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)
Costco Wholesale Corp., ROIC calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 4,254 | 3,979 | 3,353 | 2,757 | 2,700 | 2,400 | |
| Invested capital2 | 28,355 | 23,538 | 20,361 | 18,521 | 18,450 | 17,366 | |
| Performance Ratio | |||||||
| ROIC3 | 15.00% | 16.91% | 16.47% | 14.89% | 14.63% | 13.82% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Amazon.com Inc. | — | 12.59% | 13.28% | 5.94% | 10.40% | 7.00% | |
| Dollar General Corp. | 11.22% | 10.94% | 9.31% | 8.86% | 8.94% | 8.15% | |
| Home Depot Inc. | 34.91% | 35.70% | 27.93% | 25.73% | 23.46% | 22.47% | |
| Lowe’s Cos. Inc. | 18.00% | 12.51% | 15.33% | 14.36% | 12.78% | 13.07% | |
| Target Corp. | 14.30% | 14.14% | 12.07% | 12.75% | 12.12% | 10.31% | |
| TJX Cos. Inc. | 19.13% | 18.60% | 16.31% | 16.38% | 18.59% | 19.20% | |
| Walmart Inc. | 10.88% | 5.72% | 8.64% | 11.52% | 10.49% | 12.30% | |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).
1 NOPAT. See details »
2 Invested capital. See details »
3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 4,254 ÷ 28,355 = 15.00%
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. | Costco Wholesale Corp.’s ROIC improved from 2018 to 2019 but then deteriorated significantly from 2019 to 2020. |
Decomposition of ROIC
Costco Wholesale Corp., decomposition of ROIC
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).
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 efficiency measured by turnover of capital (TO) ratio.
Operating Profit Margin (OPM)
Costco Wholesale Corp., OPM calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 4,254 | 3,979 | 3,353 | 2,757 | 2,700 | 2,400 | |
| Add: Cash operating taxes2 | 1,246 | 944 | 1,368 | 1,424 | 1,048 | 1,360 | |
| Net operating profit before taxes (NOPBT) | 5,500 | 4,923 | 4,721 | 4,181 | 3,748 | 3,759 | |
| Net sales | 163,220 | 149,351 | 138,434 | 126,172 | 116,073 | 113,666 | |
| Profitability Ratio | |||||||
| OPM3 | 3.37% | 3.30% | 3.41% | 3.31% | 3.23% | 3.31% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Amazon.com Inc. | — | 6.37% | 6.29% | 3.30% | 4.62% | 3.15% | |
| Dollar General Corp. | 9.65% | 9.52% | 9.56% | 10.23% | 10.43% | 10.17% | |
| Home Depot Inc. | 14.80% | 14.70% | 15.10% | 14.77% | 13.94% | 13.32% | |
| Lowe’s Cos. Inc. | 8.61% | 6.38% | 9.56% | 9.72% | 9.07% | 9.26% | |
| Target Corp. | 6.17% | 5.67% | 6.18% | 7.35% | 7.67% | 6.41% | |
| TJX Cos. Inc. | 11.23% | 11.30% | 11.44% | 11.94% | 12.79% | 13.18% | |
| Walmart Inc. | 4.52% | 2.84% | 3.65% | 4.93% | 5.26% | 5.84% | |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 5,500 ÷ 163,220 = 3.37%
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. | Costco Wholesale Corp.’s OPM deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level. |
Turnover of Capital (TO)
Costco Wholesale Corp., TO calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 163,220 | 149,351 | 138,434 | 126,172 | 116,073 | 113,666 | |
| Invested capital1 | 28,355 | 23,538 | 20,361 | 18,521 | 18,450 | 17,366 | |
| Efficiency Ratio | |||||||
| TO2 | 5.76 | 6.35 | 6.80 | 6.81 | 6.29 | 6.55 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Amazon.com Inc. | — | 2.21 | 2.28 | 2.26 | 3.20 | 3.24 | |
| Dollar General Corp. | 1.45 | 1.42 | 1.35 | 1.35 | 1.35 | 1.27 | |
| Home Depot Inc. | 3.01 | 3.17 | 2.87 | 2.75 | 2.62 | 2.59 | |
| Lowe’s Cos. Inc. | 2.69 | 2.86 | 2.47 | 2.39 | 2.41 | 2.29 | |
| Target Corp. | 2.83 | 2.86 | 2.66 | 2.57 | 2.57 | 2.41 | |
| TJX Cos. Inc. | 2.29 | 2.30 | 2.22 | 2.22 | 2.30 | 2.23 | |
| Walmart Inc. | 3.11 | 3.21 | 3.48 | 3.24 | 3.07 | 3.21 | |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).
1 Invested capital. See details »
2 2020 Calculation
TO = Net sales ÷ Invested capital
= 163,220 ÷ 28,355 = 5.76
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. | Costco Wholesale Corp.’s TO deteriorated from 2018 to 2019 and from 2019 to 2020. |
Effective Cash Tax Rate (CTR)
Costco Wholesale Corp., CTR calculation, comparison to benchmarks
| Aug 30, 2020 | Sep 1, 2019 | Sep 2, 2018 | Sep 3, 2017 | Aug 28, 2016 | Aug 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 4,254 | 3,979 | 3,353 | 2,757 | 2,700 | 2,400 | |
| Add: Cash operating taxes2 | 1,246 | 944 | 1,368 | 1,424 | 1,048 | 1,360 | |
| Net operating profit before taxes (NOPBT) | 5,500 | 4,923 | 4,721 | 4,181 | 3,748 | 3,759 | |
| Tax Rate | |||||||
| CTR3 | 22.65% | 19.18% | 28.98% | 34.06% | 27.96% | 36.17% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Amazon.com Inc. | — | 10.59% | 7.26% | 20.39% | 29.64% | 31.33% | |
| Dollar General Corp. | 19.88% | 18.75% | 27.64% | 35.82% | 36.32% | 36.89% | |
| Home Depot Inc. | 21.74% | 23.26% | 35.67% | 36.71% | 35.80% | 34.80% | |
| Lowe’s Cos. Inc. | 22.32% | 31.40% | 34.96% | 38.25% | 41.52% | 38.25% | |
| Target Corp. | 18.12% | 12.76% | 26.52% | 32.40% | 38.55% | 33.25% | |
| TJX Cos. Inc. | 25.59% | 28.37% | 35.80% | 38.22% | 36.75% | 34.74% | |
| Walmart Inc. | 22.54% | 37.20% | 31.97% | 27.77% | 35.04% | 34.38% | |
Based on: 10-K (filing date: 2020-10-07), 10-K (filing date: 2019-10-11), 10-K (filing date: 2018-10-26), 10-K (filing date: 2017-10-18), 10-K (filing date: 2016-10-12), 10-K (filing date: 2015-10-14).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,246 ÷ 5,500 = 22.65%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Costco Wholesale Corp.’s CTR decreased from 2018 to 2019 but then slightly increased from 2019 to 2020. |