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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- Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Capital Asset Pricing Model (CAPM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
ConocoPhillips, 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 period. Starting with a negative value of -2991 million USD in 2020, it markedly improved to 10273 million USD in 2021. This upward trend continued strongly into 2022, peaking at 21159 million USD. However, a decline followed in 2023 and 2024, with values decreasing to 12357 million USD and 9976 million USD respectively, indicating reduced profitability after 2022.
- Cost of Capital
- The cost of capital showed a gradual upward trend from 13.9% in 2020 to a peak of 15.36% in 2022. After reaching this peak, it slightly decreased to 15.14% in 2023 and further to 14.72% in 2024. The overall pattern suggests a general increase in capital costs over time, peaking midway through the period before marginally declining.
- Invested Capital
- Invested capital demonstrated a consistent upward trajectory throughout the period. Starting at 50,870 million USD in 2020, it increased significantly each year, reaching 106,371 million USD by 2024. This indicates growing investment in assets or capital employed within the business.
- Economic Profit
- Economic profit showed considerable volatility. The value began with a substantial negative figure of -10,064 million USD in 2020, reflecting inadequate returns relative to the cost of capital. It improved sharply in 2021 to -949 million USD and turned positive in 2022 at 9,560 million USD, suggesting value creation. However, it dramatically decreased to 51 million USD in 2023 and reverted to negative territory at -5,681 million USD in 2024, indicating challenges in sustaining returns above capital costs following 2022.
- Overall Insights
- The data reveals a recovery in profitability and economic value from 2020 through 2022, with peak performance in 2022. Despite rising invested capital, the cost of capital also increased, potentially pressuring returns. The downturn in NOPAT and economic profit after 2022 hints at diminishing efficiency in utilizing invested capital to generate profits above the cost of capital. The decline in economic profit despite increased invested capital indicates that additional investments may not have yielded commensurate returns in the latter years.
Net Operating Profit after Taxes (NOPAT)
ConocoPhillips, 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.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in equity equivalents to net income (loss) attributable to ConocoPhillips.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 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 (loss) attributable to ConocoPhillips.
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 Income (Loss) Attributable to ConocoPhillips
-
The net income attributable to the company demonstrated significant volatility over the analyzed period. In 2020, the figure was a substantial loss of 2,701 million US dollars, indicating a challenging financial year. However, a dramatic recovery occurred in 2021, with net income rising to 8,079 million US dollars, reflecting a strong turnaround.
The upward trend continued in 2022, with net income reaching a peak of 18,680 million US dollars, more than doubling the previous year's performance. Despite a notable decline in 2023 to 10,957 million US dollars, net income remained robust and significantly positive. In 2024, the figure further declined to 9,245 million US dollars, representing a tapering off of profitability but maintaining a solid profit level relative to earlier years.
- Net Operating Profit After Taxes (NOPAT)
-
The net operating profit after taxes followed a pattern similar to net income, though with some differences in magnitude. The company recorded a negative NOPAT of 2,991 million US dollars in 2020, aligning with the overall loss experienced that year.
A sharp improvement occurred in 2021, with NOPAT rising to 10,273 million US dollars. This growth trend accelerated in 2022, reaching a peak at 21,159 million US dollars, which was the highest point in the observed period. Subsequently, NOPAT decreased to 12,357 million US dollars in 2023 and then to 9,976 million US dollars in 2024.
Despite these declines in the last two years, NOPAT remained significantly positive, indicating continued operational profitability post-tax, though at a lower level than the peak in 2022.
- Overall Trend Summary
-
The financial results demonstrate a recovery from significant losses in 2020 to strong profitability in subsequent years. Both net income and NOPAT peaked in 2022, followed by decreases in the later years of 2023 and 2024, suggesting a potential moderation in earnings after a period of exceptional growth.
The alignment in trends between net income and NOPAT suggests consistent operational performance after tax impacts are considered. The decline after the peak year may indicate changing market conditions, operational challenges, or strategic shifts impacting profitability, but the company remains financially robust relative to 2020 lows.
Cash Operating Taxes
ConocoPhillips, 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 (Benefit)
- The income tax provision exhibited significant volatility over the five-year period. In 2020, the provision was a benefit amounting to -485 million USD, indicating a tax credit or refund. This trend reversed dramatically in 2021 with a substantial increase to 4633 million USD, followed by further escalation in 2022 reaching 9548 million USD. Thereafter, the provision declined notably in 2023 to 5331 million USD and continued to decrease in 2024 to 4427 million USD. This pattern suggests a shift from a net tax benefit to considerable tax expenses, peaking in 2022 before trending downward in subsequent years.
- Cash Operating Taxes
- Cash operating taxes demonstrated an overall upward trajectory from 2020 through 2022, increasing from 502 million USD in 2020 to 7594 million USD in 2022. However, after this peak, the amount decreased significantly to 4270 million USD in 2023 and saw a slight further reduction to 4150 million USD in 2024. This indicates that while the company’s cash tax payments rose sharply in the initial years, they moderated in the most recent periods.
- Comparative Insights
- Both the income tax provision and cash operating taxes followed similar trends with increases up to 2022 and subsequent declines. The notable spike in 2022 for both metrics may reflect higher taxable income or changes in tax rates or structures influencing the tax liabilities. The subsequent decline may indicate improved tax planning, tax rate reductions, or decreased taxable income in the latter years.
