Microsoft Excel LibreOffice Calc

Activision Blizzard Inc. (NASDAQ:ATVI)

Return on Capital (ROC)

Advanced level

Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.

Return on Invested Capital (ROIC)

Activision Blizzard Inc., ROIC calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 990  1,378  511  939  879 
Invested capital2 17,061  16,088  16,549  16,593  14,712 
Performance Ratio
ROIC3 5.80% 8.57% 3.09% 5.66% 5.98%

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-29).

1 NOPAT. See details »

2 Invested capital. See details »

3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 990 ÷ 17,061 = 5.80%

Performance ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Activision Blizzard Inc.’s ROIC improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Decomposition of ROIC

Activision Blizzard Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2019 5.80% = 23.04% × 0.37 × 67.44%
Dec 31, 2018 8.57% = 20.27% × 0.44 × 96.24%
Dec 31, 2017 3.09% = 22.14% × 0.44 × 31.52%
Dec 31, 2016 5.66% = 17.85% × 0.39 × 80.56%
Dec 31, 2015 5.98% = 26.07% × 0.31 × 73.82%

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-29).

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 2019 year is the increase in effective cash tax rate (CTR).

Operating Profit Margin (OPM)

Activision Blizzard Inc., OPM calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 990  1,378  511  939  879 
Add: Cash operating taxes2 478  54  1,110  227  312 
Net operating profit before taxes (NOPBT) 1,468  1,432  1,620  1,166  1,191 
 
Net revenues 6,489  7,500  7,017  6,608  4,664 
Add: Increase (decrease) in deferred revenues (118) (436) 301  (74) (95)
Adjusted net revenues 6,371  7,064  7,318  6,534  4,569 
Profitability Ratio
OPM3 23.04% 20.27% 22.14% 17.85% 26.07%

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-29).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenues
= 100 × 1,468 ÷ 6,371 = 23.04%

Profitability ratio Description The company
OPM The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. Activision Blizzard Inc.’s OPM deteriorated from 2017 to 2018 but then improved from 2018 to 2019 exceeding 2017 level.

Turnover of Capital (TO)

Activision Blizzard Inc., TO calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net revenues 6,489  7,500  7,017  6,608  4,664 
Add: Increase (decrease) in deferred revenues (118) (436) 301  (74) (95)
Adjusted net revenues 6,371  7,064  7,318  6,534  4,569 
 
Invested capital1 17,061  16,088  16,549  16,593  14,712 
Efficiency Ratio
TO2 0.37 0.44 0.44 0.39 0.31

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-29).

1 Invested capital. See details »

2 2019 Calculation
TO = Adjusted net revenues ÷ Invested capital
= 6,371 ÷ 17,061 = 0.37

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. Activision Blizzard Inc.’s TO deteriorated from 2017 to 2018 and from 2018 to 2019.

Effective Cash Tax Rate (CTR)

Activision Blizzard Inc., CTR calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 990  1,378  511  939  879 
Add: Cash operating taxes2 478  54  1,110  227  312 
Net operating profit before taxes (NOPBT) 1,468  1,432  1,620  1,166  1,191 
Tax Rate
CTR3 32.56% 3.76% 68.48% 19.44% 26.18%

Based on: 10-K (filing date: 2020-02-27), 10-K (filing date: 2019-02-28), 10-K (filing date: 2018-02-27), 10-K (filing date: 2017-02-28), 10-K (filing date: 2016-02-29).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 478 ÷ 1,468 = 32.56%

Tax rate Description The company
CTR Effective cash tax rate on operating income. Activision Blizzard Inc.’s CTR decreased from 2017 to 2018 but then slightly increased from 2018 to 2019.