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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Marathon Petroleum Corp., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	10,783)	17,951)	6,187)	(10,978)	6,182)
Cost of capital²	17.51%	17.40%	15.31%	13.43%	13.34%
Invested capital³	63,897)	69,547)	63,579)	70,186)	82,004)

Economic profit⁴	(404)	5,852)	(3,545)	(20,403)	(4,756)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 10,783 – 17.51% × 63,897 = -404

The analysis of economic profit from 2019 to 2023 reveals a period of significant volatility, characterized by a general struggle to consistently generate returns that exceed the cost of capital. While a peak in value creation occurred in 2022, the overall trend indicates that the company spent the majority of the period destroying shareholder value in economic terms.

Net Operating Profit After Taxes (NOPAT): NOPAT exhibited extreme fluctuations over the five-year period. A severe contraction occurred in 2020, where profit fell to negative 10,978 million USD. This was followed by a strong recovery, reaching a peak of 17,951 million USD in 2022. By 2023, NOPAT decreased to 10,783 million USD, although it remained substantially higher than the pre-2022 levels.
Cost of Capital and Invested Capital: The cost of capital showed a consistent upward trajectory, rising from 13.34% in 2019 to 17.51% in 2023. This steady increase raised the earnings threshold required to achieve a positive economic profit. Simultaneously, invested capital generally trended downward, decreasing from 82,004 million USD in 2019 to a low of 63,579 million USD in 2021, with a slight rebound in 2022 before settling at 63,897 million USD in 2023.
Economic Profit and Value Creation: Economic profit remained negative for four out of the five years analyzed. The most significant value destruction occurred in 2020, with an economic profit of negative 20,403 million USD, driven by the collapse in NOPAT. A transition to positive value creation was achieved only in 2022, with an economic profit of 5,852 million USD, coinciding with the peak in operating performance. However, this gain was erased by 2023, as economic profit returned to a negative value of 404 million USD, suggesting that the increased cost of capital neutralized the operational gains.

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Marathon Petroleum Corp., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to MPC	9,681)	14,516)	9,738)	(9,826)	2,637)
Deferred income tax expense (benefit)¹	(28)	290)	(169)	(241)	1,023)
Increase (decrease) in allowance for doubtful accounts²	15)	(11)	22)	1)	8)
Increase (decrease) in LIFO reserve³	(950)	880)	2,840)	(787)	871)
Increase (decrease) in restructuring reserve⁴	(46)	(13)	(82)	141)	—)
Increase (decrease) in equity equivalents⁵	(1,009)	1,146)	2,611)	(886)	1,902)
Interest expense, net of interest capitalized	1,265)	1,195)	1,267)	1,333)	1,238)
Interest expense, operating lease liability⁶	50)	43)	42)	56)	100)
Adjusted interest expense, net of interest capitalized	1,315)	1,238)	1,309)	1,389)	1,338)
Tax benefit of interest expense, net of interest capitalized⁷	(276)	(260)	(275)	(292)	(281)
Adjusted interest expense, net of interest capitalized, after taxes⁸	1,039)	978)	1,034)	1,097)	1,057)
Interest income	(530)	(191)	(14)	(9)	(40)
Investment income, before taxes	(530)	(191)	(14)	(9)	(40)
Tax expense (benefit) of investment income⁹	111)	40)	3)	2)	8)
Investment income, after taxes¹⁰	(419)	(151)	(11)	(7)	(32)
(Income) loss from discontinued operations, net of tax¹¹	—)	(72)	(8,448)	(1,205)	—)
Net income (loss) attributable to noncontrolling interest	1,491)	1,534)	1,263)	(151)	618)
Net operating profit after taxes (NOPAT)	10,783)	17,951)	6,187)	(10,978)	6,182)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Elimination of deferred tax expense. See details »

² Addition of increase (decrease) in allowance for doubtful accounts.

³ Addition of increase (decrease) in LIFO reserve. See details »

⁴ Addition of increase (decrease) in restructuring reserve.

⁵ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to MPC.

⁶ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,218 × 4.10% = 50

⁷ 2023 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= 1,315 × 21.00% = 276

⁸ Addition of after taxes interest expense to net income (loss) attributable to MPC.

⁹ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 530 × 21.00% = 111

¹⁰ Elimination of after taxes investment income.

