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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Booking Holdings Inc. pages available for free this week:
- Income Statement
- Statement of Comprehensive Income
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Debt
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Booking Holdings 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 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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.
The financial data reveals notable trends over the five-year period from 2020 to 2024.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT showed a marginal increase from 670 million US dollars in 2020 to 671 million US dollars in 2021. Subsequently, there was a significant growth in 2022, where NOPAT rose to 2,965 million US dollars. The upward trend continued with 3,758 million US dollars in 2023 and reached 6,151 million US dollars by 2024. This reflects a substantial improvement in operational profitability over the period.
- Invested Capital
- Invested capital initially increased slightly from 14,563 million US dollars in 2020 to 15,004 million US dollars in 2021. It then decreased to 13,642 million US dollars in 2022 and further declined to 11,415 million US dollars in 2023. A moderate recovery occurred in 2024, with invested capital rising to 12,973 million US dollars. Overall, invested capital shows a declining trend after 2021, with a partial rebound in the final year.
- Return on Invested Capital (ROIC)
- ROIC remained relatively stable at around 4.6% in 2020 and 4.47% in 2021. Thereafter, it increased sharply to 21.73% in 2022 and escalated further to 32.92% in 2023. By 2024, ROIC surged to 47.41%, reflecting markedly improved efficiency in generating returns from invested capital across the period.
In summary, the data demonstrates a significant expansion in net operating profit and enhanced capital efficiency, evidenced by the rising ROIC. Despite a reduction in invested capital after 2021, the company has effectively increased its profitability and utilization of capital, indicating stronger operational performance and value creation over time.
Decomposition of ROIC
Booking Holdings 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 exhibited a fluctuating yet overall upward trend over the observed period. Starting at 15.18% in 2020, it declined to 13.04% in 2021 before experiencing a significant increase to 24.15% in 2022. This upward momentum continued with a rise to 25.31% in 2023, culminating in a substantial peak of 31.62% by the end of 2024. This suggests improved operational efficiency or higher profitability from core business activities in recent years.
- Turnover of Capital (TO)
- The turnover of capital demonstrated consistent growth from 0.47 in 2020 to a peak of 1.87 in 2023, followed by a slight decline to 1.83 in 2024. The increase indicates enhanced asset utilization and operational efficiency, effectively generating more revenue per unit of invested capital over time. Despite the small decrease at the end, the overall trend reflects better capital management.
- 1 – Effective Cash Tax Rate (CTR)
- This measure showed notable variability throughout the period. Beginning at a high level of 64.94% in 2020, it dropped significantly to 46.94% in 2021. The rate then increased sharply to 71.84% in 2022, with moderate reductions in 2023 (69.48%), followed by a marked increase to the highest value of 81.95% in 2024. This indicates increasing cash tax liabilities relative to earnings, potentially affecting net cash flows.
- Return on Invested Capital (ROIC)
- Return on invested capital experienced a dramatic increase over the timeframe. From modest levels of 4.6% in 2020 and 4.47% in 2021, it surged to 21.73% in 2022, reaching 32.92% in 2023, and peaking at 47.41% in 2024. This robust improvement suggests significantly enhanced value generation from capital investments, indicating effective investment strategies and improved profitability.
Operating Profit Margin (OPM)
Booking Holdings 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) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 ÷ Revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- There has been a substantial increase in net operating profit before taxes over the five-year period. The value rose from $1,032 million in 2020 to $7,506 million in 2024, representing a significant growth trend. A sharp increase is particularly notable between 2021 and 2022, where NOPBT almost tripled from $1,429 million to $4,127 million, followed by steady growth in the subsequent years.
- Revenues
- Revenues showed consistent growth throughout the period, increasing from $6,796 million in 2020 to $23,739 million in 2024. The rate of revenue growth was particularly strong between 2020 and 2022, with revenues more than doubling. Although the growth rate slowed slightly in the following years, the upward trajectory continued steadily.
