Return on Capital (ROC)

Difficulty: Advanced

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)

Amazon.com Inc., ROIC calculation

 
Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014 Dec 31, 2013
Selected Financial Data (USD $ in millions)
Net operating profit after taxes (NOPAT)1 3,556  4,500  2,356  356  673 
Invested capital2 84,152  45,656  35,260  30,413  17,996 
Ratio
ROIC3 4.23% 9.86% 6.68% 1.17% 3.74%

Source: Based on data from Amazon.com Inc. Annual Reports

2017 Calculations

1 NOPAT. See Details »

2 Invested capital. See Details »

3 ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 3,556 ÷ 84,152 = 4.23%

Ratio Description The company
ROIC A measure of the periodic, after tax, cash-on-cash yield earned in the business. Amazon.com Inc.'s ROIC improved from 2015 to 2016 but then deteriorated significantly from 2016 to 2017.

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