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)
Axon Enterprise Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2022 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 experienced considerable fluctuations over the analyzed periods. Starting at 78,057 thousand USD in 2018, it sharply declined to 17,857 thousand USD in 2019. A recovery phase followed, with an increase to 51,762 thousand USD in 2020, before decreasing again to 38,523 thousand USD in 2021. A substantial surge occurred in 2022, reaching 326,174 thousand USD, the highest value within the given timeframe.
- Invested Capital
- Invested capital showed a general upward trajectory from 2018 to 2022. Initially, it decreased from 631,660 thousand USD in 2018 to 500,291 thousand USD in 2019. However, the subsequent years exhibited strong growth, rising to 722,746 thousand USD in 2020, then accelerating significantly to 1,262,920 thousand USD in 2021, and further climbing to 1,607,800 thousand USD in 2022.
- Return on Invested Capital (ROIC)
- The return on invested capital displayed notable volatility through the years. It started relatively high at 12.36% in 2018, then dropped substantially to 3.57% in 2019. The metric improved to 7.16% in 2020 but decreased again to its lowest point of 3.05% in 2021. A marked improvement was observed in 2022 when ROIC surged to 20.29%, indicating a significantly more efficient utilization of the invested capital in generating profit.
- Overall Analysis
- The data reveals volatility in profitability measures and capital utilization up to 2021, with declines in both NOPAT and ROIC in select years, despite growth in invested capital. The sharp increase in both NOPAT and ROIC in 2022 suggests a substantial enhancement in operational performance and capital efficiency. The accelerated growth of invested capital in the last two years combined with the impressive rise in profitability metrics indicates a period of significant expansion and improved returns.
Decomposition of ROIC
Axon Enterprise Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The financial ratios over the five-year period demonstrate notable fluctuations and trends that offer insights into operational efficiency, capital utilization, tax impact, and overall return performance.
- Operating Profit Margin (OPM)
- The operating profit margin displayed variability with a low point in 2021 at 3.62% and a significant increase in 2022 to 26.29%. The interim years show moderate margins with 4.88% in 2019 and 8.5% in 2020, indicating fluctuating profitability before a strong recovery in the final year observed.
- Turnover of Capital (TO)
- The turnover of capital ratio remained relatively stable but slightly declined over the period. It peaked at 1.11 in 2019, then gradually decreased to 0.82 by 2021 and slightly increased to 0.84 in 2022. This suggests a modest decrease in asset efficiency or sales generation relative to capital employed in the later years.
- 1 – Effective Cash Tax Rate (CTR)
- This ratio showed inconsistency with values above 90% in 2018 and again in 2022, while it dropped noticeably in 2019 (65.84%) and rose sharply above 100% in 2021 (102.26%). The fluctuations imply varying effective tax burdens, possibly indicating changes in tax strategies or taxable income components across the years.
- Return on Invested Capital (ROIC)
- The ROIC exhibited a downward trend from 12.36% in 2018 to a trough of 3.05% in 2021, followed by a considerable rebound to 20.29% in 2022. This pattern signifies challenges in generating returns on capital in the middle years, with a strong improvement in the final year, aligning with the marked increase in operating profitability observed.
Overall, the data reveal a period of operational and financial performance volatility, with a substantial recovery in profitability and return metrics in the last year. Capital turnover efficiency showed minor decline, while the tax rate effects have varied significantly, impacting net performance outcomes.
Operating Profit Margin (OPM)
Axon Enterprise Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 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 showed significant volatility over the analyzed period. Starting at 85,723 thousand USD in 2018, it dropped sharply to 27,123 thousand USD in 2019, indicating a substantial decline in profitability. In 2020, the NOPBT increased to 63,795 thousand USD but again decreased in 2021 to 37,672 thousand USD. A remarkable recovery occurred in 2022, with NOPBT soaring to 354,062 thousand USD, the highest value during the period under review.
- Adjusted Net Sales
- Adjusted net sales exhibited a consistent upward trend over the years. Beginning with 476,219 thousand USD in 2018, sales increased steadily each year, reaching 555,227 thousand USD in 2019, 750,384 thousand USD in 2020, 1,039,512 thousand USD in 2021, and culminating at 1,346,663 thousand USD in 2022. This trend reflects sustained revenue growth, nearly tripling over the five-year span.
