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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

Valero Energy Corp., 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	7,868)	13,520)	5,561)	(1,650)	4,429)
Cost of capital²	15.15%	15.29%	13.43%	12.75%	13.94%
Invested capital³	51,119)	49,772)	44,526)	40,966)	40,757)

Economic profit⁴	124)	5,907)	(418)	(6,872)	(1,254)

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
= 7,868 – 15.15% × 51,119 = 124

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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.	Valero Energy Corp. economic profit increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Valero Energy Corp., 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 Valero Energy Corporation stockholders	8,835)	11,528)	930)	(1,421)	2,422)
Deferred income tax expense (benefit)¹	103)	50)	(126)	158)	234)
Increase (decrease) in allowance for credit losses²	(2)	2)	(19)	11)	2)
Increase (decrease) in LIFO reserve³	(1,900)	1,100)	3,900)	(1,200)	1,000)
Increase (decrease) in equity equivalents⁴	(1,799)	1,152)	3,755)	(1,031)	1,236)
Interest and debt expense, net of capitalized interest	592)	562)	603)	563)	454)
Interest expense, operating lease liability⁵	63)	57)	53)	55)	63)
Adjusted interest and debt expense, net of capitalized interest	655)	619)	656)	618)	517)
Tax benefit of interest and debt expense, net of capitalized interest⁶	(138)	(130)	(138)	(130)	(109)
Adjusted interest and debt expense, net of capitalized interest, after taxes⁷	518)	489)	518)	488)	409)
Net income (loss) attributable to noncontrolling interest	314)	351)	358)	314)	362)
Net operating profit after taxes (NOPAT)	7,868)	13,520)	5,561)	(1,650)	4,429)

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 credit losses.

³ Addition of increase (decrease) in LIFO reserve. See details »

⁴ Addition of increase (decrease) in equity equivalents to net income (loss) attributable to Valero Energy Corporation stockholders.

⁵ 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 1,113 × 5.70% = 63

⁶ 2023 Calculation
Tax benefit of interest and debt expense, net of capitalized interest = Adjusted interest and debt expense, net of capitalized interest × Statutory income tax rate
= 655 × 21.00% = 138

⁷ Addition of after taxes interest expense to net income (loss) attributable to Valero Energy Corporation stockholders.

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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.	Valero Energy Corp. NOPAT increased from 2021 to 2022 but then slightly decreased from 2022 to 2023 not reaching 2021 level.

Valero Energy Corp., 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
Income tax expense (benefit)	2,619)	3,428)	255)	(903)	702)
Less: Deferred income tax expense (benefit)	103)	50)	(126)	158)	234)
Add: Tax savings from interest and debt expense, net of capitalized interest	138)	130)	138)	130)	109)
Cash operating taxes	2,654)	3,508)	519)	(931)	577)

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.	Valero Energy Corp. cash operating taxes increased from 2021 to 2022 but then slightly decreased from 2022 to 2023.

Valero Energy Corp., invested capital calculation (financing approach)

US$ in millions

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Current portion of debt and finance lease obligations	1,406)	1,109)	1,264)	723)	494)
Debt and finance lease obligations, less current portion	10,118)	10,526)	12,606)	13,954)	9,178)
Operating lease liability¹	1,113)	1,087)	1,255)	1,170)	1,290)
Total reported debt & leases	12,637)	12,722)	15,125)	15,847)	10,962)
Total Valero Energy Corporation stockholders’ equity	26,346)	23,561)	18,430)	18,801)	21,803)
Net deferred tax (assets) liabilities²	5,349)	5,217)	5,210)	5,275)	5,103)
Allowance for credit losses³	28)	30)	28)	47)	36)
LIFO reserve⁴	4,400)	6,300)	5,200)	1,300)	2,500)
Equity equivalents⁵	9,777)	11,547)	10,438)	6,622)	7,639)
Accumulated other comprehensive (income) loss, net of tax⁶	870)	1,359)	1,008)	1,254)	1,351)
Noncontrolling interests	2,178)	1,907)	1,387)	841)	733)
Adjusted total Valero Energy Corporation stockholders’ equity	39,171)	38,374)	31,263)	27,518)	31,526)
Construction in progress⁷	(689)	(1,324)	(1,862)	(2,399)	(1,731)
Invested capital	51,119)	49,772)	44,526)	40,966)	40,757)

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 LIFO reserve. See details »

⁵ Addition of equity equivalents to total Valero Energy Corporation stockholders’ equity.

⁶ Removal of accumulated other comprehensive income.

⁷ Subtraction of construction in progress.

