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
SLB N.V., economic profit calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2025 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 3,544 – 12.57% × 44,371 = -2,034
The analysis of economic value added reveals a period of operational recovery and gradual convergence toward value creation, followed by a significant downturn in the final period.
- Net Operating Profit After Taxes (NOPAT)
- A sustained upward trend was observed between 2021 and 2024, with NOPAT growing from 2,298 million to a peak of 4,815 million. This growth indicated an improvement in operational efficiency and earnings power. However, this trajectory reversed in 2025, as NOPAT declined to 3,544 million.
- Invested Capital and Cost of Capital
- Invested capital demonstrated consistent growth throughout the entire period, increasing from 32,896 million in 2021 to 44,371 million in 2025. Meanwhile, the cost of capital remained relatively stable, fluctuating within a narrow band between 11.57% and 12.66%, suggesting a consistent risk profile and financing environment.
- Economic Profit Performance
- Economic profit exhibited a steady recovery from 2021 to 2024, reducing annual losses from 1,508 million to a marginal positive gain of 18 million. This improvement was driven by the growth in NOPAT outpacing the increase in the capital charge. However, 2025 saw a severe contraction, with economic profit falling to -2,034 million. This sharp decline resulted from the simultaneous occurrence of reduced operating profits and a continued increase in the total invested capital base, which significantly widened the gap between generated returns and the cost of capital.
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Net Operating Profit after Taxes (NOPAT)
SLB N.V., NOPAT calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income attributable to SLB.
4 2025 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 905 × 4.00% = 36
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 594 × 21.00% = 125
6 Addition of after taxes interest expense to net income attributable to SLB.
7 2025 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 136 × 21.00% = 29
8 Elimination of after taxes investment income.
Net income attributable to SLB and net operating profit after taxes (NOPAT) both demonstrate positive performance over the analyzed period, though with differing trajectories. NOPAT consistently exceeds net income attributable to SLB across all reported years. Both metrics experienced growth from 2021 to 2023, followed by a leveling off and subsequent decline in the most recent year.
- NOPAT Trend
- NOPAT increased from US$2,298 million in 2021 to US$3,801 million in 2022, representing a substantial growth of approximately 65.7%. This upward trend continued into 2023, with NOPAT reaching US$4,641 million. Further incremental growth was observed in 2024, reaching US$4,815 million. However, 2025 saw a decrease in NOPAT to US$3,544 million, indicating a decline of approximately 26.3% from the peak in 2024.
- Net Income Trend
- Net income attributable to SLB increased from US$1,881 million in 2021 to US$3,441 million in 2022, a growth of approximately 82.9%. The growth continued in 2023, reaching US$4,203 million, and then to US$4,461 million in 2024. Similar to NOPAT, net income decreased in 2025, falling to US$3,374 million, a decline of approximately 24.4% from the 2024 high.
- Relationship between NOPAT and Net Income
- The difference between NOPAT and net income attributable to SLB remains consistently positive throughout the period. This suggests that factors such as interest expense and non-operating items are reducing reported net income relative to core operational profitability as measured by NOPAT. The magnitude of this difference does not exhibit a significant trend over the period, remaining relatively stable in absolute terms.
The observed decline in both NOPAT and net income in 2025 warrants further investigation to determine the underlying causes. Potential factors could include changes in revenue, operating costs, tax rates, or non-operating expenses.
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Cash Operating Taxes
SLB N.V., cash operating taxes calculation
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
The reported tax expense and cash operating taxes demonstrate increasing values from 2021 through 2024, followed by a decrease in 2025. Both metrics exhibit a consistent pattern of growth before the final year’s decline.
- Tax Expense
- Tax expense increased from US$446 million in 2021 to US$1,093 million in 2024, representing a significant rise over the period. This increase suggests potentially higher profitability or changes in applicable tax rates. However, tax expense decreased to US$840 million in 2025, indicating a possible reduction in taxable income or the benefit of tax planning strategies.
