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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- Income Statement
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Economic Profit
ONEOK Inc., economic profit calculation
US$ in thousands
| 12 months ended: | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2022 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
A consistent trend of negative economic profit is observed over the five-year period ending December 31, 2022. Despite an overall increase in operating profitability, the returns generated were insufficient to cover the cost of the capital invested in the business, resulting in a persistent failure to create economic value.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability exhibited volatility, characterized by a significant decline in 2020 to US$ 1.37 billion. This was followed by a strong recovery, with NOPAT reaching a peak of US$ 2.72 billion by 2022. While the long-term trajectory is upward, the growth in operating profit did not keep pace with the capital charge.
- Invested Capital
- Invested capital grew steadily from US$ 16.42 billion in 2018 to US$ 22.06 billion in 2022. The most substantial expansion occurred between 2018 and 2020, after which the capital base remained relatively stable, fluctuating around the US$ 21 billion to US$ 22 billion range.
- Cost of Capital
- The cost of capital remained high throughout the period, fluctuating between a peak of 20.19% in 2018 and a low of 16.11% in 2020. An upward trend resumed in the final two years, closing at 19.32% in 2022, which intensified the pressure on economic profit.
- Economic Profit Performance
- Economic profit remained negative for all reported years, indicating that the company operated below its required rate of return. The economic deficit widened to its maximum of US$ 2.12 billion in 2020, a result of the simultaneous dip in NOPAT and the continued increase in invested capital. Although a partial recovery occurred in 2021, the economic profit declined again to negative US$ 1.54 billion in 2022.
Net Operating Profit after Taxes (NOPAT)
ONEOK Inc., NOPAT calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in equity equivalents to net income attributable to ONEOK.
3 2022 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
4 2022 Calculation
Tax benefit of interest expense, net of capitalized interest = Adjusted interest expense, net of capitalized interest × Statutory income tax rate
= × 21.00% =
5 Addition of after taxes interest expense to net income attributable to ONEOK.
The financial data reveals notable trends in the profitability metrics over the five-year period.
- Net income attributable to ONEOK
- The net income demonstrates fluctuations within the observed timeframe. It increased from 1,151,703 thousand USD in 2018 to 1,278,577 thousand USD in 2019, representing moderate growth. In 2020, there was a significant decline to 612,809 thousand USD, indicating a considerable reduction in profitability. However, the trend reversed in the subsequent years, with net income rising sharply to 1,499,706 thousand USD in 2021 and further increasing to 1,722,221 thousand USD in 2022. This rebound suggests a recovery and improvement in operational performance post-2020.
- Net operating profit after taxes (NOPAT)
- NOPAT followed a pattern similar to net income but with higher absolute values, reflecting operating efficiency post-tax adjustments. Starting at 1,887,822 thousand USD in 2018, it rose to 2,040,364 thousand USD in 2019. A decline was again observed in 2020, dropping to 1,365,278 thousand USD, which parallels the dip in net income during the same year. Subsequently, NOPAT experienced a strong recovery, reaching 2,553,175 thousand USD in 2021 and rising further to 2,721,886 thousand USD in 2022. This trajectory indicates improvements in operating profitability and effective tax management after 2020.
Overall, both net income and NOPAT reveal a downturn in 2020, likely attributable to adverse economic or operational conditions during that period, followed by considerable recovery and growth in the following years. The magnitude of increase post-2020 surpasses the pre-2020 levels, implying strengthened financial performance and resilience.
Cash Operating Taxes
ONEOK Inc., cash operating taxes calculation
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
The financial data reveals a notable pattern in the provision for income taxes and cash operating taxes from 2018 to 2022.
- Provision for Income Taxes
- The provision for income taxes experienced a decline from 2018 (US$ 362,903 thousand) to 2020 (US$ 189,507 thousand). This drop was followed by a sharp increase in 2021 (US$ 484,498 thousand) and continued to rise in 2022, reaching US$ 527,424 thousand. This trend indicates a significant fluctuation, with the provision nearly tripling between 2020 and 2022.
- Cash Operating Taxes
- Cash operating taxes showed a steady upward trend over the entire period. Beginning at US$ 100,721 thousand in 2018, the amount increased each year, reaching US$ 206,551 thousand in 2022. The growth rate appears consistent, indicating increasing cash outflows related to operating taxes year over year.
Overall, the provision for income taxes showed volatility with a sharp recovery and growth after 2020, while cash operating taxes steadily increased throughout the observed periods. This may suggest changes in tax liabilities or profitability affecting the provisions, coupled with a consistent increase in actual cash taxes paid.
