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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Schlumberger Ltd. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
- Analysis of Debt
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Economic Profit
Schlumberger Ltd., 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 shows a significant recovery over the observed period. Initially, there was a substantial loss of 11,275 million US dollars in 2020. However, from 2021 onwards, the NOPAT turned positive, increasing steadily each year to 4,815 million US dollars by 2024. This indicates improved operational efficiency or profitability over time.
- Cost of Capital
- The cost of capital demonstrates an upward trend from 12.95% in 2020 to a peak of 17.55% in 2022. Following this peak, the cost of capital slightly decreases to 16.82% by 2024. This rise and subsequent small decline may reflect changes in market conditions, risk assessments, or company-specific financial strategies.
- Invested Capital
- The invested capital remains relatively stable with minor fluctuations. The value starts at 33,428 million US dollars in 2020, dips slightly in 2021 to 32,896 million, then rises steadily to 39,383 million US dollars by 2024. This indicates a gradual increase in the company's capital investment base over the five-year period.
- Economic Profit
- The economic profit remains negative throughout the period but shows consistent improvement. It starts at a substantial loss of 15,602 million US dollars in 2020 and steadily decreases in magnitude to 1,810 million dollars negative by 2024. Despite this improvement, the persistent negative economic profit suggests that the returns generated are still below the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Schlumberger Ltd., 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.
- Net income (loss) attributable to SLB
- The net income attributable to SLB demonstrates a significant recovery trend over the observed period. In 2020, the company reported a substantial loss of approximately 10.5 billion US dollars. However, this was followed by a marked turnaround in 2021, reaching a positive net income of about 1.9 billion US dollars. The subsequent years show consistent growth, with net income increasing to 3.4 billion in 2022, 4.2 billion in 2023, and 4.5 billion US dollars in 2024. This progression indicates improving profitability and effective management responses to prior challenges.
- Net operating profit after taxes (NOPAT)
- NOPAT mirrors the trends observed in net income, starting from a significant negative value of around 11.3 billion US dollars in 2020. Following this, there is a steady and considerable improvement, with the figure rising to approximately 2.3 billion in 2021. The upward trajectory continues through 2022 to 2024, with NOPAT reaching 3.8 billion, then 4.6 billion, and finally stabilizing near 4.8 billion US dollars. This consistent increase highlights enhanced operational efficiency and profitability after tax expenses.
- Overall Observations
- Both key profitability metrics exhibit a substantial recovery from profound losses in 2020 to solid gains by 2024. The steady annual increases suggest that the company implemented effective strategies to reverse losses and improve financial health. The close alignment between net income and NOPAT trends indicates sound operational performance and improved tax management over the period analyzed.
Cash Operating Taxes
Schlumberger Ltd., 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).
The financial data indicates a consistent and rising trend in the tax expense (benefit) over the observed periods. Starting from a negative tax expense (benefit) of -812 million US dollars in 2020, the figure turned positive and increased substantially to 446 million in 2021. Thereafter, the tax expense showed a steady upward trajectory, reaching 779 million in 2022, 1007 million in 2023, and further climbing to 1093 million in 2024. This progression suggests an improvement in profitability or taxable income over the years, as tax expenses tend to correlate positively with earnings before tax.
In parallel, cash operating taxes also exhibited a similar expanding trend. Beginning at 546 million US dollars in 2020, cash operating taxes rose moderately to 579 million in 2021, followed by a significant increase to 905 million in 2022. This growth continued in 2023 with cash operating taxes amounting to 1070 million, and further to 1211 million in 2024. The consistent increase in cash operating taxes aligns with the upward movement in reported tax expense, indicating sustained growth in taxable cash flows and possibly improved operational performance.
The simultaneous increase observed in both tax expense and cash operating taxes over the five-year period reflects an overall positive financial trajectory. The data implies enhanced earnings capacity, higher taxable income, and an expanding tax liability footprint, which typically signals operational growth and improving economic conditions for the company.
Invested Capital
Schlumberger Ltd., 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.
- Total reported debt & leases
- There is a consistent downward trend in total reported debt and leases from 2020 through 2023, decreasing from 17,897 million USD in 2020 to 12,775 million USD in 2023. In 2024, the debt level stabilized, showing a slight increase to 12,816 million USD. Overall, this indicates a reduction in leverage over the five-year period, with a significant decrease in the first three years followed by stabilization.
- Total SLB stockholders’ equity
- Stockholders’ equity exhibits a steady and significant upward trend throughout the entire period. It grew from 12,071 million USD in 2020 to 21,130 million USD in 2024, showing sustained capital accumulation and increased net asset value. This growth suggests strengthening financial stability and potentially successful retention of earnings or capital infusions.
- Invested capital
- Invested capital showed a slight decline from 33,428 million USD in 2020 to 32,896 million USD in 2021, followed by a modest increase to 33,931 million USD in 2022. From 2022 onward, the invested capital rose noticeably, reaching 39,383 million USD in 2024. This trend implies increasing investment activities or asset base expansion in the latter years, reflecting growth initiatives or capital expenditures.
Cost of Capital
Schlumberger Ltd., 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
Schlumberger Ltd., 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 × ÷ =
- Economic profit
- Economic profit shows a marked improvement over the period analyzed, moving from a significant loss of US$ -15,602 million in 2020 to a much smaller loss of US$ -1,810 million in 2024. This trend reflects a consistent reduction in the negative economic profit, indicating progress toward profitability or reduced economic losses.
- Invested capital
- The invested capital exhibits a generally increasing trend throughout the five-year period, starting at US$ 33,428 million in 2020 and rising to US$ 39,383 million by 2024. There is a slight dip from 2020 to 2021, but overall growth is observed especially after 2021, suggesting increased capital allocation or investments over time.
- Economic spread ratio
- The economic spread ratio improves consistently over the period, moving from a deeply negative -46.67% in 2020 to a less negative -4.6% in 2024. Although it remains negative, the narrowing gap suggests a gradual increase in the efficiency of invested capital or improved returns relative to the cost of capital, reflecting better economic performance.
Economic Profit Margin
Schlumberger Ltd., 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 Trend
- Revenue exhibited a steady upward trajectory over the five-year period. Starting at $23,601 million in 2020, revenue experienced a slight decrease in 2021 to $22,929 million but then increased consistently thereafter, reaching $28,091 million in 2022, $33,135 million in 2023, and $36,289 million in 2024. This growth indicates a gradual strengthening in the company's top-line performance.
- Economic Profit Analysis
- Economic profit showed significant improvement throughout the observed period, although it remained negative. The loss narrowed considerably from -$15,602 million in 2020 to -$2,950 million in 2021, followed by further reductions to -$2,153 million in 2022, -$1,909 million in 2023, and -$1,810 million in 2024. This pattern reflects a substantial enhancement in the company's economic value creation, albeit still operating below break-even on an economic profit basis.
- Economic Profit Margin Insights
- The economic profit margin mirrored the positive trend observed in economic profit levels. It improved markedly from a deeply negative margin of -66.11% in 2020 to -12.87% in 2021. The margin continued to narrow to -7.66% in 2022, -5.76% in 2023, and -4.99% in 2024. Despite these improvements, margins remained negative, indicating persistent challenges in translating revenue growth into positive economic profit margins.
- Overall Observations
- The data reveal a clear pattern of revenue growth accompanied by incremental recovery in economic profit and margin metrics. Although economic profit remains negative, the significant reduction in losses and the consistent improvement in economic profit margins suggest enhanced operational efficiency or cost management. The company appears to be moving towards positive economic profitability, supported by top-line growth and margin improvements.