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: 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
= 7,695 – 7.11% × 59,271 = 3,479
The financial performance between 2021 and 2025 is characterized by significant volatility in operating profitability and a consistent reduction in the capital base, culminating in a strong recovery of value creation by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited substantial instability throughout the period. Following a decline in 2022, profitability recovered in 2023 before experiencing a severe contraction in 2024, falling to negative 9,292 million USD. A sharp reversal occurred in 2025, with NOPAT rising to 7,695 million USD, the highest level recorded in the five-year sequence.
- Invested Capital
- A consistent downward trend is observed in invested capital, which decreased every year from 80,284 million USD in 2021 to 59,271 million USD in 2025. This steady decline indicates a systematic reduction in the assets employed to generate operating returns.
- Cost of Capital
- The cost of capital remained relatively stable, fluctuating within a narrow corridor between 6.93% and 7.35%. This stability suggests that the minimum required rate of return remained constant despite the fluctuations in operating performance.
- Economic Profit
- Economic profit mirrored the volatility of NOPAT, shifting from a positive 1,042 million USD in 2021 to a significant deficit of 13,665 million USD in 2024. The substantial loss in 2024 represents a period of severe value destruction. However, by 2025, economic profit rebounded to 3,479 million USD, indicating that the entity successfully generated returns well in excess of its cost of capital.
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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
= 2,028 × 5.00% = 101
6 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 1,992 × 21.00% = 418
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$7,054 million.
The correlation between NOPAT and net earnings is strong, suggesting that changes in operating profitability directly impact the bottom line. The pronounced negative results in 2024 for both metrics indicate a period of significant operational or financial challenges. The subsequent recovery in 2025 suggests corrective actions or favorable market conditions may have taken effect. The difference between NOPAT and net earnings should be investigated to understand non-operating factors impacting overall profitability.
- Comparative Trend
- While both NOPAT and net earnings move in the same direction, the magnitude of change in NOPAT is consistently greater. This suggests that operating performance is a primary driver of overall profitability, and fluctuations in operating results have a magnified effect on the company’s financial outcome.
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Cash Operating Taxes
Bristol-Myers Squibb Co., cash operating taxes calculation
US$ 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$3,655 million. While fluctuating, the changes in cash operating taxes were less dramatic than those observed in the income tax provision.
The divergence between the income tax provision and cash operating taxes suggests potential differences between book and tax accounting methods. The substantial increase in income tax provision in 2025, coupled with a moderate increase in cash operating taxes, warrants further investigation into the underlying drivers of these changes, such as deferred tax adjustments or changes in tax legislation. The higher cash taxes paid relative to the income tax provision in 2021 and 2022 could be due to prior year tax liabilities being settled.
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Invested Capital
Bristol-Myers Squibb Co., invested capital calculation (financing approach)
US$ 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$18,473 million occurred in 2025, but equity remained substantially lower than its initial value. This decline in equity contributed significantly to the reduction in invested capital.
The combined effect of decreasing shareholders’ equity and fluctuating debt levels resulted in the observed decline in invested capital. The increase in debt in 2024 partially offset the continued decrease in equity, but the overall trend remained negative. The slight recovery in shareholders’ equity in 2025 did not fully reverse the prior declines.
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Cost of Capital
Bristol-Myers Squibb Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 122,046) | 122,046) | ÷ | 165,858) | = | 0.74 | 0.74 | × | 8.49% | = | 6.25% | ||
| Debt3 | 41,784) | 41,784) | ÷ | 165,858) | = | 0.25 | 0.25 | × | 4.09% × (1 – 21.00%) | = | 0.81% | ||
| Operating lease liability4 | 2,028) | 2,028) | ÷ | 165,858) | = | 0.01 | 0.01 | × | 5.00% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 165,858) | 1.00 | 7.11% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 113,946) | 113,946) | ÷ | 161,015) | = | 0.71 | 0.71 | × | 8.49% | = | 6.01% | ||
| 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 | 6.98% | ||||||||||
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 | × | 8.49% | = | 6.10% | ||
| 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 | 6.93% | ||||||||||
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 | × | 8.49% | = | 6.84% | ||
| 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 | 7.35% | ||||||||||
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 | × | 8.49% | = | 6.32% | ||
| 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 | 6.99% | ||||||||||
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 | 3,479) | (13,665) | 1,184) | (702) | 1,042) | |
| Invested capital2 | 59,271) | 62,654) | 67,562) | 71,720) | 80,284) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 5.87% | -21.81% | 1.75% | -0.98% | 1.30% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| AbbVie Inc. | 0.92% | -2.01% | -3.73% | 5.69% | 5.05% | |
| Amgen Inc. | 6.40% | -0.40% | 2.41% | 6.95% | 6.94% | |
| Danaher Corp. | -10.74% | -10.91% | -11.68% | -6.67% | -5.84% | |
| Eli Lilly & Co. | 30.38% | 14.72% | 1.65% | 8.75% | 10.41% | |
| Gilead Sciences Inc. | 12.83% | -10.26% | 3.05% | -0.07% | 6.93% | |
| Johnson & Johnson | 11.78% | 2.11% | 0.26% | 5.52% | 10.59% | |
| Merck & Co. Inc. | 10.74% | 13.62% | -8.67% | 11.51% | 11.65% | |
| Pfizer Inc. | -3.56% | -3.24% | -9.35% | 18.13% | 11.30% | |
| Regeneron Pharmaceuticals Inc. | 14.03% | 16.85% | 13.65% | 19.02% | 62.77% | |
| Thermo Fisher Scientific Inc. | -7.48% | -8.28% | -8.75% | -7.00% | -4.98% | |
| Vertex Pharmaceuticals Inc. | 21.07% | -22.58% | 11.36% | 14.11% | 15.32% | |
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 × 3,479 ÷ 59,271 = 5.87%
4 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by extreme volatility in value creation metrics despite a consistent and linear reduction in the capital base. While invested capital followed a steady downward trajectory, economic profit and the associated spread ratio exhibited sharp fluctuations, including a severe contraction in 2024 followed by a robust recovery in 2025.
