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 – 12.54% × 44,371 = -2,021
The financial trajectory of economic profit from 2021 to 2025 reveals a period of steady recovery and value creation that culminated in 2024, followed by a sharp reversal in 2025. While operational profits improved significantly for the first four years, the simultaneous increase in invested capital created a challenging environment for generating positive economic value.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend in NOPAT is observed between 2021 and 2024, with values increasing from 2,298 million US$ to a peak of 4,815 million US$. This represents a substantial expansion in operational profitability. However, this growth trend reversed in 2025, as NOPAT declined to 3,544 million US$, indicating a contraction in operating performance.
- Invested Capital and Cost of Capital
- Invested capital exhibited consistent growth throughout the entire period, rising from 32,896 million US$ in 2021 to 44,371 million US$ by 2025. During this expansion, the cost of capital remained relatively stable, fluctuating within a narrow range between 11.54% and 12.63%. The continuous increase in the capital base heightened the threshold of NOPAT required to achieve a positive economic profit.
- Economic Profit Analysis
- Economic profit remained negative for the majority of the analyzed period, reflecting a situation where NOPAT was insufficient to cover the cost of invested capital. A progressive recovery was noted from 2021 (-1,500 million US$) through 2023 (-79 million US$), eventually reaching a positive value of 28 million US$ in 2024. This 2024 peak marked the only instance of value creation above the cost of capital. However, 2025 saw a severe decline to -2,021 million US$, the lowest point in the five-year series, driven by the combination of falling NOPAT and a continuing increase in invested capital.
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Net Operating Profit after Taxes (NOPAT)
SLB N.V., NOPAT calculation
US$ 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$26,109 million in 2025. This represents a cumulative increase of approximately 73%. The rate of increase in stockholders’ equity also appears to be accelerating, mirroring the trend observed in invested capital.
The increase in invested capital, coupled with the decrease in debt and the substantial increase in stockholders’ equity, suggests a shift in the company’s capital structure. The company appears to be relying more on equity financing and less on debt financing. The accelerating growth in both invested capital and stockholders’ equity in the later years of the period may indicate increased investment in operations or acquisitions, funded primarily by equity.
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Cost of Capital
SLB N.V., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 73,496) | 73,496) | ÷ | 85,695) | = | 0.86 | 0.86 | × | 14.21% | = | 12.18% | ||
| Debt3 | 11,294) | 11,294) | ÷ | 85,695) | = | 0.13 | 0.13 | × | 3.12% × (1 – 21.00%) | = | 0.32% | ||
| Operating lease liability4 | 905) | 905) | ÷ | 85,695) | = | 0.01 | 0.01 | × | 4.00% × (1 – 21.00%) | = | 0.03% | ||
| Total: | 85,695) | 1.00 | 12.54% | ||||||||||
Based on: 10-K (reporting date: 2025-12-31).
1 US$ 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 | × | 14.21% | = | 11.75% | ||
| 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 | 12.16% | ||||||||||
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 | × | 14.21% | = | 12.20% | ||
| 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 | 12.49% | ||||||||||
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 | × | 14.21% | = | 12.39% | ||
| 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 | 12.63% | ||||||||||
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 | × | 14.21% | = | 11.10% | ||
| 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 | 11.54% | ||||||||||
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 × -2,021 ÷ 44,371 = -4.56%
A cyclical trend in economic value creation is observed over the five-year period. Between 2021 and 2024, there was a consistent trajectory of recovery in economic performance, culminating in a transition to positive economic profit. However, this progress was sharply reversed in 2025, during which economic value destruction reached its highest level within the analyzed timeframe.
- Economic Spread Ratio
- The ratio exhibited a steady improvement from -4.56% in 2021 to 0.07% in 2024, indicating a gradual narrowing of the gap between the return on invested capital and the cost of capital. This positive inflection in 2024 marked a brief period of value creation. This trend was completely neutralized in 2025, as the ratio reverted to -4.56%, matching the deficit seen at the start of the period.
- Economic Profit
- Economic profit demonstrated a recovery phase from 2021 through 2024, moving from a deficit of 1,500 million US$ to a surplus of 28 million US$. The subsequent collapse to negative 2,021 million US$ in 2025 represents a significant deterioration in the ability to generate returns above the required cost of capital.
- Invested Capital
- A continuous expansion of the capital base is evident, with invested capital rising from 32,896 million US$ in 2021 to 44,371 million US$ in 2025. The data indicates that while the capital base grew consistently, this growth did not yield a corresponding sustainable increase in economic spread, as the highest level of invested capital coincided with the deepest economic loss in 2025.
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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 × -2,021 ÷ 35,708 = -5.66%
The analysis of economic value creation between 2021 and 2025 reveals a period of steady operational recovery that culminated in a brief transition to positive economic profit, followed by a sharp reversal in the final year.
- Revenue Trajectory
- A consistent upward trend in revenue was observed from 2021 through 2024, with figures rising from US$ 22,929 million to a peak of US$ 36,289 million. A marginal contraction occurred in 2025, with revenue settling at US$ 35,708 million.
- Economic Profit Performance
- Economic profit demonstrated a strong recovery trend for the first four years of the period. The initial deficit of US$ 1,500 million in 2021 narrowed significantly to US$ 484 million in 2022 and US$ 79 million in 2023, eventually reaching a positive value of US$ 28 million in 2024. This trend indicates a progressive alignment of operating returns with the cost of capital. However, this progress was sharply reversed in 2025, as economic profit plummeted to a period-low of US$ -2,021 million.
- Economic Profit Margin Analysis
- The economic profit margin mirrored the absolute profit trend, improving from -6.54% in 2021 to a positive 0.08% in 2024. This trajectory suggests a gradual enhancement in the efficiency of capital utilization relative to revenue generation. The positive momentum was interrupted in 2025, with the margin contracting to -5.66%, representing a substantial deterioration in value creation efficiency and suggesting that the cost of capital significantly exceeded operating returns in the final year.
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