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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Cytokinetics Inc. pages available for free this week:
- Balance Sheet: Assets
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Operating Profit Margin since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
- Price to Book Value (P/BV) since 2005
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Return on Invested Capital (ROIC)
Cytokinetics 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 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 NOPAT values exhibit significant volatility and predominantly negative results over the analyzed period. Starting from -105,906 thousand US$ in 2018, the figure declined further to -119,531 thousand US$ in 2019. In 2020, there was a notable improvement when the loss narrowed to -31,573 thousand US$, yet this trend reversed in 2021 with a sharp increase in loss to -193,076 thousand US$. The downward trajectory continued sharply into 2022, reaching -460,021 thousand US$. This demonstrates escalating operational challenges or increased expenses impacting profitability.
- Invested Capital
- The invested capital values also show considerable instability and inconsistencies. Starting at -78,273 thousand US$ in 2018, the figure worsened to -106,877 thousand US$ in 2019 before improving somewhat to -87,987 thousand US$ in 2020. In 2021, a large positive spike is observed at 91,721 thousand US$, indicating either an accounting adjustment or a significant inflow, before falling back into negative territory with -117,411 thousand US$ in 2022. This erratic behavior suggests fluctuations in asset base or capital structure, potentially signaling changes in investment strategy or accounting treatment.
- Return on Invested Capital (ROIC)
- The only available ROIC figure is for the year 2021 and it stands at -210.5%. This extremely negative return implies that the company generated substantial losses relative to its invested capital during that period. The absence of ROIC data for other years limits the ability to assess trends, but the 2021 figure underscores a period of considerable inefficiency in capital utilization.
- Summary of Trends and Insights
- Overall, the data reflect a challenging financial performance characterized by persistent and deepening losses in operational profitability. The severe negative NOPAT values and the extraordinarily negative ROIC in 2021 highlight critical issues in generating returns from the company's invested assets. Additionally, the fluctuations and occasional large changes in invested capital hint at volatility in asset management or capital deployment. These patterns collectively suggest structural financial difficulties and the need for strategic reassessment to improve capital efficiency and profitability.
Decomposition of ROIC
Cytokinetics 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 »
- Operating Profit Margin (OPM)
- The operating profit margin exhibits significant volatility throughout the observed periods. Beginning at -335.88% in 2018, it deteriorates further to -442.74% in 2019. In 2020, there is a marked improvement where the margin reduces its negative value to -20.48%. However, this improvement is not sustained, as the margin declines again to -265.75% in 2021 and then dramatically deteriorates to -6006.66% in 2022. This extreme negative value in 2022 indicates substantial operational losses relative to revenue during that year.
- Turnover of Capital (TO)
- Data is sparse for turnover of capital, with values only available for 2021, where it is recorded at 0.77. The absence of data in other years limits the ability to analyze trends or draw conclusions about changes over time.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate remains consistently at 100% across all periods from 2018 to 2022, indicating that the company was fully subject to cash taxes despite operating losses. This constant rate implies no variation in cash tax obligations during these years.
- Return on Invested Capital (ROIC)
- The return on invested capital is only reported for the year 2021, showing a negative return of -210.5%. This significantly negative figure suggests that the company’s investments were not generating value and were instead destroying capital. Due to the lack of data for other years, it is not possible to evaluate the trend in ROIC.
Operating Profit Margin (OPM)
Cytokinetics 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) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed a highly negative trend throughout the periods analyzed. Starting at -105,805 thousand USD in 2018, it further declined to -118,956 thousand USD in 2019. In 2020, there was a notable improvement with a significant reduction of losses to -29,256 thousand USD. However, this positive shift was short-lived, as the figure deteriorated again in the following years, reaching -187,165 thousand USD in 2021 and sharply worsening to -455,785 thousand USD by the end of 2022.
- Adjusted Revenues
- Adjusted revenues exhibited considerable volatility over the five-year period. They dropped slightly from 31,501 thousand USD in 2018 to 26,868 thousand USD in 2019, followed by a sharp increase to 142,828 thousand USD in 2020. Subsequently, revenues decreased to 70,428 thousand USD in 2021 and further declined to a low level of 7,588 thousand USD in 2022. This pattern indicates significant fluctuations that may be related to changing operational conditions or one-off events.
