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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- Statement of Comprehensive Income
- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Revenues
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Economic Profit
ConocoPhillips, 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 period demonstrates significant fluctuations in economic profit. Net operating profit after taxes (NOPAT) experienced a substantial increase from 2021 to 2022, followed by declines in subsequent years. Invested capital also exhibited volatility, increasing notably in 2023 and 2024 before stabilizing. The cost of capital remained relatively consistent throughout the analyzed timeframe.
- Economic Profit Trend
- Economic profit peaked in 2022 at US$14,789 million, representing a considerable improvement over the US$4,013 million recorded in 2021. However, a consistent downward trend is then observed, with economic profit decreasing to US$5,558 million in 2023, US$1,257 million in 2024, and further declining to US$252 million in 2025. This suggests diminishing returns on invested capital or increasing costs relative to generated profits.
- NOPAT and Invested Capital Relationship
- While NOPAT increased significantly in 2022, the subsequent declines in NOPAT, coupled with increases in invested capital in 2023 and 2024, contributed to the reduction in economic profit. The increase in invested capital without a corresponding increase in NOPAT suggests potential inefficiencies in capital allocation or a lag in realizing returns from new investments. The stabilization of invested capital in 2025 did not prevent further erosion of economic profit, indicating that NOPAT decline was the primary driver.
- Cost of Capital Stability
- The cost of capital remained relatively stable, fluctuating between 8.20% and 8.44% over the period. This suggests that external financing conditions did not significantly impact the economic profit trend. The observed changes in economic profit are therefore primarily attributable to changes in NOPAT and invested capital, rather than shifts in the cost of funding those investments.
In summary, the period was characterized by a strong initial performance in 2022, followed by a consistent decline in economic profit. This decline appears to be driven by decreasing NOPAT and, to a lesser extent, increases in invested capital, despite a stable cost of capital. Further investigation into the factors affecting NOPAT and capital allocation efficiency would be warranted.
Net Operating Profit after Taxes (NOPAT)
ConocoPhillips, NOPAT calculation
US$ 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 equity equivalents to net income.
5 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2025 Calculation
Tax benefit of interest and debt expense = Adjusted interest and debt expense × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income.
8 2025 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 operating profit after taxes (NOPAT) exhibited significant fluctuation over the five-year period. While net income experienced volatility, NOPAT demonstrated a more pronounced pattern of increase followed by decline. A clear trend of increasing profitability was observed between 2021 and 2022, followed by a subsequent decrease through 2025.
- Overall Trend
- NOPAT increased substantially from US$10,273 million in 2021 to US$21,159 million in 2022, representing a growth of approximately 106%. This was followed by a consistent decline over the subsequent three years, decreasing to US$8,950 million by 2025. This represents an overall decrease of approximately 58% from the 2022 peak.
- Year-over-Year Changes
- The largest year-over-year increase occurred between 2021 and 2022, with NOPAT growing by US$10,886 million. The most significant decrease was observed between 2022 and 2023, with a reduction of US$8,802 million. Subsequent declines were more moderate, with decreases of US$369 million between 2023 and 2024, and US$1,026 million between 2024 and 2025.
- Relationship to Net Income
- While both NOPAT and net income fluctuated, NOPAT consistently exceeded net income throughout the period. The difference between NOPAT and net income suggests the presence of significant non-operating items or differences in accounting treatment impacting reported net income. The gap between NOPAT and net income also varied year to year, indicating changes in these non-operating factors.
The observed decline in NOPAT from 2022 to 2025 warrants further investigation to determine the underlying drivers. Potential factors could include changes in operating expenses, revenue fluctuations, or shifts in the effective tax rate. The consistent difference between NOPAT and net income also suggests a need for detailed analysis of non-operating items to fully understand the company’s profitability.
Cash Operating Taxes
ConocoPhillips, cash operating taxes calculation
US$ 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 income tax provision and cash operating taxes exhibited fluctuating behavior over the five-year period. A significant increase in both metrics occurred between 2021 and 2022, followed by subsequent adjustments in the following years.
- Income Tax Provision
- The income tax provision increased substantially from US$4,633 million in 2021 to US$9,548 million in 2022. This represents a more than 100% increase. Following this peak, the provision decreased to US$5,331 million in 2023 and further to US$4,427 million in 2024. A slight increase to US$4,668 million was observed in 2025, remaining relatively close to the 2021 level.
- Cash Operating Taxes
- Cash operating taxes mirrored the trend observed in the income tax provision, increasing from US$3,469 million in 2021 to US$7,594 million in 2022. This also represents an increase exceeding 100%. Subsequent years saw a decline to US$4,270 million in 2023, followed by US$4,150 million in 2024. The value increased slightly in 2025, reaching US$4,242 million.
The close correlation between the income tax provision and cash operating taxes suggests a strong link between reported accounting income and actual cash outflows for tax purposes. The substantial increase in 2022, followed by declines in 2023 and 2024, could be attributable to changes in taxable income, tax rates, or the timing of tax payments. The stabilization in 2025 indicates a potential leveling off of these factors.
- Relationship between Metrics
- Cash operating taxes consistently remained below the income tax provision throughout the period. This difference could be due to various factors, including deferred tax assets or liabilities, tax credits, or differences in the timing of recognition for accounting and tax purposes. The magnitude of this difference remained relatively stable across the observed years.
