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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Schlumberger Ltd., economic profit calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	4,641)	3,801)	2,298)	(11,275)	(10,628)
Cost of capital²	16.53%	16.73%	15.22%	12.37%	14.74%
Invested capital³	37,776)	33,931)	32,896)	33,428)	45,035)

Economic profit⁴	(1,604)	(1,875)	(2,709)	(15,409)	(17,265)

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ NOPAT. See details »

² Cost of capital. See details »

³ Invested capital. See details »

⁴ 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 4,641 – 16.53% × 37,776 = -1,604

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Schlumberger Ltd. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd., NOPAT calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss) attributable to SLB	4,203)	3,441)	1,881)	(10,518)	(10,137)
Deferred income tax expense (benefit)¹	28)	(39)	(31)	(1,248)	(1,011)
Increase (decrease) in allowance for doubtful accounts²	(3)	21)	18)	46)	6)
Increase (decrease) in equity equivalents³	25)	(18)	(13)	(1,202)	(1,005)
Interest expense	503)	490)	539)	563)	609)
Interest expense, operating lease liability⁴	29)	23)	25)	32)	45)
Adjusted interest expense	532)	513)	564)	595)	654)
Tax benefit of interest expense⁵	(112)	(108)	(118)	(125)	(137)
Adjusted interest expense, after taxes⁶	420)	405)	446)	470)	517)
(Gain) loss on marketable securities	—)	—)	(47)	(39)	—)
Interest income	(100)	(99)	(33)	(33)	(41)
Investment income, before taxes	(100)	(99)	(80)	(72)	(41)
Tax expense (benefit) of investment income⁷	21)	21)	17)	15)	9)
Investment income, after taxes⁸	(79)	(78)	(63)	(57)	(32)
Net income (loss) attributable to noncontrolling interest	72)	51)	47)	32)	30)
Net operating profit after taxes (NOPAT)	4,641)	3,801)	2,298)	(11,275)	(10,628)

Based on: 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), 10-K (reporting date: 2019-12-31).

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 (loss) attributable to SLB.

⁴ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 810 × 3.60% = 29

⁵ 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 532 × 21.00% = 112

⁶ Addition of after taxes interest expense to net income (loss) attributable to SLB.

⁷ 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 100 × 21.00% = 21

⁸ Elimination of after taxes investment income.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Schlumberger Ltd. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd., cash operating taxes calculation

US$ in millions

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Tax expense (benefit)	1,007)	779)	446)	(812)	(311)
Less: Deferred income tax expense (benefit)	28)	(39)	(31)	(1,248)	(1,011)
Add: Tax savings from interest expense	112)	108)	118)	125)	137)
Less: Tax imposed on investment income	21)	21)	17)	15)	9)
Cash operating taxes	1,070)	905)	579)	546)	829)

Based on: 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), 10-K (reporting date: 2019-12-31).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Schlumberger Ltd. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Short-term borrowings and current portion of long-term debt	1,123)	1,632)	909)	850)	524)
Long-term debt, excluding current portion	10,842)	10,594)	13,286)	16,036)	14,770)
Operating lease liability¹	810)	699)	814)	1,011)	1,411)
Total reported debt & leases	12,775)	12,925)	15,009)	17,897)	16,705)
Total SLB stockholders’ equity	20,189)	17,685)	15,004)	12,071)	23,760)
Net deferred tax (assets) liabilities²	140)	61)	94)	19)	491)
Allowance for doubtful accounts³	337)	340)	319)	301)	255)
Equity equivalents⁴	477)	401)	413)	320)	746)
Accumulated other comprehensive (income) loss, net of tax⁵	4,254)	3,855)	3,570)	4,884)	4,438)
Noncontrolling interests	1,170)	304)	282)	418)	416)
Adjusted total SLB stockholders’ equity	26,090)	22,245)	19,269)	17,693)	29,360)
Marketable securities⁶	(1,089)	(1,239)	(1,382)	(2,162)	(1,030)
Invested capital	37,776)	33,931)	32,896)	33,428)	45,035)

Based on: 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), 10-K (reporting date: 2019-12-31).

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.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Schlumberger Ltd. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	73,753)	73,753)	÷	85,886)	=	0.86	0.86	×	18.91%	=	16.24%
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					16.53%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	79,886)	79,886)	÷	91,617)	=	0.87	0.87	×	18.91%	=	16.49%
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					16.73%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	55,855)	55,855)	÷	71,478)	=	0.78	0.78	×	18.91%	=	14.78%
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					15.22%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,367)	30,367)	÷	49,528)	=	0.61	0.61	×	18.91%	=	11.59%
Debt³	18,150)	18,150)	÷	49,528)	=	0.37	0.37	×	2.50% × (1 – 21.00%)	=	0.72%
Operating lease liability⁴	1,011)	1,011)	÷	49,528)	=	0.02	0.02	×	3.20% × (1 – 21.00%)	=	0.05%
Total:	49,528)					1.00					12.37%

Based on: 10-K (reporting date: 2020-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	50,784)	50,784)	÷	68,019)	=	0.75	0.75	×	18.91%	=	14.12%
Debt³	15,824)	15,824)	÷	68,019)	=	0.23	0.23	×	3.09% × (1 – 21.00%)	=	0.57%
Operating lease liability⁴	1,411)	1,411)	÷	68,019)	=	0.02	0.02	×	3.20% × (1 – 21.00%)	=	0.05%
Total:	68,019)					1.00					14.74%

Based on: 10-K (reporting date: 2019-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt. See details »

⁴ Operating lease liability. See details »

Schlumberger Ltd., economic spread ratio calculation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(1,604)	(1,875)	(2,709)	(15,409)	(17,265)
Invested capital²	37,776)	33,931)	32,896)	33,428)	45,035)
Performance Ratio
Economic spread ratio³	-4.25%	-5.52%	-8.23%	-46.10%	-38.34%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² Invested capital. See details »

³ 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × -1,604 ÷ 37,776 = -4.25%

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Schlumberger Ltd. economic spread ratio improved from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd., economic profit margin calculation

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	(1,604)	(1,875)	(2,709)	(15,409)	(17,265)
Revenue	33,135)	28,091)	22,929)	23,601)	32,917)
Performance Ratio
Economic profit margin²	-4.84%	-6.67%	-11.81%	-65.29%	-52.45%

Based on: 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), 10-K (reporting date: 2019-12-31).

¹ Economic profit. See details »

² 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × -1,604 ÷ 33,135 = -4.84%

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Schlumberger Ltd. economic profit margin improved from 2021 to 2022 and from 2022 to 2023.

Schlumberger Ltd. (NYSE:SLB)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin