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.
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Return on Invested Capital (ROIC)
Amazon.com Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates significant fluctuations in Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both experienced considerable changes, directly influencing the ROIC performance.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT exhibited a substantial decline in 2022, resulting in a negative value. This represents a significant shift from the positive NOPAT of US$37,525 million in 2021. A recovery was observed in 2023, with NOPAT increasing to US$31,856 million, followed by further growth to US$58,988 million in 2024 and reaching US$90,849 million in 2025. This indicates a strengthening of operational profitability over the latter part of the analyzed period.
- Invested Capital
- Invested capital consistently increased throughout the period. From US$202,836 million in 2021, it rose to US$269,358 million in 2022, US$326,668 million in 2023, US$375,421 million in 2024, and ultimately reached US$475,175 million in 2025. This continuous expansion suggests ongoing investment in the business.
- Return on Invested Capital (ROIC)
- The ROIC mirrored the volatility in NOPAT. A substantial decrease was recorded in 2022, with the ROIC falling to -2.09%. The ROIC recovered to 9.75% in 2023, then increased to 15.71% in 2024, and further improved to 19.12% in 2025. This upward trend in ROIC from 2023 onwards aligns with the increasing NOPAT and demonstrates improved efficiency in generating returns from invested capital. The 2025 ROIC represents the highest value within the observed period.
The negative ROIC in 2022 is a key observation, likely driven by the significant decline in NOPAT. The subsequent recovery and growth in ROIC suggest successful strategies were implemented to improve profitability and capital utilization. The increasing invested capital alongside rising ROIC indicates that investments are being deployed effectively to generate higher returns.
Decomposition of ROIC
Amazon.com Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates significant fluctuations in return on invested capital (ROIC), driven by changes in operating profit margin, capital turnover, and the effective cash tax rate. A notable decline in ROIC occurred in 2022, followed by a recovery and subsequent improvement through 2025.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a substantial decrease from 9.14% in 2021 to 0.01% in 2022. This was followed by a recovery to 7.84% in 2023, and a consistent increase to 11.38% in 2024 and 13.76% in 2025. This upward trend in OPM from 2023 onwards suggests improving operational efficiency or pricing power.
- Turnover of Capital (TO)
- The turnover of capital exhibited a consistent downward trend throughout the period. Starting at 2.33 in 2021, it decreased to 1.92 in 2022, 1.77 in 2023, 1.71 in 2024, and further to 1.51 in 2025. This indicates a decreasing efficiency in utilizing capital to generate revenue, potentially due to increased investment in assets without a proportional increase in sales.
- Effective Cash Tax Rate (CTR)
- The (1 – Effective cash tax rate) metric showed considerable volatility. It began at 86.92% in 2021, then experienced a highly unusual value of -8,013.11% in 2022, before recovering to 70.11% in 2023, 80.79% in 2024, and reaching 92.03% in 2025. The 2022 value is an outlier and warrants further investigation to understand the underlying cause. The subsequent increase suggests a higher proportion of after-tax profit retained by the company.
- Return on Invested Capital (ROIC)
- ROIC mirrored the combined effects of the aforementioned ratios. The significant drop in 2022, to -2.09%, was likely driven by the sharp decline in operating profit margin, partially offset by the impact of the anomalous cash tax rate. The recovery in 2023 and subsequent growth to 15.71% in 2024 and 19.12% in 2025 align with the improvements in operating profit margin and a stabilizing effective cash tax rate, despite the decreasing capital turnover.
Overall, the analysis suggests that while capital efficiency is declining, improvements in profitability are driving the positive trend in ROIC observed from 2023 to 2025. The unusual value for the effective cash tax rate in 2022 requires further scrutiny.
Operating Profit Margin (OPM)
Amazon.com Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited significant fluctuation over the five-year period. Initial performance was followed by a substantial decline, then a period of recovery and growth.
- Operating Profit Margin (OPM)
- In 2021, the operating profit margin stood at 9.14%. A dramatic decrease was observed in 2022, falling to 0.01%. This represents a significant contraction in profitability relative to sales. The OPM then began to recover in 2023, reaching 7.84%, indicating some restoration of profitability. Further improvement occurred in 2024, with the OPM rising to 11.38%. This upward trend continued into 2025, with the OPM reaching 13.76%, the highest level observed during the analyzed period.
