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
Newmont Corp., economic profit 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 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
= -2,520 – 10.02% × 36,379 = -6,165
The financial performance from 2019 to 2023 indicates a severe deterioration in economic value creation, characterized by a transition from positive economic profit to accelerating value destruction. This decline is primarily driven by a consistent and significant collapse in net operating profit after taxes (NOPAT), which eventually turned negative, while the cost of capital remained relatively stable.
- Net Operating Profit After Taxes (NOPAT) Trends
- A persistent downward trajectory is observed in NOPAT, which fell from US$ 3,486 million in 2019 to a deficit of US$ 2,520 million by 2023. The most precipitous drop occurred between 2020 and 2021, where profitability declined by over 89%, signaling a fundamental shift in operating efficiency or market conditions that eroded the company's ability to generate operating income.
- Invested Capital Dynamics
- Invested capital exhibited fluctuation throughout the period, initially remaining stable around US$ 29 billion before decreasing to a low of US$ 23,044 million in 2022. However, a substantial increase occurred in 2023, with invested capital rising to US$ 36,379 million. This expansion of the capital base occurred simultaneously with declining operating profits, which intensified the negative impact on economic value.
- Cost of Capital Stability
- The cost of capital remained remarkably stable over the five-year period, fluctuating within a narrow range between 10.02% and 10.74%. Because this rate did not increase significantly, the deterioration in economic profit cannot be attributed to a rising cost of funding or increased risk premiums, but rather to the failure of the operating assets to generate returns exceeding this threshold.
- Economic Profit Trajectory
- Economic profit shifted from a positive US$ 473 million in 2019 to a substantial loss of US$ 6,165 million by 2023. The trend indicates an accelerating rate of value destruction. The gap between NOPAT and the capital charge widened significantly, particularly in 2023, where the combination of the largest invested capital base and the deepest operating loss resulted in the peak economic deficit of the period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Net Operating Profit after Taxes (NOPAT)
Newmont 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 equity equivalents to net income (loss) attributable to Newmont stockholders.
3 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 105 × 3.78% = 4
4 2023 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= 247 × 21.00% = 52
5 Addition of after taxes interest expense to net income (loss) attributable to Newmont stockholders.
6 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 148 × 21.00% = 31
7 Elimination of after taxes investment income.
8 Elimination of discontinued operations.
A significant and accelerating decline in both net income and net operating profit after taxes (NOPAT) is observed between 2019 and 2023. The financial trajectory shifted from strong profitability in the initial years to substantial operating and net losses by the end of the period.
- Net Operating Profit After Taxes (NOPAT) Trends
- NOPAT experienced a consistent and steep downward trend, decreasing from 3,486 million USD in 2019 to 2,630 million USD in 2020, followed by a sharp contraction to 274 million USD in 2021. The metric entered negative territory in 2022 with a loss of 555 million USD, which further deteriorated to 2,520 million USD by 2023, indicating a severe erosion of operational profitability.
- Net Income Attributable to Stockholders Trends
- Net income remained relatively stable between 2019 and 2020, recording 2,805 million USD and 2,829 million USD respectively. A sharp decline occurred in 2021, where income fell to 1,166 million USD. Similar to the operational profit trend, net income transitioned to a deficit in 2022 at -429 million USD and plummeted to -2,494 million USD in 2023.
- Comparative Operational Performance
- The divergence between NOPAT and net income was most pronounced between 2019 and 2021, as operational profitability declined more rapidly than the bottom-line net income. By 2023, the two metrics converged closely, both reporting losses exceeding 2.4 billion USD, suggesting that the losses are primarily driven by core operating performance.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cash Operating Taxes
Newmont 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).
The financial data exhibits a period of significant volatility in tax-related outflows between 2019 and 2023, with a notable peak occurring in 2021. Cash operating taxes and income and mining tax expenses followed divergent paths initially before aligning in a downward trend toward the end of the period.
- Cash Operating Taxes Trend
- A substantial increase in cash operating taxes is observed from 2019 to 2021, rising from 550 million USD to a peak of 1,262 million USD. This represents a growth of approximately 129% over two years. Following this peak, a consistent decline occurred, with values falling to 765 million USD in 2022 and further to 651 million USD in 2023.
- Income and Mining Tax Expense Volatility
- Income and mining tax expenses demonstrated more fluctuation than cash payments. After an initial decrease from 832 million USD in 2019 to 704 million USD in 2020, expenses spiked to 1,098 million USD in 2021. A sharp contraction followed in 2022, where expenses dropped to 455 million USD, before experiencing a slight recovery to 526 million USD in 2023.
