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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Freeport-McMoRan Inc. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Price to Sales (P/S) since 2005
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Economic Profit
Freeport-McMoRan Inc., 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 performance from 2021 to 2025 is characterized by a consistent inability to generate positive economic value, as evidenced by negative economic profit throughout the entire period. The deficit expanded over time, reaching its maximum point in 2025, indicating that the returns generated by operations were insufficient to cover the cost of the capital employed.
- Net Operating Profit After Taxes (NOPAT)
- A general downward trajectory was observed from 2021 to 2024, with NOPAT decreasing from 6,188 million US$ to 4,538 million US$. While a slight recovery to 4,755 million US$ occurred in 2025, the figure remained substantially lower than the initial 2021 levels.
- Cost of Capital
- The cost of capital remained relatively stable, fluctuating minimally between 20.30% and 20.40% from 2021 through 2024. An upward shift was recorded in 2025, where the cost of capital increased to 21.15%, thereby increasing the financial burden required to achieve a positive economic return.
- Invested Capital
- Invested capital levels were relatively stable between 2021 and 2024, moving within a range of 33,889 million US$ to 36,035 million US$. A significant increase occurred in 2025, with invested capital rising to 40,693 million US$, representing a substantial expansion of the capital base.
- Economic Profit Analysis
- Economic profit remained negative for the duration of the analysis, reflecting a consistent destruction of shareholder value. The loss widened from 930 million US$ in 2021 to 2,498 million US$ by 2023. Despite a slight improvement in 2024, the economic profit dropped sharply to negative 3,851 million US$ in 2025. This deterioration is the result of the simultaneous increase in invested capital and the cost of capital, occurring while NOPAT failed to recover to previous peaks.
Net Operating Profit after Taxes (NOPAT)
Freeport-McMoRan Inc., 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 deferred revenue.
3 Addition of increase (decrease) in equity equivalents to net income attributable to common stockholders.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
5 2025 Calculation
Tax benefit of interest expense, net = Adjusted interest expense, net × Statutory income tax rate
= × 21.00% =
6 Addition of after taxes interest expense to net income attributable to common stockholders.
Net income attributable to common stockholders and net operating profit after taxes (NOPAT) exhibited distinct performance patterns between 2021 and 2025. NOPAT demonstrated relative stability compared to net income, while both metrics experienced fluctuations over the five-year period.
- NOPAT Trend
- NOPAT began at US$6,188 million in 2021, representing the highest value within the observed timeframe. A decline was noted in 2022, falling to US$5,116 million. This downward trend continued, albeit at a slower pace, reaching US$4,632 million in 2023. A slight decrease was observed in 2024, with NOPAT at US$4,538 million. Finally, NOPAT increased to US$4,755 million in 2025, indicating a potential stabilization or modest recovery.
- Net Income Trend
- Net income attributable to common stockholders started at US$4,306 million in 2021. A substantial decrease occurred in 2022, with net income reported at US$3,468 million. This decline was more pronounced in 2023, reaching US$1,848 million. A slight recovery was seen in 2024, with net income at US$1,889 million, followed by a further increase to US$2,204 million in 2025.
- Relationship between NOPAT and Net Income
- While both metrics moved in similar directions, the magnitude of change differed. The decrease in net income from 2021 to 2023 was more significant than the corresponding decrease in NOPAT. This suggests that factors beyond core operating profitability, such as financing costs or non-operating items, played a substantial role in influencing net income. The relative stabilization of NOPAT in the later years, coupled with the recovery in net income, indicates a potential improvement in the efficiency of translating operating profits into earnings attributable to common stockholders.
Overall, the period demonstrates a challenging environment initially, followed by signs of potential stabilization and recovery in the later years, particularly as evidenced by the 2025 figures for both NOPAT and net income.
Cash Operating Taxes
Freeport-McMoRan Inc., cash operating taxes calculation
US$ 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 provision for income taxes and cash operating taxes exhibited fluctuations over the five-year period. While both metrics generally remained within a relatively narrow range, notable shifts occurred in specific years, particularly in 2024.
- Provision for Income Taxes
- The provision for income taxes remained relatively stable between 2021 and 2023, fluctuating around the $2,200 million to $2,300 million mark. A discernible increase was observed in 2024, reaching $2,523 million, before decreasing to $2,221 million in 2025. This suggests potential impacts from changes in tax regulations or profitability in 2024, followed by a partial reversion in the subsequent year.
- Cash Operating Taxes
- Cash operating taxes demonstrated a decreasing trend from 2021 to 2023, declining from $2,217 million to $2,009 million. Similar to the provision for income taxes, a substantial increase occurred in 2024, with cash operating taxes rising to $2,672 million. This was followed by a decrease to $2,057 million in 2025, mirroring the pattern observed in the provision for income taxes. The correlation between the two metrics suggests that changes in reported income taxes are largely reflected in actual cash outflows for taxes.
- Relationship between Provision and Cash Taxes
- The difference between the provision for income taxes and cash operating taxes remained relatively consistent across the period, generally ranging between $80 million and $200 million. This difference likely represents deferred tax items, such as changes in tax loss carryforwards or temporary differences between book and tax accounting methods. The consistency in this difference indicates a stable tax position regarding these deferred items.
