Stock Analysis on Net
Stock Analysis on Net
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, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 2,491  990  1,378  511  939 
Invested capital2 20,352  17,061  16,088  16,549  16,593 
Performance Ratio
ROIC3 12.24% 5.80% 8.57% 3.09% 5.66%

Based on: 10-K (filing date: 2021-02-23), 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).

1 NOPAT. See details »

2 Invested capital. See details »

3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,491 ÷ 20,352 = 12.24%

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 deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Decomposition of ROIC

Activision Blizzard Inc., decomposition of ROIC

Microsoft Excel LibreOffice Calc
ROIC = OPM1 × TO2 × 1 – CTR3
Dec 31, 2020 12.24% = 36.02% × 0.41 × 82.33%
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%

Based on: 10-K (filing date: 2021-02-23), 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).

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 increase in return on invested capital (ROIC) over 2020 year is the increase in profitability measured by operating profit margin (OPM) ratio.


Operating Profit Margin (OPM)

Activision Blizzard Inc., OPM calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 2,491  990  1,378  511  939 
Add: Cash operating taxes2 535  478  54  1,110  227 
Net operating profit before taxes (NOPBT) 3,026  1,468  1,432  1,620  1,166 
 
Net revenues 8,086  6,489  7,500  7,017  6,608 
Add: Increase (decrease) in deferred revenues 314  (118) (436) 301  (74)
Adjusted net revenues 8,400  6,371  7,064  7,318  6,534 
Profitability Ratio
OPM3 36.02% 23.04% 20.27% 22.14% 17.85%

Based on: 10-K (filing date: 2021-02-23), 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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenues
= 100 × 3,026 ÷ 8,400 = 36.02%

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 improved from 2018 to 2019 and from 2019 to 2020.

Turnover of Capital (TO)

Activision Blizzard Inc., TO calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net revenues 8,086  6,489  7,500  7,017  6,608 
Add: Increase (decrease) in deferred revenues 314  (118) (436) 301  (74)
Adjusted net revenues 8,400  6,371  7,064  7,318  6,534 
 
Invested capital1 20,352  17,061  16,088  16,549  16,593 
Efficiency Ratio
TO2 0.41 0.37 0.44 0.44 0.39

Based on: 10-K (filing date: 2021-02-23), 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).

1 Invested capital. See details »

2 2020 Calculation
TO = Adjusted net revenues ÷ Invested capital
= 8,400 ÷ 20,352 = 0.41

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 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Effective Cash Tax Rate (CTR)

Activision Blizzard Inc., CTR calculation

Microsoft Excel LibreOffice Calc
Dec 31, 2020 Dec 31, 2019 Dec 31, 2018 Dec 31, 2017 Dec 31, 2016
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)1 2,491  990  1,378  511  939 
Add: Cash operating taxes2 535  478  54  1,110  227 
Net operating profit before taxes (NOPBT) 3,026  1,468  1,432  1,620  1,166 
Tax Rate
CTR3 17.67% 32.56% 3.76% 68.48% 19.44%

Based on: 10-K (filing date: 2021-02-23), 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).

1 NOPAT. See details »

2 Cash operating taxes. See details »

3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 535 ÷ 3,026 = 17.67%

Tax rate Description The company
CTR Effective cash tax rate on operating income. Activision Blizzard Inc.’s CTR increased from 2018 to 2019 but then slightly decreased from 2019 to 2020 not reaching 2018 level.