- Cash Operating Taxes
- Cash operating taxes followed a similar trajectory to tax expense, rising from US$579 million in 2021 to US$1,211 million in 2024. This indicates an increasing cash outflow related to tax obligations. The value then decreased slightly to US$1,215 million in 2025. The consistency between the 2024 and 2025 values suggests the decrease may not be substantial.
- Relationship between Tax Expense and Cash Operating Taxes
- Cash operating taxes consistently exceeded tax expense across all reported years. This difference could be attributed to timing differences between the recognition of tax expense under accounting standards and the actual cash payments made for taxes. The gap between the two metrics remained relatively stable throughout the period, suggesting a consistent pattern in these timing differences.
The observed trends suggest a period of increasing tax obligations followed by a potential stabilization or slight reduction in 2025. Further investigation into the underlying drivers of these changes, such as profitability, tax rate fluctuations, and tax planning initiatives, would be necessary for a more comprehensive understanding.
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Invested Capital
SLB N.V., invested capital calculation (financing approach)
US$ in millions
Based on: 10-K (reporting date: 2025-12-31), 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).
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 equity equivalents to total SLB stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of marketable securities.
The reported invested capital demonstrates a consistent upward trend over the five-year period. Simultaneously, changes are observed in the components contributing to this figure, namely total reported debt & leases and total stockholders’ equity.
- Invested Capital Trend
- Invested capital increased from US$32,896 million in 2021 to US$44,371 million in 2025. This represents a cumulative increase of approximately 35% over the period. The growth appears to be accelerating, with larger absolute increases observed in the later years of the period (2023-2025) compared to the earlier years (2021-2023).
- Debt & Leases
- Total reported debt & leases decreased from US$15,009 million in 2021 to US$12,541 million in 2025. The largest decrease occurred between 2021 and 2022, followed by a period of relative stability with minor fluctuations between 2022 and 2024. A further decrease is noted in 2025.
- Stockholders’ Equity
- Total stockholders’ equity exhibited a consistent increase throughout the period, rising from US$15,004 million in 2021 to US$26,109 million in 2025. This represents a cumulative increase of approximately 73%. The rate of increase in stockholders’ equity also appears to be accelerating, mirroring the trend observed in invested capital.
The increase in invested capital, coupled with the decrease in debt and the substantial increase in stockholders’ equity, suggests a shift in the company’s capital structure. The company appears to be relying more on equity financing and less on debt financing. The accelerating growth in both invested capital and stockholders’ equity in the later years of the period may indicate increased investment in operations or acquisitions, funded primarily by equity.
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Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 73,496) | 73,496) | ÷ | 85,695) | = | 0.86 | 0.86 | × | 14.24% | = | 12.21% | ||
| Debt3 | 11,294) | 11,294) | ÷ | 85,695) | = | 0.13 | 0.13 | × | 3.12% × (1 – 21.00%) | = | 0.32% | ||
| Operating lease liability4 | 905) | 905) | ÷ | 85,695) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,695) | 1.00 | 12.57% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | 58,317) | 58,317) | ÷ | 70,510) | = | 0.83 | 0.83 | × | 14.24% | = | 11.78% | ||
| Debt3 | 11,451) | 11,451) | ÷ | 70,510) | = | 0.16 | 0.16 | × | 2.91% × (1 – 21.00%) | = | 0.37% | ||
| Operating lease liability4 | 742) | 742) | ÷ | 70,510) | = | 0.01 | 0.01 | × | 3.80% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 70,510) | 1.00 | 12.18% | ||||||||||
Based on: 10-K (reporting date: 2024-12-31).
