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)
Dollar Tree Inc., ROIC calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| ROIC3 | |||||||
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
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 significant fluctuations over the analyzed periods. Beginning at approximately 1.19 billion US dollars in early 2017, it increased notably to around 1.64 billion in early 2018. However, there was a substantial decline in early 2019, with NOPAT turning negative at approximately -1.11 billion. Following this downturn, the company recovered by early 2020, reaching 1.18 billion, and continued to improve in early 2021 with a peak of roughly 1.69 billion. The most recent data from early 2022 shows a slight decrease to about 1.62 billion, indicating relative stability but below the previous high.
- Invested Capital
- Invested capital demonstrated a general downward trend initially, starting at around 19.17 billion US dollars in early 2017 and reducing to approximately 17.01 billion by early 2019. From that point onward, the invested capital showed gradual recovery and growth, reaching about 18.20 billion in early 2022. This pattern suggests some level of divestment or capital reduction followed by reinvestment or capital expansion in recent years.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the volatility seen in the profitability metrics. The ROIC improved from 6.19% in early 2017 to 8.24% in early 2018, indicating better efficiency in generating returns from invested capital. The period ending early 2019 marked a significant downturn with a negative return of -6.54%, aligning with the negative NOPAT. Subsequent years showed recovery with ROIC reaching 6.93% in early 2020, increasing further to a high of 9.53% in early 2021 before slightly declining to 8.91% in early 2022. Overall, ROIC performance reflects the company's ability to rebound and enhance capital efficiency after a period of underperformance.
Decomposition of ROIC
Dollar Tree Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Jan 29, 2022 | = | × | × | ||||
| Jan 30, 2021 | = | × | × | ||||
| Feb 1, 2020 | = | × | × | ||||
| Feb 2, 2019 | = | × | × | ||||
| Feb 3, 2018 | = | × | × | ||||
| Jan 28, 2017 | = | × | × |
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
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 experienced fluctuations over the analyzed period. It initially increased from 9.52% in January 2017 to a peak of 10.34% in February 2018. Following this, there was a sharp decline to -3.02% in 2019, indicating an operating loss during that year. The margin then recovered to positive values, reaching 6.48% in 2020 and further improving to 8.38% in 2021, before slightly decreasing to 7.73% in 2022. Overall, despite volatility, the OPM demonstrates partial recovery after a significant downturn in 2019.
- Turnover of Capital (TO)
- This ratio showed a consistent upward trend throughout the entire time frame. Starting at 1.08 in 2017, it steadily increased each year, reaching 1.45 by 2022. This suggests an improvement in asset utilization and efficiency in generating sales from invested capital over the period.
- 1 – Effective Cash Tax Rate (CTR)
- The metric showed a notable variation with a steep increase in 2019, reaching 100%, which indicates no cash tax was effectively paid that year. Before 2019, it was lower at 60.16% and 71.12% in 2017 and 2018 respectively. After peaking, it stabilized around the high 70% range in the subsequent years (2020-2022). This pattern may reflect changes in tax strategy, legislative impacts, or one-time tax adjustments during 2019.
- Return on Invested Capital (ROIC)
- ROIC mirrored the volatile trend observed in the operating profit margin. It rose from 6.19% in 2017 to 8.24% in 2018, then sharply dropped to -6.54% in 2019, indicating a loss on invested capital that year. After the dip, the ROIC recovered to positive territory, improving to 6.93% in 2020 and peaking at 9.53% in 2021 before slightly decreasing to 8.91% in 2022. The recovery demonstrates improved profitability relative to invested capital following the significant downturn.
Operating Profit Margin (OPM)
Dollar Tree Inc., OPM calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| 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 | |||||||
| Profitability Ratio | |||||||
| OPM3 | |||||||
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrates considerable volatility throughout the periods. Starting at $1,973,479 thousand in the earliest period, it increased to a peak of $2,300,780 thousand in the second period. However, a substantial decline occurred in the third period, with a negative value of -$688,527 thousand, indicating an operating loss before taxes. Subsequently, the NOPBT recovered, reaching $1,529,928 thousand in the fourth period, and further rose to $2,137,234 thousand in the fifth period before slightly declining to $2,033,912 thousand in the last period.
- Net Sales
- Net sales exhibit a consistent upward trend over the entire period. The values increased from $20,719,200 thousand initially to $26,309,800 thousand in the most recent period. This steady growth indicates successful revenue expansion, with no periods reflecting a decline in sales.