The net operating profit before taxes generally increased over the period, though the low OPM in 2022 suggests that sales growth did not translate into proportional profit growth that year. Adjusted net sales consistently increased year-over-year, indicating revenue expansion. The increasing OPM in 2024 and 2025, coupled with rising net operating profit before taxes, suggests improved operational efficiency and/or pricing power during those years.
The substantial decline in the operating profit margin in 2022 warrants further investigation to understand the underlying causes. The subsequent recovery and continued growth in the OPM indicate a positive trajectory in profitability, but ongoing monitoring is recommended to ensure sustainability.
Turnover of Capital (TO)
Amazon.com Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in unearned revenue | ||||||
| Adjusted net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 Invested capital. See details »
2 2025 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates a consistent decline in the turnover of capital. While adjusted net sales have increased year-over-year, the growth in invested capital has outpaced sales growth, resulting in a decreasing ratio.
- Turnover of Capital (TO)
- The turnover of capital ratio decreased from 2.33 in 2021 to 1.51 in 2025. This indicates a diminishing efficiency in generating sales from the capital employed. The most significant decrease occurred between 2021 and 2022, dropping to 1.92, followed by a more gradual decline in subsequent years.
Adjusted net sales exhibited consistent growth throughout the period, increasing from US$472,241 million in 2021 to US$717,297 million in 2025. However, invested capital experienced a more substantial increase, rising from US$202,836 million in 2021 to US$475,175 million in 2025. This disparity between sales growth and capital investment is the primary driver of the declining turnover of capital.
- Sales Growth
- Sales increased each year, suggesting continued demand for the company’s products and services. The largest absolute increase in sales occurred between 2024 and 2025, adding US$75,662 million.
- Invested Capital Growth
- Invested capital grew significantly each year, with the largest absolute increase occurring between 2023 and 2024, adding US$48,753 million. This suggests substantial investment in assets to support future growth, but also contributes to the decreasing turnover ratio.
The decreasing trend in the turnover of capital warrants further investigation. While increased investment can be a positive sign of future growth potential, the declining ratio suggests that the returns on that investment, as measured by sales generated per dollar of capital, are diminishing. Potential factors contributing to this trend could include increased working capital requirements, less efficient asset utilization, or a shift in business strategy towards longer-term, less immediately revenue-generating projects.
Effective Cash Tax Rate (CTR)
Amazon.com Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited significant fluctuations over the observed period. Initial values were relatively stable before a substantial increase, followed by a decline towards the end of the period. Cash operating taxes demonstrated an overall upward trend, though with considerable variation year-to-year. Net operating profit before taxes (NOPBT) experienced a dramatic decrease in 2022, followed by a strong recovery and continued growth.
- Effective Cash Tax Rate (CTR)
- In 2021, the CTR stood at 13.08%. A considerable spike occurred in 2022, reaching 8,113.11%. This represents a substantial increase, likely driven by specific tax events or adjustments. The CTR then decreased to 29.89% in 2023, indicating a return towards more typical levels, though still elevated compared to 2021. A further decrease to 19.21% was observed in 2024, and this downward trend continued into 2025, with the CTR falling to 7.97%. This final value represents the lowest rate observed during the analyzed period.
- Cash Operating Taxes
- Cash operating taxes increased from US$5,646 million in 2021 to US$5,689 million in 2022, representing a modest increase. A significant jump occurred in 2023, reaching US$13,583 million, aligning with the increased NOPBT and CTR. This value rose further in 2024 to US$14,023 million before decreasing substantially to US$7,866 million in 2025, coinciding with the decline in the CTR.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT began at US$43,171 million in 2021. A dramatic decrease was observed in 2022, falling to US$70 million. This represents a significant contraction in profitability before tax considerations. NOPBT rebounded strongly in 2023, reaching US$45,439 million, and continued to grow in subsequent years, reaching US$73,011 million in 2024 and US$98,714 million in 2025. This indicates a substantial recovery and subsequent expansion of operating profitability.
The interplay between NOPBT and cash operating taxes is evident in the CTR fluctuations. The exceptionally high CTR in 2022 was likely a result of the low NOPBT combined with a relatively stable level of cash taxes. The subsequent decline in CTR in 2023-2025 correlates with the increasing NOPBT and the decreasing proportion of taxes relative to profit.