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 | 73,753) | 73,753) | ÷ | 85,886) | = | 0.86 | 0.86 | × | 14.24% | = | 12.23% | ||
| Debt3 | 11,323) | 11,323) | ÷ | 85,886) | = | 0.13 | 0.13 | × | 2.57% × (1 – 21.00%) | = | 0.27% | ||
| Operating lease liability4 | 810) | 810) | ÷ | 85,886) | = | 0.01 | 0.01 | × | 3.60% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,886) | 1.00 | 12.52% | ||||||||||
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 | 79,886) | 79,886) | ÷ | 91,617) | = | 0.87 | 0.87 | × | 14.24% | = | 12.42% | ||
| Debt3 | 11,032) | 11,032) | ÷ | 91,617) | = | 0.12 | 0.12 | × | 2.31% × (1 – 21.00%) | = | 0.22% | ||
| Operating lease liability4 | 699) | 699) | ÷ | 91,617) | = | 0.01 | 0.01 | × | 3.30% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 91,617) | 1.00 | 12.66% | ||||||||||
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 | 55,855) | 55,855) | ÷ | 71,478) | = | 0.78 | 0.78 | × | 14.24% | = | 11.13% | ||
| Debt3 | 14,809) | 14,809) | ÷ | 71,478) | = | 0.21 | 0.21 | × | 2.53% × (1 – 21.00%) | = | 0.41% | ||
| Operating lease liability4 | 814) | 814) | ÷ | 71,478) | = | 0.01 | 0.01 | × | 3.10% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 71,478) | 1.00 | 11.57% | ||||||||||
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 »
Economic Spread Ratio
SLB N.V., economic spread ratio calculation
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 Invested capital. See details »
3 2025 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -2,034 ÷ 44,371 = -4.58%
The financial trajectory regarding economic value addition shows a period of steady recovery from 2021 through 2024, followed by a substantial contraction in 2025. While the capital base grew consistently throughout the entire period, the ability to generate returns in excess of the cost of capital proved volatile.
- Economic Profit Trends
- A progressive improvement in economic profit is observed between 2021 and 2024, moving from a deficit of -1,508 million to a slight surplus of 18 million. This positive momentum was sharply reversed in 2025, with economic profit declining to -2,034 million, the most significant loss recorded in the analyzed timeframe.
- Invested Capital Growth
- Invested capital exhibits a continuous upward trend, increasing annually from 32,896 million in 2021 to 44,371 million in 2025. This indicates a sustained expansion of the company's capital employments over the five-year period.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of economic profit, improving from -4.58% in 2021 to a marginal positive of 0.04% in 2024. This suggests that by 2024, the company had nearly reached a break-even point where returns equaled the cost of capital. However, the ratio reverted to -4.58% in 2025, demonstrating a failure to maintain value creation as the invested capital reached its peak.
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Economic Profit Margin
SLB N.V., economic profit margin calculation
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Economic profit. See details »
2 2025 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -2,034 ÷ 35,708 = -5.70%
The financial performance from 2021 through 2025 exhibits a distinct trajectory of recovery followed by a sharp contraction in economic value generation. Between 2021 and 2024, there was a consistent improvement in the ability to cover the cost of capital, culminating in a transition from significant economic losses to a marginal positive economic profit.
- Revenue Growth and Scaling
- A sustained upward trend in revenue was observed from 2021 to 2024, with figures increasing from 22,929 million USD to a peak of 36,289 million USD. This represents a substantial expansion in the top line over a four-year period. However, this growth plateaued in 2025, with revenue experiencing a slight contraction to 35,708 million USD.
- Economic Profit Trajectory
- Economic profit showed a steady recovery path from 2021 to 2024, moving from a deficit of 1,508 million USD to a positive value of 18 million USD. This progression indicates an increasing efficiency in generating returns relative to the cost of invested capital. This trend reversed abruptly in 2025, as economic profit plummeted to a period-low of -2,034 million USD, indicating a severe erosion of economic value.
- Economic Profit Margin Analysis
- The economic profit margin mirrors the volatility of the absolute economic profit. The margin improved from -6.58% in 2021 to 0.05% in 2024, signaling that the entity nearly reached a break-even point regarding its cost of capital. The subsequent decline to -5.70% in 2025 suggests that the losses in the final year were not merely a result of lower revenue, but rather a significant increase in the cost of capital or a sharp decline in operational profitability.
The correlation between rising revenues and improving economic margins from 2021 to 2024 suggests a period of successful operational scaling. Conversely, the divergence in 2025, where revenue remained relatively stable while economic profit collapsed, points to a substantial increase in the economic burden or a significant impairment of value.
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