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 – 12.52% × 44,371 = -2,011
The financial trajectory of the entity between 2021 and 2025 is characterized by a period of recovery and marginal value creation followed by a significant downturn in economic performance. While operational profits showed consistent growth for the first four years, the expansion of the capital base and a sharp decline in profitability in the final year resulted in a substantial reversal of economic profit.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is observed from 2021 to 2024, with NOPAT increasing from 2,298 million US$ to a peak of 4,815 million US$. This growth represents a significant improvement in operational efficiency and earnings power. However, this trend reversed in 2025, with NOPAT falling to 3,544 million US$, indicating a contraction in operational profitability.
- Invested Capital and Cost of Capital
- Invested capital exhibited a continuous and steady increase throughout the period, rising from 32,896 million US$ in 2021 to 44,371 million US$ by 2025. Concurrently, the cost of capital remained relatively stable, fluctuating within a narrow range between 11.52% and 12.60%. The consistent growth in invested capital increased the financial hurdle the company needed to overcome to generate positive economic value.
- Economic Profit Analysis
- The economic profit trend reflects a transition from value destruction toward value creation, followed by a sharp decline. From 2021 to 2023, the entity reduced its economic losses from -1,493 million US$ to -70 million US$. A peak was reached in 2024, where the entity achieved a positive economic profit of 37 million US$, signifying that NOPAT finally exceeded the cost of capital charge. This progress was abruptly reversed in 2025, with economic profit plunging to -2,011 million US$. This final downturn is the result of the simultaneous occurrence of declining NOPAT and the highest level of invested capital in the analyzed period, leading to the most significant value destruction since 2021.
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Net Operating Profit after Taxes (NOPAT)
SLB N.V., NOPAT calculation
US$ 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$26,109 million in 2025. This represents a cumulative increase of approximately 73%. The rate of increase in stockholders’ equity also appears to be accelerating, mirroring the trend observed in invested capital.
The increase in invested capital, coupled with the decrease in debt and the substantial increase in stockholders’ equity, suggests a shift in the company’s capital structure. The company appears to be relying more on equity financing and less on debt financing. The accelerating growth in both invested capital and stockholders’ equity in the later years of the period may indicate increased investment in operations or acquisitions, funded primarily by equity.
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Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 73,496) | 73,496) | ÷ | 85,695) | = | 0.86 | 0.86 | × | 14.18% | = | 12.16% | ||
| Debt3 | 11,294) | 11,294) | ÷ | 85,695) | = | 0.13 | 0.13 | × | 3.12% × (1 – 21.00%) | = | 0.32% | ||
| Operating lease liability4 | 905) | 905) | ÷ | 85,695) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,695) | 1.00 | 12.52% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 14.18% | = | 11.73% | ||
| 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 | 12.13% | ||||||||||
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 | × | 14.18% | = | 12.18% | ||
| 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 | 12.47% | ||||||||||
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 | × | 14.18% | = | 12.36% | ||
| 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 | 12.60% | ||||||||||
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 | × | 14.18% | = | 11.08% | ||
| 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 | 11.52% | ||||||||||
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 × -2,011 ÷ 44,371 = -4.53%
The financial trajectory from 2021 to 2025 reflects a period of gradual recovery in economic value creation that culminated in a brief positive turnaround in 2024, followed by a significant reversal in 2025. While the capital base expanded consistently throughout the period, the ability to generate returns exceeding the cost of capital remained volatile.
- Invested Capital Growth
- A consistent upward trend in invested capital is observed, rising from 32,896 million US$ in 2021 to 44,371 million US$ by 2025. This represents a steady expansion of the resource base used to generate value, with the most significant increase occurring between 2024 and 2025.
- Economic Profit Performance
- Economic profit exhibited a strong recovery phase between 2021 and 2024, moving from a deficit of 1,493 million US$ to a surplus of 37 million US$. However, this positive momentum was sharply interrupted in 2025, where economic profit fell to its lowest point in the observed period at -2,011 million US$.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the trend of economic profit, demonstrating a narrowing gap between the return on invested capital and the cost of capital from 2021 (-4.54%) through 2024 (0.09%). The transition to a positive ratio in 2024 indicated that the entity had finally begun creating economic value. This progress was erased in 2025, as the ratio dropped to -4.53%, indicating a return to significant value destruction nearly identical to the levels seen in 2021.
The divergence between the steadily increasing invested capital and the volatile economic spread ratio suggests that the expansion of the capital base did not yield sustainable economic value. The sharp decline in 2025 indicates that the cost of capital significantly outweighed the returns generated from the expanded investment base during that fiscal year.
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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 × -2,011 ÷ 35,708 = -5.63%
The financial performance between 2021 and 2025 is characterized by a sustained period of recovery in value creation that culminated in a brief transition to positive economic profit, followed by a significant downturn in the final period. While revenue demonstrated a consistent upward trajectory for the majority of the analyzed timeframe, the ability to generate returns above the cost of capital fluctuated substantially.
- Revenue Growth Patterns
- A consistent growth trend in revenue is observed from 2021 through 2024, increasing from 22,929 million USD to a peak of 36,289 million USD. This represents a substantial expansion in top-line activity. A slight contraction occurred in 2025, with revenue declining to 35,708 million USD.
- Economic Profit Trajectory
- Economic profit exhibited a steady recovery from a deficit of 1,493 million USD in 2021, narrowing to 476 million USD in 2022 and 70 million USD in 2023. The trend reached a positive inflection point in 2024 with a profit of 37 million USD. However, this progress was reversed in 2025, as economic profit plummeted to a period-low of 2,011 million USD.
- Economic Profit Margin Analysis
- The economic profit margin closely mirrored the absolute profit trend, improving from -6.51% in 2021 to -1.69% in 2022, and further to -0.21% in 2023. The margin achieved a positive value of 0.10% in 2024, indicating that the company had successfully surpassed its cost of capital. This margin collapsed to -5.63% in 2025, suggesting a severe misalignment between operating returns and the capital employed during that year.
- Correlation Between Scale and Value Creation
- The data indicates that revenue growth between 2021 and 2024 was effectively leveraged to reduce economic losses and eventually achieve a positive margin. In contrast, the 2025 results show a decoupling of revenue and value creation, as a relatively stable revenue base of 35,708 million USD was associated with the most significant economic profit loss in the five-year period.
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