Further investigation into the underlying drivers of these fluctuations, such as changes in revenue, expenses, and applicable tax laws, would be necessary to provide a more comprehensive understanding of these trends.
Invested Capital
ConocoPhillips, invested capital calculation (financing approach)
US$ 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 equity equivalents to equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
The reported invested capital exhibited a fluctuating pattern over the five-year period. Initially, a slight decrease is observed between 2021 and 2022, followed by a period of growth and then a minor contraction. Concurrent changes are noted in the components contributing to invested capital – total reported debt & leases and equity.
- Invested Capital Trend
- Invested capital decreased marginally from US$76,355 million in 2021 to US$75,520 million in 2022, representing a decline of approximately 1.1%. A subsequent increase occurred, with invested capital reaching US$81,278 million in 2023. This growth accelerated in 2024, with invested capital rising to US$106,371 million. A slight decrease was then recorded in 2025, with invested capital settling at US$105,245 million.
- Debt & Leases
- Total reported debt & leases decreased significantly from US$20,601 million in 2021 to US$17,188 million in 2022. An increase followed in 2023, reaching US$19,634 million, and continued into 2024, with debt & leases rising to US$25,348 million. A modest decrease was observed in 2025, with the value reported as US$24,394 million.
- Equity
- Equity demonstrated a consistent upward trend from 2021 to 2024. It increased from US$45,406 million in 2021 to US$48,003 million in 2022, then to US$49,279 million in 2023, and reached US$64,796 million in 2024. A slight decrease was recorded in 2025, with equity reported at US$64,487 million.
The substantial increase in invested capital between 2023 and 2024 appears to be driven by a combination of increased debt & leases and a significant rise in equity. The minor decrease in invested capital in 2025 is attributable to a slight reduction in both debt & leases and equity. The growth in equity is more pronounced than the fluctuations in debt & leases, suggesting equity is becoming a more dominant component of the invested capital base.
Cost of Capital
ConocoPhillips, cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt, including finance leases3 | ÷ | = | × | × (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, including finance leases. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ConocoPhillips, 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 | ||||||
| Chevron Corp. | ||||||
| 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 economic spread ratio demonstrates a significant fluctuation over the five-year period. Initially strong, the ratio experienced a substantial increase followed by a marked decline, ultimately reaching a low point in the final year observed.
- Economic Spread Ratio Trend
- In 2021, the economic spread ratio stood at 5.26%. This value increased dramatically to 19.58% in 2022, indicating a substantial improvement in the return generated relative to the capital invested. However, a considerable decrease was observed in 2023, with the ratio falling to 6.84%. This downward trend continued through 2024, with the ratio declining further to 1.18%. By 2025, the economic spread ratio reached 0.24%, representing a significant contraction from the peak observed in 2022.
The economic spread ratio’s movement appears closely linked to changes in economic profit. While invested capital generally increased over the period, economic profit experienced volatility. The substantial increase in the ratio in 2022 coincided with a large increase in economic profit. Conversely, the subsequent declines in the ratio correlate with decreasing economic profit figures in 2023, 2024, and 2025.
- Relationship to Economic Profit and Invested Capital
- The economic spread ratio is calculated using economic profit and invested capital. The observed trend suggests that while the company has been increasing its invested capital, its ability to generate economic profit relative to that investment has diminished significantly over time. The substantial growth in invested capital between 2023 and 2024 did not translate into a corresponding increase in economic profit, contributing to the ratio’s decline.
The decreasing economic spread ratio warrants further investigation to understand the underlying drivers of profitability and capital efficiency. The substantial decline from 2022 to 2025 suggests potential challenges in maintaining returns on invested capital.
Economic Profit Margin
ConocoPhillips, 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 | ||||||
| Chevron Corp. | ||||||
| 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 economic profit margin demonstrates a significant fluctuation over the five-year period. Initially strong, the margin experienced substantial growth followed by a marked decline.
- Economic Profit Margin Trend
- In 2021, the economic profit margin stood at 8.76%. This figure increased considerably in 2022, reaching 18.84%, representing a period of heightened profitability relative to sales. However, the margin decreased to 9.90% in 2023, indicating a moderation in economic profit generation. The decline continued into 2024, with the margin falling to 2.30%, and further diminished to 0.43% in 2025. This represents a substantial contraction in profitability as a percentage of sales over the latter part of the observed period.
The economic profit itself mirrors this trend. While economic profit increased significantly from 2021 to 2022, it subsequently decreased each year through 2025. This suggests that while sales increased in 2022, the subsequent years saw a combination of decreasing sales and/or increasing capital costs that impacted economic profit.
- Relationship between Sales and Margin
- Sales and other operating revenues increased substantially from 2021 to 2022, coinciding with the peak in economic profit margin. However, despite a subsequent decrease in sales in 2023, the economic profit margin did not recover to 2022 levels. Sales experienced a modest recovery in 2024 and 2025, but the economic profit margin continued to decline, suggesting factors beyond revenue volume are significantly influencing profitability.
The consistent decline in the economic profit margin from 2022 through 2025 warrants further investigation. Potential contributing factors could include increased operating costs, a higher cost of capital, or a shift in the sales mix towards lower-margin products or services.