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.
Economic Profit
Bristol-Myers Squibb Co., economic profit 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 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
= -9,292 – 7.53% × 62,654 = -14,011
The financial data reveals significant fluctuations in key performance metrics over the observed five-year period. Net operating profit after taxes (NOPAT) demonstrates considerable volatility, with a negative figure of -6,822 million in 2020, improving sharply to a positive 6,656 million in 2021. This positive trend reversed in 2022 with a decline to 4,571 million, followed by a recovery to 5,869 million in 2023, and then a steep drop to -9,292 million by the end of 2024. This pattern indicates instability in operational profitability across these years.
The cost of capital shows a gradual increase from 7.23% in 2020 to a peak of 7.98% in 2022. Thereafter, it slightly decreases to 7.49% in 2023 and stabilizes around 7.53% in 2024. This suggests a relatively increased expense in financing invested capital during the middle years, with some easing in the subsequent period.
Invested capital steadily declines throughout the period, moving from 90,149 million in 2020 down to 62,654 million in 2024. This consistent reduction may reflect asset divestments, capital efficiency improvements, or shifts in investment strategy.
Economic profit also fluctuates markedly, starting at -13,337 million in 2020. It then improves to a modest surplus of 576 million in 2021, dips to -1,153 million in 2022, slightly recovers to 806 million in 2023, and then drastically falls again to -14,011 million in 2024. These trends parallel those of NOPAT, highlighting a challenging value creation environment with intermittent periods of limited economic gain.
Overall, the data illustrate a complex financial performance marked by significant swings in profitability and value generation. The declining invested capital coupled with variable economic profit and NOPAT suggests periods of operational and financial restructuring, possibly in response to external market conditions or internal strategic adjustments. The relatively stable but elevated cost of capital may exert pressure on profitability and investment returns in this context.
Net Operating Profit after Taxes (NOPAT)
Bristol-Myers Squibb Co., 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 expected credit loss.
3 Addition of increase (decrease) in restructuring liability.
4 Addition of increase (decrease) in equity equivalents to net earnings (loss) attributable to BMS.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,551 × 5.00% = 78
6 2024 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 2,025 × 21.00% = 425
7 Addition of after taxes interest expense to net earnings (loss) attributable to BMS.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 0 × 21.00% = 0
9 Elimination of after taxes investment income.
- Net Earnings (Loss) Attributable to BMS
- The net earnings exhibit significant volatility over the five-year period. In 2020, the company experienced a substantial loss of approximately $9.015 billion. This was followed by a strong recovery in 2021, with net earnings turning positive at around $6.994 billion. The positive trend continued through 2022 and 2023, with earnings of $6.327 billion and $8.025 billion, respectively, indicating operational improvements and profitability restoration. However, in 2024, the net earnings again declined sharply to a loss of about $8.948 billion, suggesting potential one-time charges, operational challenges, or market conditions adversely affecting profitability.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values reflect a similar pattern of volatility as net earnings. In 2020, the company reported a significant negative NOPAT of approximately $6.822 billion. The following year showed a substantial positive turnaround with NOPAT reaching $6.656 billion. Despite this improvement, the subsequent years showed a decline in NOPAT, falling to $4.571 billion in 2022 and recovering slightly to $5.869 billion in 2023. In 2024, there was a notable decline to a negative $9.292 billion, aligning with the net earnings loss. This suggests that operational efficiency and tax impacts fluctuated considerably, with a sharp deterioration in 2024 likely driven by operational issues or exceptional expenses.
- Overall Trend and Insights
- Both net earnings and NOPAT demonstrate a pronounced cyclical pattern, with strong losses in 2020 followed by recovery in the subsequent years up to 2023, and then a substantial reversal back to losses in 2024. This pattern indicates that while the company was able to restore profitability after a difficult 2020, it encountered renewed challenges in 2024. The divergence between earnings and operating profit in some years suggests that non-operating factors, such as extraordinary items or tax effects, may have influenced net profitability. The data points to the necessity for a deeper review of underlying causes behind the 2024 downturn, including potential one-time charges, market dynamics, or changes in operational efficiency.
