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)
Amazon.com Inc., ROIC calculation, comparison to benchmarks
| 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 | 24,183 | 16,097 | 13,690 | 4,698 | 4,480 | |
| Invested capital2 | 150,160 | 127,843 | 103,096 | 79,125 | 43,073 | |
| Performance Ratio | ||||||
| ROIC3 | 16.11% | 12.59% | 13.28% | 5.94% | 10.40% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Booking Holdings Inc. | -6.59% | 40.58% | 57.09% | 37.32% | 31.93% | |
| Home Depot Inc. | 34.91% | 35.70% | 27.93% | 25.73% | 23.46% | |
| Lowe’s Cos. Inc. | 18.00% | 12.51% | 15.33% | 14.36% | 12.78% | |
| Target Corp. | 14.30% | 14.14% | 12.07% | 12.75% | 12.12% | |
| TJX Cos. Inc. | 19.13% | 18.60% | 16.31% | 16.38% | 18.59% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 24,183 ÷ 150,160 = 16.11%
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. | Amazon.com Inc. ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Decomposition of ROIC
Amazon.com Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
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 efficiency measured by turnover of capital (TO) ratio.
Operating Profit Margin (OPM)
Amazon.com Inc., OPM calculation, comparison to benchmarks
| 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 | 24,183 | 16,097 | 13,690 | 4,698 | 4,480 | |
| Add: Cash operating taxes2 | 3,844 | 1,907 | 1,072 | 1,204 | 1,888 | |
| Net operating profit before taxes (NOPBT) | 28,027 | 18,004 | 14,763 | 5,902 | 6,368 | |
| Net sales | 386,064 | 280,522 | 232,887 | 177,866 | 135,987 | |
| Add: Increase (decrease) in unearned revenue | 1,418 | 2,254 | 1,839 | 830 | 1,905 | |
| Adjusted net sales | 387,482 | 282,776 | 234,726 | 178,696 | 137,892 | |
| Profitability Ratio | ||||||
| OPM3 | 7.23% | 6.37% | 6.29% | 3.30% | 4.62% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Booking Holdings Inc. | -14.78% | 35.66% | 36.61% | 35.69% | 26.54% | |
| Home Depot Inc. | 14.80% | 14.70% | 15.10% | 14.77% | 13.94% | |
| Lowe’s Cos. Inc. | 8.61% | 6.38% | 9.56% | 9.72% | 9.07% | |
| Target Corp. | 6.17% | 5.67% | 6.18% | 7.35% | 7.67% | |
| TJX Cos. Inc. | 11.23% | 11.30% | 11.44% | 11.94% | 12.79% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 28,027 ÷ 387,482 = 7.23%
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. | Amazon.com Inc. OPM improved from 2018 to 2019 and from 2019 to 2020. |
Turnover of Capital (TO)
Amazon.com Inc., TO calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 386,064 | 280,522 | 232,887 | 177,866 | 135,987 | |
| Add: Increase (decrease) in unearned revenue | 1,418 | 2,254 | 1,839 | 830 | 1,905 | |
| Adjusted net sales | 387,482 | 282,776 | 234,726 | 178,696 | 137,892 | |
| Invested capital1 | 150,160 | 127,843 | 103,096 | 79,125 | 43,073 | |
| Efficiency Ratio | ||||||
| TO2 | 2.58 | 2.21 | 2.28 | 2.26 | 3.20 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Booking Holdings Inc. | 0.45 | 1.35 | 1.96 | 1.98 | 1.62 | |
| Home Depot Inc. | 3.01 | 3.17 | 2.87 | 2.75 | 2.62 | |
| Lowe’s Cos. Inc. | 2.69 | 2.86 | 2.47 | 2.39 | 2.41 | |
| Target Corp. | 2.83 | 2.86 | 2.66 | 2.57 | 2.57 | |
| TJX Cos. Inc. | 2.29 | 2.30 | 2.22 | 2.22 | 2.30 | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Invested capital. See details »
2 2020 Calculation
TO = Adjusted net sales ÷ Invested capital
= 387,482 ÷ 150,160 = 2.58
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. | Amazon.com Inc. TO deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Effective Cash Tax Rate (CTR)
Amazon.com Inc., CTR calculation, comparison to benchmarks
| 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 | 24,183 | 16,097 | 13,690 | 4,698 | 4,480 | |
| Add: Cash operating taxes2 | 3,844 | 1,907 | 1,072 | 1,204 | 1,888 | |
| Net operating profit before taxes (NOPBT) | 28,027 | 18,004 | 14,763 | 5,902 | 6,368 | |
| Tax Rate | ||||||
| CTR3 | 13.72% | 10.59% | 7.26% | 20.39% | 29.64% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Booking Holdings Inc. | — | 15.54% | 20.39% | 47.06% | 25.77% | |
| Home Depot Inc. | 21.74% | 23.26% | 35.67% | 36.71% | 35.80% | |
| Lowe’s Cos. Inc. | 22.32% | 31.40% | 34.96% | 38.25% | 41.52% | |
| Target Corp. | 18.12% | 12.76% | 26.52% | 32.40% | 38.55% | |
| TJX Cos. Inc. | 25.59% | 28.37% | 35.80% | 38.22% | 36.75% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 3,844 ÷ 28,027 = 13.72%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Amazon.com Inc. CTR increased from 2018 to 2019 and from 2019 to 2020. |