- Operating profit margin (OPM)
- The operating profit margin exhibited some variability but overall showed significant improvement. Starting at 15.18% in 2020, it declined slightly to 13.04% in 2021, before increasing sharply to 24.15% in 2022. This upward momentum continued, reaching 31.62% by 2024. The margin expansion indicates enhanced operating efficiency and profitability over time.
- Summary of Trends
- The company's financial performance over the period reflects strong and sustained growth in both revenues and operating profitability. The exceptional increase in net operating profit before taxes coupled with margin expansion suggests effective cost control and operational scaling. Despite a minor dip in operating profit margin in 2021, the overall trend is a marked improvement in profitability metrics.
Turnover of Capital (TO)
Booking Holdings Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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 = Revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The financial data reveals several notable trends over the five-year period ending in 2024. Revenues consistently increased each year, displaying robust growth from 6,796 million US dollars in 2020 to 23,739 million US dollars in 2024. This signifies a more than threefold increase in revenue, indicating strong top-line expansion.
Invested capital, in contrast, shows a different pattern. The invested capital initially rose slightly from 14,563 million US dollars in 2020 to 15,004 million US dollars in 2021, before declining steadily to 11,415 million US dollars in 2023. Thereafter, it experienced a modest rebound to 12,973 million US dollars by 2024. Overall, invested capital declined over the period, suggesting a reduction in assets or capital employed after 2021.
The turnover of capital (TO) ratio, which measures how efficiently the invested capital is used to generate revenues, exhibited a significant upward trend. The ratio increased from 0.47 in 2020 to 1.83 by 2024. This improvement indicates enhanced operational efficiency, as the company was able to generate more revenue per unit of invested capital over time. Notably, the largest increments in turnover occurred between 2021 and 2023, with a slight decrease observed from 1.87 in 2023 to 1.83 in 2024.
- Key Observations:
- The revenue growth is strong and consistent, reflecting successful business expansion or market penetration.
- Invested capital peaked early in the window but trended downwards before a modest recovery, potentially reflecting asset optimization or divestiture strategies.
- The turnover of capital ratio rose sharply, demonstrating improved capital efficiency and better utilization of resources to generate revenues over time.
- The slight decline in turnover ratio during the last year could signal either an increase in invested capital without proportional revenue growth or a plateau in operational improvements.
In summary, the data suggests a company focusing on revenue expansion while optimizing capital investment, resulting in marked efficiency gains. The slight moderation in efficiency gains in the last year warrants monitoring to assess sustainability of this trend.
Effective Cash Tax Rate (CTR)
Booking Holdings 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 | ||||||
| Airbnb Inc. | ||||||
| Chipotle Mexican Grill Inc. | ||||||
| McDonald’s Corp. | ||||||
| Starbucks Corp. | ||||||
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
- The cash operating taxes exhibited a rising trend from 2020 to 2023, increasing from $362 million in 2020 to a peak of $1,650 million in 2023. However, in 2024 there is a decline to $1,355 million, indicating a reduction in tax payments despite the prior upward momentum.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes shows a consistent and strong upward trajectory over the analyzed period. Starting at $1,032 million in 2020, it more than doubled by 2021 reaching $1,429 million, then experienced a significant surge in 2022 to $4,127 million. This positive momentum continued with further increases to $5,408 million in 2023 and $7,506 million in 2024, demonstrating robust operational profitability growth.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate presented variability across the years. It rose sharply from 35.06% in 2020 to 53.06% in 2021, indicating a substantial increase in the proportion of profit paid as tax during that year. Subsequently, the rate declined notably to 28.16% in 2022 and slightly increased to 30.52% in 2023. The rate then dropped further to its lowest point of 18.05% in 2024, suggesting improved tax efficiency or utilization of tax benefits in the most recent year.
- Overall Insights
- The data reveals growing profitability as reflected by the significant increases in net operating profit before taxes. Despite increasing absolute cash tax payments until 2023, the effective cash tax rate has generally decreased since its peak in 2021, facilitating enhanced after-tax earnings. The decrease in cash operating taxes in 2024, coupled with lower tax rates, points to optimized tax management strategies in the latest period. The combination of rising profits and more efficient tax costs likely improves the company’s financial robustness and cash flow generation capacity.