- 2024 Anomaly
- The year 2024 stands out due to the significant increases in both the provision for income taxes and cash operating taxes. Further investigation would be required to determine the underlying drivers of this increase, such as a substantial rise in pre-tax income, changes in applicable tax rates, or the recognition of previously unrealized tax liabilities. The subsequent decrease in 2025 suggests the factors driving the 2024 increase were not sustained.
Invested Capital
Freeport-McMoRan Inc., invested capital calculation (financing approach)
US$ 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 deferred revenue.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of investment securities.
The reported invested capital exhibited a generally stable pattern over the five-year period, with fluctuations observed. Total reported debt & leases and stockholders’ equity both contributed to the overall invested capital figure, and their individual trends influenced the invested capital’s trajectory.
- Invested Capital Trend
- Invested capital increased from US$35.043 billion in 2021 to US$36.035 billion in 2022, representing a growth of approximately 2.8%. A slight decrease followed in 2023, with invested capital reaching US$35.126 billion. This was further reduced in 2024 to US$33.889 billion, marking the lowest value within the observed period. However, a significant increase occurred in 2025, with invested capital rising to US$40.693 billion.
- Debt & Leases
- Total reported debt & leases increased from US$9.769 billion in 2021 to US$10.952 billion in 2022, a rise of approximately 12.1%. It then decreased in both 2023 and 2024, reaching US$9.853 billion and US$9.738 billion respectively. A subsequent increase was noted in 2025, with debt & leases reaching US$10.492 billion. The fluctuations in debt levels likely influenced the invested capital calculations.
- Stockholders’ Equity
- Stockholders’ equity demonstrated a consistent upward trend throughout the period. It increased from US$13.980 billion in 2021 to US$15.555 billion in 2022, US$16.693 billion in 2023, US$17.581 billion in 2024, and finally to US$18.899 billion in 2025. This continuous growth in equity contributed positively to the overall invested capital, particularly offsetting the decline observed in 2024.
The substantial increase in invested capital in 2025 is primarily attributable to the combined effect of a moderate increase in debt & leases and a more significant increase in stockholders’ equity. The decrease in invested capital in 2024 appears to be driven by a reduction in both debt and equity, although the decrease in debt was less pronounced.
Cost of Capital
Freeport-McMoRan Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Long-term debt, including current portion3 | ÷ | = | × | × (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 Long-term debt, including current portion. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Freeport-McMoRan Inc., economic spread ratio calculation
| 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 | ||||||
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 × ÷ =
An analysis of the economic value added indicators reveals a persistent trend of negative economic profit and a deteriorating economic spread ratio over the period from 2021 to 2025. The organization failed to generate returns exceeding its cost of capital throughout the entire timeframe, indicating a continuous erosion of economic value.
- Economic Profit Trends
- Economic profit remained negative throughout the analyzed period, exhibiting a general downward trajectory. The deficit expanded from -930 million US$ in 2021 to a peak deficit of -3,851 million US$ by 2025. While a minor stabilization occurred in 2024, where losses narrowed slightly to -2,374 million US$ from the 2023 low of -2,498 million US$, this was followed by a sharp acceleration in losses in the final year.
- Invested Capital Dynamics
- Invested capital demonstrated relative stability between 2021 and 2024, fluctuating within a range of 33,889 million US$ to 36,035 million US$. However, a significant increase is observed in 2025, with invested capital rising to 40,693 million US$. This substantial expansion of the capital base coincided with the deepest decline in economic profit, suggesting that the additional capital deployed did not produce a positive economic return.
- Economic Spread Ratio Performance
- The economic spread ratio remained negative for the duration of the period, signifying that the return on invested capital was consistently below the cost of capital. The ratio widened from -2.65% in 2021 to -7.11% in 2023, indicating an increasing gap in value creation. Despite a marginal improvement to -7.01% in 2024, the ratio deteriorated further to -9.46% in 2025, representing the lowest point of efficiency across the five-year period.
Economic Profit Margin
Freeport-McMoRan Inc., economic profit margin calculation
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 ÷ Adjusted revenues
= 100 × ÷ =
Analysis of economic value added reveals a persistent trend of economic loss from 2021 through 2025. The organization consistently operated below its required cost of capital, leading to a continuous erosion of economic value despite fluctuations in top-line performance.
- Economic Profit Trajectory
- A significant downward trend in economic profit is observed, moving from a loss of 930 million USD in 2021 to a loss of 3,851 million USD by 2025. While a marginal improvement occurred in 2024, where losses narrowed to 2,374 million USD, the subsequent decline in 2025 represents the most substantial deficit in the five-year period.
- Adjusted Revenue Performance
- Revenues remained relatively stagnant between 2021 and 2023, fluctuating around 22.9 billion USD. A growth phase emerged in 2024 and 2025, with adjusted revenues increasing to 25,385 million USD and 25,930 million USD, respectively. This indicates that while the scale of operations expanded, the growth was insufficient to offset the capital charges.
- Economic Profit Margin Dynamics
- The economic profit margin exhibited a volatile negative trend, deteriorating from -4.05% in 2021 to -10.89% in 2023. Despite a brief recovery to -9.35% in 2024, the margin reached a five-year low of -14.85% in 2025. The widening gap between rising revenues and a deepening negative margin suggests that the cost of capital increased at a rate that significantly outpaced operational gains, resulting in decreased efficiency in value creation.