- Invested Capital Trend
- A continuous decline in invested capital is observed throughout the five-year period, decreasing from 80,284 million USD in 2021 to 59,271 million USD by 2025. This represents a sustained contraction of the total capital employed in the business.
- Economic Profit Analysis
- Economic profit demonstrated high instability, shifting between positive and negative values. A modest profit of 1,042 million USD in 2021 transitioned to a loss of 702 million USD in 2022, before returning to a positive 1,184 million USD in 2023. A significant anomaly occurred in 2024, with economic profit plummeting to negative 13,665 million USD. However, a strong recovery is noted in 2025, with profit rising to 3,479 million USD, the highest level within the analyzed period.
- Economic Spread Ratio Performance
- The economic spread ratio mirrors the volatility of economic profit, indicating the efficiency of capital returns relative to the cost of capital. The ratio moved from 1.30% in 2021 to -0.98% in 2022, recovered to 1.75% in 2023, and then collapsed to -21.81% in 2024, signaling substantial value destruction. The period ends with a sharp reversal in 2025, reaching a peak spread of 5.87%, which suggests a significant improvement in the company's ability to generate returns above its cost of capital.
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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 | 3,479) | (13,665) | 1,184) | (702) | 1,042) | |
| Revenues | 48,194) | 48,300) | 45,006) | 46,159) | 46,385) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 7.22% | -28.29% | 2.63% | -1.52% | 2.25% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| AbbVie Inc. | 0.93% | -2.48% | -4.68% | 8.04% | 8.62% | |
| Amgen Inc. | 10.67% | -0.79% | 6.28% | 11.14% | 11.50% | |
| Danaher Corp. | -32.92% | -33.67% | -38.34% | -16.57% | -14.59% | |
| Eli Lilly & Co. | 23.12% | 11.70% | 1.42% | 7.44% | 9.60% | |
| Gilead Sciences Inc. | 19.00% | -15.90% | 5.19% | -0.12% | 12.27% | |
| Johnson & Johnson | 17.28% | 2.53% | 0.31% | 6.62% | 11.07% | |
| Merck & Co. Inc. | 16.19% | 16.85% | -10.10% | 14.35% | 16.93% | |
| Pfizer Inc. | -7.94% | -6.89% | -24.33% | 19.85% | 12.06% | |
| Regeneron Pharmaceuticals Inc. | 12.96% | 14.78% | 12.45% | 19.15% | 42.45% | |
| Thermo Fisher Scientific Inc. | -15.81% | -15.85% | -17.47% | -12.91% | -10.13% | |
| Vertex Pharmaceuticals Inc. | 18.58% | -18.54% | 15.25% | 20.83% | 18.99% | |
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 × 3,479 ÷ 48,194 = 7.22%
3 Click competitor name to see calculations.
The financial performance between 2021 and 2025 is characterized by substantial volatility in economic value creation, contrasting with a relatively stable revenue base. While top-line growth remained consistent, the ability to generate returns above the cost of capital experienced extreme fluctuations, culminating in a severe contraction in 2024 followed by a significant recovery in 2025.
- Revenue Stability
- Annual revenues demonstrated minimal variance over the five-year period, fluctuating within a narrow range between 45,006 million and 48,300 million US dollars. A slight upward trend was noted in 2024, which plateaued in 2025, indicating a consistent market presence and stable sales volume.
- Economic Profit Volatility
- Economic profit exhibited an inconsistent trajectory, shifting between positive and negative territories. After a positive start in 2021 (1,042 million US dollars) and a dip into negative territory in 2022 (-702 million US dollars), the figure recovered in 2023 (1,184 million US dollars). A critical decline occurred in 2024, with economic profit plummeting to -13,665 million US dollars, before rebounding sharply to 3,479 million US dollars in 2025.
- Economic Profit Margin Trends
- The economic profit margin closely mirrored the volatility of the absolute economic profit. The margin remained low but positive in 2021 (2.25%) and recovered to 2.63% in 2023. The most significant anomaly occurred in 2024, where the margin collapsed to -28.29%, suggesting that capital charges or extraordinary losses vastly outweighed operating returns during that fiscal year. By 2025, the margin reached its period peak of 7.22%, indicating a substantial improvement in the efficiency of value creation relative to revenue.
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