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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- Analysis of Profitability Ratios
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
Amazon.com Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows considerable fluctuations over the observed periods. There is a strong increase from 24,183 million US dollars in 2020 to 37,525 million in 2021, indicating improved operational profitability. However, in 2022, NOPAT turns negative at -5,619 million US dollars, signifying operational challenges or extraordinary expenses that year. The figure rebounds substantially in 2023 to 31,856 million and further improves in 2024 to 58,988 million US dollars, surpassing previous peak levels. This pattern suggests volatility with a notable recovery and growth phase in the later years.
- Invested Capital
- Invested capital demonstrates a consistent and substantial upward trend throughout the five-year period. Starting at 150,160 million US dollars in 2020, it grows steadily each subsequent year, reaching 375,421 million US dollars by 2024. This reflects ongoing investments and expansion in the company's asset base and operations. The continuous increase in invested capital indicates a strategy of scaling or asset accumulation over time.
- Return on Invested Capital (ROIC)
- ROIC follows a pattern that aligns closely with the changes in NOPAT. It increases from 16.11% in 2020 to a peak of 18.5% in 2021, indicating efficient use of invested capital to generate returns. In 2022, ROIC declines sharply to -2.09%, corresponding with the negative NOPAT and signaling a period of poor capital efficiency or losses. The ratio recovers to 9.75% in 2023 and further improves to 15.71% in 2024, suggesting restoration of operational efficiency and profitability relative to the invested capital.
Decomposition of ROIC
Amazon.com Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin showed a fluctuating pattern over the periods analyzed. It increased from 7.23% in 2020 to a peak of 9.14% in 2021, followed by a significant decline to nearly zero (0.01%) in 2022. Subsequently, the margin recovered notably to 7.84% in 2023 and continued to improve, reaching 11.38% in 2024. This indicates a period of substantial operational challenges in 2022, with a strong rebound in profitability in the later years.
- Turnover of Capital (TO)
- The turnover of capital demonstrated a consistent downward trend across the observed periods. Starting at 2.58 in 2020, it decreased to 2.33 in 2021 and continued declining steadily to 1.92 in 2022, 1.77 in 2023, and 1.71 in 2024. This suggests a reduction in the efficiency with which the company uses its capital to generate revenue, possibly reflecting changes in asset management or operational structure.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibits extreme variability. The company maintained a high rate above 86% in 2020 and 2021. However, there is an anomalous and substantially negative value in 2022 (-8013.11%), which likely reflects one-time tax benefits or accounting adjustments. The rate normalized somewhat in the following years to 70.11% and 80.79% in 2023 and 2024 respectively, remaining generally high but showing a more stable pattern after the outlier year.
- Return on Invested Capital (ROIC)
- Return on invested capital experienced significant fluctuations. The ROIC rose from 16.11% in 2020 to a peak of 18.5% in 2021, demonstrating effective capital utilization during that period. In 2022, there was a marked decline to a negative return (-2.09%), indicating the company failed to generate adequate returns on its investments. Recovery occurred in 2023 with a return of 9.75%, continuing upward to 15.71% in 2024, reflecting improvements in profitability and investment effectiveness.
Operating Profit Margin (OPM)
Amazon.com Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows significant fluctuations over the period. There was a strong increase from 28,027 million US dollars in 2020 to 43,171 million in 2021. However, in 2022, the value sharply decreased to 70 million, indicating a substantial drop in profitability for that year. The following years show a remarkable recovery and growth, with NOPBT rising to 45,439 million in 2023 and further to 73,011 million in 2024, surpassing previous highs.
- Adjusted Net Sales
- Adjusted net sales exhibit a consistent upward trend throughout the period. Starting at 387,482 million US dollars in 2020, the sales increased significantly each year, reaching 472,241 million in 2021 and continuing to grow to 516,083 million in 2022. The upward trajectory remains strong with sales at 579,585 million in 2023 and 641,635 million in 2024, demonstrating continuous expansion of revenue.
- Operating Profit Margin (OPM)
- The operating profit margin shows a similar pattern to NOPBT, with notable volatility. It increased from 7.23% in 2020 to 9.14% in 2021, reflecting improved operational efficiency. In 2022, the margin dropped drastically to 0.01%, aligning with the sharp decline in operating profit that year. The margin recovered significantly to 7.84% in 2023 and improved further to 11.38% in 2024, suggesting enhanced profitability and operational leverage in the most recent years.
- Summary
- Overall, the data indicates robust revenue growth and strong profitability growth, except for the year 2022, which experienced a marked downturn in both operating profit and margin. The recovery post-2022 is substantial, with 2023 and 2024 showing strong improvement in both absolute profit and margin percentages, pointing to improved business performance and possibly favorable market or operational conditions.
Turnover of Capital (TO)
Amazon.com Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Sales
- The adjusted net sales demonstrate a consistent upward trend over the analyzed periods. Starting from $387,482 million in 2020, sales increased steadily each year, reaching $641,635 million by 2024. This represents significant growth, indicating expanding revenue generation capabilities and market demand.
- Invested Capital
- Invested capital also shows a continuous increase, rising from $150,160 million in 2020 to $375,421 million in 2024. The increase in invested capital suggests ongoing investment in assets, infrastructure, or business expansion initiatives supporting growth ambitions.
- Turnover of Capital (TO)
- Turnover of capital, calculated as the ratio of adjusted net sales to invested capital, exhibits a declining trend over the same period. It decreased from 2.58 in 2020 to 1.71 in 2024. This decline indicates that although sales are growing, the growth rate of invested capital exceeds that of sales, reflecting lower capital efficiency or increased capital intensity over time.
- Overall Analysis
- The data reveals a strong expansion in both sales and capital investment. However, the declining turnover of capital ratio suggests a shift towards a more capital-intensive business model or that additional investments have yet to fully translate into proportionate sales increases. This trend may warrant further strategic evaluation to optimize capital deployment and maintain or improve asset efficiency.
Effective Cash Tax Rate (CTR)
Amazon.com Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes show a notable upward trend over the period analyzed. Beginning at $3,844 million in 2020, the tax payments increased steadily to $5,646 million in 2021 and marginally to $5,689 million in 2022. Thereafter, a significant jump is observed, with cash operating taxes almost doubling to $13,583 million in 2023 and slightly increasing further to $14,023 million in 2024. This pattern suggests a substantial rise in taxable income or changes in tax-related policies affecting the company from 2023 onward.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes experienced fluctuations with an overall upward movement. It rose markedly from $28,027 million in 2020 to $43,171 million in 2021. However, in 2022, there is an anomalous sharp drop to $70 million, which indicates either an extraordinary event or a possible data irregularity. Following this decline, the NOPBT rebounded strongly to $45,439 million in 2023 and further increased to $73,011 million in 2024. This recovery reflects significant profitability improvement after the unusual dip in 2022.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibits inconsistent behavior throughout the period. It starts at 13.72% in 2020 and slightly decreases to 13.08% in 2021, indicating stable tax efficiency. However, in 2022, the CTR spikes dramatically to 8113.11%, an atypical and likely erroneous figure given the scale. This anomaly coincides with the drop in NOPBT during the same year and may reflect distortions arising from minimal taxable profits or extraordinary tax adjustments. The CTR then normalizes to 29.89% in 2023 before decreasing to 19.21% in 2024, suggesting an improvement in tax rate management or changes in tax policy following the outlier year.