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
Chevron Corp., 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
= 13,042 – 12.80% × 274,202 = -22,051
The analysis of economic profit from 2021 to 2025 reveals a period characterized by significant volatility and a general trend of value destruction, with only one year of positive economic value added. The company struggled to consistently generate operating returns that exceeded the cost of the capital employed, resulting in negative economic profit in four out of the five years analyzed.
- Net Operating Profit After Taxes (NOPAT)
- A substantial fluctuation in NOPAT is observed, peaking in 2022 at 41,794 million US dollars before reverting to levels near 19,000 million US dollars in 2023 and 2024. A further decline is noted in 2025, where NOPAT dropped to 13,042 million US dollars, indicating a weakening of operating profitability toward the end of the period.
- Invested Capital and Cost of Capital
- The cost of capital remained relatively stable, fluctuating within a narrow range between 12.53% and 13.05%. However, invested capital showed a significant increase in 2025, rising to 274,202 million US dollars from 208,395 million US dollars in 2024. This expansion of the capital base occurred simultaneously with declining operating profits, placing upward pressure on the capital charge.
- Economic Profit Trends
- Economic profit was negative in 2021, turning positive in 2022 due to the surge in NOPAT which outweighed the cost of capital. This trend reversed in 2023 and 2024, with economic profits falling to -8,222 million and -6,776 million US dollars, respectively. The most severe value destruction occurred in 2025, with economic profit plummeting to -22,051 million US dollars, driven by the combined effect of the lowest NOPAT in the period and the highest level of invested capital.
The convergence of decreasing operational efficiency and an expanding capital base in 2025 suggests a significant divergence between the company's investment strategy and its ability to generate commensurate returns. The resulting economic profit trajectory indicates that the company failed to create shareholder value relative to the opportunity cost of capital for the majority of the observed timeframe.
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Net Operating Profit after Taxes (NOPAT)
Chevron Corp., 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.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in accrued severance liability.
5 Addition of increase (decrease) in equity equivalents to net income attributable to Chevron Corporation.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 5,985 × 4.00% = 239
7 2025 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 1,456 × 21.00% = 306
8 Addition of after taxes interest expense to net income attributable to Chevron Corporation.
Net income attributable to Chevron Corporation and Net Operating Profit After Taxes (NOPAT) exhibited significant fluctuations between 2021 and 2025. NOPAT demonstrated a substantial increase in 2022, followed by a decline in subsequent years, while net income mirrored this pattern, albeit with differing magnitudes.
- NOPAT Trend
- NOPAT increased markedly from US$19,443 million in 2021 to US$41,794 million in 2022, representing a growth of over 115%. This was followed by a decrease to US$19,473 million in 2023, nearly returning to the 2021 level. A slight increase to US$20,090 million occurred in 2024, but NOPAT then decreased again in 2025, reaching US$13,042 million. This final value represents a substantial decline from the 2022 peak and is the lowest value observed within the analyzed period.
- Net Income Trend
- Net income attributable to Chevron Corporation showed a similar pattern of volatility. It rose significantly from US$15,625 million in 2021 to US$35,465 million in 2022, a more than doubling of the prior year’s result. A substantial decrease was then observed in 2023, with net income falling to US$21,369 million. Further declines occurred in 2024 (US$17,661 million) and 2025 (US$12,299 million), resulting in a final value that is lower than the 2021 level.
- Relationship between NOPAT and Net Income
- While both metrics moved in the same direction over the period, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for NOPAT than for net income. Conversely, the declines from 2022 to 2025 were relatively more significant for net income. This suggests that factors impacting net income beyond core operating profitability, such as non-operating items or tax provisions, may have played a more substantial role in the latter part of the period.
The observed trends indicate a period of high profitability in 2022, followed by a consistent decline in both NOPAT and net income. The decrease in NOPAT from 2022 to 2025 warrants further investigation to determine the underlying drivers, such as changes in revenue, operating costs, or tax rates.
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Cash Operating Taxes
Chevron Corp., cash operating taxes calculation
US$ 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 reported income tax expense and cash operating taxes exhibit significant fluctuations over the five-year period. A substantial increase in both metrics is observed between 2021 and 2022, followed by a decrease in 2023, and a moderate increase in 2024 before declining again in 2025.
- Income Tax Expense
- Income tax expense increased markedly from US$5,950 million in 2021 to US$14,066 million in 2022. This represents a more than 136% increase. A subsequent decrease to US$8,173 million occurred in 2023, followed by a rise to US$9,757 million in 2024. The final year, 2025, saw a further reduction to US$7,258 million. The volatility suggests a strong correlation with underlying profitability and potentially changes in applicable tax rates or tax planning strategies.
