data indicates a strengthening in the company’s financial position characterized by a reduction in debt levels during the early years alongside steady growth in equity and invested capital. The stable debt levels in later years combined with increasing equity and invested capital suggest improved capital structure management and potentially enhanced financial flexibility.
Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
SLB N.V., 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 analysis of the economic profit, invested capital, and economic spread ratio for the most recent five-year period reveals notable trends that reflect the company's financial performance and capital efficiency.
- Economic Profit
- The economic profit shows a consistent negative value throughout the five-year span, indicating the company did not generate returns above its cost of capital. However, a clear improvement trend is observed, with losses shrinking significantly from -15,667 million USD in 2020 to -1,913 million USD in 2024. This suggests that while the company remains unprofitable on an economic profit basis, it has managed to reduce the deficit considerably over time.
- Invested Capital
- The invested capital experienced moderate growth during the analyzed years, increasing from 33,428 million USD in 2020 to 39,383 million USD in 2024. The increase is fairly steady, with a slight acceleration apparent after 2022, possibly indicating expansion efforts or increased asset base. Despite the rising capital invested, the economic profit has improved, which could point to more efficient use of the capital or better cost management.
- Economic Spread Ratio
- The economic spread ratio, which quantifies the percentage difference between returns and cost of capital, remains negative for all years. Starting at -46.87% in 2020, it improves gradually to -4.86% by 2024. This upward trend demonstrates a reduction in the gap between the company's return on invested capital and its cost of capital. Although still negative, the convergence toward zero indicates improving operational performance and financial discipline.
In summary, while the company continues to report economic losses indicating it is not yet generating value above its cost of capital, the marked improvement in economic profit and economic spread ratio, alongside moderate growth in invested capital, reflects positive operational trends and more efficient capital management over the period analyzed.
Economic Profit Margin
SLB N.V., economic profit margin calculation
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
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 ÷ Revenue
= 100 × ÷ =
- Revenue
- The revenue of the company has exhibited a consistent upward trend over the observed period. Starting from US$23,601 million in 2020, revenue decreased slightly in 2021 to US$22,929 million but then increased significantly in subsequent years, reaching US$28,091 million in 2022, US$33,135 million in 2023, and US$36,289 million in 2024. This indicates overall growth in the company's sales or service delivery capacity over time.
- Economic Profit
- Economic profit has improved substantially from 2020 to 2024, though it remains negative throughout the period. In 2020, the company experienced a substantial economic loss of US$15,667 million, which narrowed drastically in 2021 to a loss of US$3,032 million. The loss further decreased and stabilized around US$2,000 million levels in the following years, with values of US$2,247 million in 2022, US$2,012 million in 2023, and US$1,913 million in 2024. This trend reflects increased efficiency or profitability but indicates that the company's returns have yet to exceed its cost of capital.
- Economic Profit Margin
- The economic profit margin shows a marked improvement from 2020 through 2024. The margin was deeply negative at -66.38% in 2020, reflecting large losses relative to revenue. It improved significantly to -13.22% in 2021 and continued to improve steadily to -8.00% in 2022, -6.07% in 2023, and -5.27% in 2024. Despite this positive trajectory, the negative margins indicate the company has yet to achieve true economic profitability.
- Summary
- Overall, the analysis reveals that the company is experiencing strong growth in revenue alongside consistent reductions in economic losses across the covered years. While the economic profit remains negative, the narrowing losses and improving economic profit margins suggest enhanced operational or capital efficiency. The company is moving closer toward economic profitability but has not yet fully reached a positive economic profit position by 2024.