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
ExxonMobil Holdings 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
= 28,426 – 9.46% × 371,757 = -6,738
The financial performance from 2021 to 2025 exhibits a significant transition from substantial value creation to value destruction. After a period of peak profitability in 2022, the combination of declining operating returns and an expanding capital base has resulted in negative economic profit by the end of the period.
- Net Operating Profit After Taxes (NOPAT)
- A volatile trend is observed in NOPAT, which peaked in 2022 at 62,749 million US dollars. Following this peak, a consistent downward trajectory occurred, with profits declining to 28,426 million US dollars by 2025. This represents a contraction of approximately 54.7% from the 2022 high, indicating a reduction in core operational earning power.
- Invested Capital and Cost of Capital
- Invested capital grew steadily from 272,673 million US dollars in 2021 to a peak of 378,995 million US dollars in 2024, before a slight reduction in 2025. Simultaneously, the cost of capital increased marginally but consistently from 8.80% to 9.46%. The expansion of the capital base, coupled with a rising hurdle rate, significantly increased the annual capital charge required to maintain value.
- Economic Profit and Value Creation
- Economic profit followed a sharp bell-shaped curve, reaching a maximum of 35,151 million US dollars in 2022. However, the subsequent erosion of NOPAT and the increase in invested capital led to a collapse in economic profit. The transition to negative territory began in 2024 (-3,951 million US dollars) and intensified in 2025 (-6,738 million US dollars), signaling that the returns generated by the operating assets are no longer sufficient to cover the cost of the capital employed.
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Net Operating Profit after Taxes (NOPAT)
ExxonMobil Holdings 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 reserves.
3 Addition of increase (decrease) in LIFO reserve. See details »
4 Addition of increase (decrease) in restructuring reserves.
5 Addition of increase (decrease) in equity equivalents to net income attributable to ExxonMobil.
6 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 6,834 × 4.70% = 321
7 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 924 × 21.00% = 194
8 Addition of after taxes interest expense to net income attributable to ExxonMobil.
The financial trajectory from 2021 to 2025 is characterized by a period of significant volatility, featuring a substantial peak in 2022 followed by a sustained multi-year contraction in both operating and net profitability.
- Net Operating Profit After Taxes (NOPAT) Analysis
- NOPAT exhibited a sharp increase between 2021 and 2022, rising from US$ 32,736 million to a peak of US$ 62,749 million. This peak was followed by a significant correction in 2023, where NOPAT fell to US$ 37,855 million. A consistent downward trend continued through 2024 (US$ 31,476 million) and 2025 (US$ 28,426 million), resulting in a terminal value that is lower than the initial 2021 level.
- Net Income Trends
- Net income attributable to the company mirrored the movement of NOPAT, experiencing a surge from US$ 23,040 million in 2021 to US$ 55,740 million in 2022. Subsequent years showed a steady decline, with values dropping to US$ 36,010 million in 2023, US$ 33,680 million in 2024, and US$ 28,844 million in 2025.
- Comparative Profitability Insight
- A notable convergence is observed between NOPAT and Net Income over the five-year period. In 2021 and 2022, NOPAT was substantially higher than Net Income, indicating a significant impact from non-operating items or financing costs. By 2025, this gap effectively closed, with Net Income (US$ 28,844 million) and NOPAT (US$ 28,426 million) reaching near parity, suggesting a shift in the capital structure's impact on the bottom line or a change in non-operating income streams.
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Cash Operating Taxes
ExxonMobil Holdings 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).
An analysis of the tax expenditures from 2021 to 2025 reveals a significant volatility peak in 2022, followed by a general downward trajectory in both income tax expense and cash operating taxes.
- Cash Operating Tax Volatility
- Cash operating taxes experienced a substantial increase between 2021 and 2022, rising from 7,904 million USD to 16,789 million USD. This peak was followed by a period of relative stabilization in 2023 and 2024, with values of 14,713 million USD and 14,916 million USD respectively, before dropping to 10,730 million USD in 2025.
- Income Tax Expense Trends
- Income tax expense followed a similar pattern, spiking from 7,636 million USD in 2021 to 20,176 million USD in 2022. Unlike the cash tax figures, the income tax expense showed a continuous year-over-year decline from 2022 through 2025, ending the period at 11,504 million USD.