- Cash Operating Taxes
- Cash operating taxes mirrored the trend of income tax expense. An increase from US$5,416 million in 2021 to US$12,067 million in 2022 was observed, representing a 123% increase. A decrease to US$7,986 million followed in 2023, with a subsequent increase to US$8,681 million in 2024. Finally, cash operating taxes decreased to US$6,579 million in 2025. The close alignment between cash operating taxes and income tax expense indicates that the company’s actual cash outflows for taxes are closely tied to its reported taxable income.
The difference between income tax expense and cash operating taxes, while generally small, suggests the presence of deferred tax items or other non-cash tax effects. The consistency of this difference across the period indicates a stable approach to tax accounting. The fluctuations in both measures highlight the sensitivity of the company’s tax burden to changes in earnings and external tax factors.
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Invested Capital
Chevron Corp., invested capital calculation (financing approach)
US$ 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 LIFO reserve. See details »
5 Addition of accrued severance liability.
6 Addition of equity equivalents to total Chevron Corporation stockholders’ equity.
7 Removal of accumulated other comprehensive income.
8 Subtraction of marketable securities.
The invested capital of the corporation exhibited an overall increasing trend between 2021 and 2025, though with some fluctuation. Total reported debt & leases and total stockholders’ equity both contribute to the calculation of invested capital, and their individual movements influence the overall trend.
- Invested Capital Trend
- Invested capital began at US$193,606 million in 2021, increasing to US$212,342 million in 2022. It remained relatively stable in 2023 at US$212,337 million before decreasing slightly to US$208,395 million in 2024. A significant increase was then observed in 2025, reaching US$274,202 million.
- Debt & Leases
- Total reported debt & leases decreased from US$34,872 million in 2021 to US$27,370 million in 2022, continuing to US$26,070 million in 2023. An increase was noted in 2024, rising to US$29,611 million, followed by a substantial increase to US$46,743 million in 2025. This represents the largest single-year increase in this metric over the observed period.
- Stockholders’ Equity
- Total stockholders’ equity increased from US$139,067 million in 2021 to US$159,282 million in 2022, and further to US$160,957 million in 2023. A decrease was observed in 2024, falling to US$152,318 million, before rising significantly to US$186,450 million in 2025.
The substantial increase in invested capital in 2025 appears to be driven by concurrent increases in both debt & leases and stockholders’ equity. The decrease in invested capital from 2023 to 2024 is attributable to a decrease in stockholders’ equity, partially offset by a slight increase in debt & leases. The earlier increases in invested capital from 2021 to 2023 were supported by increases in both components, though stockholders’ equity contributed more significantly to the growth.
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Cost of Capital
Chevron Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 369,825) | 369,825) | ÷ | 415,997) | = | 0.89 | 0.89 | × | 13.96% | = | 12.41% | ||
| Debt3 | 40,187) | 40,187) | ÷ | 415,997) | = | 0.10 | 0.10 | × | 4.52% × (1 – 21.00%) | = | 0.34% | ||
| Operating lease liability4 | 5,985) | 5,985) | ÷ | 415,997) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 415,997) | 1.00 | 12.80% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 276,273) | 276,273) | ÷ | 304,336) | = | 0.91 | 0.91 | × | 13.96% | = | 12.67% | ||
| Debt3 | 22,993) | 22,993) | ÷ | 304,336) | = | 0.08 | 0.08 | × | 2.91% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 5,070) | 5,070) | ÷ | 304,336) | = | 0.02 | 0.02 | × | 3.70% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 304,336) | 1.00 | 12.89% | ||||||||||
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 | 286,855) | 286,855) | ÷ | 311,444) | = | 0.92 | 0.92 | × | 13.96% | = | 12.85% | ||
| Debt3 | 19,355) | 19,355) | ÷ | 311,444) | = | 0.06 | 0.06 | × | 2.94% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 5,234) | 5,234) | ÷ | 311,444) | = | 0.02 | 0.02 | × | 3.30% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 311,444) | 1.00 | 13.04% | ||||||||||
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 | 308,748) | 308,748) | ÷ | 334,155) | = | 0.92 | 0.92 | × | 13.96% | = | 12.90% | ||
| Debt3 | 21,376) | 21,376) | ÷ | 334,155) | = | 0.06 | 0.06 | × | 2.79% × (1 – 21.00%) | = | 0.14% | ||
| Operating lease liability4 | 4,031) | 4,031) | ÷ | 334,155) | = | 0.01 | 0.01 | × | 1.90% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 334,155) | 1.00 | 13.05% | ||||||||||
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 | 262,628) | 262,628) | ÷ | 298,265) | = | 0.88 | 0.88 | × | 13.96% | = | 12.29% | ||
| Debt3 | 32,134) | 32,134) | ÷ | 298,265) | = | 0.11 | 0.11 | × | 2.56% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 3,503) | 3,503) | ÷ | 298,265) | = | 0.01 | 0.01 | × | 2.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 298,265) | 1.00 | 12.53% | ||||||||||
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
Chevron Corp., 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 | (22,051) | (6,776) | (8,222) | 14,074) | (4,811) | |
| Invested capital2 | 274,202) | 208,395) | 212,337) | 212,342) | 193,606) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -8.04% | -3.25% | -3.87% | 6.63% | -2.48% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| ConocoPhillips | -0.23% | 0.72% | 6.35% | 19.09% | 4.79% | |
| Exxon Mobil Corp. | -2.01% | -1.23% | 2.88% | 11.64% | 3.03% | |
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 × -22,051 ÷ 274,202 = -8.04%
