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)
Amgen 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 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals 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 net operating profit after taxes exhibited some volatility over the analyzed period. Starting at 7,889 million US dollars at the end of 2020, it decreased notably to 6,412 million in 2021 and remained relatively stable in 2022 with 6,399 million. There was a pronounced rebound in 2023, with NOPAT increasing to 7,802 million, followed by a significant decline again in 2024 to 5,377 million. This pattern indicates fluctuations in operational profitability, with a peak in 2023 before the sharp drop in the latest year.
- Invested capital
- The invested capital showed a general upward trend initially, increasing from 38,776 million US dollars at the end of 2020 to 40,247 million in 2021. It slightly decreased to 39,722 million in 2022 but then surged substantially in 2023 to 69,976 million. In 2024, invested capital reduced somewhat to 63,169 million. The significant rise in 2023 suggests considerable investment activities or capital allocation increases during that year, followed by a moderate contraction in 2024.
- Return on invested capital (ROIC)
- The return on invested capital demonstrated a clear downward trend throughout the period. Starting from a strong 20.35% in 2020, ROIC fell to 15.93% in 2021 and slightly recovered to 16.11% in 2022. However, the decline accelerated in subsequent years, dropping to 11.15% in 2023 and further down to 8.51% in 2024. This decline signifies diminishing efficiency in generating returns from the invested capital over the years, particularly from 2022 onward.
- Summary of trends
- The overall analysis indicates that while invested capital increased substantially, especially in 2023, the net operating profit after taxes did not follow the same growth pattern consistently and fell significantly in the most recent year. Consequently, the return on invested capital contracted steadily from 2020 through 2024, suggesting decreasing operational efficiency relative to the capital employed. The fluctuations in NOPAT combined with the volatile changes in invested capital highlight possible shifts in business strategy, investment, or market conditions affecting profitability and capital utilization over the period examined.
Decomposition of ROIC
Amgen 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 experienced fluctuations over the analyzed period. It started at a high of 38.71% in 2020, then decreased to 32.55% in 2021. It showed improvement in 2022 and further increased to reach a peak of 40% in 2023. However, it declined sharply to 24.36% in 2024, indicating a notable reduction in operational profitability in the most recent year.
- Turnover of Capital (TO)
- The turnover of capital maintained a relatively stable but modest range from 2020 to 2022, fluctuating slightly between 0.60 and 0.63. This ratio then decreased significantly to 0.38 in 2023, reflecting less efficient utilization of capital during that year. It rebounded partially to 0.51 in 2024, suggesting some recovery in capital efficiency but still below earlier years.
- Effective Cash Tax Rate (1 - CTR)
- The indicator of effective cash tax rate, expressed as 1 minus the cash tax rate, displayed a consistent downward trend across the period. Starting at a high of 84.09% in 2020, it steadily declined each year to reach 68.91% in 2024. This trend implies an increasing cash tax burden or decreased tax benefits over time.
- Return on Invested Capital (ROIC)
- Return on invested capital showed a marked decrease from 20.35% in 2020 to 15.93% in 2021, followed by a modest recovery to 16.11% in 2022. Afterward, ROIC declined sharply to 11.15% in 2023 and further to 8.51% in 2024, indicating a significant reduction in the effectiveness of capital investment in generating returns over the most recent years.
- Summary of Trends
- Overall, profitability and capital efficiency metrics reveal some volatility and weakening performance in the latest periods. While operating profit margin and turnover of capital had intermittent improvements, both declined sharply by 2024. The continuous decrease in the 1 – effective cash tax rate ratio suggests a rising tax expense impact. Most notably, ROIC has shown a pronounced downward trend, highlighting deteriorating returns on invested capital. These patterns collectively suggest challenges in sustaining profitability and capital utilization efficiencies in recent years.
Operating Profit Margin (OPM)
Amgen 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) | ||||||
| Product sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals 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 ÷ Product sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits a fluctuating trend over the observed periods. Initially, there is a decline from 9,382 million USD in 2020 to 7,909 million USD in 2021. This is followed by a recovery in 2022, reaching 8,767 million USD, and a more pronounced increase in 2023, peaking at 10,765 million USD. However, in 2024, there is a notable decline to 7,803 million USD. The pattern suggests variability in profitability before taxes despite other positive trends in sales.
- Product Sales
- Product sales show consistent growth throughout the period. The sales figures increase steadily from 24,240 million USD in 2020 to 24,297 million USD in 2021, a modest rise. There is a continuous upward trajectory in the following years, reaching 24,801 million USD in 2022, 26,910 million USD in 2023, and further accelerating to 32,026 million USD in 2024. This indicates successful revenue expansion over the five-year span.
- Operating Profit Margin (OPM)
- The operating profit margin demonstrates notable volatility. Starting from a strong margin of 38.71% in 2020, it declines significantly to 32.55% in 2021. It partially recovers to 35.35% in 2022 and peaks at 40% in 2023. However, there is a sharp drop to 24.36% in 2024, the lowest margin in the reported period. This decline in operating margin in 2024 contrasts with the rising sales, indicating potential increases in operating costs or other factors adversely affecting profitability efficiency.
- Summary Insights
- While the company shows a consistent increase in product sales across the years, the profitability metrics (NOPBT and OPM) do not consistently follow this trend. The NOPBT varied with peaks and troughs, and the operating profit margin fluctuated significantly, with a sharp decline in the latest period observed (2024). This divergence suggests that despite growing revenue, operational efficiency or cost management may have deteriorated recently, impacting overall profitability negatively. The company's financial performance thus reflects both growth in revenue and challenges in sustaining profit margins.
Turnover of Capital (TO)
Amgen 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) | ||||||
| Product sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals 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 = Product sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Product Sales
-
Product sales exhibit a steady upward trend over the five-year period. Starting at US$24,240 million in 2020, sales slightly increased to US$24,297 million in 2021, followed by a gradual rise to US$24,801 million in 2022. A more significant increase occurred in 2023, reaching US$26,910 million, and this growth accelerated further in 2024, with sales reaching US$32,026 million. This progression indicates strengthening revenue generation, particularly in the latter two years.
- Invested Capital
-
Invested capital displays fluctuations with an overall increasing trend but notable volatility. It grew from US$38,776 million in 2020 to US$40,247 million in 2021, then slightly decreased to US$39,722 million in 2022. A substantial jump occurred in 2023, where invested capital surged to US$69,976 million, representing a significant increase in capital deployment. This level declined in 2024 to US$63,169 million, still considerably higher than the initial years, suggesting possible large investments or asset acquisitions during this period.
- Turnover of Capital (TO)
-
Turnover of capital, which measures efficiency in generating sales from invested capital, shows a declining trend initially and some recovery towards the end. It started at 0.63 in 2020 and decreased to 0.60 in 2021, followed by a slight rise to 0.62 in 2022. However, in 2023, there was a marked drop to 0.38, reflecting decreased efficiency likely due to the large increase in invested capital. In 2024, the ratio recovered partially to 0.51, indicating some improvement in capital utilization but still below earlier levels.
Effective Cash Tax Rate (CTR)
Amgen Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| AbbVie Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals 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
- Cash operating taxes exhibit an overall increasing trend from 2020 to 2023, rising from 1493 million USD to a peak of 2963 million USD. However, in 2024, there is a noticeable decline to 2426 million USD, indicating a reduction after the previous years of growth.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes shows variability over the analyzed period. The value declines from 9382 million USD in 2020 to 7909 million USD in 2021. It then recovers to 8767 million USD in 2022 and peaks at 10765 million USD in 2023. In 2024, profit falls significantly to 7803 million USD, resulting in a pattern of fluctuation with a downward trend in the final year assessed.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate steadily increases throughout the period, starting at 15.91% in 2020 and rising consistently each year to reach 31.09% by 2024. This indicates a progressive increase in the proportion of operating profit paid as cash taxes over the five-year span.
- Summary of Trends
- The data suggests that while net operating profits have shown fluctuations—with a peak in 2023 followed by a decrease—cash operating taxes have generally trended upwards, peaking slightly earlier before declining somewhat in 2024. Meanwhile, the effective cash tax rate has steadily increased each year, reflecting rising tax burdens relative to operating profit. The simultaneous increase in tax rates and reduction in operating profit in the latest year may explain the decrease in absolute cash operating tax payments observed in 2024.