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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Occidental Petroleum Corp. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Debt
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Economic Profit
Occidental Petroleum Corp., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2024 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= – × =
The financial data reveals several key trends in profitability, capital costs, and invested capital over the five-year period.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows a significant improvement from a substantial loss in 2020 to positive values in 2021 and 2022, peaking at 12,526 million USD in 2022. However, there is a decline in 2023 and 2024, with NOPAT dropping to 5,524 million USD and further down to 3,380 million USD, indicating weakening operating profitability in the latter years.
- Cost of Capital
- The cost of capital has shown an increasing trend from 10.57% in 2020 to a peak of 15.62% in 2022. After this peak, it slightly decreases but remains elevated at 14.41% in 2024 compared to the initial year. This rising cost of capital suggests increasing financial risk or market conditions that led to higher required returns on invested capital.
- Invested Capital
- Invested capital experienced a decline from 63,270 million USD in 2020 to a low of 56,295 million USD in 2022, followed by a modest rebound to 66,896 million USD in 2024. The initial decrease could indicate asset divestment or capital efficiency improvements, while the subsequent increase may reflect new investments or asset acquisitions.
- Economic Profit
- Economic profit has remained negative for most of the period, indicating that the returns generated did not cover the cost of capital. Although there was an improvement from a large loss of -21,575 million USD in 2020 to a positive 3,735 million USD in 2022, it reverted to negative in the following years, with -3,284 million USD in 2023 and a further decline to -6,258 million USD in 2024. This suggests the company struggled to generate value beyond its capital costs after 2022, despite improvements in operating profit in earlier years.
Overall, the data depicts a recovery in operating profitability until 2022, followed by weakening results in 2023 and 2024, set against an environment of rising cost of capital and fluctuating invested capital. The persistence of negative economic profit in the latter years highlights challenges in creating shareholder value beyond capital costs.
Net Operating Profit after Taxes (NOPAT)
Occidental Petroleum Corp., NOPAT calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 equity equivalents to net income (loss) attributable to Occidental.
5 2024 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= × =
6 2024 Calculation
Tax benefit of interest and debt expense, net = Adjusted interest and debt expense, net × Statutory income tax rate
= × 21.00% =
7 Addition of after taxes interest expense to net income (loss) attributable to Occidental.
8 Elimination of discontinued operations.
- Net income (loss) attributable to Occidental
- The net income shows a significant turnaround from a substantial loss of -14,831 million USD in 2020 to a positive net income of 2,322 million USD in 2021. This positive trend continues with a peak net income of 13,304 million USD in 2022, indicating a strong recovery and profitability increase. However, the net income declines in subsequent years, dropping to 4,696 million USD in 2023 and further to 3,056 million USD in 2024, suggesting some challenges or decreased profitability in the most recent periods.
- Net operating profit after taxes (NOPAT)
- The NOPAT also follows a similar pattern, starting with a negative value of -14,889 million USD in 2020, reflecting operating losses. A considerable improvement occurs in 2021 with a positive NOPAT of 4,213 million USD, followed by a substantial increase to 12,526 million USD in 2022. Like net income, the NOPAT decreases over the subsequent periods to 5,524 million USD in 2023 and declining further to 3,380 million USD in 2024, indicating reduced operating profitability after a peak performance in 2022.
- Overall Trend and Insights
- The data reflects a strong recovery and improved profitability between 2020 and 2022, both in net income and operating profits. This suggests effective operational improvements or favorable market conditions during this interval. However, the decline from 2023 onwards in both metrics points to emerging challenges or less favorable conditions impacting profitability. Despite the reductions, the figures remain positive in the latest years, indicating ongoing profitability, albeit at a reduced level compared to the 2022 peak.
Cash Operating Taxes
Occidental Petroleum Corp., cash operating taxes calculation
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
The financial data indicates notable fluctuations in tax-related expenses over the five-year period. The income tax expense (benefit) shows a significant shift from a substantial tax benefit in 2020 to positive tax expenses in subsequent years. Specifically, there was a large negative expense (tax benefit) recorded in 2020, which reversed sharply to a positive tax expense in 2021 and remained positive through 2024. While the amount decreased slightly in 2022 compared to 2021, it increased again in 2023 before declining somewhat in 2024.
Cash operating taxes demonstrated a clear upward trajectory from 2020 through 2022, tripling over this period. This growth slowed noticeably in 2023, where the cash taxes decreased from the previous year, and remained relatively stable into 2024. The spike in cash operating taxes in 2022 could reflect an underlying increase in taxable income or changes in operational profitability or tax regulations during that year.
- Income Tax Expense (Benefit)
- Exhibited a transition from a tax benefit of -2,172 million US dollars in 2020 to positive expenses in the range of 813 to 1,733 million US dollars in the following years, indicating a reversal from a net tax credit to a liability position.
- Cash Operating Taxes
- Increased substantially from 655 million US dollars in 2020 to a peak of 2,681 million US dollars in 2022, before declining and stabilizing around 1,887 to 1,892 million US dollars in 2023 and 2024 respectively.
Overall, the data suggests a period of tax volatility in 2020 followed by a normalization to consistent tax payments. The divergence between income tax expense and cash operating taxes in some years may reflect timing differences, deferred tax items, or adjustments related to tax regulations and accounting interpretations. The reduction in cash taxes from the 2022 peak hints at either improved tax planning, changes in profitability, or external factors affecting taxable income in recent years.
Invested Capital
Occidental Petroleum Corp., invested capital calculation (financing approach)
US$ in millions
Based on: 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), 10-K (reporting date: 2020-12-31).
