Return on Capital (ROC)
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Applied Materials Inc., ROIC calculation, comparison to benchmarks
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,533) | 6,900) | 6,175) | 3,885) | 2,934) | 3,704) | |
| Invested capital2 | 17,777) | 14,890) | 14,717) | 13,090) | 10,129) | 10,187) | |
| Performance Ratio | |||||||
| ROIC3 | 36.75% | 46.34% | 41.96% | 29.68% | 28.97% | 36.36% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Advanced Micro Devices Inc. | -0.35% | -0.24% | 56.77% | 30.47% | 12.00% | — | |
| Analog Devices Inc. | 7.11% | 5.76% | 2.37% | 6.95% | 8.23% | 4.98% | |
| Broadcom Inc. | 23.04% | 20.76% | 11.02% | 4.80% | 5.00% | 10.03% | |
| Intel Corp. | -1.60% | 4.14% | 22.03% | 28.01% | 26.78% | — | |
| KLA Corp. | 40.63% | 42.51% | 31.64% | 19.88% | 20.98% | 39.57% | |
| Lam Research Corp. | 28.08% | 42.41% | 41.94% | 24.20% | 20.10% | 25.72% | |
| Micron Technology Inc. | -11.01% | 17.20% | 12.88% | 6.84% | 17.15% | 39.70% | |
| NVIDIA Corp. | 10.91% | 53.12% | 33.44% | 19.63% | 80.01% | — | |
| ON Semiconductor Corp. | 18.98% | 21.26% | 16.06% | 3.81% | 4.97% | — | |
| Qualcomm Inc. | 18.69% | 45.12% | 42.56% | 27.48% | 28.27% | -16.74% | |
| Texas Instruments Inc. | 28.83% | 49.74% | 48.28% | 43.48% | 43.15% | — | |
Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 6,533 ÷ 17,777 = 36.75%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Applied Materials Inc. ROIC improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
Decomposition of ROIC
Applied Materials Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the decrease in return on invested capital (ROIC) over 2023 year is the decrease in efficiency measured by turnover of capital (TO) ratio.
Operating Profit Margin (OPM)
Applied Materials Inc., OPM calculation, comparison to benchmarks
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,533) | 6,900) | 6,175) | 3,885) | 2,934) | 3,704) | |
| Add: Cash operating taxes2 | 1,215) | 920) | 868) | 530) | 563) | 1,239) | |
| Net operating profit before taxes (NOPBT) | 7,748) | 7,819) | 7,043) | 4,416) | 3,497) | 4,943) | |
| Net sales | 26,517) | 25,785) | 23,063) | 17,202) | 14,608) | 17,253) | |
| Profitability Ratio | |||||||
| OPM3 | 29.22% | 30.32% | 30.54% | 25.67% | 23.94% | 28.65% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 2.02% | 5.31% | 22.70% | 13.87% | 6.93% | — | |
| Analog Devices Inc. | 32.00% | 27.59% | 20.52% | 26.98% | 29.60% | 30.11% | |
| Broadcom Inc. | 45.19% | 42.94% | 31.06% | 17.10% | 15.65% | 24.22% | |
| Intel Corp. | -0.86% | 13.58% | 28.05% | 32.68% | 33.46% | — | |
| KLA Corp. | 39.78% | 41.73% | 36.39% | 26.09% | 32.80% | 39.49% | |
| Lam Research Corp. | 28.99% | 35.59% | 34.25% | 27.26% | 20.46% | 29.43% | |
| Micron Technology Inc. | -36.77% | 31.50% | 23.15% | 14.37% | 29.89% | 47.86% | |
| NVIDIA Corp. | 15.97% | 37.99% | 28.45% | 26.65% | 33.15% | — | |
| ON Semiconductor Corp. | 30.82% | 29.41% | 19.27% | 6.72% | 7.62% | — | |
| Qualcomm Inc. | 21.48% | 35.06% | 30.10% | 24.17% | 29.86% | 1.24% | |
| Texas Instruments Inc. | 44.51% | 51.22% | 49.60% | 43.13% | 40.81% | — | |
Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 7,748 ÷ 26,517 = 29.22%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Applied Materials Inc. OPM deteriorated from 2021 to 2022 and from 2022 to 2023. |
Turnover of Capital (TO)
Applied Materials Inc., TO calculation, comparison to benchmarks
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 26,517) | 25,785) | 23,063) | 17,202) | 14,608) | 17,253) | |
| Invested capital1 | 17,777) | 14,890) | 14,717) | 13,090) | 10,129) | 10,187) | |
| Efficiency Ratio | |||||||
| TO2 | 1.49 | 1.73 | 1.57 | 1.31 | 1.44 | 1.69 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Advanced Micro Devices Inc. | 0.39 | 0.40 | 2.65 | 2.24 | 1.98 | — | |
| Analog Devices Inc. | 0.28 | 0.27 | 0.16 | 0.31 | 0.33 | 0.33 | |
| Broadcom Inc. | 0.57 | 0.53 | 0.42 | 0.36 | 0.38 | 0.47 | |
| Intel Corp. | 0.59 | 0.71 | 0.89 | 0.95 | 0.89 | — | |
| KLA Corp. | 1.26 | 1.18 | 1.01 | 0.89 | 0.72 | 1.54 | |
| Lam Research Corp. | 1.15 | 1.38 | 1.40 | 1.02 | 1.15 | 1.15 | |
| Micron Technology Inc. | 0.29 | 0.58 | 0.60 | 0.51 | 0.60 | 0.86 | |
| NVIDIA Corp. | 1.26 | 1.49 | 1.28 | 0.77 | 2.45 | — | |
| ON Semiconductor Corp. | 0.76 | 0.89 | 0.89 | 0.76 | 0.80 | — | |
| Qualcomm Inc. | 1.14 | 1.50 | 1.66 | 1.33 | 1.13 | 1.21 | |
| Texas Instruments Inc. | 0.78 | 1.14 | 1.12 | 1.12 | 1.19 | — | |
Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).
1 Invested capital. See details »
2 2023 Calculation
TO = Net sales ÷ Invested capital
= 26,517 ÷ 17,777 = 1.49
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Applied Materials Inc. TO improved from 2021 to 2022 but then deteriorated significantly from 2022 to 2023. |
Effective Cash Tax Rate (CTR)
Applied Materials Inc., CTR calculation, comparison to benchmarks
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,533) | 6,900) | 6,175) | 3,885) | 2,934) | 3,704) | |
| Add: Cash operating taxes2 | 1,215) | 920) | 868) | 530) | 563) | 1,239) | |
| Net operating profit before taxes (NOPBT) | 7,748) | 7,819) | 7,043) | 4,416) | 3,497) | 4,943) | |
| Tax Rate | |||||||
| CTR3 | 15.68% | 11.76% | 12.33% | 12.01% | 16.10% | 25.07% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 143.92% | 111.01% | 5.73% | 1.76% | 12.31% | — | |
| Analog Devices Inc. | 20.23% | 21.73% | 25.70% | 16.31% | 14.82% | 50.33% | |
| Broadcom Inc. | 10.78% | 9.59% | 16.44% | 22.63% | 15.10% | 11.38% | |
| Intel Corp. | — | 57.13% | 12.07% | 9.78% | 10.35% | — | |
| KLA Corp. | 18.86% | 13.88% | 14.30% | 14.62% | 10.70% | 35.06% | |
| Lam Research Corp. | 15.67% | 13.55% | 12.57% | 13.09% | 14.26% | 24.00% | |
| Micron Technology Inc. | — | 6.38% | 6.96% | 6.13% | 4.94% | 3.36% | |
| NVIDIA Corp. | 45.94% | 6.28% | 8.10% | 4.59% | 1.47% | — | |
| ON Semiconductor Corp. | 18.48% | 18.66% | 6.53% | 25.63% | 19.02% | — | |
| Qualcomm Inc. | 23.51% | 14.27% | 14.84% | 14.19% | 16.37% | 1,215.96% | |
| Texas Instruments Inc. | 16.49% | 14.83% | 12.93% | 9.63% | 11.38% | — | |
Based on: 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,215 ÷ 7,748 = 15.68%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Applied Materials Inc. CTR decreased from 2021 to 2022 but then increased from 2022 to 2023 exceeding 2021 level. |