- Comparative Analysis of Cash vs. Accrual Taxes
- A divergence between cash operating taxes and reported tax expenses is evident. In 2019, the income and mining tax expense exceeded cash operating taxes by 282 million USD. However, from 2020 through 2023, cash operating taxes consistently exceeded the accounting tax expense. This gap was most pronounced in 2021, where cash taxes were 164 million USD higher than the reported expense, indicating a period of higher immediate liquidity outflows for tax obligations relative to the recognized expense on the income statement.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Invested Capital
Newmont 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 equity equivalents to total Newmont stockholders’ equity.
4 Removal of accumulated other comprehensive income.
5 Subtraction of construction-in-progress.
6 Subtraction of marketable securities and restricted marketable securities.
Invested capital exhibited a fluctuating trajectory between 2019 and 2022, followed by a substantial expansion in 2023. From 2019 to 2022, the capital base contracted from US$ 28,943 million to a period low of US$ 23,044 million, representing a total decline of approximately 20.4%. This trend reversed sharply in 2023, with invested capital surging to US$ 36,379 million, the highest level recorded within the five-year period analyzed.
- Total Reported Debt and Leases
- A consistent downward trend in total debt and leases was observed from 2019 through 2022, with values decreasing from US$ 6,909 million to US$ 6,248 million. This period of deleveraging was interrupted in 2023 by a significant increase to US$ 9,541 million, marking a 52.7% year-over-year increase.
- Total Stockholders' Equity
- Stockholders' equity showed volatility during the initial four years, peaking in 2020 at US$ 23,008 million before declining to US$ 19,354 million by the end of 2022. A substantial increase occurred in 2023, driving equity to US$ 29,027 million, which represents a growth of approximately 49.9% compared to the previous year.
- Capital Structure Dynamics
- The overall growth in invested capital in 2023 was driven by a concurrent and proportional increase in both debt and equity. While a lean capital structure was maintained through 2022, the 2023 expansion indicates a significant increase in the funding base, resulting in a total invested capital increase of 57.9% over the 2022 fiscal year end.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Cost of Capital
Newmont Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 36,017) | 36,017) | ÷ | 45,659) | = | 0.79 | 0.79 | × | 11.76% | = | 9.28% | ||
| Debt, finance lease and other financing obligations3 | 9,537) | 9,537) | ÷ | 45,659) | = | 0.21 | 0.21 | × | 4.44% × (1 – 21.00%) | = | 0.73% | ||
| Operating lease liability4 | 105) | 105) | ÷ | 45,659) | = | 0.00 | 0.00 | × | 3.78% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 45,659) | 1.00 | 10.02% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 35,133) | 35,133) | ÷ | 40,946) | = | 0.86 | 0.86 | × | 11.76% | = | 10.09% | ||
| Debt, finance lease and other financing obligations3 | 5,697) | 5,697) | ÷ | 40,946) | = | 0.14 | 0.14 | × | 4.42% × (1 – 21.00%) | = | 0.49% | ||
| Operating lease liability4 | 116) | 116) | ÷ | 40,946) | = | 0.00 | 0.00 | × | 4.35% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 40,946) | 1.00 | 10.59% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 52,876) | 52,876) | ÷ | 60,366) | = | 0.88 | 0.88 | × | 11.76% | = | 10.30% | ||
| Debt, finance lease and other financing obligations3 | 7,362) | 7,362) | ÷ | 60,366) | = | 0.12 | 0.12 | × | 4.42% × (1 – 21.00%) | = | 0.43% | ||
| Operating lease liability4 | 128) | 128) | ÷ | 60,366) | = | 0.00 | 0.00 | × | 4.90% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 60,366) | 1.00 | 10.74% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 45,906) | 45,906) | ÷ | 54,271) | = | 0.85 | 0.85 | × | 11.76% | = | 9.95% | ||
| Debt, finance lease and other financing obligations3 | 8,257) | 8,257) | ÷ | 54,271) | = | 0.15 | 0.15 | × | 4.55% × (1 – 21.00%) | = | 0.55% | ||
| Operating lease liability4 | 108) | 108) | ÷ | 54,271) | = | 0.00 | 0.00 | × | 3.87% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 54,271) | 1.00 | 10.50% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 38,845) | 38,845) | ÷ | 46,684) | = | 0.83 | 0.83 | × | 11.76% | = | 9.79% | ||
| Debt, finance lease and other financing obligations3 | 7,764) | 7,764) | ÷ | 46,684) | = | 0.17 | 0.17 | × | 4.68% × (1 – 21.00%) | = | 0.61% | ||
| Operating lease liability4 | 75) | 75) | ÷ | 46,684) | = | 0.00 | 0.00 | × | 5.31% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 46,684) | 1.00 | 10.41% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in millions
2 Equity. See details »
3 Debt, finance lease and other financing obligations. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Newmont 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 | (6,165) | (2,996) | (2,686) | (465) | 473) | |
| Invested capital2 | 36,379) | 23,044) | 27,566) | 29,461) | 28,943) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | -16.95% | -13.00% | -9.74% | -1.58% | 1.63% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Freeport-McMoRan Inc. | -6.95% | -5.97% | -2.49% | — | — | |
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 × -6,165 ÷ 36,379 = -16.95%