Invested Capital
ONEOK Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of equity equivalents to total ONEOK shareholders’ equity.
4 Removal of accumulated other comprehensive income.
- Total reported debt & leases
- The total reported debt and leases have shown an overall increasing trend from 2018 to 2020, rising sharply from approximately 9.4 billion US dollars to around 14.36 billion US dollars. Thereafter, it experienced a slight decrease in 2021, followed by stabilization in 2022 at approximately 13.7 billion US dollars.
- Total ONEOK shareholders’ equity
- Shareholders’ equity declined steadily from about 6.58 billion US dollars in 2018 to around 6 billion US dollars in 2021, indicating a gradual reduction in net assets relative to common shareholders. However, in 2022, equity saw a moderate increase to roughly 6.49 billion US dollars, reversing the prior downward trend.
- Invested capital
- Invested capital expanded significantly over the observed period. Starting from approximately 16.4 billion US dollars in 2018, it increased nearly continuously to about 22.06 billion US dollars by 2022. A peak occurred in 2020 at around 21.63 billion US dollars, followed by a marginal dip in 2021 before rising again in 2022.
Cost of Capital
ONEOK Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series E Preferred Stock | ÷ | = | × | = | |||||||||
| Debt and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series E Preferred Stock | ÷ | = | × | = | |||||||||
| Debt and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series E Preferred Stock | ÷ | = | × | = | |||||||||
| Debt and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series E Preferred Stock | ÷ | = | × | = | |||||||||
| Debt and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liability. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Series E Preferred Stock | ÷ | = | × | = | |||||||||
| Debt and finance lease liability3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2018-12-31).
1 US$ in thousands
2 Equity. See details »
3 Debt and finance lease liability. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
ONEOK Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2022 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
An analysis of the financial performance from 2018 to 2022 reveals a consistent inability to generate positive economic value. Economic profit remained negative throughout the entire five-year period, indicating that the returns on capital were insufficient to cover the company's cost of capital, thereby eroding shareholder value.
- Economic Profit Trends
- Economic profit exhibited significant volatility while remaining in negative territory. A downward trajectory was observed from 2018 to 2020, with losses widening from -1.43 billion to a peak deficit of -2.12 billion. A notable recovery occurred in 2021, where the loss narrowed to -1.33 billion, before slipping again to -1.54 billion by the end of 2022.
- Invested Capital Expansion
- There was a steady increase in invested capital over the period. Capital grew from 16.42 billion in 2018 to 22.06 billion in 2022. This upward trend suggests continued investment in assets or operations, although these investments did not translate into positive economic profit.
- Economic Spread Ratio Performance
- The economic spread ratio remained negative, mirroring the trend of the economic profit. The ratio reached its lowest point in 2020 at -9.80%, representing the widest gap between the return on capital and the cost of capital. An improvement was noted in 2021, with the ratio rising to -6.22%, followed by a slight decline to -6.98% in 2022. The persistence of negative spread ratios confirms that the company failed to achieve a positive economic premium over the analyzed timeframe.
Economic Profit Margin
ONEOK Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | ||||||
| Revenues | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Economic profit. See details »
2 2022 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenues
= 100 × ÷ =
3 Click competitor name to see calculations.
The analysis of economic value generation from 2018 to 2022 reveals a period of consistent economic loss, although the efficiency of revenue utilization showed significant improvement in the latter years of the period.
- Economic Profit Trends
- Absolute economic profit remained negative throughout the five-year window, indicating that the company did not generate returns above its cost of capital. Losses expanded from -1.43 billion USD in 2018 to a peak of -2.12 billion USD in 2020. A partial recovery occurred in 2021, with losses narrowing to -1.33 billion USD, before slightly widening again to -1.54 billion USD in 2022.
- Revenue Volatility
- Revenues experienced a notable contraction between 2018 and 2020, falling from 12.59 billion USD to 8.54 billion USD. This downward trend reversed sharply in 2021, with revenues escalating to 16.54 billion USD and continuing a strong upward trajectory to reach 22.39 billion USD by 2022.
- Economic Profit Margin Analysis
- The economic profit margin exhibited a significant fluctuation, reaching its lowest point in 2020 at -24.80%. This deterioration was the result of concurrent declines in revenue and increases in absolute economic losses. From 2021 onward, a recovery trend is observed, with the margin improving to -8.06% and further reaching -6.88% in 2022. This improvement suggests that while the company continued to operate at an economic loss, the rapid expansion of the revenue base successfully diluted the impact of those losses relative to total turnover.