- Operating Profit Margin (OPM)
- The operating profit margin trends align broadly with the fluctuations in net operating profit before taxes. Beginning at 9.52%, the margin slightly improved to 10.34% in the second period, followed by a sharp drop to -3.02% in the third period, corresponding with the negative NOPBT in the same time frame. Thereafter, the margin recovered progressively to 6.48%, then to 8.38%, before a minor decrease to 7.73% in the latest period. This indicates a return to profitability and relatively strong operational efficiency, though the margin remains below the peak levels observed earlier.
Turnover of Capital (TO)
Dollar Tree Inc., TO calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net sales | |||||||
| Invested capital1 | |||||||
| Efficiency Ratio | |||||||
| TO2 | |||||||
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
1 Invested capital. See details »
2 2022 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited consistent growth throughout the observed periods, increasing from 20,719,200 thousand US dollars in early 2017 to 26,309,800 thousand US dollars by early 2022. This steady upward trajectory indicates sustained revenue expansion over the six-year span.
- Invested Capital
- The invested capital displayed some variability. Beginning at 19,165,878 thousand US dollars in early 2017, it initially increased to 19,846,068 thousand US dollars in early 2018. Subsequently, it declined markedly in the following two years to approximately 17,010,987 thousand US dollars in early 2019 and 16,987,300 thousand US dollars in early 2020. Afterward, a moderate upward trend is observed, with invested capital rising to 17,693,200 thousand US dollars in early 2021 and further to 18,201,900 thousand US dollars in early 2022. Overall, invested capital decreased in the middle of the period but showed recovery towards the end.
- Turnover of Capital (TO)
- The turnover of capital ratio showed consistent improvement across the entire timeframe. Starting from a ratio of 1.08 in early 2017, it gradually increased each year, reaching 1.45 by early 2022. This indicates that the efficiency in generating sales from the invested capital has improved steadily during the period under review.
- Summary
- The data suggests a scenario where net sales have grown consistently year-over-year. Although invested capital saw a decline in the middle years, it began to recover in later periods. Meanwhile, the turnover of capital ratio improved continuously, reflecting enhanced capital efficiency. Taken together, these trends imply that the company managed to increase revenue and improve asset utilization despite fluctuations in invested capital.
Effective Cash Tax Rate (CTR)
Dollar Tree Inc., CTR calculation, comparison to benchmarks
| Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | Feb 2, 2019 | Feb 3, 2018 | Jan 28, 2017 | ||
|---|---|---|---|---|---|---|---|
| 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 | |||||||
| Costco Wholesale Corp. | |||||||
| Target Corp. | |||||||
| Walmart Inc. | |||||||
Based on: 10-K (reporting date: 2022-01-29), 10-K (reporting date: 2021-01-30), 10-K (reporting date: 2020-02-01), 10-K (reporting date: 2019-02-02), 10-K (reporting date: 2018-02-03), 10-K (reporting date: 2017-01-28).
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
- The cash operating taxes show a general downward trend from 2017 to 2020, decreasing from 786,228 thousand US dollars in 2017 to a low of 353,258 thousand US dollars in 2020. In the subsequent years, 2021 and 2022, there is a slight recovery, with values increasing to 450,561 thousand US dollars in 2021 followed by a minor decrease to 411,860 thousand US dollars in 2022. This suggests a significant reduction in tax payments during the middle period, with some stabilization in the later years.
- Net Operating Profit Before Taxes (NOPBT)
- This metric exhibited considerable volatility over the observed period. It started at 1,973,479 thousand US dollars in 2017, increased to 2,300,780 thousand US dollars in 2018, then sharply declined to a negative figure of -688,527 thousand US dollars in 2019, indicating a substantial operating loss before taxes that year. A recovery followed, with NOPBT rising to 1,529,928 thousand US dollars in 2020 and further increasing to 2,137,234 thousand US dollars in 2021. In 2022, NOPBT slightly declined to 2,033,912 thousand US dollars but remained positive and relatively strong compared to earlier years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrates a decreasing trend overall. Starting at 39.84% in 2017, it dropped significantly to 28.88% in 2018. There is missing data for 2019, but subsequent years show further reduction: 23.09% in 2020, 21.08% in 2021, and 20.25% in 2022. This consistent decrease reflects a more efficient or lower tax burden relative to operating profits over time.
- General Insights
- The conjunction of declining cash operating taxes and a decreasing effective cash tax rate, alongside a fluctuating net operating profit before taxes, suggests fluctuating profitability and tax strategies or tax liabilities over the years. The significant operating loss in 2019 markedly affected tax payments and rates that year, as shown by missing tax rate data and a drop in cash taxes. The recovery in profit from 2020 onwards correlates with stabilization in tax payments and the continuation of a lower tax rate. Overall, the financial data indicates a successful return to profitability following an adverse period, with an improving tax efficiency trend.