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:
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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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 five-year period, while the cost of capital remained relatively stable, with a slight upward trend towards the end of the period.
- Economic Profit Trend
- Economic profit began at US$1.212 billion in 2021, decreased to a loss of US$0.538 billion in 2022, and then recovered to a profit of US$1.322 billion in 2023. A substantial decline occurred in 2024, resulting in a significant loss of US$13.539 billion. This was followed by a strong recovery in 2025, with economic profit reaching US$3.604 billion. 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 fluctuations in NOPAT. The negative economic profit in 2022 and the substantial loss in 2024 directly correspond to the lower NOPAT in those years. Conversely, the positive economic profit in 2021, 2023, and 2025 aligns with the higher NOPAT values observed in those periods. This indicates that NOPAT is a primary driver of economic profit.
- Cost of Capital and Invested Capital
- The cost of capital remained relatively consistent, fluctuating between 6.73% and 7.12% over the period. Invested capital experienced a consistent downward trend, decreasing from US$80.284 billion in 2021 to US$59.271 billion in 2025. While the cost of capital did not dramatically shift, the decreasing invested capital base, combined with NOPAT fluctuations, significantly impacted economic profit.
The substantial negative economic profit in 2024 warrants further investigation. While the recovery in 2025 is positive, understanding the factors contributing to the 2024 decline is crucial for future performance. The consistent reduction in invested capital should also be examined to determine its implications for long-term growth and profitability.
Net Operating Profit after Taxes (NOPAT)
Bristol-Myers Squibb Co., NOPAT calculation
US$ 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 positive values transitioned to a substantial negative value before recovering to a positive level. This analysis details the observed trends and potential implications.
- Economic Spread Ratio
- In 2021, the economic spread ratio stood at 1.51%. This indicates that the company generated a return on invested capital exceeding its cost of capital by 1.51 percentage points. A decrease was observed in 2022, with the ratio falling to -0.75%, signifying a return on invested capital below the cost of capital. The ratio rebounded strongly in 2023, reaching 1.96%, demonstrating improved profitability relative to invested capital.
- However, 2024 witnessed a dramatic decline, with the economic spread ratio plummeting to -21.61%. This substantial negative value suggests a significant underperformance of invested capital relative to its cost. A considerable recovery occurred in 2025, as the ratio rose to 6.08%, indicating a substantial improvement in the return generated on invested capital compared to its cost.
The economic spread ratio’s volatility suggests considerable shifts in the company’s profitability and capital efficiency. The large negative spread in 2024 warrants further investigation to understand the underlying factors contributing to this underperformance. The subsequent recovery in 2025 is a positive sign, but continued monitoring is necessary to assess the sustainability of this improvement.
- Relationship to Economic Profit and Invested Capital
- The economic spread ratio’s movements correlate with changes in economic profit and invested capital. The negative economic spread in 2022 and 2024 aligns with periods of negative economic profit, indicating that the company did not generate sufficient profit to cover its cost of capital. Conversely, positive economic spread ratios in 2021, 2023, and 2025 correspond with positive economic profit, demonstrating value creation.
- The consistent decline in invested capital from 2021 to 2025 may have influenced the economic spread ratio. While a lower invested capital base can potentially increase the ratio, the significant negative spread in 2024 indicates that profitability issues were the primary driver of the underperformance, outweighing any positive impact from capital reduction.
Overall, the economic spread ratio demonstrates a period of instability. While the recent recovery in 2025 is encouraging, the substantial fluctuations highlight the need for ongoing analysis and strategic adjustments to ensure consistent value creation.
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 exhibited significant fluctuation between 2021 and 2025. Initially positive, it transitioned to a substantial loss before recovering strongly. This volatility is reflected in the economic profit margin, which demonstrates a corresponding pattern of change.
- Economic Profit
- Economic profit began at US$1,212 million in 2021, decreased to a loss of US$538 million in 2022, and then rebounded to a profit of US$1,322 million in 2023. A dramatic decline occurred in 2024, resulting in a loss of US$13,539 million. Finally, economic profit recovered substantially in 2025, reaching US$3,604 million.
- Revenues
- Revenues experienced a slight decrease from US$46,385 million in 2021 to US$46,159 million in 2022, followed by a more noticeable decrease to US$45,006 million in 2023. Revenues then increased to US$48,300 million in 2024 and remained relatively stable at US$48,194 million in 2025.
- Economic Profit Margin
- The economic profit margin mirrored the trend in economic profit. It started at 2.61% in 2021, decreased to -1.16% in 2022, and increased to 2.94% in 2023. The margin then plummeted to -28.03% in 2024 before recovering to 7.48% in 2025. The significant drop in 2024 suggests a substantial increase in the cost of capital relative to economic profit, or a large decrease in economic profit relative to revenues.
The most striking observation is the large negative economic profit margin in 2024. While revenues increased during that year, the economic profit decreased dramatically, indicating a significant underperformance relative to the cost of capital. The subsequent recovery in 2025, both in economic profit and margin, suggests a correction of the factors contributing to the 2024 decline.