4 Click competitor name to see calculations.
The analysis of economic value creation reveals a period of significant volatility, characterized by a general inability to consistently exceed the cost of capital. Except for a singular year of positive economic value addition, the trend indicates a persistent erosion of economic profit, which intensified sharply toward the end of the observed period.
- Economic Profit
- Economic profit exhibited high variance, beginning at -4,811 million US$ in 2021 before peaking at 14,074 million US$ in 2022. This growth was temporary, as figures returned to negative territory in 2023 (-8,222 million US$) and 2024 (-6,776 million US$). A substantial decline occurred in 2025, with economic profit dropping to -22,051 million US$, marking the lowest point in the sequence.
- Invested Capital
- Invested capital remained relatively stable between 2021 and 2024, fluctuating between 193,606 million US$ and 212,342 million US$. However, 2025 saw a significant increase in capital deployment, with invested capital rising to 274,202 million US$. This spike coincided with the most severe decline in economic profit, suggesting that the additional capital invested failed to generate returns exceeding the cost of capital.
- Economic Spread Ratio
- The economic spread ratio reflects the volatility of economic profit, remaining negative for four of the five years analyzed. Following a peak of 6.63% in 2022, the ratio declined to -3.87% in 2023 and -3.25% in 2024. The ratio deteriorated sharply to -8.04% in 2025, indicating a widening gap between the return on invested capital and the required rate of return.
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Economic Profit Margin
Chevron Corp., 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 | (22,051) | (6,776) | (8,222) | 14,074) | (4,811) | |
| Sales and other operating revenues | 184,432) | 193,414) | 196,913) | 235,717) | 155,606) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -11.96% | -3.50% | -4.18% | 5.97% | -3.09% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| ConocoPhillips | -0.42% | 1.39% | 9.20% | 18.36% | 7.98% | |
| Exxon Mobil Corp. | -2.30% | -1.38% | 2.64% | 8.67% | 2.98% | |
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 ÷ Sales and other operating revenues
= 100 × -22,051 ÷ 184,432 = -11.96%
3 Click competitor name to see calculations.
The financial performance regarding economic value added exhibits significant volatility over the analyzed five-year period. Economic profit remained negative for the majority of the timeframe, with only a single year of positive value creation, indicating a recurring failure to generate returns exceeding the company's cost of capital.
- Economic Profit Trends
- A sharp fluctuation is observed in economic profit, starting at -4,811 million US$ in 2021 and peaking at 14,074 million US$ in 2022. This positive trajectory was short-lived, as the figures reverted to negative territory in 2023 and 2024. A substantial deterioration occurred by 2025, with economic profit falling to -22,051 million US$, representing the lowest point in the period.
- Revenue Correlation
- Sales and other operating revenues followed a similar trajectory to economic profit. A peak in revenue was reached in 2022 at 235,717 million US$, which directly aligns with the only period of positive economic profit. Subsequent years show a steady decline in revenue, ending at 184,432 million US$ in 2025, suggesting that the ability to create economic value is highly sensitive to top-line revenue fluctuations.
- Economic Profit Margin Analysis
- The economic profit margin reflects the same instability, shifting from -3.09% in 2021 to a positive 5.97% in 2022. Following this peak, the margin contracted to -4.18% in 2023 and -3.50% in 2024. The period concludes with a significant margin compression in 2025, reaching -11.96%, which indicates an acceleration in economic value destruction relative to total sales.
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