¹¹ Elimination of discontinued operations.

The analyzed financial data reveals significant fluctuations in key profitability indicators over the five-year period ending December 31, 2023.

Net Income (Loss) Attributable to MPC: Net income exhibited pronounced volatility. The figure fell from a positive $2,637 million in 2019 to a substantial loss of $9,826 million in 2020, indicating a severe downturn, likely driven by adverse market or operational factors during that year. Recovery occurred in 2021 with net income rising sharply to $9,738 million, surpassing the 2019 level. This upward momentum continued into 2022, reaching a peak of $14,516 million, followed by a decline in 2023 to $9,681 million. Overall, the net income reflected substantial cyclical variation, with a drastic loss followed by strong recovery and subsequent moderation.
Net Operating Profit After Taxes (NOPAT): NOPAT mirrored the pattern shown by net income, experiencing a significant negative shift in 2020 where it dropped to -$10,978 million from $6,182 million in 2019. The following years saw a robust recovery with NOPAT increasing to $6,187 million in 2021, nearly returning to the 2019 level, and then peaking at $17,951 million in 2022, which notably exceeded prior peaks in both net income and NOPAT. In 2023, NOPAT decreased to $10,783 million, indicating a moderation but remaining well above pre-2020 levels.

These trends suggest that the company was affected by a significant adverse event or market condition in 2020 leading to large losses and negative operating profit. However, the subsequent two years showed a robust rebound and profitability expansion beyond pre-2020 figures, implying possible operational improvements or favorable market conditions. The slight decline in both net income and NOPAT in 2023 could indicate some normalization or emerging challenges following exceptional performance in 2022.

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Marathon Petroleum Corp., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Income tax provision (benefit)	2,817)	4,491)	264)	(2,430)	1,074)
Less: Deferred income tax expense (benefit)	(28)	290)	(169)	(241)	1,023)
Add: Tax savings from interest expense, net of interest capitalized	276)	260)	275)	292)	281)
Less: Tax imposed on investment income	111)	40)	3)	2)	8)
Cash operating taxes	3,010)	4,421)	705)	(1,899)	324)

Based on: 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), 10-K (reporting date: 2019-12-31).

Income Tax Provision (Benefit): The income tax provision experienced significant volatility over the analyzed period. It started with a positive provision of 1,074 million USD at the end of 2019, followed by a substantial tax benefit of -2,430 million USD in 2020, indicating a reversal or tax credit situation. In 2021, the provision reverted to a modest positive value of 264 million USD. A notable increase occurred in 2022, reaching 4,491 million USD, before declining to 2,817 million USD at the end of 2023. This pattern suggests considerable fluctuations in taxable income or tax planning strategies leading to large swings in tax expense provisions.
Cash Operating Taxes: Cash operating taxes mirrored the overall trend of the income tax provision but with more pronounced changes. The 2019 figure stood at 324 million USD, then sharply decreased to a cash inflow (negative tax payment) of -1,899 million USD in 2020, reflecting adjustments or refunds. In 2021, cash taxes surged to 705 million USD, climbed dramatically to 4,421 million USD in 2022—the peak value in the period—and subsequently dropped to 3,010 million USD in 2023. These fluctuations align with variations in operational profitability and tax settlement timings, indicating an erratic but generally increasing cash tax burden post-2020.

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Marathon Petroleum Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Debt due within one year	1,954)	1,066)	571)	2,854)	711)
Long-term debt due after one year	25,329)	25,634)	24,968)	28,730)	28,127)
Operating lease liability¹	1,218)	1,209)	1,365)	1,511)	2,479)
Total reported debt & leases	28,501)	27,909)	26,904)	33,095)	31,317)
Total MPC stockholders’ equity	24,404)	27,715)	26,206)	22,199)	33,694)
Net deferred tax (assets) liabilities²	5,833)	5,903)	5,636)	6,200)	6,372)
Allowance for doubtful accounts³	44)	29)	40)	18)	17)
LIFO reserve⁴	2,770)	3,720)	2,840)	—)	871)
Restructuring reserve⁵	—)	46)	59)	141)	—)
Equity equivalents⁶	8,647)	9,698)	8,575)	6,359)	7,260)
Accumulated other comprehensive (income) loss, net of tax⁷	131)	(2)	67)	512)	320)
Redeemable noncontrolling interest	895)	968)	965)	968)	968)
Noncontrolling interests	6,100)	6,404)	6,410)	7,053)	8,445)
Adjusted total MPC stockholders’ equity	40,177)	44,783)	42,223)	37,091)	50,687)
Short-term investments⁸	(4,781)	(3,145)	(5,548)	—)	—)
Invested capital	63,897)	69,547)	63,579)	70,186)	82,004)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 reserve.