Cash Operating Taxes
Bristol-Myers Squibb Co., cash operating taxes calculation
US$ 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).
- Income Tax Provision
- The income tax provision shows a fluctuating trend over the five-year period. Starting at 2,124 million US dollars in 2020, it declined significantly to 1,084 million in 2021, followed by a moderate increase to 1,368 million in 2022. In the subsequent years, the provision dropped sharply to 400 million in 2023 but experienced a slight rebound to 554 million in 2024. This pattern suggests variability in taxable income or changes in tax strategy or regulations impacting the provision calculation.
- Cash Operating Taxes
- Cash operating taxes display a different trajectory compared to income tax provisions, indicating potential timing differences or other tax-related factors. The amount nearly doubled from 1,445 million in 2020 to 2,764 million in 2021, followed by a further substantial increase to 4,376 million in 2022. However, in 2023, cash operating taxes declined to 3,947 million and continued to drop to 3,068 million in 2024. Despite the reductions in recent years, cash tax payments remain significantly higher than in 2020. This trend may reflect changes in cash flow management, tax payment scheduling, or adjustments related to tax liabilities and credits.
- Overall Insights
- The divergence between income tax provision and cash operating taxes is notable. While income tax provisions generally decreased over the period with some volatility, cash operating taxes rose sharply before declining in the last two years but still remained elevated relative to 2020. These contrasting patterns could indicate differences in accounting recognition of tax expenses versus actual cash outflows. The fluctuations in both indicators highlight the importance of analyzing tax-related cash impacts separately from accounting provisions to fully understand the company's tax position and its effect on liquidity and profitability.
Invested Capital
Bristol-Myers Squibb Co., 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 restructuring liability.
5 Addition of equity equivalents to total BMS shareholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of construction in progress.
8 Subtraction of marketable debt securities and equity investments.
- Total reported debt & leases
- There is a noticeable reduction in total reported debt and leases from 2020 to 2022, falling from approximately $51.7 billion to about $40.7 billion. However, the debt level stabilizes around $41.5 billion in 2023 before increasing significantly to $51.2 billion in 2024, approaching the 2020 debt level once again.
- Total BMS shareholders’ equity
- The shareholders’ equity shows a consistent declining trend over the five-year period. Starting at around $37.8 billion in 2020, it decreases gradually each year, falling to roughly $16.3 billion in 2024. This decline is particularly pronounced between 2023 and 2024, where equity drops by nearly 45%, indicating potential challenges impacting the company’s net worth.
- Invested capital
- Invested capital follows a downward trend over the period, beginning at approximately $90.1 billion in 2020 and decreasing steadily every year to around $62.7 billion in 2024. The continuous reduction suggests contraction in the company's asset base or potential divestitures and may relate to the simultaneously falling equity and fluctuating debt levels.
