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’s debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Applied Materials Inc., ROIC calculation, comparison to benchmarks
| Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | Oct 25, 2015 | Oct 26, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,928 | 3,303 | 3,953 | 2,092 | 1,291 | 1,101 | |
| Invested capital2 | 10,129 | 11,090 | 12,475 | 10,186 | 11,631 | 9,431 | |
| Performance Ratio | |||||||
| ROIC3 | 28.91% | 29.78% | 31.69% | 20.54% | 11.10% | 11.68% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 11.73% | 13.53% | 2.05% | -14.86% | -27.01% | — | |
| Analog Devices Inc. | 8.23% | 4.98% | 0.38% | 23.10% | 15.63% | — | |
| Apple Inc. | 98.34% | 83.60% | 101.81% | 114.33% | 142.21% | 109.09% | |
| Broadcom Inc. | 5.00% | 10.03% | 3.52% | -1.55% | 15.58% | 3.98% | |
| Cisco Systems Inc. | 18.12% | 2.85% | 19.68% | 23.64% | 22.15% | — | |
| Intel Corp. | 26.74% | 23.84% | 10.03% | 16.51% | 17.27% | — | |
| Lam Research Corp. | 20.10% | 25.72% | 31.56% | 10.67% | 15.45% | — | |
| Micron Technology Inc. | 17.16% | 39.70% | 18.99% | -0.03% | 19.13% | 21.05% | |
| NVIDIA Corp. | 79.86% | 41.40% | 40.74% | 31.19% | 28.18% | — | |
| Qualcomm Inc. | 27.80% | -16.06% | 1.94% | 27.09% | 19.77% | 37.44% | |
| Texas Instruments Inc. | 43.15% | 44.66% | 32.30% | 28.86% | 24.07% | — | |
Based on: 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17).
1 NOPAT. See details »
2 Invested capital. See details »
3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,928 ÷ 10,129 = 28.91%
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.’s ROIC deteriorated from 2017 to 2018 and from 2018 to 2019. |
Decomposition of ROIC
Applied Materials Inc., decomposition of ROIC
Based on: 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17).
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 2019 year is the decrease in profitability measured by operating profit margin (OPM) ratio.
Operating Profit Margin (OPM)
Applied Materials Inc., OPM calculation, comparison to benchmarks
| Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | Oct 25, 2015 | Oct 26, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,928 | 3,303 | 3,953 | 2,092 | 1,291 | 1,101 | |
| Add: Cash operating taxes2 | 561 | 1,233 | 375 | 365 | 386 | 420 | |
| Net operating profit before taxes (NOPBT) | 3,489 | 4,536 | 4,328 | 2,458 | 1,677 | 1,521 | |
| Net sales | 14,608 | 17,253 | 14,537 | 10,825 | 9,659 | 9,072 | |
| Add: Increase (decrease) in deferred revenue | — | (381) | 379 | 272 | (21) | 35 | |
| Adjusted net sales | 14,608 | 16,872 | 14,916 | 11,097 | 9,638 | 9,107 | |
| Profitability Ratio | |||||||
| OPM3 | 23.89% | 26.89% | 29.01% | 22.15% | 17.40% | 16.70% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 6.80% | 5.88% | 2.42% | -5.94% | -12.88% | — | |
| Analog Devices Inc. | 29.60% | 30.11% | 21.16% | 30.31% | 23.13% | — | |
| Apple Inc. | 24.64% | 26.58% | 26.64% | 26.39% | 30.76% | 29.62% | |
| Broadcom Inc. | 15.65% | 24.22% | 12.14% | -2.93% | 24.07% | 11.51% | |
| Cisco Systems Inc. | 25.46% | 26.21% | 27.94% | 27.26% | 23.84% | — | |
| Intel Corp. | 33.40% | 30.95% | 26.66% | 21.44% | 25.84% | — | |
| Lam Research Corp. | 20.46% | 29.43% | 27.76% | 18.88% | 18.03% | — | |
| Micron Technology Inc. | 29.90% | 47.86% | 28.39% | 1.37% | 21.09% | 21.64% | |
| NVIDIA Corp. | 33.09% | 32.77% | 24.50% | 14.96% | 15.98% | — | |
| Qualcomm Inc. | 29.51% | 1.66% | 9.49% | 26.07% | 20.11% | 26.91% | |
| Texas Instruments Inc. | 40.81% | 43.25% | 41.06% | 37.64% | 32.94% | — | |
Based on: 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 3,489 ÷ 14,608 = 23.89%
