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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Chevron Corp. pages available for free this week:
- Income Statement
- Balance Sheet: Assets
- Common-Size Income Statement
- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Price to Book Value (P/BV) since 2005
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Economic Profit
Chevron Corp., 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 financial analysis of economic value added reveals a period of significant volatility and a general trend toward value destruction, with a singular exception in 2022. The interaction between operating profits and the cost of capital suggests that the organization struggled to generate returns exceeding its weighted average cost of capital for the majority of the observed period.
- Net Operating Profit After Taxes (NOPAT)
- A highly volatile trend is observed in NOPAT, which peaked sharply in 2022 at 41,794 million USD. Following this peak, profits experienced a substantial contraction, returning to approximately 19,473 million USD in 2023 and continuing a downward trajectory to 13,042 million USD by the end of 2025. This decline represents a significant reduction in the operational earnings available to cover the cost of invested capital.
- Cost of Capital
- The cost of capital remained relatively stable throughout the five-year period, fluctuating within a narrow range between 12.29% and 12.81%. A slight downward trend is noted toward the end of the period, moving from a peak of 12.81% in 2022 to 12.56% in 2025.
- Invested Capital
- Invested capital showed moderate growth and stability between 2021 and 2024, remaining within the 193,606 million to 212,342 million USD range. However, a significant increase occurred in 2025, where invested capital surged to 274,202 million USD. This sharp expansion in the capital base, occurring simultaneously with declining profits, heavily impacted the economic profit calculation.
- Economic Profit
- Economic profit demonstrates a pattern of inconsistency. Value was destroyed in 2021 (-4,351 million USD), followed by a period of significant value creation in 2022 (14,602 million USD). This reversal returned in 2023 and 2024, with losses of 7,695 million and 6,267 million USD, respectively. The most severe value destruction occurred in 2025, with economic profit falling to -21,394 million USD, driven by the combination of the lowest NOPAT in the period and the highest level of invested capital.
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
= × =
7 2025 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
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$12,299 million), resulting in a final value that is lower than the 2021 level.
- Relationship between NOPAT and Net Income
- While both metrics moved in the same direction over the period, the magnitude of change differed. The increase from 2021 to 2022 was more pronounced for NOPAT than for net income. Conversely, the declines from 2022 to 2025 were relatively more significant for net income. This suggests that factors impacting net income beyond core operating profitability, such as non-operating items or tax provisions, may have played a more substantial role in the latter part of the period.
The observed trends indicate a period of high profitability in 2022, followed by a consistent decline in both NOPAT and net income. The decrease in NOPAT from 2022 to 2025 warrants further investigation to determine the underlying drivers, such as changes in revenue, operating costs, or tax rates.
Cash Operating Taxes
Chevron Corp., cash operating taxes calculation
US$ 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$6,579 million in 2025. The close alignment between cash operating taxes and income tax expense indicates that the company’s actual cash outflows for taxes are closely tied to its reported taxable income.
The difference between income tax expense and cash operating taxes, while generally small, suggests the presence of deferred tax items or other non-cash tax effects. The consistency of this difference across the period indicates a stable approach to tax accounting. The fluctuations in both measures highlight the sensitivity of the company’s tax burden to changes in earnings and external tax factors.
Invested Capital
Chevron Corp., invested capital calculation (financing approach)
US$ 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$186,450 million in 2025.
The substantial increase in invested capital in 2025 appears to be driven by concurrent increases in both debt & leases and stockholders’ equity. The decrease in invested capital from 2023 to 2024 is attributable to a decrease in stockholders’ equity, partially offset by a slight increase in debt & leases. The earlier increases in invested capital from 2021 to 2023 were supported by increases in both components, though stockholders’ equity contributed more significantly to the growth.
Cost of Capital
Chevron Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 financial performance regarding economic value added demonstrates significant volatility over the five-year period, characterized by a singular instance of value creation followed by a sustained trend of value destruction. The overall trajectory indicates a widening gap between generated returns and the cost of capital, particularly in the final year of the analyzed period.
- Economic Profit
- Economic profit exhibited extreme fluctuations, remaining negative for four out of the five years. A peak was reached on December 31, 2022, with a positive value of 14,602 million US$, contrasting sharply with a loss of 4,351 million US$ in 2021. Following this peak, profits returned to negative territory, declining to 7,695 million US$ in 2023 and 6,267 million US$ in 2024, before experiencing a severe contraction to 21,394 million US$ by December 31, 2025.
- Invested Capital
- The capital base showed a general upward trend, expanding from 193,606 million US$ in 2021 to 212,342 million US$ in 2022. After a period of relative stability between 2023 and 2024, where capital hovered around 210,000 million US$, a substantial increase occurred in 2025, with invested capital rising to 274,202 million US$. This sharp increase in the capital base coincided with the most significant decline in economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrors the volatility of economic profit, reflecting the inefficiency of capital deployment relative to the required return. The ratio was negative in 2021 (-2.25%) and turned positive in 2022 (6.88%), indicating a period where returns exceeded the cost of capital. However, the ratio reverted to negative values in 2023 (-3.62%) and 2024 (-3.01%), ending the period at -7.80% in 2025. The deterioration of this ratio suggests a diminishing ability to generate a return that justifies the invested capital.
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 | ||||||
| Sales and other operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial performance regarding economic value added exhibits significant volatility over the five-year period, characterized by a brief window of value creation followed by a return to consistent value destruction. The overall trend indicates that for the majority of the analyzed period, returns failed to exceed the company's cost of capital.
- Economic Profit Margin Volatility
- The economic profit margin demonstrates a sharp peak in 2022, reaching 6.19% after starting at -2.80% in 2021. However, this positive trajectory was not sustained, with the margin returning to negative territory in 2023 (-3.91%) and 2024 (-3.24%). A severe deterioration is observed in 2025, where the margin dropped to -11.60%, representing the most significant erosion of economic value in the period.
- Correlation Between Revenue and Economic Profit
- A direct correlation is observed between sales volume and the ability to generate economic profit. Revenue peaked in 2022 at 235,717 million US$, coinciding with the only positive economic profit of 14,602 million US$. As sales steadily declined from 2023 through 2025, economic profit moved deeper into negative territory, suggesting that lower revenue levels were insufficient to cover the imputed cost of capital.
- Analysis of Value Destruction
- While 2021, 2023, and 2024 showed relatively stable negative economic profit figures, the results for 2025 indicate an accelerated loss of value. The economic profit fell to -21,394 million US$, a substantial increase in value destruction compared to the previous year. This decline occurred despite sales only decreasing by approximately 5% between 2024 and 2025, implying a significant compression in operating margins or an increase in the cost of capital during that fiscal year.