Cost of Capital
Bristol-Myers Squibb Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 113,946) | 113,946) | ÷ | 161,015) | = | 0.71 | 0.71 | × | 9.27% | = | 6.56% | ||
| Debt3 | 45,518) | 45,518) | ÷ | 161,015) | = | 0.28 | 0.28 | × | 4.17% × (1 – 21.00%) | = | 0.93% | ||
| Operating lease liability4 | 1,551) | 1,551) | ÷ | 161,015) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 161,015) | 1.00 | 7.53% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 | 98,501) | 98,501) | ÷ | 137,139) | = | 0.72 | 0.72 | × | 9.27% | = | 6.66% | ||
| Debt3 | 36,946) | 36,946) | ÷ | 137,139) | = | 0.27 | 0.27 | × | 3.73% × (1 – 21.00%) | = | 0.79% | ||
| Operating lease liability4 | 1,692) | 1,692) | ÷ | 137,139) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 137,139) | 1.00 | 7.49% | ||||||||||
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 | 151,637) | 151,637) | ÷ | 188,301) | = | 0.81 | 0.81 | × | 9.27% | = | 7.47% | ||
| Debt3 | 35,267) | 35,267) | ÷ | 188,301) | = | 0.19 | 0.19 | × | 3.31% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 1,397) | 1,397) | ÷ | 188,301) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 188,301) | 1.00 | 7.98% | ||||||||||
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 | 146,346) | 146,346) | ÷ | 196,673) | = | 0.74 | 0.74 | × | 9.27% | = | 6.90% | ||
| Debt3 | 49,284) | 49,284) | ÷ | 196,673) | = | 0.25 | 0.25 | × | 3.33% × (1 – 21.00%) | = | 0.66% | ||
| Operating lease liability4 | 1,043) | 1,043) | ÷ | 196,673) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 196,673) | 1.00 | 7.57% | ||||||||||
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 | 134,429) | 134,429) | ÷ | 194,266) | = | 0.69 | 0.69 | × | 9.27% | = | 6.42% | ||
| Debt3 | 58,840) | 58,840) | ÷ | 194,266) | = | 0.30 | 0.30 | × | 3.33% × (1 – 21.00%) | = | 0.80% | ||
| Operating lease liability4 | 997) | 997) | ÷ | 194,266) | = | 0.01 | 0.01 | × | 3.00% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 194,266) | 1.00 | 7.23% | ||||||||||
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
Bristol-Myers Squibb Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (14,011) | 806) | (1,153) | 576) | (13,337) | |
| Invested capital2 | 62,654) | 67,562) | 71,720) | 80,284) | 90,149) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -22.36% | 1.19% | -1.61% | 0.72% | -14.79% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | -2.93% | -4.65% | 4.79% | 4.23% | -3.55% | |
| Amgen Inc. | -0.05% | 2.76% | 7.33% | 7.31% | 11.63% | |
| Danaher Corp. | -7.68% | -8.43% | -3.47% | -2.78% | -4.17% | |
| Eli Lilly & Co. | 15.04% | 1.90% | 9.26% | 10.99% | 17.67% | |
| Gilead Sciences Inc. | -7.87% | 5.27% | 2.22% | 8.94% | -4.12% | |
| Johnson & Johnson | 1.48% | -0.38% | 4.89% | 9.95% | 4.75% | |
| Merck & Co. Inc. | 13.30% | -9.00% | 11.18% | 11.35% | 4.19% | |
| Pfizer Inc. | -3.45% | -9.54% | 17.90% | 11.07% | -3.59% | |
| Regeneron Pharmaceuticals Inc. | 21.02% | 17.85% | 23.20% | 66.90% | 38.40% | |
| Thermo Fisher Scientific Inc. | -4.52% | -5.02% | -3.24% | -1.37% | -0.42% | |
| Vertex Pharmaceuticals Inc. | -22.72% | 11.23% | 13.98% | 15.19% | 28.46% | |
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 × -14,011 ÷ 62,654 = -22.36%
4 Click competitor name to see calculations.
- Invested Capital
- The invested capital has exhibited a consistent downward trend over the period analyzed. Starting from approximately $90.1 billion in 2020, it declined steadily each year, reaching around $62.7 billion by the end of 2024. This reduction suggests a gradual drawdown or divestment of capital or possibly an optimization of asset base.
- Economic Profit
- The economic profit figures show considerable volatility throughout the years. In 2020, the company reported a significant negative economic profit of approximately -$13.3 billion. This shifted markedly to a positive profit of $576 million in 2021, followed by another decline in 2022 to about -$1.15 billion. In 2023, the profit turned positive again at $806 million but reverted sharply to a large loss of approximately -$14 billion in 2024. The pattern indicates an unstable ability to generate returns above the cost of capital, with substantial fluctuations that may be driven by operational challenges, market conditions, or one-off events.