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 equity equivalents to stockholders’ equity.
6 Removal of accumulated other comprehensive income.
- Total Reported Debt & Leases
- The total reported debt and leases showed a significant decline from 37,299 million USD at the end of 2020 to 20,765 million USD by the end of 2022. This reduction indicates a deleveraging trend over the initial two years. However, from 2023 onwards, there was a slight increase in debt levels, rising to 20,911 million USD, followed by a more pronounced rise to 27,104 million USD in 2024. This suggests a possible shift toward increased leverage or additional financing after a period of debt reduction.
- Stockholders' Equity
- Stockholders’ equity exhibited a consistent upward trajectory over the entire period. Starting at 18,573 million USD in 2020, it increased to 20,327 million USD in 2021 and continued the upward trend to 30,085 million USD in 2022. The growth persisted in subsequent years, reaching 30,250 million USD in 2023 and further advancing to 34,159 million USD in 2024. This steady increase reflects positive retained earnings and/or additional equity contributions, strengthening the company's net asset base.
- Invested Capital
- Invested capital declined from 63,270 million USD in 2020 to 56,295 million USD in 2022, indicating a contraction in capital employed. The level stabilized slightly in 2023 at 56,860 million USD but then experienced a substantial increase to 66,896 million USD in 2024. This late surge could be indicative of renewed investment or capital infusion, possibly aligning with the increase in reported debt during the same period.
- Overall Analysis
- The financial data depict an initial phase of deleveraging combined with growth in equity and reduced invested capital through the first three years. From 2023 onwards, there is a reversal in debt trend accompanied by a significant increase in invested capital and continued growth in equity. This pattern may imply strategic shifts such as expansion initiatives funded by a mix of increased leverage and equity strengthening. The overall positive trajectory in equity underscores improved net worth despite fluctuations in debt and capital employed.
Cost of Capital
Occidental Petroleum Corp., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock, at $1.00 per share par value (book value) | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2024-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock, at $1.00 per share par value (book value) | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock, at $1.00 per share par value (book value) | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock, at $1.00 per share par value (book value) | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Preferred stock, at $1.00 per share par value (book value) | ÷ | = | × | = | |||||||||
| Long-term debt, including current maturities3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in millions
2 Equity. See details »
3 Long-term debt, including current maturities. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Occidental Petroleum Corp., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2024 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Economic Profit
- The economic profit exhibited significant fluctuations over the period under review. It started with a substantial negative value of -21,575 million USD at the end of 2020, indicating considerable value destruction. Subsequently, there was a marked improvement in 2021, with economic profit rising sharply to -3,036 million USD. The trend continued positively into 2022, where economic profit turned positive at 3,735 million USD, suggesting value creation during that year. However, this improvement was not sustained, as economic profit reverted to negative values in 2023 (-3,284 million USD) and further declined in 2024 to -6,258 million USD. This pattern indicates volatility and challenges in consistently generating economic profit.
- Invested Capital
- Invested capital showed a declining trend initially, decreasing from 63,270 million USD at the end of 2020 to 56,295 million USD in 2022. This downward movement likely reflects divestments, asset sales, or diminished investment. In 2023, invested capital stabilized slightly, rising marginally to 56,860 million USD, followed by a more pronounced increase in 2024 to 66,896 million USD. The resurgence in invested capital towards the end of the period may indicate renewed investment activities or asset acquisitions.
- Economic Spread Ratio
- The economic spread ratio mirrored the pattern of economic profit with considerable variability. Starting at a deeply negative figure of -34.1% in 2020, it improved substantially to -5.23% in 2021 and turned positive in 2022 at 6.63%. However, the ratio deteriorated again in 2023 to -5.78% and declined further in 2024 to -9.35%. This ratio reflects the difference between return on invested capital and cost of capital, so the negative values imply that the company struggled to generate returns exceeding its cost of capital in most periods except 2022.
Economic Profit Margin
Occidental Petroleum Corp., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Net sales | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Economic profit. See details »
2 2024 Calculation
Economic profit margin = 100 × Economic profit ÷ Net sales
= 100 × ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales showed an overall increasing trend from 2020 to 2022, rising significantly from $17,809 million to $36,634 million. However, in the subsequent years of 2023 and 2024, net sales declined to $28,257 million and $26,725 million respectively, indicating a reversal from the previous growth trend.
- Economic Profit
- The economic profit demonstrated a considerable improvement between 2020 and 2022, moving from a large negative value of -$21,575 million to a positive figure of $3,735 million. This indicates an improved profitability and value creation during this period. Nevertheless, the trend shifted negatively in 2023 and 2024, with economic profit decreasing to -$3,284 million and further down to -$6,258 million, reflecting losses or diminished economic value in those years.
- Economic Profit Margin
- The economic profit margin mirrored the fluctuation seen in economic profit, starting at -121.15% in 2020 and improving substantially to 10.19% by 2022, signaling better operational efficiency and profitability relative to sales. In 2023 and 2024, the margin again turned negative, at -11.62% and -23.42% respectively, suggesting a decline in profitability and that economic losses are increasing relative to net sales.
- Summary of Trends
- From 2020 through 2022, the company experienced a period of recovery and growth, with increasing net sales accompanied by a shift from significant economic losses to positive economic profit and profit margins. However, the data for 2023 and 2024 reveal a reversal of this positive trend, with declining net sales and a return to negative economic profit and margins. This suggests challenges impacting profitability and value generation in the latter years analyzed.