- Comparative Analysis of Cash versus Book Taxes
- A notable divergence occurred in 2022, where income tax expense exceeded cash operating taxes by 3,387 million USD. This relationship inverted by 2024, as cash operating taxes surpassed income tax expense by 1,106 million USD. Such variances suggest fluctuations in deferred tax positions, which directly impact the adjustment of after-tax operating income for Economic Value Added calculations.
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Invested Capital
ExxonMobil Holdings 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 restructuring reserves.
6 Addition of equity equivalents to total ExxonMobil share of equity.
7 Removal of accumulated other comprehensive income.
Invested capital exhibited a strong upward trajectory from 2021 through 2024, followed by a marginal contraction in 2025. The overall growth in the capital base is primarily attributable to a substantial expansion in equity rather than an increase in leverage.
- Invested Capital Trends
- The total invested capital increased from 272,673 million US$ in 2021 to a peak of 378,995 million US$ in 2024. This represents a significant expansion of the capital base over the four-year period. A slight reduction is observed in 2025, with the figure adjusting to 371,757 million US$.
- Equity Growth and Contribution
- The share of equity served as the primary driver of the increase in invested capital. Equity grew consistently from 168,577 million US$ in 2021 to 263,705 million US$ in 2024. The most pronounced increase occurred between 2023 and 2024, where equity rose by approximately 58,903 million US$. A minor decrease to 259,386 million US$ was recorded in 2025.
- Debt and Lease Obligations
- Debt and lease obligations remained relatively stable compared to the growth in equity. A decrease was observed between 2021 and 2022, falling from 52,894 million US$ to 46,787 million US$. This was followed by a period of gradual recovery, with debt rising to 50,371 million US$ by the end of 2025. The volatility in debt levels was minimal relative to the total capital structure.
The analysis indicates a strategic shift toward equity-funded growth. By 2024, the proportion of invested capital derived from equity increased significantly, reducing the relative reliance on debt to fund operations and investments. The slight decline in both equity and total invested capital in 2025 suggests a stabilization or minor contraction of the capital base following the peak in 2024.
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Cost of Capital
ExxonMobil Holdings Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 627,848) | 627,848) | ÷ | 674,971) | = | 0.93 | 0.93 | × | 9.95% | = | 9.26% | ||
| Debt3 | 40,289) | 40,289) | ÷ | 674,971) | = | 0.06 | 0.06 | × | 3.51% × (1 – 21.00%) | = | 0.17% | ||
| Operating lease liability4 | 6,834) | 6,834) | ÷ | 674,971) | = | 0.01 | 0.01 | × | 4.70% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 674,971) | 1.00 | 9.46% | ||||||||||
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 | 478,608) | 478,608) | ÷ | 522,861) | = | 0.92 | 0.92 | × | 9.95% | = | 9.11% | ||
| Debt3 | 37,775) | 37,775) | ÷ | 522,861) | = | 0.07 | 0.07 | × | 3.35% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 6,478) | 6,478) | ÷ | 522,861) | = | 0.01 | 0.01 | × | 4.90% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 522,861) | 1.00 | 9.35% | ||||||||||
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 | 413,926) | 413,926) | ÷ | 458,407) | = | 0.90 | 0.90 | × | 9.95% | = | 8.99% | ||
| Debt3 | 38,471) | 38,471) | ÷ | 458,407) | = | 0.08 | 0.08 | × | 3.44% × (1 – 21.00%) | = | 0.23% | ||
| Operating lease liability4 | 6,010) | 6,010) | ÷ | 458,407) | = | 0.01 | 0.01 | × | 3.90% × (1 – 21.00%) | = | 0.04% | ||
| Total: | 458,407) | 1.00 | 9.25% | ||||||||||
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 | 446,709) | 446,709) | ÷ | 489,324) | = | 0.91 | 0.91 | × | 9.95% | = | 9.08% | ||
| Debt3 | 37,021) | 37,021) | ÷ | 489,324) | = | 0.08 | 0.08 | × | 3.10% × (1 – 21.00%) | = | 0.19% | ||
| Operating lease liability4 | 5,594) | 5,594) | ÷ | 489,324) | = | 0.01 | 0.01 | × | 2.40% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 489,324) | 1.00 | 9.29% | ||||||||||
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 | 325,013) | 325,013) | ÷ | 380,785) | = | 0.85 | 0.85 | × | 9.95% | = | 8.49% | ||
| Debt3 | 50,582) | 50,582) | ÷ | 380,785) | = | 0.13 | 0.13 | × | 2.67% × (1 – 21.00%) | = | 0.28% | ||
| Operating lease liability4 | 5,190) | 5,190) | ÷ | 380,785) | = | 0.01 | 0.01 | × | 2.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 380,785) | 1.00 | 8.80% | ||||||||||
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
ExxonMobil Holdings 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 | (6,738) | (3,951) | 9,428) | 35,151) | 8,746) | |
| Invested capital2 | 371,757) | 378,995) | 307,196) | 297,049) | 272,673) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -1.81% | -1.04% | 3.07% | 11.83% | 3.21% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | -7.95% | -3.16% | -3.78% | 6.72% | -2.40% | |
| ConocoPhillips | -0.04% | 0.90% | 6.55% | 19.29% | 4.98% | |
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 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -6,738 ÷ 371,757 = -1.81%