- Economic Spread Ratio
- The economic spread ratio, which reflects the difference between return on invested capital and cost of capital expressed in percentages, has likewise displayed wide variability and a downward trend overall. The ratio was deeply negative at -14.79% in 2020, improved to a small positive of 0.72% in 2021, then slipped to -1.61% in 2022, followed by a slight improvement to 1.19% in 2023. However, in 2024, the ratio deteriorated significantly to -22.36%, indicating that the company is experiencing severe negative returns relative to its capital costs in that year. This substantial negative spread suggests inefficiency or other unfavorable factors impacting overall profitability and value creation.
Economic Profit Margin
Bristol-Myers Squibb Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | (14,011) | 806) | (1,153) | 576) | (13,337) | |
| Revenues | 48,300) | 45,006) | 46,159) | 46,385) | 42,518) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -29.01% | 1.79% | -2.50% | 1.24% | -31.37% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | -3.61% | -5.84% | 6.78% | 7.22% | -8.03% | |
| Amgen Inc. | -0.09% | 7.17% | 11.74% | 12.11% | 18.61% | |
| Danaher Corp. | -23.70% | -27.68% | -8.62% | -6.95% | -12.22% | |
| Eli Lilly & Co. | 11.96% | 1.64% | 7.88% | 10.15% | 17.69% | |
| Gilead Sciences Inc. | -12.19% | 8.96% | 3.75% | 15.83% | -8.50% | |
| Johnson & Johnson | 1.78% | -0.44% | 5.87% | 10.41% | 5.66% | |
| Merck & Co. Inc. | 16.46% | -10.48% | 13.94% | 16.49% | 5.00% | |
| Pfizer Inc. | -7.36% | -24.81% | 19.59% | 11.81% | -8.75% | |
| Regeneron Pharmaceuticals Inc. | 18.43% | 16.28% | 23.36% | 45.24% | 37.41% | |
| Thermo Fisher Scientific Inc. | -8.65% | -10.02% | -5.98% | -2.79% | -0.79% | |
| Vertex Pharmaceuticals Inc. | -18.65% | 15.07% | 20.63% | 18.82% | 37.35% | |
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 ÷ Revenues
= 100 × -14,011 ÷ 48,300 = -29.01%
3 Click competitor name to see calculations.
The financial data exhibits fluctuations in both profitability and revenue over the five-year period analyzed. Key observations and trends are summarized below.
- Economic Profit
- The economic profit values show significant volatility. In 2020, there was a substantial negative economic profit of -13,337 million US dollars, which drastically improved in 2021 to a positive 576 million US dollars. However, the figure declined again in 2022 to -1,153 million US dollars, followed by a rebound to 806 million in 2023. The most recent figure for 2024 returns sharply negative at -14,011 million US dollars, the largest negative value recorded in the period. This suggests alternating cycles of profitability and loss, with no sustained positive economic profit trend.
- Revenues
- Revenues generally exhibited a moderate upward trend, increasing from 42,518 million US dollars in 2020 to 48,300 million US dollars in 2024. There was a peak in 2021 at 46,385 million US dollars, a slight decline and stabilization around 45,000 million in 2022 and 2023, followed by renewed growth in 2024. Overall, revenue growth appears steady but not dramatic, with minor year-to-year fluctuations.
- Economic Profit Margin
- The economic profit margin mirrored the pattern seen in economic profit, reflecting significant volatility. The margin was strongly negative at -31.37% in 2020, improved to a positive 1.24% in 2021, but declined again to -2.5% in 2022. It rose to 1.79% in 2023 before a steep fall to -29.01% in 2024. This inconsistency in margin indicates instability in converting revenue to economic profit, suggesting operational or cost-related challenges.
In summary, while revenues demonstrated a generally positive trend with minor fluctuations, economic profitability and its corresponding margin exhibited marked volatility with alternating positive and negative results. The sharp decline in both economic profit and margin in 2024 is a notable concern, potentially indicating increased costs, reduced operational efficiency, or other financial pressures impacting the company’s value creation capacity during that period.