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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.	Valero Energy Corp. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Valero Energy Corp., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	46,474)	46,474)	÷	59,002)	=	0.79	0.79	×	18.19%	=	14.33%
Debt and finance lease obligations, including current portion³	11,415)	11,415)	÷	59,002)	=	0.19	0.19	×	4.80% × (1 – 21.00%)	=	0.73%
Operating lease liability⁴	1,113)	1,113)	÷	59,002)	=	0.02	0.02	×	5.70% × (1 – 21.00%)	=	0.08%
Total:	59,002)					1.00					15.15%

Based on: 10-K (reporting date: 2023-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	49,152)	49,152)	÷	61,535)	=	0.80	0.80	×	18.19%	=	14.53%
Debt and finance lease obligations, including current portion³	11,296)	11,296)	÷	61,535)	=	0.18	0.18	×	4.76% × (1 – 21.00%)	=	0.69%
Operating lease liability⁴	1,087)	1,087)	÷	61,535)	=	0.02	0.02	×	5.20% × (1 – 21.00%)	=	0.07%
Total:	61,535)					1.00					15.29%

Based on: 10-K (reporting date: 2022-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	35,135)	35,135)	÷	51,978)	=	0.68	0.68	×	18.19%	=	12.30%
Debt and finance lease obligations, including current portion³	15,588)	15,588)	÷	51,978)	=	0.30	0.30	×	4.43% × (1 – 21.00%)	=	1.05%
Operating lease liability⁴	1,255)	1,255)	÷	51,978)	=	0.02	0.02	×	4.20% × (1 – 21.00%)	=	0.08%
Total:	51,978)					1.00					13.43%

Based on: 10-K (reporting date: 2021-12-31).

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	30,973)	30,973)	÷	48,910)	=	0.63	0.63	×	18.19%	=	11.52%
Debt and finance lease obligations, including current portion³	16,767)	16,767)	÷	48,910)	=	0.34	0.34	×	4.20% × (1 – 21.00%)	=	1.14%
Operating lease liability⁴	1,170)	1,170)	÷	48,910)	=	0.02	0.02	×	4.70% × (1 – 21.00%)	=	0.09%
Total:	48,910)					1.00					12.75%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations, including current portion. See details »

⁴ Operating lease liability. See details »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	29,358)	29,358)	÷	42,022)	=	0.70	0.70	×	18.19%	=	12.71%
Debt and finance lease obligations, including current portion³	11,374)	11,374)	÷	42,022)	=	0.27	0.27	×	5.21% × (1 – 21.00%)	=	1.11%
Operating lease liability⁴	1,290)	1,290)	÷	42,022)	=	0.03	0.03	×	4.90% × (1 – 21.00%)	=	0.12%
Total:	42,022)					1.00					13.94%

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

¹ US$ in millions

² Equity. See details »

³ Debt and finance lease obligations, including current portion. See details »

⁴ Operating lease liability. See details »

Valero Energy Corp., economic spread ratio calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	124)	5,907)	(418)	(6,872)	(1,254)
Invested capital²	51,119)	49,772)	44,526)	40,966)	40,757)
Performance Ratio
Economic spread ratio³	0.24%	11.87%	-0.94%	-16.77%	-3.08%
Benchmarks
Economic Spread Ratio, Competitors⁴
Chevron Corp.	-4.57%	5.93%	-3.15%	-17.32%	-12.59%
ConocoPhillips	1.03%	13.65%	-0.32%	-18.98%	-0.33%
Exxon Mobil Corp.	0.05%	8.78%	0.36%	-22.90%	-5.72%
Marathon Petroleum Corp.	3.35%	12.37%	-2.21%	-26.24%	-3.03%
Occidental Petroleum Corp.	-4.68%	7.74%	-4.44%	-33.50%	-10.58%

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 × 124 ÷ 51,119 = 0.24%

⁴ Click competitor name to see calculations.

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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.	Valero Energy Corp. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Valero Energy Corp., economic profit margin calculation, comparison to benchmarks

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Selected Financial Data (US$ in millions)
Economic profit¹	124)	5,907)	(418)	(6,872)	(1,254)
Revenues, includes excise taxes on sales by certain of foreign operations	144,766)	176,383)	113,977)	64,912)	108,324)
Performance Ratio
Economic profit margin²	0.09%	3.35%	-0.37%	-10.59%	-1.16%
Benchmarks
Economic Profit Margin, Competitors³
Chevron Corp.	-4.93%	5.34%	-3.92%	-36.18%	-17.62%
ConocoPhillips	1.49%	13.13%	-0.53%	-51.39%	-0.59%
Exxon Mobil Corp.	0.05%	6.54%	0.35%	-35.12%	-6.79%
Marathon Petroleum Corp.	1.44%	4.85%	-1.17%	-26.40%	-2.00%
Occidental Petroleum Corp.	-9.42%	11.89%	-9.93%	-119.00%	-43.66%

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 ÷ Revenues, includes excise taxes on sales by certain of foreign operations
= 100 × 124 ÷ 144,766 = 0.09%

³ Click competitor name to see calculations.

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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.	Valero Energy Corp. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023 not reaching 2021 level.

Valero Energy Corp. (NYSE:VLO)

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