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.’s OPM deteriorated from 2017 to 2018 and from 2018 to 2019. |
Turnover of Capital (TO)
Applied Materials Inc., TO calculation, comparison to benchmarks
| Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | Oct 25, 2015 | Oct 26, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 14,608 | 17,253 | 14,537 | 10,825 | 9,659 | 9,072 | |
| Add: Increase (decrease) in deferred revenue | — | (381) | 379 | 272 | (21) | 35 | |
| Adjusted net sales | 14,608 | 16,872 | 14,916 | 11,097 | 9,638 | 9,107 | |
| Invested capital1 | 10,129 | 11,090 | 12,475 | 10,186 | 11,631 | 9,431 | |
| Efficiency Ratio | |||||||
| TO2 | 1.44 | 1.52 | 1.20 | 1.09 | 0.83 | 0.97 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Advanced Micro Devices Inc. | 1.97 | 2.43 | 2.39 | 1.90 | 1.82 | — | |
| Analog Devices Inc. | 0.33 | 0.33 | 0.26 | 0.85 | 0.86 | — | |
| Apple Inc. | 4.79 | 8.83 | 4.47 | 5.26 | 6.05 | 4.62 | |
| Broadcom Inc. | 0.38 | 0.47 | 0.35 | 0.29 | 0.81 | 0.49 | |
| Cisco Systems Inc. | 0.95 | 1.00 | 0.87 | 1.04 | 1.13 | — | |
| Intel Corp. | 0.89 | 0.94 | 0.94 | 0.92 | 0.91 | — | |
| Lam Research Corp. | 1.15 | 1.15 | 1.15 | 0.64 | 0.95 | — | |
| Micron Technology Inc. | 0.60 | 0.86 | 0.71 | 0.56 | 0.97 | 1.02 | |
| NVIDIA Corp. | 2.45 | 1.50 | 1.71 | 2.08 | 1.89 | — | |
| Qualcomm Inc. | 1.13 | 1.20 | 0.45 | 1.30 | 1.21 | 1.58 | |
| Texas Instruments Inc. | 1.19 | 1.26 | 1.26 | 1.11 | 1.06 | — | |
Based on: 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17).
1 Invested capital. See details »
2 2019 Calculation
TO = Adjusted net sales ÷ Invested capital
= 14,608 ÷ 10,129 = 1.44
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.’s TO improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Effective Cash Tax Rate (CTR)
Applied Materials Inc., CTR calculation, comparison to benchmarks
| Oct 27, 2019 | Oct 28, 2018 | Oct 29, 2017 | Oct 30, 2016 | Oct 25, 2015 | Oct 26, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,928 | 3,303 | 3,953 | 2,092 | 1,291 | 1,101 | |
| Add: Cash operating taxes2 | 561 | 1,233 | 375 | 365 | 386 | 420 | |
| Net operating profit before taxes (NOPBT) | 3,489 | 4,536 | 4,328 | 2,458 | 1,677 | 1,521 | |
| Tax Rate | |||||||
| CTR3 | 16.09% | 27.18% | 8.67% | 14.87% | 23.00% | 27.58% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Advanced Micro Devices Inc. | 12.55% | 5.44% | 64.46% | — | — | — | |
| Analog Devices Inc. | 14.82% | 50.33% | 93.08% | 10.78% | 21.70% | — | |
| Apple Inc. | 16.60% | 64.38% | 14.50% | 17.63% | 23.61% | 20.30% | |
| Broadcom Inc. | 15.10% | 11.38% | 16.03% | — | 19.97% | 29.19% | |
| Cisco Systems Inc. | 24.92% | 89.18% | 19.15% | 16.48% | 17.77% | — | |
| Intel Corp. | 10.33% | 18.16% | 59.84% | 16.68% | 26.25% | — | |
| Lam Research Corp. | 14.26% | 24.00% | 1.52% | 11.77% | 10.13% | — | |
| Micron Technology Inc. | 4.94% | 3.36% | 6.08% | 104.15% | 6.26% | 4.73% | |
| NVIDIA Corp. | 1.47% | 15.99% | 2.78% | -0.02% | 6.81% | — | |
| Qualcomm Inc. | 16.54% | 905.86% | 54.42% | 20.17% | 19.01% | 11.76% | |
| Texas Instruments Inc. | 11.38% | 18.14% | 37.69% | 31.13% | 30.79% | — | |
Based on: 10-K (filing date: 2019-12-13), 10-K (filing date: 2018-12-13), 10-K (filing date: 2017-12-15), 10-K (filing date: 2016-12-15), 10-K (filing date: 2015-12-09), 10-K (filing date: 2014-12-17).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 561 ÷ 3,489 = 16.09%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Applied Materials Inc.’s CTR increased from 2017 to 2018 but then slightly decreased from 2018 to 2019 not reaching 2017 level. |