Stock Analysis on Net
Stock Analysis on Net
Microsoft Excel LibreOffice Calc

Chevron Corp. (NYSE:CVX)

Economic Value Added (EVA)

Advanced level

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

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net operating profit after taxes (NOPAT)1 864  18,189  7,468  (4,972) (845)
Cost of capital2 10.70% 10.70% 10.34% 10.05% 9.84%
Invested capital3 195,762  212,825  208,093  214,697  219,665 
 
Economic profit4 (20,081) (4,581) (14,054) (26,550) (22,450)

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1 NOPAT. See details »

2 Cost of capital. See details »

3 Invested capital. See details »

4 2019 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 86410.70% × 195,762 = -20,081

Item Description The company
Economic profit Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital. Chevron Corp.’s economic profit increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Net Operating Profit after Taxes (NOPAT)

Chevron Corp., NOPAT calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Net income (loss) attributable to Chevron Corporation 2,924  14,824  9,195  (497) 4,587 
Deferred income tax expense (benefit)1 (1,966) 1,051  (3,203) (3,835) (1,861)
Increase (decrease) in allowance for doubtful accounts2 (123) 379  117  60  254 
Increase (decrease) in LIFO reserve3 (621) 1,197  995  (803) (4,390)
Increase (decrease) in accrued severance liability4 —  —  (60) (233) 293 
Increase (decrease) in equity equivalents5 (2,710) 2,627  (2,151) (4,811) (5,704)
Interest and debt expense 798  748  307  201  — 
Interest expense, operating lease liability6 124  141  232  214  230 
Adjusted interest and debt expense 922  889  539  415  230 
Tax benefit of interest and debt expense7 (194) (187) (189) (145) (80)
Adjusted interest and debt expense, after taxes8 729  702  350  270  149 
Net income (loss) attributable to noncontrolling interest (79) 36  74  66  123 
Net operating profit after taxes (NOPAT) 864  18,189  7,468  (4,972) (845)

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1 Elimination of deferred tax expense. See details »

2 Addition of increase (decrease) in allowance for doubtful accounts.

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 (loss) attributable to Chevron Corporation.

6 2019 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 3,885 × 3.20% = 124

7 2019 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= 922 × 21.00% = 194

8 Addition of after taxes interest expense to net income (loss) attributable to Chevron Corporation.

Item Description The company
NOPAT Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income. Chevron Corp.’s NOPAT increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Cash Operating Taxes

Chevron Corp., cash operating taxes calculation

US$ in millions

Microsoft Excel LibreOffice Calc
12 months ended: Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Income tax expense (benefit) 2,691  5,715  (48) (1,729) 132 
Less: Deferred income tax expense (benefit) (1,966) 1,051  (3,203) (3,835) (1,861)
Add: Tax savings from interest and debt expense 194  187  189  145  80 
Cash operating taxes 4,851  4,851  3,344  2,251  2,073 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

Item Description The company
Cash operating taxes Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction. Chevron Corp.’s cash operating taxes increased from 2017 to 2018 and from 2018 to 2019.

Invested Capital

Chevron Corp., invested capital calculation (financing approach)

US$ in millions

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Short-term debt 3,282  5,726  5,192  10,840  4,928 
Long-term debt, excluding debt due within one year 23,691  28,733  33,571  35,286  33,664 
Operating lease liability1 3,885  1,708  2,102  1,777  2,599 
Total reported debt & leases 30,858  36,167  40,865  47,903  41,191 
Total Chevron Corporation stockholders’ equity 144,213  154,554  148,124  145,556  152,716 
Net deferred tax (assets) liabilities2 9,510  11,522  9,902  12,867  16,256 
Allowance for doubtful accounts3 746  869  490  373  313 
LIFO reserve4 4,513  5,134  3,937  2,942  3,745 
Accrued severance liability5 —  —  —  60  293 
Equity equivalents6 14,769  17,525  14,329  16,242  20,607 
Accumulated other comprehensive (income) loss, net of tax7 4,990  3,544  3,589  3,843  4,291 
Noncontrolling interests 995  1,088  1,195  1,166  1,170 
Adjusted total Chevron Corporation stockholders’ equity 164,967  176,711  167,237  166,807  178,784 
Marketable securities8 (63) (53) (9) (13) (310)
Invested capital 195,762  212,825  208,093  214,697  219,665 

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

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.

