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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Bristol-Myers Squibb Co. pages available for free this week:
- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2005
- Price to Sales (P/S) 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 period under review demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) exhibited volatility, decreasing substantially in 2022 before partially recovering in 2023, experiencing a large negative value in 2024, and then rebounding strongly in 2025. Invested capital consistently declined throughout the observed timeframe. The cost of capital remained relatively stable, with minor variations annually.
- Economic Profit Trend
- Economic profit began at US$1,086 million in 2021, decreased to a loss of US$660 million in 2022, and then recovered to a profit of US$1,219 million in 2023. A substantial decline occurred in 2024, resulting in a significant loss of US$13,633 million. This was followed by a considerable recovery in 2025, with economic profit reaching US$3,511 million. The volatility suggests sensitivity to changes in NOPAT and potentially, invested capital.
- NOPAT and Economic Profit Relationship
- The movement of economic profit closely mirrors the changes in NOPAT. The decrease in NOPAT from 2021 to 2022 directly contributed to the shift from positive to negative economic profit. Similarly, the large negative NOPAT in 2024 drove the substantial loss in economic profit that year. The recovery in NOPAT in 2025 corresponded with a return to positive economic profit.
- Invested Capital Trend
- Invested capital experienced a consistent downward trend, decreasing from US$80,284 million in 2021 to US$59,271 million in 2025. This ongoing reduction in capital employed occurred regardless of economic profit performance, suggesting strategic capital allocation decisions or divestitures. The decreasing capital base may have amplified the impact of NOPAT fluctuations on economic profit.
- Cost of Capital Stability
- The cost of capital remained relatively stable throughout the period, fluctuating between 6.88% and 7.29%. This consistency suggests that the company’s risk profile and market conditions did not significantly change over the observed years. The stable cost of capital allows for a clearer interpretation of the NOPAT’s impact on economic profit.
In summary, the economic profit performance was heavily influenced by fluctuations in NOPAT, while a consistent reduction in invested capital was observed. The cost of capital remained relatively constant, providing a stable benchmark for evaluating profitability.
Net Operating Profit after Taxes (NOPAT)
Bristol-Myers Squibb Co., NOPAT calculation
US$ 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 economic spread ratio exhibited significant fluctuations between 2021 and 2025. Initial values indicated a positive spread, which deteriorated substantially before recovering. A detailed examination of the period reveals notable shifts in the relationship between economic profit and invested capital.
- Economic Spread Ratio Trend
- In 2021, the economic spread ratio stood at 1.35%. This positive value suggests the company generated returns exceeding its cost of capital. However, the ratio declined sharply to -0.92% in 2022, indicating returns fell below the cost of capital. A recovery was observed in 2023, with the ratio increasing to 1.80%, signifying a return to generating value above the cost of capital. This positive trend was dramatically reversed in 2024, with the ratio plummeting to -21.76%, representing a substantial underperformance relative to the cost of capital. Finally, the ratio rebounded strongly in 2025, reaching 5.92%, indicating a significant improvement in value creation.
The economic spread ratio’s volatility closely mirrors the fluctuations in economic profit. The substantial decline in the ratio in 2024 directly corresponds with the significant negative economic profit reported for that year. Conversely, the positive ratios in 2021, 2023, and 2025 align with positive economic profit figures.
- Invested Capital Trend
- Invested capital decreased consistently throughout the period, from US$80,284 million in 2021 to US$59,271 million in 2025. This continuous reduction in invested capital occurred alongside the fluctuating economic spread ratio, suggesting that changes in capital allocation did not consistently mitigate or exacerbate the impact of economic profit on the spread ratio.
The large negative economic spread ratio in 2024 warrants further investigation. While the decrease in invested capital is consistent, the magnitude of the negative economic profit in that year appears to be the primary driver of the substantial decline in the economic spread ratio. The recovery in 2025 suggests corrective actions or favorable market conditions improved profitability.
Economic Profit Margin
Bristol-Myers Squibb Co., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 economic profit margin exhibited significant fluctuations between 2021 and 2025. Initial profitability declined sharply before recovering, ultimately reaching a peak in the final year of the observed period. A detailed examination of the economic profit margin and its underlying components reveals notable shifts in financial performance.
- Economic Profit Margin
- In 2021, the economic profit margin stood at 2.34%. This positive margin decreased substantially in 2022, resulting in a negative margin of -1.43%. A recovery was observed in 2023, with the margin increasing to 2.71%. However, 2024 witnessed a dramatic decline, with the economic profit margin plummeting to -28.22%. The final year, 2025, showed a strong rebound, with the margin rising to 7.29%.
The economic profit margin’s volatility closely mirrors the changes in economic profit. The substantial negative margin in 2024 is particularly noteworthy, indicating a significant underperformance relative to the cost of capital during that year. The return to positive and increasing margins in 2025 suggests a subsequent improvement in profitability and capital efficiency.
- Revenue Trend
- Revenues demonstrated a relatively stable pattern over the five-year period. Revenues were 46,385 million in 2021, decreasing slightly to 46,159 million in 2022, and then to 45,006 million in 2023. A notable increase occurred in 2024, reaching 48,300 million, followed by a slight decrease to 48,194 million in 2025. While revenues generally trended upwards, the fluctuations in economic profit margin suggest that revenue growth alone does not fully explain the observed performance.
The divergence between revenue trends and economic profit margin highlights the importance of considering factors beyond top-line growth. The significant decline in economic profit margin in 2024, despite increased revenues, suggests a substantial increase in costs or a decrease in operational efficiency. The subsequent recovery in 2025, coupled with a moderate revenue change, indicates successful cost management or efficiency improvements.
- Overall Assessment
- The period under review was characterized by considerable volatility in economic profitability. While revenues remained relatively stable, the economic profit margin experienced substantial swings, culminating in a significant loss in 2024 before recovering in 2025. Further investigation into the factors driving these fluctuations, particularly the events of 2024, is warranted to understand the underlying causes and inform future strategic decisions.