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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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 experienced significant fluctuations over the observed periods. Starting from a substantial negative value in 2020, it reversed to a positive figure in 2021, followed by a decline in 2022. It then improved again in 2023 before declining sharply into negative territory by 2024. This pattern indicates considerable volatility in operational profitability across these years.
- Cost of Capital
- The cost of capital showed a generally increasing trend from 2020 to 2022, rising from 7.3% to 8.06%. In the subsequent periods, it experienced a slight decline to 7.57% in 2023 and a marginal increase to 7.6% in 2024, reflecting moderate fluctuations around a relatively stable range.
- Invested Capital
- Invested capital consistently decreased throughout the periods, dropping from approximately 90 billion US dollars in 2020 to around 62.7 billion US dollars in 2024. This downward trend suggests ongoing asset divestment, capital reduction, or operational scaling down activities during these years.
- Economic Profit
- Economic profit demonstrated considerable volatility. It started with a significant negative value in 2020, followed by a switch to a modest positive in 2021. There was a decline back into negative territory in 2022, a return to positive performance in 2023, and a substantial drop to a large negative number in 2024. The pattern mirrors the behavior observed in NOPAT and indicates inconsistent value creation relative to capital costs.
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 demonstrates significant volatility over the five-year period. It recorded a large negative value of -13,400 million USD in 2020, improved substantially to a positive 515 million USD in 2021, then declined into negative territory again at -1,211 million USD in 2022. The figure turned positive in 2023 with 756 million USD but sharply decreased to -14,056 million USD in 2024. This irregular pattern reflects fluctuations in the company's ability to generate returns above its cost of capital, with notable downturns at the beginning and end of the period.
- Invested Capital
- Invested capital shows a clear downward trend throughout the period. Starting from 90,149 million USD in 2020, it decreases annually to reach 62,654 million USD by 2024. This continuous reduction of approximately 30% over five years suggests a contraction in the capital base employed by the company, possibly indicating asset divestitures, capital efficiency improvements, or restructuring efforts.
- Economic Spread Ratio
- The economic spread ratio, which measures the difference between return on invested capital and cost of capital, parallels the volatility observed in economic profit. The ratio starts negative at -14.86% in 2020, turns slightly positive to 0.64% in 2021, dips back to -1.69% in 2022, improves to 1.12% in 2023, and then drastically falls to -22.43% in 2024. The steep negative value in 2024 indicates a significant gap where the return on capital fell well below the cost of capital, consistent with the large economic loss reported that year.
- Overall Insights
- The financial data reveals a company facing instability in generating economic returns, reflected by fluctuating economic profit and economic spread ratio values. The consistent decline in invested capital suggests strategic shifts or reductions in capital deployment. The substantial negative economic spread and economic profit in 2024 highlight a potential deterioration in operational performance or changes in market conditions that negatively impacted profitability relative to capital costs.
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.
- Revenue Trends
- Revenues have shown fluctuations over the analyzed periods. There was an increase from 42,518 million USD at the end of 2020 to 46,385 million USD in 2021. This was followed by a slight decrease in 2022 and 2023, moving to 46,159 million USD and 45,006 million USD respectively. However, revenues rebounded in 2024, reaching 48,300 million USD, the highest value in the period under review.
- Economic Profit Analysis
- The economic profit figures present a volatile pattern with significant negative values at the beginning and end of the period. Starting at a substantial loss of -13,400 million USD in 2020, the company achieved a positive economic profit of 515 million USD in 2021. Nevertheless, this was not sustained, as economic profit fell to -1,211 million USD in 2022, improved to a small positive 756 million USD in 2023, and then declined sharply to -14,056 million USD in 2024.
- Economic Profit Margin Insights
- The economic profit margin reflects a similar volatile trend. It started deeply negative at -31.52% in 2020, improved to a positive 1.11% in 2021, and declined again to -2.62% in 2022. A rebound occurred in 2023 with 1.68%, followed by a significant drop to -29.1% in 2024. These fluctuations parallel the economic profit values, indicating unstable profitability relative to revenue across the years.
- Summary of Performance Trends
- Overall, the financial data reveals considerable instability in economic profitability despite relatively stable revenue figures. While revenues generally trended upwards with minor dips, economic profit and its margin exhibited sharp swings between negative and positive values. The years 2021 and 2023 stand out as periods of slight economic profit improvement, contrasting with the major losses reported in 2020 and 2024. This suggests challenges in maintaining consistent value creation despite revenue growth, which could indicate issues related to cost structure, investment efficiency, or external factors impacting profitability.