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)
Decomposition of ROIC
Operating Profit Margin (OPM)
Turnover of Capital (TO)
Effective Cash Tax Rate (CTR)

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
Walmart Inc.	10.88%	5.72%	8.64%	11.52%	10.49%	—

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.

Costco Wholesale Corp., decomposition of ROIC


	ROIC	=	OPM¹	×	TO²	×	1 – CTR³
Aug 30, 2020	15.00%	=	3.37%	×	5.76	×	77.35%
Sep 1, 2019	16.91%	=	3.30%	×	6.35	×	80.82%
Sep 2, 2018	16.47%	=	3.41%	×	6.80	×	71.02%
Sep 3, 2017	14.89%	=	3.31%	×	6.81	×	65.94%
Aug 28, 2016	14.63%	=	3.23%	×	6.29	×	72.04%
Aug 30, 2015	13.82%	=	3.31%	×	6.55	×	63.83%

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.

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
Walmart Inc.	4.52%	2.84%	3.65%	4.93%	5.26%	—

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.

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
Walmart Inc.	3.11	3.21	3.48	3.24	3.07	—

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.

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
Walmart Inc.	22.54%	37.20%	31.97%	27.77%	35.04%	—

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.

Costco Wholesale Corp. (NASDAQ:COST)

Return on Capital (ROC)

Return on Invested Capital (ROIC)

Decomposition of ROIC

Operating Profit Margin (OPM)

Turnover of Capital (TO)

Effective Cash Tax Rate (CTR)