Item Description The company
Invested capital Capital is an approximation of the economic book value of all cash invested in going-concern business activities. Chevron Corp.’s invested capital increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Cost of Capital

Chevron Corp., cost of capital calculations

Capital (fair value)1 Weights Cost of capital
Equity2 204,865  204,865  ÷ 236,390  = 0.87 0.87 × 12.03% = 10.42%
Debt3 27,640  27,640  ÷ 236,390  = 0.12 0.12 × 2.54% × (1 – 21.00%) = 0.23%
Operating lease liability4 3,885  3,885  ÷ 236,390  = 0.02 0.02 × 3.20% × (1 – 21.00%) = 0.04%
Total: 236,390  1.00 10.70%

Based on: 10-K (filing date: 2020-02-21).

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 226,848  226,848  ÷ 263,039  = 0.86 0.86 × 12.03% = 10.37%
Debt3 34,482  34,482  ÷ 263,039  = 0.13 0.13 × 2.75% × (1 – 21.00%) = 0.28%
Operating lease liability4 1,708  1,708  ÷ 263,039  = 0.01 0.01 × 8.24% × (1 – 21.00%) = 0.04%
Total: 263,039  1.00 10.70%

Based on: 10-K (filing date: 2019-02-22).

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 209,918  209,918  ÷ 251,248  = 0.84 0.84 × 12.03% = 10.05%
Debt3 39,229  39,229  ÷ 251,248  = 0.16 0.16 × 2.31% × (1 – 35.00%) = 0.23%
Operating lease liability4 2,102  2,102  ÷ 251,248  = 0.01 0.01 × 11.02% × (1 – 35.00%) = 0.06%
Total: 251,248  1.00 10.34%

Based on: 10-K (filing date: 2018-02-22).

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 210,172  210,172  ÷ 258,509  = 0.81 0.81 × 12.03% = 9.78%
Debt3 46,560  46,560  ÷ 258,509  = 0.18 0.18 × 1.87% × (1 – 35.00%) = 0.22%
Operating lease liability4 1,777  1,777  ÷ 258,509  = 0.01 0.01 × 12.05% × (1 – 35.00%) = 0.05%
Total: 258,509  1.00 10.05%

Based on: 10-K (filing date: 2017-02-23).

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 160,633  160,633  ÷ 202,124  = 0.79 0.79 × 12.03% = 9.56%
Debt3 38,892  38,892  ÷ 202,124  = 0.19 0.19 × 1.63% × (1 – 35.00%) = 0.20%
Operating lease liability4 2,599  2,599  ÷ 202,124  = 0.01 0.01 × 8.83% × (1 – 35.00%) = 0.07%
Total: 202,124  1.00 9.84%

Based on: 10-K (filing date: 2016-02-25).

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

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (20,081) (4,581) (14,054) (26,550) (22,450)
Invested capital2 195,762  212,825  208,093  214,697  219,665 
Performance Ratio
Economic spread ratio3 -10.26% -2.15% -6.75% -12.37% -10.22%
Benchmarks
Economic Spread Ratio, Competitors4
Exxon Mobil Corp. -4.72% -4.39% -5.71% -7.67% -7.61%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1 Economic profit. See details »

2 Invested capital. See details »

3 2019 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -20,081 ÷ 195,762 = -10.26%

4 Click competitor name to see calculations.

Performance ratio Description The company
Economic spread ratio The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital. Chevron Corp.’s economic spread ratio improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.

Economic Profit Margin

Chevron Corp., economic profit margin calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Economic profit1 (20,081) (4,581) (14,054) (26,550) (22,450)
Sales and other operating revenues 139,865  158,902  134,674  110,215  129,925 
Performance Ratio
Economic profit margin2 -14.36% -2.88% -10.44% -24.09% -17.28%
Benchmarks
Economic Profit Margin, Competitors3
Exxon Mobil Corp. -5.61% -4.60% -7.01% -9.83% -8.21%

Based on: 10-K (filing date: 2020-02-21), 10-K (filing date: 2019-02-22), 10-K (filing date: 2018-02-22), 10-K (filing date: 2017-02-23), 10-K (filing date: 2016-02-25).

1 Economic profit. See details »

2 2019 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × -20,081 ÷ 139,865 = -14.36%

3 Click competitor name to see calculations.

Performance ratio Description The company
Economic profit margin The ratio of economic profit to sales. It is the company’s profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin. Chevron Corp.’s economic profit margin improved from 2017 to 2018 but then deteriorated significantly from 2018 to 2019.