- Operating Profit Margin (OPM)
- The operating profit margin was consistently deeply negative throughout the entire duration. In 2018, the margin was -335.88%, worsening to -442.74% in 2019. The margin improved markedly in 2020 to -20.48%, aligning with the improvement noted in net operating profit. Nevertheless, the margin sharply declined again in subsequent years, reaching -265.75% in 2021 and plunging dramatically to -6006.66% in 2022, demonstrating extreme operating inefficiency in the most recent period.
- Overall Trends and Insights
- The company experienced persistent operating losses over the five-year period, with some temporary recovery in 2020. The adjusted revenues did not show a stable upward or downward trend but rather fluctuated significantly, peaking in 2020 before declining sharply afterward. Correspondingly, the operating profit margin mirrored these changes, improving substantially in 2020 but then deteriorating drastically by 2022, indicating increasing operating challenges and inefficiencies.
Turnover of Capital (TO)
Cytokinetics 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) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues demonstrate significant volatility over the observed period. Revenues decreased from approximately $31.5 million in 2018 to $26.9 million in 2019. This was followed by a substantial increase to about $142.8 million in 2020. However, a sharp decline occurred again in 2021, with revenues falling to approximately $70.4 million, and this downward trend continued into 2022, reaching just around $7.6 million.
- Invested Capital
- The invested capital figures exhibit considerable fluctuations, including both negative and positive values. From 2018 through 2020, invested capital was negative, decreasing from roughly -$78.3 million in 2018 to nearly -$106.9 million in 2019, then improving slightly to around -$87.9 million in 2020. In 2021, there was a marked shift to positive invested capital of approximately $91.7 million, followed by a dramatic reversal back to negative invested capital (-$117.4 million) in 2022.
- Turnover of Capital (TO)
- The turnover of capital ratio is missing for most periods, with data only available for 2021, where it stood at 0.77. This indicates that in 2021, the company generated $0.77 of adjusted revenue for each dollar of invested capital, suggesting moderate capital efficiency during that year.
- Overall Observations
- The financial data reveals high volatility in both adjusted revenues and invested capital over the five-year span, with no consistent upward or downward trend. The sharp revenue spike in 2020 followed by a rapid decline could indicate extraordinary or one-time events impacting sales or recognition of revenues. Invested capital swings between negative and positive values might reflect significant changes in financing structure, asset base, or accounting treatments. Limited information on turnover of capital restricts comprehensive assessment of capital efficiency across the entire timeline, but the available data for 2021 suggests moderate utilization of capital that year. The overall pattern emphasizes instability and potential operational or market challenges during the analyzed period.
Effective Cash Tax Rate (CTR)
Cytokinetics Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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.
- Cash Operating Taxes
- There was a significant increase in cash operating taxes from 2018 to 2019, rising sharply from 102 thousand USD to 575 thousand USD. This upward trend continued dramatically into 2020, reaching 2,317 thousand USD. The amount peaked in 2021 at 5,911 thousand USD, before declining in 2022 to 4,236 thousand USD. Overall, cash operating taxes exhibit increasing volatility with a notable peak in 2021 followed by a decrease in the subsequent year.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes remained negative throughout the period, indicating consistent operating losses. The losses deepened from -105,805 thousand USD in 2018 to -118,956 thousand USD in 2019, reflecting a worsening performance. In 2020, the loss narrowed significantly to -29,256 thousand USD, suggesting some recovery or cost control during that year. However, this trend reversed in 2021, with losses increasing steeply to -187,165 thousand USD, and then substantially worsening further in 2022 to -455,785 thousand USD. This pattern points to a highly volatile financial performance with major deterioration in the last two years.
- Effective Cash Tax Rate (CTR)
- No data was provided for the effective cash tax rate across all periods, making it impossible to analyze trends related to tax efficiency or liabilities relative to operating profits.