⁶ Addition of equity equivalents to total MPC stockholders’ equity.

⁷ Removal of accumulated other comprehensive income.

⁸ Subtraction of short-term investments.

The financial data reveals several key trends in the capital structure and investment base over the five-year period ending in 2023.

Total reported debt & leases: The total reported debt and leases experienced some fluctuations. Initially, it increased from 31,317 million USD in 2019 to a peak of 33,095 million USD in 2020. This was followed by a notable decline in 2021 to 26,904 million USD. Subsequently, a moderate rise occurred over the next two years, reaching 28,501 million USD in 2023. Overall, the debt levels show some volatility but remained below the 2019 level by the end of 2023.
Total MPC stockholders’ equity: Stockholders’ equity showed a declining trend over the period. Starting at 33,694 million USD in 2019, equity sharply decreased to 22,199 million USD in 2020. Although it buoyantly recovered to 26,206 million USD in 2021 and further increased to 27,715 million USD in 2022, equity declined again to 24,404 million USD in 2023. Despite recovery attempts, equity in 2023 remained significantly below the 2019 level, indicating possible challenges affecting retained earnings or other components of equity.
Invested capital: The invested capital consistently trended downward from 82,004 million USD in 2019 to 63,897 million USD in 2023, with intermediate fluctuations. It dropped to 70,186 million USD in 2020 and further to 63,579 million USD in 2021. A recovery occurred in 2022, reaching 69,547 million USD, followed by a decline again to 63,897 million USD in 2023. This pattern suggests variability in capital investment levels or changes in capital employed over the timeframe.

In summary, the data indicates that the company experienced a general reduction in invested capital and equity levels over the five years, paired with fluctuating debt levels that ultimately ended slightly below the initial value. The changes in equity and invested capital might reflect operational or strategic adjustments impacting the capital structure.

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Marathon Petroleum Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	60,405)	60,405)	÷	87,593)	=	0.69	0.69	×	23.78%	=	16.40%
Debt³	25,970)	25,970)	÷	87,593)	=	0.30	0.30	×	4.54% × (1 – 21.00%)	=	1.06%
Operating lease liability⁴	1,218)	1,218)	÷	87,593)	=	0.01	0.01	×	4.10% × (1 – 21.00%)	=	0.05%
Total:	87,593)					1.00					17.51%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,925)	55,925)	÷	81,664)	=	0.68	0.68	×	23.78%	=	16.29%
Debt³	24,530)	24,530)	÷	81,664)	=	0.30	0.30	×	4.51% × (1 – 21.00%)	=	1.07%
Operating lease liability⁴	1,209)	1,209)	÷	81,664)	=	0.01	0.01	×	3.55% × (1 – 21.00%)	=	0.04%
Total:	81,664)					1.00					17.40%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	42,086)	42,086)	÷	72,149)	=	0.58	0.58	×	23.78%	=	13.87%
Debt³	28,698)	28,698)	÷	72,149)	=	0.40	0.40	×	4.42% × (1 – 21.00%)	=	1.39%
Operating lease liability⁴	1,365)	1,365)	÷	72,149)	=	0.02	0.02	×	3.11% × (1 – 21.00%)	=	0.05%
Total:	72,149)					1.00					15.31%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	35,573)	35,573)	÷	72,629)	=	0.49	0.49	×	23.78%	=	11.65%
Debt³	35,545)	35,545)	÷	72,629)	=	0.49	0.49	×	4.45% × (1 – 21.00%)	=	1.72%
Operating lease liability⁴	1,511)	1,511)	÷	72,629)	=	0.02	0.02	×	3.68% × (1 – 21.00%)	=	0.06%
Total:	72,629)					1.00					13.43%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,799)	30,799)	÷	64,076)	=	0.48	0.48	×	23.78%	=	11.43%
Debt³	30,798)	30,798)	÷	64,076)	=	0.48	0.48	×	4.70% × (1 – 21.00%)	=	1.78%
Operating lease liability⁴	2,479)	2,479)	÷	64,076)	=	0.04	0.04	×	4.02% × (1 – 21.00%)	=	0.12%
Total:	64,076)					1.00					13.34%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Marathon Petroleum Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(404)	5,852)	(3,545)	(20,403)	(4,756)
Invested capital²	63,897)	69,547)	63,579)	70,186)	82,004)
Performance Ratio
Economic spread ratio³	-0.63%	8.41%	-5.58%	-29.07%	-5.80%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	-3.75%	6.75%	-2.37%	—	—
ConocoPhillips	6.61%	19.35%	5.03%	—	—
Exxon Mobil Corp.	3.12%	11.89%	3.26%	—	—

