Economic Value Added (EVA)
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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.
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Bristol-Myers Squibb Co. pages available for free this week:
- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Price to Earnings (P/E) since 2005
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Economic Profit
Bristol-Myers Squibb Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial performance from 2021 to 2025 is characterized by significant volatility in value creation, contrasted by a consistent reduction in the capital base. While the organization maintained a relatively stable cost of capital, the fluctuations in operating profitability led to inconsistent economic profit outcomes, including a severe contraction in 2024 followed by a strong recovery in 2025.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability exhibited extreme variance over the five-year period. After a decline in 2022, NOPAT recovered slightly in 2023 before experiencing a substantial collapse in 2024, falling to a deficit of 9,292 million US$. However, a significant rebound occurred in 2025, with NOPAT rising to 7,695 million US$, the highest level recorded in the analyzed period.
- Invested Capital
- A steady and uninterrupted downward trend in invested capital is observed. The capital base decreased from 80,284 million US$ in 2021 to 59,271 million US$ by 2025. This consistent reduction suggests a strategic contraction of the asset base or a systematic return of capital over time.
- Cost of Capital
- The cost of capital remained remarkably stable, fluctuating within a narrow range between 7.08% and 7.52%. This stability indicates that the organization's weighted average cost of funding remained constant despite the volatility in operational earnings and the reduction in total invested capital.
- Economic Profit
- Economic profit followed the volatility of the NOPAT. Positive value creation was recorded in 2021, 2023, and 2025, with the peak occurring in 2025 at 3,387 million US$. Conversely, 2022 and 2024 saw value destruction, with 2024 representing a critical outlier where economic profit plummeted to -13,758 million US$. The recovery in 2025 indicates a return to generating returns in excess of the cost of capital.
Net Operating Profit after Taxes (NOPAT)
Bristol-Myers Squibb Co., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net earnings (loss) attributable to BMS.
The financial performance, as indicated by net earnings and net operating profit after taxes, exhibits considerable fluctuation over the five-year period. A notable divergence between these figures is observed in 2024, warranting further investigation.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrates a significant decline from 2021 to 2022, decreasing from US$6,656 million to US$4,571 million. A partial recovery is then seen in 2023, with NOPAT reaching US$5,869 million. However, 2024 presents a substantial negative value of US$9,292 million, representing a considerable downturn. The final year, 2025, shows a return to positive figures, with NOPAT at US$7,695 million, exceeding the 2021 level.
- Net Earnings Attributable to BMS
- Net earnings follow a similar pattern of fluctuation, though less extreme than NOPAT. A decrease is observed from US$6,994 million in 2021 to US$6,327 million in 2022. Earnings increase to US$8,025 million in 2023 before experiencing a substantial loss of US$8,948 million in 2024. Net earnings recover in 2025, reaching US$7,054 million.
The correlation between NOPAT and net earnings is strong, suggesting that changes in operating profitability directly impact the bottom line. The pronounced negative results in 2024 for both metrics indicate a period of significant operational or financial challenges. The subsequent recovery in 2025 suggests corrective actions or favorable market conditions may have taken effect. The difference between NOPAT and net earnings should be investigated to understand non-operating factors impacting overall profitability.
- Comparative Trend
- While both NOPAT and net earnings move in the same direction, the magnitude of change in NOPAT is consistently greater. This suggests that operating performance is a primary driver of overall profitability, and fluctuations in operating results have a magnified effect on the company’s financial outcome.
Cash Operating Taxes
Bristol-Myers Squibb Co., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The income tax provision and cash operating taxes exhibited distinct trends between 2021 and 2025. A significant fluctuation in income tax provision is observed, while cash operating taxes demonstrate a more moderate pattern of change.
- Income Tax Provision
- The income tax provision increased from US$1,084 million in 2021 to US$1,368 million in 2022, representing a 26.2% increase. A substantial decrease followed in 2023, with the provision falling to US$400 million. This trend reversed in 2024, with a rise to US$554 million, before reaching US$2,272 million in 2025 – the highest value observed during the analyzed period. This indicates considerable volatility in reported income tax expense.
- Cash Operating Taxes
- Cash operating taxes increased from US$2,764 million in 2021 to US$4,376 million in 2022, a 58.3% increase. The value then decreased to US$3,947 million in 2023, followed by a further decrease to US$3,068 million in 2024. In 2025, cash operating taxes rose to US$3,655 million. While fluctuating, the changes in cash operating taxes were less dramatic than those observed in the income tax provision.
