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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SLB N.V. pages available for free this week:
- Balance Sheet: Assets
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Total Asset Turnover since 2005
- Aggregate Accruals
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Economic Profit
SLB N.V., economic profit calculation
US$ in millions
| 12 months ended: | Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|
| Net operating profit after taxes (NOPAT)1 | ||||||
| Cost of capital2 | ||||||
| Invested capital3 | ||||||
| Economic profit4 | ||||||
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
= – × =
The financial performance between 2021 and 2025 demonstrates a period of operating profitability recovery followed by a significant contraction in economic value creation.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trajectory is observed from 2021 through 2024, with NOPAT increasing from 2,298 million USD to a peak of 4,815 million USD. This growth trend reversed in 2025, with figures declining to 3,544 million USD, representing a notable decrease from the previous year's high.
- Invested Capital and Cost of Capital
- Invested capital shows a consistent and uninterrupted increase over the five-year period, rising from 32,896 million USD in 2021 to 44,371 million USD in 2025. Throughout this expansion of the capital base, the cost of capital remained relatively stable, fluctuating within a narrow range between 11.40% and 12.47%.
- Economic Profit and Value Creation
- Economic profit trended toward break-even between 2021 and 2023, moving from a deficit of 1,454 million USD to nearly zero. A marginal positive economic profit of 87 million USD was achieved in 2024, marking the only period in the sequence where the company generated returns exceeding its cost of capital. However, 2025 reflects a substantial downturn, with economic profit falling to -1,953 million USD, the lowest value in the observed period.
The results indicate that while operating profits grew significantly until 2024, the continuous expansion of invested capital created a higher threshold for value creation. The sharp decline in economic profit in 2025 is a result of the simultaneous contraction of NOPAT and the continued increase in the capital base.
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
= × =
5 2025 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= × 21.00% =
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
= × 21.00% =
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$3,374 million, a decline of approximately 24.4% from the 2024 high.
- Relationship between NOPAT and Net Income
- The difference between NOPAT and net income attributable to SLB remains consistently positive throughout the period. This suggests that factors such as interest expense and non-operating items are reducing reported net income relative to core operational profitability as measured by NOPAT. The magnitude of this difference does not exhibit a significant trend over the period, remaining relatively stable in absolute terms.
The observed decline in both NOPAT and net income in 2025 warrants further investigation to determine the underlying causes. Potential factors could include changes in revenue, operating costs, tax rates, or non-operating expenses.
Cash Operating Taxes
SLB N.V., cash operating taxes calculation
US$ 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$1,215 million in 2025. The consistency between the 2024 and 2025 values suggests the decrease may not be substantial.
- Relationship between Tax Expense and Cash Operating Taxes
- Cash operating taxes consistently exceeded tax expense across all reported years. This difference could be attributed to timing differences between the recognition of tax expense under accounting standards and the actual cash payments made for taxes. The gap between the two metrics remained relatively stable throughout the period, suggesting a consistent pattern in these timing differences.
The observed trends suggest a period of increasing tax obligations followed by a potential stabilization or slight reduction in 2025. Further investigation into the underlying drivers of these changes, such as profitability, tax rate fluctuations, and tax planning initiatives, would be necessary for a more comprehensive understanding.
Invested Capital
SLB N.V., invested capital calculation (financing approach)
US$ 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$26,109 million in 2025. This represents a cumulative increase of approximately 73%. The rate of increase in stockholders’ equity also appears to be accelerating, mirroring the trend observed in invested capital.
The increase in invested capital, coupled with the decrease in debt and the substantial increase in stockholders’ equity, suggests a shift in the company’s capital structure. The company appears to be relying more on equity financing and less on debt financing. The accelerating growth in both invested capital and stockholders’ equity in the later years of the period may indicate increased investment in operations or acquisitions, funded primarily by equity.
Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Operating lease liability4 | ÷ | = | × | × (1 – 21.00%) | = | ||||||||
| Total: | |||||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | ÷ | = | × | = | |||||||||
| Debt3 | ÷ | = | × | × (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 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: 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 »
Economic Spread Ratio
SLB N.V., economic spread ratio calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| Economic spread ratio3 | ||||||
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 × ÷ =
The financial performance concerning economic value added reflects a period of gradual recovery and value stabilization leading up to 2024, followed by a significant contraction in 2025.
- Economic Spread Ratio
- A consistent upward trend is observed between 2021 and 2024, as the ratio improved from -4.42% to a positive 0.22%. This indicates a period where the return on invested capital progressively converged with and eventually exceeded the cost of capital, transitioning the entity from value destruction to value creation. However, this trend reversed sharply in 2025, with the ratio falling to -4.40%, signaling a return to substantial value destruction.
- Invested Capital
- Invested capital demonstrated an uninterrupted growth trajectory throughout the period, rising from 32,896 million USD in 2021 to 44,371 million USD in 2025. This steady expansion of the capital base suggests continuous investment in assets or operations, despite the volatility observed in the resulting economic profit.
- Economic Profit
- Economic profit shifted from a significant deficit of -1,454 million USD in 2021 to a positive 87 million USD in 2024, representing a sustained recovery phase. This positive momentum was lost in 2025, as economic profit declined to -1,953 million USD. The 2025 figure represents the most severe value loss in the reported timeframe, coinciding with the peak of invested capital.
Economic Profit Margin
SLB N.V., economic profit margin calculation
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Economic profit1 | ||||||
| Revenue | ||||||
| Performance Ratio | ||||||
| Economic profit margin2 | ||||||
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 × ÷ =
Analysis of the economic profit and margin reveals a distinct cycle of recovery followed by a sharp downturn. From 2021 to 2024, there was a consistent improvement in the capacity to generate value above the cost of capital, though this trajectory was abruptly reversed in 2025.
- Revenue Performance
- Revenue exhibited a sustained upward trajectory from 2021 through 2024, increasing from 22,929 million USD to a peak of 36,289 million USD. This growth period indicates an expansion in scale or pricing power, followed by a slight contraction to 35,708 million USD in 2025.
- Economic Profit Trends
- Economic profit demonstrated a steady recovery over a four-year period, narrowing from a loss of 1,454 million USD in 2021 to a positive gain of 87 million USD in 2024. This transition indicates a period of increasing operational efficiency and a successful alignment of returns with the cost of capital. However, 2025 shows a significant reversal, with economic profit falling to -1,953 million USD, the most substantial loss within the observed timeframe.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the trends observed in absolute economic profit. The margin improved from -6.34% in 2021 to a positive 0.24% in 2024, signaling a shift toward value creation. The subsequent collapse to -5.47% in 2025 indicates a severe erosion of economic value, suggesting that costs or capital charges significantly outweighed the earnings generated during that period.