4 Click competitor name to see calculations.
The financial data indicates a significant volatility in economic value creation, characterized by a sharp peak in 2022 followed by a sustained decline into negative territory by 2025. This trajectory suggests a transition from substantial value generation to economic value destruction over the five-year period.
- Economic Profit Trends
- Economic profit experienced a dramatic increase from US$ 8,746 million in 2021 to a peak of US$ 35,151 million in 2022. However, this gain was not sustained, as profit levels fell sharply to US$ 9,428 million in 2023. A critical inflection point occurred in 2024, where economic profit turned negative at US$ -3,951 million, further deteriorating to US$ -6,738 million by December 31, 2025.
- Invested Capital Evolution
- Invested capital showed a consistent upward trend from 2021 through 2024, rising from US$ 272,673 million to a peak of US$ 378,995 million. This represents a significant expansion of the capital base. A slight contraction was observed in 2025, with invested capital decreasing to US$ 371,757 million, though the capital base remained substantially higher than the 2021 baseline.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of the economic profit. After starting at 3.21% in 2021, the ratio surged to 11.83% in 2022, indicating a period of high efficiency where returns significantly exceeded the cost of capital. This ratio reverted to 3.07% in 2023 before entering negative territory. The spread ratio reached -1.04% in 2024 and declined further to -1.81% in 2025, confirming that the returns on invested capital failed to cover the cost of that capital in the final two years of the period.
The divergence between the growth in invested capital and the decline in economic profit suggests that the capital deployments made between 2021 and 2024 did not yield proportional economic returns. The shift to a negative economic spread ratio indicates an erosion of shareholder value, as the company ceased to generate returns above its cost of capital starting in 2024.
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Economic Profit Margin
ExxonMobil Holdings 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 | (6,738) | (3,951) | 9,428) | 35,151) | 8,746) | |
| Sales and other operating revenue | 323,905) | 339,247) | 334,697) | 398,675) | 276,692) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -2.08% | -1.16% | 2.82% | 8.82% | 3.16% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | -11.82% | -3.41% | -4.08% | 6.05% | -2.98% | |
| ConocoPhillips | -0.08% | 1.76% | 9.48% | 18.56% | 8.30% | |
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 revenue
= 100 × -6,738 ÷ 323,905 = -2.08%
3 Click competitor name to see calculations.
The financial performance over the five-year period is characterized by a significant peak in value creation in 2022, followed by a progressive decline that transitioned into value destruction by 2024.
- Economic Profit Trajectory
- Economic profit exhibited extreme volatility, rising sharply from US$ 8,746 million in 2021 to a peak of US$ 35,151 million in 2022. However, this gain was not sustained, as figures dropped to US$ 9,428 million in 2023 and entered negative territory in 2024 at -US$ 3,951 million, further deteriorating to -US$ 6,738 million by the end of 2025.
- Revenue Correlation
- Sales and other operating revenue peaked in 2022 at US$ 398,675 million, aligning with the peak in economic profit. While revenue remained relatively resilient between 2023 and 2025, fluctuating between approximately US$ 323,905 million and US$ 339,247 million, the economic profit continued to decline. This divergence indicates that the erosion of economic profit was driven by factors beyond mere revenue contraction, such as increased capital charges or rising operating costs.
- Economic Profit Margin Analysis
- The economic profit margin reflects a mirrored trend of the absolute profit figures. The margin expanded from 3.16% in 2021 to a high of 8.82% in 2022 before contracting to 2.82% in 2023. The transition to a negative margin of -1.16% in 2024 and -2.08% in 2025 confirms that the company failed to generate returns exceeding its cost of capital during the final two years of the analyzed period.
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