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)
Amgen 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 | 7,889 | 8,504 | 9,431 | 1,591 | 8,810 | |
| Invested capital2 | 38,776 | 37,391 | 25,226 | 24,118 | 32,328 | |
| Performance Ratio | ||||||
| ROIC3 | 20.35% | 22.74% | 37.39% | 6.60% | 27.25% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| AbbVie Inc. | 4.49% | 14.72% | 15.25% | 3.87% | 11.87% | |
| Eli Lilly & Co. | 25.89% | 22.93% | 14.16% | -4.90% | 13.83% | |
| Gilead Sciences Inc. | 1.26% | 12.92% | 18.88% | 21.91% | 72.54% | |
| Johnson & Johnson | 13.91% | 12.94% | 14.38% | 3.55% | 19.24% | |
| Merck & Co. Inc. | 11.66% | 18.52% | 12.10% | 0.69% | 5.02% | |
| Moderna Inc. | 73.88% | -125.87% | -45.95% | — | — | |
| Pfizer Inc. | 5.87% | 14.19% | 11.81% | -4.78% | 6.18% | |
| Regeneron Pharmaceuticals Inc. | 44.87% | 34.24% | 37.16% | 29.41% | 22.47% | |
| Thermo Fisher Scientific Inc. | 10.69% | 6.68% | 5.62% | 1.79% | 3.97% | |
| Zoetis Inc. | 14.94% | 15.96% | 15.59% | 13.93% | 10.88% | |
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 × 7,889 ÷ 38,776 = 20.35%
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. | Amgen Inc. ROIC deteriorated from 2018 to 2019 and from 2019 to 2020. |
Decomposition of ROIC
Amgen 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 decrease in return on invested capital (ROIC) over 2020 year is the decrease in profitability measured by operating profit margin (OPM) ratio.
Operating Profit Margin (OPM)
Amgen 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 | 7,889 | 8,504 | 9,431 | 1,591 | 8,810 | |
| Add: Cash operating taxes2 | 1,493 | 1,863 | 1,887 | 9,373 | 1,697 | |
| Net operating profit before taxes (NOPBT) | 9,382 | 10,366 | 11,318 | 10,964 | 10,507 | |
| Product sales | 24,240 | 22,204 | 22,533 | 21,795 | 21,892 | |
| Profitability Ratio | ||||||
| OPM3 | 38.71% | 46.69% | 50.23% | 50.31% | 48.00% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | 13.66% | 30.01% | 19.46% | 30.71% | 34.32% | |
| Eli Lilly & Co. | 30.98% | 24.91% | 15.94% | 9.01% | 15.95% | |
| Gilead Sciences Inc. | 10.83% | 27.94% | 41.05% | 57.07% | 60.31% | |
| Johnson & Johnson | 20.16% | 21.00% | 22.50% | 23.33% | 27.69% | |
| Merck & Co. Inc. | 19.13% | 26.21% | 21.47% | 17.70% | 12.62% | |
| Moderna Inc. | 76.50% | — | — | — | — | |
| Pfizer Inc. | 19.53% | 35.42% | 23.50% | 23.75% | 18.27% | |
| Regeneron Pharmaceuticals Inc. | 46.12% | 33.76% | 38.20% | 34.45% | 31.23% | |
| Thermo Fisher Scientific Inc. | 24.14% | 17.60% | 15.74% | 14.38% | 13.87% | |
| Zoetis Inc. | 32.90% | 31.81% | 32.17% | 30.87% | 25.67% | |
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 ÷ Product sales
= 100 × 9,382 ÷ 24,240 = 38.71%
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. | Amgen Inc. OPM deteriorated from 2018 to 2019 and from 2019 to 2020. |
Turnover of Capital (TO)
Amgen 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) | ||||||
| Product sales | 24,240 | 22,204 | 22,533 | 21,795 | 21,892 | |
| Invested capital1 | 38,776 | 37,391 | 25,226 | 24,118 | 32,328 | |
| Efficiency Ratio | ||||||
| TO2 | 0.63 | 0.59 | 0.89 | 0.90 | 0.68 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | 0.44 | 0.53 | 0.98 | 0.62 | 0.53 | |
| Eli Lilly & Co. | 1.00 | 1.04 | 0.95 | 1.02 | 0.93 | |
| Gilead Sciences Inc. | 0.48 | 0.70 | 0.62 | 1.06 | 1.55 | |
| Johnson & Johnson | 0.84 | 0.85 | 0.81 | 0.72 | 0.85 | |
| Merck & Co. Inc. | 0.84 | 0.87 | 0.86 | 0.81 | 0.75 | |
| Moderna Inc. | 0.97 | -0.15 | -0.06 | — | — | |
| Pfizer Inc. | 0.40 | 0.43 | 0.53 | 0.51 | 0.43 | |
| Regeneron Pharmaceuticals Inc. | 1.03 | 1.21 | 1.08 | 1.20 | 1.45 | |
| Thermo Fisher Scientific Inc. | 0.53 | 0.48 | 0.47 | 0.40 | 0.42 | |
| Zoetis Inc. | 0.58 | 0.64 | 0.62 | 0.71 | 0.72 | |
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 = Product sales ÷ Invested capital
= 24,240 ÷ 38,776 = 0.63
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. | Amgen Inc. TO deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
Effective Cash Tax Rate (CTR)
Amgen 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 | 7,889 | 8,504 | 9,431 | 1,591 | 8,810 | |
| Add: Cash operating taxes2 | 1,493 | 1,863 | 1,887 | 9,373 | 1,697 | |
| Net operating profit before taxes (NOPBT) | 9,382 | 10,366 | 11,318 | 10,964 | 10,507 | |
| Tax Rate | ||||||
| CTR3 | 15.91% | 17.97% | 16.67% | 85.49% | 16.15% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| AbbVie Inc. | 25.34% | 7.43% | 19.97% | 79.78% | 34.90% | |
| Eli Lilly & Co. | 16.37% | 11.34% | 6.98% | 153.07% | 6.91% | |
| Gilead Sciences Inc. | 76.01% | 34.29% | 25.67% | 63.90% | 22.60% | |
| Johnson & Johnson | 17.72% | 27.17% | 20.74% | 78.78% | 18.53% | |
| Merck & Co. Inc. | 27.35% | 19.04% | 34.59% | 95.19% | 47.06% | |
| Moderna Inc. | 0.05% | — | — | — | — | |
| Pfizer Inc. | 25.53% | 6.34% | 4.78% | 139.36% | 21.23% | |
| Regeneron Pharmaceuticals Inc. | 5.71% | 16.35% | 10.01% | 28.60% | 50.27% | |
| Thermo Fisher Scientific Inc. | 15.78% | 21.66% | 23.84% | 69.25% | 31.24% | |
| Zoetis Inc. | 21.37% | 21.17% | 22.25% | 36.23% | 41.44% | |
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 × 1,493 ÷ 9,382 = 15.91%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Amgen Inc. CTR increased from 2018 to 2019 but then decreased significantly from 2019 to 2020. |