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.
Return on Invested Capital (ROIC)
Fiserv Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 1,797) | 1,728) | 1,565) | 1,322) | 1,176) | |
| Invested capital2 | 59,700) | 60,165) | 62,514) | 9,909) | 9,201) | |
| Performance Ratio | ||||||
| ROIC3 | 3.01% | 2.87% | 2.50% | 13.35% | 12.78% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Accenture PLC | 25.83% | — | — | — | — | |
| Adobe Inc. | 29.44% | 21.67% | — | — | — | |
| AppLovin Corp. | 0.83% | — | — | — | — | |
| Cadence Design Systems Inc. | 24.26% | — | — | — | — | |
| Datadog Inc. | 16.66% | — | — | — | — | |
| International Business Machines Corp. | 3.86% | — | — | — | — | |
| Intuit Inc. | 17.64% | — | — | — | — | |
| Microsoft Corp. | 45.56% | — | — | — | — | |
| Oracle Corp. | 17.55% | — | — | — | — | |
| Palantir Technologies Inc. | -14.60% | — | — | — | — | |
| Palo Alto Networks Inc. | 11.48% | — | — | — | — | |
| Salesforce Inc. | 8.25% | — | — | — | — | |
| ServiceNow Inc. | 18.88% | — | — | — | — | |
| Synopsys Inc. | 11.52% | 11.63% | — | — | — | |
| Workday Inc. | 1.38% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 1,797 ÷ 59,700 = 3.01%
4 Click competitor name to see calculations.
The financial performance from 2017 to 2021 is characterized by steady operational growth contrasted with a significant expansion of the capital base, resulting in a marked compression of capital efficiency.
- Net Operating Profit After Taxes (NOPAT)
- A consistent upward trajectory is observed in NOPAT, which increased from 1,176 million USD in 2017 to 1,797 million USD by 2021. This continuous growth indicates a sustained improvement in core operational profitability over the five-year period.
- Invested Capital
- The capital base remained relatively stable between 2017 and 2018, moving from 9,201 million USD to 9,909 million USD. A substantial increase occurred in 2019, where invested capital surged to 62,514 million USD. Following this peak, a gradual decline was noted, with the figure settling at 59,700 million USD by 2021.
- Return on Invested Capital (ROIC)
- ROIC exhibited a sharp decline after 2018. While returns were strong in 2017 at 12.78% and peaked in 2018 at 13.35%, the dramatic increase in invested capital in 2019 led to a significant reduction in the ratio to 2.50%. A marginal recovery followed in 2020 and 2021, reaching 3.01%, indicating that while operational profits continue to rise, they have not yet scaled proportionally to the expanded capital investment.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Decomposition of ROIC
Fiserv Inc., decomposition of ROIC
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The Return on Invested Capital (ROIC) experienced a severe contraction between 2018 and 2019, falling from 13.35% to 2.50%. Although a marginal recovery trend was observed from 2019 through 2021, the ROIC remained suppressed, ending the period at 3.01%.
- Operating Profit Margin (OPM)
- A significant decline in operating profitability occurred starting in 2019. Margins remained stable at approximately 28% during 2017 and 2018, but plummeted to 17.56% in 2019 and reached a period low of 13.42% in 2020. A partial recovery to 15.78% was noted in 2021, though this remained substantially below the 2017-2018 baseline.
- Turnover of Capital (TO)
- Capital efficiency deteriorated sharply in 2019, with the turnover ratio dropping from 0.57 to 0.17. This suggests a substantial expansion of the invested capital base that did not yield a proportional increase in revenue. A gradual upward trend followed, with the ratio improving to 0.25 in 2020 and 0.27 in 2021.
- Effective Cash Tax Rate (1 – CTR)
- The after-tax component of the return decomposition showed an upward trend in tax efficiency from 2017 to 2020, rising from 71.42% to a peak of 86.16%. However, this trend reversed sharply in 2021, where the value fell to 69.88%, indicating a higher effective cash tax burden that acted as a drag on the final ROIC.
The precipitous drop in ROIC in 2019 was driven by the simultaneous collapse of both operating margins and capital turnover. While the subsequent years showed slight improvements in these two operational metrics, the overall return on invested capital remained stagnant due to the scale of the 2019 impairment in capital efficiency and the increased tax burden observed in 2021.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Operating Profit Margin (OPM)
Fiserv Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 1,797) | 1,728) | 1,565) | 1,322) | 1,176) | |
| Add: Cash operating taxes2 | 775) | 278) | 255) | 288) | 471) | |
| Net operating profit before taxes (NOPBT) | 2,572) | 2,005) | 1,820) | 1,610) | 1,646) | |
| Revenue | 16,226) | 14,852) | 10,187) | 5,823) | 5,696) | |
| Add: Increase (decrease) in contract liabilities | 77) | 86) | 178) | (161) | 69) | |
| Adjusted revenue | 16,303) | 14,938) | 10,365) | 5,662) | 5,765) | |
| Profitability Ratio | ||||||
| OPM3 | 15.78% | 13.42% | 17.56% | 28.43% | 28.56% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Accenture PLC | 16.65% | — | — | — | — | |
| Adobe Inc. | 40.89% | 34.42% | — | — | — | |
| AppLovin Corp. | 5.23% | — | — | — | — | |
| Cadence Design Systems Inc. | 28.51% | — | — | — | — | |
| Datadog Inc. | 13.48% | — | — | — | — | |
| International Business Machines Corp. | 11.04% | — | — | — | — | |
| Intuit Inc. | 28.02% | — | — | — | — | |
| Microsoft Corp. | 43.49% | — | — | — | — | |
| Oracle Corp. | 40.03% | — | — | — | — | |
| Palantir Technologies Inc. | -23.57% | — | — | — | — | |
| Palo Alto Networks Inc. | 16.95% | — | — | — | — | |
| Salesforce Inc. | 20.31% | — | — | — | — | |
| ServiceNow Inc. | 17.20% | — | — | — | — | |
| Synopsys Inc. | 22.47% | 22.28% | — | — | — | |
| Workday Inc. | 2.23% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 2,572 ÷ 16,303 = 15.78%
