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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Marathon Petroleum Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Reportable Segments
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2011
- Price to Earnings (P/E) since 2011
- Aggregate Accruals
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Economic Profit
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 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial data reveals significant fluctuations in key performance indicators over the five-year period ending December 31, 2023.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced considerable volatility. It started at 6,182 million USD in 2019 and sharply declined to a negative figure of -10,978 million USD in 2020, indicating a substantial operational loss that year. The company recovered in 2021, returning to approximately the 2019 level at 6,187 million USD. This was followed by a strong increase in 2022, reaching a peak of 17,951 million USD before decreasing to 10,783 million USD in 2023. This suggests a period of operational recovery and growth post-2020, albeit with a slight decline in the most recent year.
- Cost of Capital
- The cost of capital shows a steady upward trend throughout the period. Beginning at 11.6% in 2019, the rate increased incrementally each year to 15.01% in 2023. This rise indicates increasing costs associated with financing and investment risks, which may impact the company’s capital expenditure and valuation.
- Invested Capital
- Invested capital decreased overall from 82,004 million USD in 2019 to 63,897 million USD in 2023, with a notable dip in 2021 to 63,579 million USD after an initial drop in 2020. There was a moderate increase in 2022 to 69,547 million USD before declining again in 2023. This decline in invested capital suggests divestitures, asset sales, or reductions in net operating assets over the period, possibly reflecting strategic shifts or responses to market conditions.
- Economic Profit
- Economic profit was negative in 2019 and 2020, with losses widening significantly in 2020 to -19,160 million USD, reflecting poor value creation possibly due to the sharp loss in NOPAT combined with the rising cost of capital. A recovery to -2,203 million USD in 2021 was followed by a positive economic profit of 7,574 million USD in 2022, indicating value creation exceeding the cost of capital for that year. However, economic profit declined again to 1,190 million USD in 2023, showing diminished but still positive value contribution.
Overall, the data presents a narrative of a company experiencing a severe operational downturn in 2020, followed by recovery and growth in subsequent years. The increasing cost of capital introduces heightened financial pressure, while the decrease in invested capital signals strategic asset management. The fluctuations in economic profit mirror the operational performance and cost dynamics, highlighting periods of significant value erosion and later value creation.
Net Operating Profit after Taxes (NOPAT)
Marathon Petroleum Corp., NOPAT calculation
US$ in millions
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
= × =
7 2023 Calculation
Tax benefit of interest expense, net of interest capitalized = Adjusted interest expense, net of interest capitalized × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
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 $10,783 million, indicating a moderation but remaining well above pre-2020 levels.
These trends suggest that the company was affected by a significant adverse event or market condition in 2020 leading to large losses and negative operating profit. However, the subsequent two years showed a robust rebound and profitability expansion beyond pre-2020 figures, implying possible operational improvements or favorable market conditions. The slight decline in both net income and NOPAT in 2023 could indicate some normalization or emerging challenges following exceptional performance in 2022.
Cash Operating Taxes
Marathon Petroleum Corp., cash operating taxes calculation
US$ in millions
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.
Invested Capital
Marathon Petroleum Corp., invested capital calculation (financing approach)
US$ in millions
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.
Cost of Capital
Marathon Petroleum Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
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 »
Economic Spread Ratio
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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit demonstrated significant volatility over the analyzed period. It started with a negative value of -$3,330 million in 2019, which worsened substantially to -$19,160 million in 2020. This decline suggests a period of substantial economic losses in 2020. However, there was a notable recovery in subsequent years, with economic profit improving to -$2,203 million in 2021, then turning positive to $7,574 million in 2022. In 2023, the economic profit decreased again but remained positive at $1,190 million, indicating a reduction in profitability compared to the prior year yet maintaining economic gains.
- Invested Capital
- Invested capital showed a decreasing trend overall. Starting at $82,004 million in 2019, it fell to $70,186 million in 2020 and continued to decline to $63,579 million in 2021. After a slight increase to $69,547 million in 2022, it dropped again to $63,897 million in 2023. This pattern indicates a reduction in capital investment or asset base over the five-year period, with a minor rebound in 2022 before declining once more.
- Economic Spread Ratio
- The economic spread ratio exhibited a similar pattern to economic profit, reflecting the cost of capital versus returns. It was negative across the first three years, starting at -4.06% in 2019, deteriorating sharply to -27.3% in 2020, and improving to -3.47% in 2021. A significant positive turn occurred in 2022 with a ratio of 10.89%, indicating returns above the cost of capital. The ratio decreased to 1.86% in 2023, suggesting a reduction in economic efficiency but still maintaining returns exceeding capital costs.
Economic Profit Margin
Marathon Petroleum Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Sales and other operating revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
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 × ÷ =
3 Click competitor name to see calculations.
The financial data reveals several noteworthy trends in key performance indicators over the five-year period from 2019 to 2023. The assessment focuses on economic profit, sales and other operating revenues, and economic profit margin.
- Economic Profit
- The economic profit experienced significant fluctuations. In 2019, the company recorded a negative economic profit of -3,330 million US dollars. This downturn intensified drastically in 2020, reaching a low of -19,160 million US dollars, indicating severe profitability challenges during that year. However, the metric showed a marked recovery in 2021, improving to -2,203 million US dollars, and then shifted to positive territory in 2022 with 7,574 million US dollars. The trend, however, moderated in 2023, declining to 1,190 million US dollars. Overall, this pattern suggests volatile profitability with a major dip in 2020 followed by gradual stabilization and improvement in subsequent years.
- Sales and Other Operating Revenues
- Sales and other operating revenues displayed a variable but generally increasing trend over the period. Revenues decreased sharply from 123,949 million US dollars in 2019 to 69,779 million US dollars in 2020, reflecting a substantial contraction likely influenced by external factors. The recovery was significant in 2021, with revenues climbing back to 119,983 million US dollars and continuing to increase to 177,453 million US dollars in 2022, the highest point in the observed period. However, in 2023, revenues declined to 148,379 million US dollars, indicating some retrenchment or market challenges in the most recent year.
- Economic Profit Margin
- The economic profit margin follows the pattern observed in economic profit, initially negative at -2.69% in 2019 and substantially worse at -27.46% in 2020. This margin improved notably to -1.84% in 2021 and turned positive in 2022 at 4.27%, indicating a return to profitability relative to sales. In 2023, the margin decreased to 0.8%, suggesting a reduction in profitability but remaining above breakeven levels. The margin's trajectory points to a recovery from a crisis period followed by stabilization.
In summary, the data indicates a company experiencing a significant downturn in 2020, characterized by reduced revenues and large economic losses. Subsequent years show a recovery phase with increased revenues and a return to economic profitability, although the momentum slowed in 2023 with declines in both sales and economic profit margin. This pattern may reflect the impact of external economic conditions and the firm's response towards stabilizing and improving its financial health.