- Operating Profit Margin (OPM)
- The operating profit margin demonstrated considerable fluctuations throughout the period. In 2018, the OPM was relatively strong at 18%. It then declined sharply to 4.88% in 2019 and improved moderately to 8.5% in 2020. The margin again declined to 3.62% in 2021, indicating operating challenges despite increasing sales. However, in 2022, there was a significant margin improvement to 26.29%, surpassing the margin level seen at the start of the period and suggesting more effective cost management or operational leverage combined with robust sales growth.
- Overall Insights
- The data reveal a pattern of increasing revenue with uneven profitability metrics. The large fluctuations in net operating profit before taxes and operating profit margin suggest volatility in operating efficiency or cost structure over the years. The strong rebound in both profitability measures in 2022 possibly reflects strategic or operational improvements, favorable market conditions, or one-time factors enhancing earnings. The consistent growth in adjusted net sales emphasizes solid top-line expansion despite profitability instability in preceding years.
Turnover of Capital (TO)
Axon Enterprise Inc., TO calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 Invested capital. See details »
2 2022 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis of the data over the five-year period reveals significant trends in key financial metrics.
- Adjusted Net Sales
- There is a clear and consistent upward trend in adjusted net sales, with values increasing each year. Starting from approximately 476 million US dollars in 2018, the figure rose to around 1.35 billion US dollars by the end of 2022. This represents almost a threefold increase over the five-year period, indicating strong revenue growth.
- Invested Capital
- Invested capital shows a less steady pattern but generally exhibits growth over the period. After a dip to about 500 million US dollars in 2019, the invested capital increased substantially in subsequent years, reaching approximately 1.61 billion US dollars by 2022. This suggests increased capital deployment to support business expansion or operational needs.
- Turnover of Capital (TO)
- The turnover of capital, calculated as a ratio of adjusted net sales to invested capital, displays some volatility. It increased significantly from 0.75 in 2018 to 1.11 in 2019, reflecting improved efficiency in capital utilization. However, the ratio then declined to 1.04 in 2020 and further down to around 0.82 and 0.84 in 2021 and 2022, respectively. Despite the ongoing increase in net sales and invested capital, the reduced turnover ratio in the latter years indicates a decreasing efficiency in generating sales from each unit of invested capital.
In summary, the data indicate robust sales growth accompanied by increased capital investment. However, the efficiency of capital usage has declined since 2019, suggesting that while the company is expanding, it may be doing so with diminishing returns on its invested capital.
Effective Cash Tax Rate (CTR)
Axon Enterprise Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data reveals significant fluctuations and variations in key operating metrics over the analyzed periods.
- Cash Operating Taxes
- Cash operating taxes showed a general upward trend from 2018 through 2020, increasing from 7,666 thousand USD to 12,034 thousand USD. However, in 2021, there was a sharp reversal, as the cash taxes turned negative at -851 thousand USD, indicating potential tax refunds or adjustments. In the following year, 2022, the amount rebounded strongly to 27,888 thousand USD, the highest observed within the period.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT exhibited considerable volatility, falling from 85,723 thousand USD in 2018 to a low of 27,123 thousand USD in 2019. It then improved in 2020 to 63,795 thousand USD but declined again to 37,672 thousand USD in 2021. A substantial increase occurred in 2022, with NOPBT soaring to 354,062 thousand USD, representing a notable surge compared to previous years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated considerable variability. It started at 8.94% in 2018, escalated sharply to 34.16% in 2019, then decreased to 18.86% in 2020. In 2021, this rate turned negative at -2.26%, consistent with the negative cash taxes recorded during that year. By 2022, the effective cash tax rate dropped again to 7.88%, indicating a relatively low tax burden compared to earlier years.
Overall, the data reflects a period of financial instability and fluctuations, with tax payments and profit before taxes showing irregular trends. The sharp increase in NOPBT in 2022, coupled with a lower effective tax rate, significantly impacted the cash operating taxes, resulting in the highest tax payment recorded during the period. Negative tax payments and rates in 2021 warrant further investigation to understand underlying causes such as tax credits or adjustments.