The divergence between the income tax provision and cash operating taxes suggests potential differences between book and tax accounting methods. The substantial increase in income tax provision in 2025, coupled with a moderate increase in cash operating taxes, warrants further investigation into the underlying drivers of these changes, such as deferred tax adjustments or changes in tax legislation. The higher cash taxes paid relative to the income tax provision in 2021 and 2022 could be due to prior year tax liabilities being settled.
Invested Capital
Bristol-Myers Squibb Co., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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.
The invested capital of the company decreased over the five-year period from 2021 to 2025. Simultaneously, both total reported debt & leases and total shareholders’ equity exhibited fluctuations, contributing to the overall trend in invested capital.
- Invested Capital Trend
- Invested capital began at US$80,284 million in 2021 and experienced a consistent decline, reaching US$59,271 million by 2025. The largest single-year decrease occurred between 2022 and 2023, with a reduction of US$4,158 million. The rate of decline slowed between 2024 and 2025.
- Debt & Leases
- Total reported debt & leases decreased from US$45,596 million in 2021 to US$40,717 million in 2022, representing a notable reduction. It then increased to US$41,464 million in 2023 before rising significantly to US$51,200 million in 2024. A subsequent decrease to US$47,139 million was observed in 2025. This fluctuating debt level likely influenced the overall invested capital.
- Shareholders’ Equity
- Total shareholders’ equity demonstrated a consistent downward trend from 2021 to 2024. Beginning at US$35,946 million in 2021, it decreased to US$16,335 million in 2024. A modest increase to US$18,473 million occurred in 2025, but equity remained substantially lower than its initial value. This decline in equity contributed significantly to the reduction in invested capital.
The combined effect of decreasing shareholders’ equity and fluctuating debt levels resulted in the observed decline in invested capital. The increase in debt in 2024 partially offset the continued decrease in equity, but the overall trend remained negative. The slight recovery in shareholders’ equity in 2025 did not fully reverse the prior declines.
Cost of Capital
Bristol-Myers Squibb Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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: 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 »
Economic Spread Ratio
Bristol-Myers Squibb Co., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial trajectory between 2021 and 2025 is characterized by a consistent reduction in the capital base juxtaposed with extreme volatility in economic value creation. While the company has steadily decreased its invested capital, the resulting economic profit and spread ratio have experienced significant fluctuations, indicating a period of instability followed by a strong recovery in the final year.
- Invested Capital Trend
- A sustained downward trend in invested capital is observed, declining from 80,284 million US$ in 2021 to 59,271 million US$ by 2025. This represents a continuous reduction in the total capital employed, suggesting a strategic deleveraging or a reduction in asset intensity over the five-year period.
- Economic Profit Volatility
- Economic profit exhibits high instability, alternating between positive and negative values. After a modest gain in 2021 and a slight deficit in 2022, a significant contraction occurred in 2024, where economic profit dropped to negative 13,758 million US$. This sharp decline represents a substantial failure to cover the cost of capital during that period. However, a recovery is noted in 2025, with economic profit rebounding to 3,387 million US$.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit, reflecting the efficiency of capital utilization. The ratio fluctuated between 1.14% in 2021 and -1.15% in 2022, before reaching a critical low of -21.96% in 2024. The final period in 2025 shows the highest efficiency in the series, with the ratio rising to 5.72%. This suggests that by 2025, the company achieved its most effective alignment between the return on invested capital and its cost of capital, despite the lower overall capital base.
Economic Profit Margin
Bristol-Myers Squibb Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The financial performance from 2021 through 2025 is characterized by extreme volatility in economic value creation, contrasting with a relatively stable revenue base. While revenues remained consistently between $45 billion and $48.3 billion, the ability to generate economic profit above the cost of capital fluctuated significantly.
- Revenue Stability
- Revenues exhibited marginal fluctuations over the five-year period, reaching a low of $45,006 million in 2023 before peaking at $48,300 million in 2024. The consistency of the top line suggests that the swings in economic profit are not driven by sales volume, but rather by changes in operational efficiency or the cost of capital.
- Economic Profit Trajectory
- Economic profit demonstrated an unstable pattern, alternating between positive and negative values. A severe contraction occurred in 2024, with economic profit falling to -13,758 million. This represents a sharp deviation from the 1,082 million reported in 2023. However, a strong recovery followed in 2025, with economic profit rising to 3,387 million, the highest value in the period.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the volatility of absolute economic profit. The margin fluctuated within a narrow band between -1.79% and 2.40% from 2021 to 2023. A critical decline to -28.49% was observed in 2024, indicating a substantial gap between generated returns and the cost of capital. This was followed by a significant rebound to 7.03% in 2025, marking the peak of economic efficiency for the analyzed timeframe.