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -404 ÷ 63,897 = -0.63%

⁴ Click competitor name to see calculations.

The analysis of economic value added reveals a period of significant volatility in the company's ability to generate returns above its cost of capital between 2019 and 2023. Value creation was inconsistent, characterized by a severe contraction in 2020, a notable recovery in 2022, and a subsequent regression toward a marginal deficit in 2023.

Economic Spread Ratio Performance: The economic spread ratio exhibited extreme fluctuations throughout the period. A significant decline was observed in 2020, where the ratio reached a trough of -29.07%. A recovery trend followed, with the ratio improving to -5.58% in 2021 and reaching a peak of 8.41% in 2022, marking the only year of positive economic spread. By 2023, the ratio narrowed to -0.63%, indicating that returns nearly equilibrated with the cost of capital, though they remained slightly insufficient to create economic value.
Economic Profit Trends: Economic profit mirrored the volatility of the spread ratio. A substantial deficit of -20,403 million US$ was recorded in 2020, representing the most significant loss of economic value. This was followed by a reduction in losses in 2021 and a shift to a positive economic profit of 5,852 million US$ in 2022. The period concluded with a return to a negative position in 2023, with an economic profit of -404 million US$, suggesting a loss of the value-creation momentum observed in the prior year.
Invested Capital Dynamics: Invested capital followed a general downward trajectory for much of the period, decreasing from 82,004 million US$ in 2019 to a low of 63,579 million US$ in 2021. While there was a slight increase to 69,547 million US$ in 2022, the capital base ended the period at 63,897 million US$ in 2023. The reduction in invested capital did not linearly correlate with an improvement in the economic spread, as the fluctuations in economic profit remained the dominant driver of the spread ratio.

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Marathon Petroleum Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(404)	5,852)	(3,545)	(20,403)	(4,756)
Sales and other operating revenues	148,379)	177,453)	119,983)	69,779)	123,949)
Performance Ratio
Economic profit margin²	-0.27%	3.30%	-2.95%	-29.24%	-3.84%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	-4.05%	6.08%	-2.95%	—	—
ConocoPhillips	9.56%	18.61%	8.39%	—	—
Exxon Mobil Corp.	2.87%	8.86%	3.21%	—	—

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Sales and other operating revenues
= 100 × -404 ÷ 148,379 = -0.27%

³ Click competitor name to see calculations.

The analysis of economic value added reveals significant volatility in financial performance from 2019 through 2023, with results heavily influenced by fluctuations in operating revenues.

Economic Profit Margin Analysis: The economic profit margin demonstrated extreme variance, falling from -3.84% in 2019 to a low of -29.24% in 2020. A recovery followed, culminating in a positive margin of 3.30% in 2022. By the end of 2023, the margin contracted again to -0.27%, indicating a near-breakeven state relative to the cost of capital.
Economic Profit Performance: Absolute economic profit shifted from a loss of $4,756 million in 2019 to a substantial loss of $20,403 million in 2020. Performance improved markedly in 2021 and peaked in 2022 with a surplus of $5,852 million. The 2023 result shows a return to a negative position of -$404 million, although this represents a significant improvement over the losses experienced between 2019 and 2021.
Revenue Impact on Value Creation: A direct relationship is evident between sales and other operating revenues and the generation of economic profit. The surge in revenue to $177,453 million in 2022 was the primary driver for the only period of positive economic value addition. Conversely, the revenue drop to $69,779 million in 2020 coincided with the most significant destruction of economic value.

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Marathon Petroleum Corp. (NYSE:MPC)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin