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)
Applied Materials Inc., ROIC calculation, comparison to benchmarks
| Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,195 | 3,885 | 2,934 | 3,704 | 3,582 | 1,825 | |
| Invested capital2 | 14,717 | 13,090 | 10,129 | 10,187 | 11,191 | 9,281 | |
| Performance Ratio | |||||||
| ROIC3 | 42.10% | 29.68% | 28.97% | 36.36% | 32.01% | 19.67% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 30.67% | 11.73% | 13.53% | 2.05% | -14.86% | |
| Broadcom Inc. | 11.02% | 4.80% | 5.00% | 10.03% | 3.52% | -1.55% | |
| Intel Corp. | — | 27.99% | 26.74% | 23.84% | 10.03% | 16.51% | |
| Lam Research Corp. | 41.94% | 24.20% | 20.10% | 25.72% | 31.56% | 10.67% | |
| Micron Technology Inc. | 12.88% | 6.84% | 17.15% | 39.70% | 18.99% | -0.03% | |
| NVIDIA Corp. | 33.44% | 19.63% | 79.86% | 41.40% | 40.74% | 31.19% | |
| Qualcomm Inc. | 42.56% | 27.48% | 28.27% | -16.74% | 1.92% | 27.12% | |
| Texas Instruments Inc. | — | 43.48% | 43.15% | 44.66% | 32.30% | 28.86% | |
Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 6,195 ÷ 14,717 = 42.10%
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. | Applied Materials Inc. ROIC improved from 2019 to 2020 and from 2020 to 2021. |
Decomposition of ROIC
Applied Materials Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).
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 increase in return on invested capital (ROIC) over 2021 year is the increase in profitability measured by operating profit margin (OPM) ratio.
Operating Profit Margin (OPM)
Applied Materials Inc., OPM calculation, comparison to benchmarks
| Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,195 | 3,885 | 2,934 | 3,704 | 3,582 | 1,825 | |
| Add: Cash operating taxes2 | 874 | 530 | 563 | 1,239 | 380 | 368 | |
| Net operating profit before taxes (NOPBT) | 7,069 | 4,416 | 3,497 | 4,943 | 3,962 | 2,194 | |
| Net sales | 23,063 | 17,202 | 14,608 | 17,253 | 14,537 | 10,825 | |
| Profitability Ratio | |||||||
| OPM3 | 30.65% | 25.67% | 23.94% | 28.65% | 27.25% | 20.26% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 13.98% | 6.80% | 5.88% | 2.42% | -5.94% | |
| Broadcom Inc. | 31.06% | 17.10% | 15.65% | 24.22% | 12.14% | -2.93% | |
| Intel Corp. | — | 32.65% | 33.40% | 30.95% | 26.66% | 21.44% | |
| Lam Research Corp. | 34.25% | 27.26% | 20.46% | 29.43% | 27.76% | 18.88% | |
| Micron Technology Inc. | 23.15% | 14.37% | 29.89% | 47.86% | 28.39% | 1.37% | |
| NVIDIA Corp. | 28.45% | 26.65% | 33.09% | 32.77% | 24.50% | 14.96% | |
| Qualcomm Inc. | 30.10% | 24.17% | 29.86% | 1.24% | 9.45% | 26.09% | |
| Texas Instruments Inc. | — | 43.13% | 40.81% | 43.25% | 41.06% | 37.64% | |
Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 7,069 ÷ 23,063 = 30.65%
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. | Applied Materials Inc. OPM improved from 2019 to 2020 and from 2020 to 2021. |
Turnover of Capital (TO)
Applied Materials Inc., TO calculation, comparison to benchmarks
| Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 23,063 | 17,202 | 14,608 | 17,253 | 14,537 | 10,825 | |
| Invested capital1 | 14,717 | 13,090 | 10,129 | 10,187 | 11,191 | 9,281 | |
| Efficiency Ratio | |||||||
| TO2 | 1.57 | 1.31 | 1.44 | 1.69 | 1.30 | 1.17 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Advanced Micro Devices Inc. | — | 2.23 | 1.97 | 2.43 | 2.39 | 1.90 | |
| Broadcom Inc. | 0.42 | 0.36 | 0.38 | 0.47 | 0.35 | 0.29 | |
| Intel Corp. | — | 0.95 | 0.89 | 0.94 | 0.94 | 0.92 | |
| Lam Research Corp. | 1.40 | 1.02 | 1.15 | 1.15 | 1.15 | 0.64 | |
| Micron Technology Inc. | 0.60 | 0.51 | 0.60 | 0.86 | 0.71 | 0.56 | |
| NVIDIA Corp. | 1.28 | 0.77 | 2.45 | 1.50 | 1.71 | 2.08 | |
| Qualcomm Inc. | 1.66 | 1.33 | 1.13 | 1.21 | 0.45 | 1.30 | |
| Texas Instruments Inc. | — | 1.12 | 1.19 | 1.26 | 1.26 | 1.11 | |
Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).
1 Invested capital. See details »
2 2021 Calculation
TO = Net sales ÷ Invested capital
= 23,063 ÷ 14,717 = 1.57
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. | Applied Materials Inc. TO deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level. |
Effective Cash Tax Rate (CTR)
Applied Materials Inc., CTR calculation, comparison to benchmarks
| Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 6,195 | 3,885 | 2,934 | 3,704 | 3,582 | 1,825 | |
| Add: Cash operating taxes2 | 874 | 530 | 563 | 1,239 | 380 | 368 | |
| Net operating profit before taxes (NOPBT) | 7,069 | 4,416 | 3,497 | 4,943 | 3,962 | 2,194 | |
| Tax Rate | |||||||
| CTR3 | 12.36% | 12.01% | 16.10% | 25.07% | 9.58% | 16.78% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Advanced Micro Devices Inc. | — | 1.75% | 12.55% | 5.44% | 64.46% | — | |
| Broadcom Inc. | 16.44% | 22.63% | 15.10% | 11.38% | 16.03% | — | |
| Intel Corp. | — | 9.76% | 10.33% | 18.16% | 59.84% | 16.68% | |
| Lam Research Corp. | 12.57% | 13.09% | 14.26% | 24.00% | 1.52% | 11.77% | |
| Micron Technology Inc. | 6.96% | 6.13% | 4.94% | 3.36% | 6.08% | 104.15% | |
| NVIDIA Corp. | 8.10% | 4.59% | 1.47% | 15.99% | 2.78% | -0.02% | |
| Qualcomm Inc. | 14.84% | 14.19% | 16.37% | 1,215.96% | 54.68% | 20.15% | |
| Texas Instruments Inc. | — | 9.63% | 11.38% | 18.14% | 37.69% | 31.13% | |
Based on: 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25), 10-K (reporting date: 2019-10-27), 10-K (reporting date: 2018-10-28), 10-K (reporting date: 2017-10-29), 10-K (reporting date: 2016-10-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 874 ÷ 7,069 = 12.36%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Applied Materials Inc. CTR decreased from 2019 to 2020 but then slightly increased from 2020 to 2021. |