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:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Selected Financial Data since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
- Analysis of Revenues
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Economic Profit
Bristol-Myers Squibb Co., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT values demonstrate significant volatility over the analyzed periods. The company experienced a negative NOPAT in 2020 at -6822 million USD, followed by a substantial recovery in 2021 to 6656 million USD. However, the subsequent years show fluctuations, with a decrease to 4571 million USD in 2022, a rise again to 5869 million USD in 2023, and a sharp decline back to negative territory at -9292 million USD in 2024. This pattern indicates inconsistency in operational profitability, with notable challenges arising in the final year.
- Cost of Capital
- The cost of capital exhibits a gradual upward trend between 2020 and 2022, increasing from 7.22% to a peak of 7.98%. A slight decrease occurs in 2023 to 7.49%, followed by a marginal rise to 7.53% in 2024. Overall, the cost of capital remains relatively stable around the mid to high 7% range, suggesting moderate fluctuations in the company’s financing costs or risk profile.
- Invested Capital
- Invested capital decreases steadily over the five-year period, declining from 90,149 million USD in 2020 to 62,654 million USD in 2024. This consistent reduction indicates a progressive contraction or divestment of capital assets, which could reflect strategic restructuring, asset sales, or efforts to improve capital efficiency.
- Economic Profit
- The economic profit closely mirrors the trends observed in NOPAT but with more pronounced swings. It starts with a significant negative value of -13,333 million USD in 2020, shifts to a positive 580 million USD in 2021, then drops again into negative territory at -1,149 million USD in 2022. A rebound occurs in 2023 with a positive economic profit of 809 million USD, followed by a drastic decline to -14,008 million USD in 2024. These sharp variations suggest inconsistent value creation relative to the company's cost of capital, highlighting periods of both slight economic value generation and heavy destruction.
- Summary
- Overall, the analysis reveals a highly fluctuating financial performance with periods of recovery interrupted by significant declines. The steady decrease in invested capital contrasts with the erratic profitability metrics, implying potential challenges in maintaining sustainable returns on a shrinking asset base. The relatively stable cost of capital suggests that external financing conditions remained fairly consistent, placing the focus on operational and strategic factors influencing profitability and economic value.
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
= × =
6 2024 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.
8 2024 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= × 21.00% =
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 $62.7 billion in 2024. The continuous reduction suggests contraction in the company's asset base or potential divestitures and may relate to the simultaneously falling equity and fluctuating debt levels.
Cost of Capital
Bristol-Myers Squibb Co., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ 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 »
| 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: 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 | ||||||
| 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: 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 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant volatility over the analyzed period. Starting with a substantial negative value of -13,333 million USD in 2020, it shifted sharply to a positive 580 million USD in 2021. This improvement was followed by a decline back into negative territory at -1,149 million USD in 2022. The year 2023 showed a recovery to a positive 809 million USD. However, in 2024, there was a dramatic reversal to a notably large negative economic profit of -14,008 million USD, the lowest point within the provided timeline.
- Invested Capital
- The invested capital consistently decreased each year from 90,149 million USD in 2020 to 62,654 million USD in 2024. This steady contraction suggests divestment or asset reduction activities, resulting in a total reduction of approximately 27,495 million USD over the five-year span.
- Economic Spread Ratio
- The economic spread ratio, reflecting the difference between return on invested capital and cost of capital, fluctuated considerably. It started at a deeply negative -14.79% in 2020, improved to a slightly positive 0.72% in 2021, then dipped again to -1.6% in 2022. In 2023, it rose to a positive 1.2%. Despite these modest recoveries, the ratio plummeted sharply to -22.36% in 2024, indicating a severe decline in the company’s value generation efficiency during the final year observed.
- Summary
- Overall, the data portrays a pattern of instability in value creation, with economic profit and economic spread ratios oscillating between negative and positive values across the years. The persistent reduction in invested capital may be indicative of strategic adjustments or divestments. The severe declines in both economic profit and economic spread ratio in 2024 suggest substantial challenges impacting profitability and capital efficiency during that period.
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 | ||||||
| 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: 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 × ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues have shown a generally positive trend over the five-year period, increasing from 42,518 million USD in 2020 to 48,300 million USD in 2024. There was a peak in revenue in 2021 at 46,385 million USD, followed by a slight decline in 2022 and 2023, before rising again in 2024. Overall, the revenue growth appears modest but stable.
- Economic Profit
- The economic profit exhibits considerable volatility throughout the period. The company experienced a significant economic loss of 13,333 million USD in 2020, followed by a positive turnaround to 580 million USD in 2021. However, this was not sustained, with the economic profit dropping again to -1,149 million USD in 2022 and rising to a positive 809 million USD in 2023. The trend reversed sharply in 2024, showing a substantial loss of 14,008 million USD. This indicates fluctuations in value creation that are not consistently aligned with revenue trends.
- Economic Profit Margin
- The economic profit margin reflects the variability seen in economic profit. Starting with a negative margin of -31.36% in 2020, it improved to a positive margin of 1.25% in 2021. The margin declined to -2.49% in 2022, rose again slightly to 1.8% in 2023, and then sharply fell to -29% in 2024. This pattern highlights instability in profitability and suggests challenges in efficiently converting revenues into economic profit.