4 Click competitor name to see calculations.
The financial performance from 2019 to 2023 demonstrates a significant deterioration in economic value generation. The transition from a positive economic profit to deepening annual losses indicates that the return on invested capital has consistently fallen below the company's cost of capital over the majority of the period analyzed.
- Economic Profit Trend
- A sharp downward trajectory is observed in economic profit, which moved from a positive US$ 473 million in 2019 to a deficit of US$ 6,165 million by 2023. The losses accelerated significantly after 2020, with the magnitude of economic value destruction increasing each year, particularly between 2022 and 2023 where the deficit more than doubled.
- Invested Capital Dynamics
- Invested capital remained relatively stable between 2019 and 2021, followed by a decline to US$ 23,044 million in 2022. However, a substantial increase occurred in 2023, with invested capital rising to US$ 36,379 million. This sharp increase in the capital base coincided with the largest annual drop in economic profit.
- Economic Spread Ratio Analysis
- The economic spread ratio exhibits a consistent and severe decline, starting at 1.63% in 2019 and falling to -16.95% by 2023. This persistent contraction indicates a widening gap between the actual return on capital and the required rate of return, signaling a systemic inability to create economic value during this five-year window.
The convergence of increasing invested capital and a plummeting economic spread ratio in 2023 suggests that recent capital allocations have not yielded returns sufficient to cover the cost of that capital, thereby exacerbating the total economic loss.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Economic Profit Margin
Newmont 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 | (6,165) | (2,996) | (2,686) | (465) | 473) | |
| Sales | 11,812) | 11,915) | 12,222) | 11,497) | 9,740) | |
| Performance Ratio | ||||||
| Economic profit margin2 | -52.19% | -25.14% | -21.98% | -4.04% | 4.85% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Freeport-McMoRan Inc. | -10.64% | -9.49% | -3.80% | — | — | |
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
= 100 × -6,165 ÷ 11,812 = -52.19%
3 Click competitor name to see calculations.
A significant deterioration in economic value creation is evident between 2019 and 2023, characterized by a transition from positive economic profit to substantial economic losses. While revenue remained relatively stable or grew during the early part of the period, the cost of capital consistently exceeded returns, leading to an accelerating erosion of the economic profit margin.
- Economic Profit Trends
- The period began with a positive economic profit of US$ 473 million in 2019, indicating that the organization generated returns above its cost of capital. However, a reversal occurred in 2020, with a deficit of US$ 465 million. This downward trajectory intensified sharply over the following years, culminating in a loss of US$ 6,165 million by December 31, 2023. The magnitude of the loss expanded more than thirteen-fold between 2020 and 2023.
- Sales Performance and Correlation
- Sales exhibited a growth trend in the first three years, rising from US$ 9,740 million in 2019 to a peak of US$ 12,222 million in 2021. Subsequently, revenue experienced a slight decline, stabilizing at US$ 11,812 million by 2023. The divergence between increasing or stable sales and plummeting economic profit suggests that the decline in value was not driven by a loss of top-line revenue, but rather by increasing operational costs, declining margins, or a significant increase in the cost of capital.
- Economic Profit Margin Analysis
- The economic profit margin shifted from a positive 4.85% in 2019 to a severe negative 52.19% in 2023. The most aggressive decline occurred between 2020 and 2021, where the margin dropped from -4.04% to -21.98%. By 2023, the margin indicated that the organization was destroying value at a rate exceeding half of its annual sales, reflecting a critical misalignment between the capital employed and the resulting economic returns.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?