Invested Capital
ConocoPhillips, 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 LIFO reserve. See details »
5 Addition of equity equivalents to common stockholders’ equity.
6 Removal of accumulated other comprehensive income.
7 Subtraction of marketable securities.
- Total Reported Debt & Leases
- The total reported debt and leases exhibit a fluctuating yet overall increasing trend from 2020 through 2024. The debt rose significantly from 16,154 million in 2020 to a peak of 20,601 million in 2021, followed by a decline to 17,188 million in 2022. Subsequently, the debt increased again, reaching 19,634 million in 2023 and further escalating to 25,348 million by the end of 2024. This pattern indicates periods of both deleveraging and increased borrowing or lease obligations, with a notable surge in the final reported year.
- Common Stockholders’ Equity
- Common stockholders’ equity demonstrates a consistent upward trajectory across all years presented. Starting at 29,849 million in 2020, equity grew substantially each year, reaching 45,406 million in 2021, 48,003 million in 2022, and 49,279 million in 2023. The growth accelerates notably in 2024 with equity rising to 64,796 million. This steady increase reflects a strengthening equity base, likely supported by retained earnings growth and possibly additional equity issuance or valuation gains.
- Invested Capital
- Invested capital shows an overall growth trend with slight volatility. Beginning at 50,870 million in 2020, it increased sharply to 76,355 million in 2021 but then edged down marginally to 75,520 million in 2022. Afterwards, invested capital resumed growth, climbing to 81,278 million in 2023 and making a more pronounced leap to 106,371 million in 2024. The upward movement in invested capital corresponds with the increases in both equity and debt, indicating expanding asset bases or capital expenditures that may be financed through both debt and equity.
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: 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 »
| 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: 2020-12-31).
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, 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 | ||||||
| Chevron Corp. | ||||||
| Exxon Mobil Corp. | ||||||
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.
The financial data over the five-year period reveal significant fluctuations in the company's economic profit, invested capital, and economic spread ratio. These indicators provide insight into the company's profitability and capital efficiency trends.
- Economic Profit
- The economic profit showed a substantial negative value in 2020, indicating a loss of 10,064 million US dollars. This loss sharply decreased in 2021 to 949 million US dollars, suggesting an improvement in profit generation. In 2022, the company achieved a notable positive economic profit of 9,560 million US dollars, reflecting a strong recovery and creation of shareholder value during that period. However, the subsequent years displayed volatility, with economic profit dropping to 51 million US dollars in 2023 and then declining into negative territory again at -5,681 million US dollars by the end of 2024. This trend indicates challenges in maintaining consistent profitability after 2022.
- Invested Capital
- There was a consistent increase in invested capital over the evaluated years. Starting from 50,870 million US dollars in 2020, invested capital rose substantially to 76,355 million US dollars in 2021. Although there was a slight decline to 75,520 million US dollars in 2022, the invested capital resumed growth in 2023 and 2024, reaching 81,278 million and 106,371 million US dollars, respectively. This steady increase suggests ongoing investments or asset expansion despite fluctuations in economic profit.
- Economic Spread Ratio
- The economic spread ratio mirrored the fluctuations seen in economic profit, indicating the company's varying efficiency in generating returns above its cost of capital. The ratio was deeply negative at -19.78% in 2020 and improved significantly to nearly break even at -1.24% in 2021. A favorable positive value of 12.66% was achieved in 2022, highlighting a year of strong economic profit returns relative to invested capital. However, the ratio declined sharply to 0.06% in 2023 and then turned negative again to -5.34% in 2024, reinforcing the observation of decreased profitability and capital return efficiency in the latter years.
In summary, the data reflect a volatile financial performance characterized by a major recovery in economic profit and spread in 2022, followed by a decline in subsequent years. Despite this, invested capital steadily increased, which may impose pressure on returns if profitability does not improve consistently going forward. The economic spread ratio corroborates the overall variability in profit generation relative to capital employed, underscoring the importance of monitoring these metrics for sustained value creation.
Economic Profit Margin
ConocoPhillips, 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 | ||||||
| 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: 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 ÷ Sales and other operating revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibits significant volatility over the analyzed period. In 2020, the economic profit was substantially negative at -10,064 million US dollars, indicating a considerable economic loss. This loss markedly decreased in 2021 to -949 million US dollars, approaching breakeven. By 2022, the company achieved a notable positive economic profit of 9,560 million US dollars, reflecting a strong turnaround. However, in 2023, economic profit sharply declined again to a marginal positive value of 51 million US dollars and reverted to a negative figure of -5,681 million US dollars in 2024, signaling a return to economic loss.
- Sales and Other Operating Revenues
- Sales and other operating revenues reveal an upward trend until 2022, peaking at 78,494 million US dollars. This represents strong growth from 18,784 million US dollars in 2020 and 45,828 million US dollars in 2021. However, revenues decreased in the following years, dropping to 56,141 million US dollars in 2023 and slightly declining further to 54,745 million US dollars in 2024. Despite the decline from the 2022 peak, revenues remain significantly higher than the 2020 and 2021 levels.
- Economic Profit Margin
- The economic profit margin mirrors the pattern of economic profit, starting deeply negative at -53.58% in 2020. This margin improved considerably in 2021 to -2.07%, close to zero, and turned positive in 2022 with a margin of 12.18%, indicating efficient profitability relative to revenues. In 2023, the margin sharply declined to 0.09%, nearly breakeven, and dropped to -10.38% in 2024, reflecting deteriorating profitability.
- Summary Insights
- Overall, the data indicate a period of strong recovery and peak performance in 2022, with a significant increase in both revenue and economic profitability. However, the subsequent two years show a reversal in this trend, with declining revenues and a slide back into negative economic profit and profit margins. This suggests challenges in sustaining profitability despite relatively high revenue levels post-2020 recovery. The fluctuations highlight the company's exposure to volatility, possibly influenced by market conditions or operational factors over the period analyzed.