4 Click competitor name to see calculations.
A comprehensive analysis of financial performance between 2017 and 2021 reveals a period of aggressive scale expansion accompanied by significant fluctuations in operational efficiency.
- Revenue Growth and Scale
- Adjusted revenue exhibited a substantial upward trajectory, increasing from US$ 5,765 million in 2017 to US$ 16,303 million in 2021. A notable surge is observed between 2018 and 2020, during which revenue grew from US$ 5,662 million to US$ 14,938 million, indicating a rapid expansion of the business footprint.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT grew from US$ 1,646 million in 2017 to US$ 2,572 million in 2021. While the overall trend is positive, the growth in absolute operating profit did not keep pace with the rate of revenue expansion, particularly during the peak growth years of 2019 and 2020.
- Operating Profit Margin (OPM) Compression and Recovery
- A significant contraction in the operating profit margin is evident, dropping from 28.56% in 2017 to a low of 13.42% in 2020. This decline suggests that the rapid increase in adjusted revenue was associated with higher operating expenses or the integration of business segments with lower inherent margins. A reversal of this trend occurred in 2021, as the OPM recovered to 15.78%, signaling an improvement in cost management or the realization of operational synergies.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Turnover of Capital (TO)
Fiserv Inc., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | 16,226) | 14,852) | 10,187) | 5,823) | 5,696) | |
| Add: Increase (decrease) in contract liabilities | 77) | 86) | 178) | (161) | 69) | |
| Adjusted revenue | 16,303) | 14,938) | 10,365) | 5,662) | 5,765) | |
| Invested capital1 | 59,700) | 60,165) | 62,514) | 9,909) | 9,201) | |
| Efficiency Ratio | ||||||
| TO2 | 0.27 | 0.25 | 0.17 | 0.57 | 0.63 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Accenture PLC | 1.95 | — | — | — | — | |
| Adobe Inc. | 0.80 | 0.70 | — | — | — | |
| AppLovin Corp. | 0.50 | — | — | — | — | |
| Cadence Design Systems Inc. | 0.98 | — | — | — | — | |
| Datadog Inc. | 1.26 | — | — | — | — | |
| International Business Machines Corp. | 0.53 | — | — | — | — | |
| Intuit Inc. | 0.79 | — | — | — | — | |
| Microsoft Corp. | 1.20 | — | — | — | — | |
| Oracle Corp. | 0.51 | — | — | — | — | |
| Palantir Technologies Inc. | 0.61 | — | — | — | — | |
| Palo Alto Networks Inc. | 0.74 | — | — | — | — | |
| Salesforce Inc. | 0.44 | — | — | — | — | |
| ServiceNow Inc. | 1.16 | — | — | — | — | |
| Synopsys Inc. | 0.63 | 0.58 | — | — | — | |
| Workday Inc. | 0.77 | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Invested capital. See details »
2 2021 Calculation
TO = Adjusted revenue ÷ Invested capital
= 16,303 ÷ 59,700 = 0.27
3 Click competitor name to see calculations.
The analysis of the turnover of capital reveals a significant structural shift in the capital base and revenue generation capabilities between 2017 and 2021. While revenue experienced substantial growth over the period, the disproportionate increase in invested capital during 2019 led to a sharp contraction in capital efficiency, followed by a gradual recovery.
- Adjusted Revenue Trends
- Revenue remained relatively stable between 2017 and 2018, followed by a period of rapid expansion. A significant increase is observed starting in 2019, with revenue rising from 5,662 million USD in 2018 to 16,303 million USD by 2021, representing a nearly threefold increase over four years.
- Invested Capital Dynamics
- A dramatic expansion of the invested capital base occurred in 2019, where the value escalated from 9,909 million USD to 62,514 million USD. Following this surge, the invested capital remained relatively stable, showing a slight downward trajectory to 59,700 million USD by the end of 2021.
- Turnover of Capital (TO) Performance
- The turnover ratio experienced a severe decline in 2019, dropping from 0.57 in 2018 to 0.17. This decline is directly attributable to the surge in invested capital outpacing the growth in adjusted revenue. However, a recovery trend is evident in the subsequent years, with the ratio improving to 0.25 in 2020 and 0.27 in 2021, suggesting a gradual improvement in the efficiency of the expanded capital base in generating revenue.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Effective Cash Tax Rate (CTR)
Fiserv Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 1,797) | 1,728) | 1,565) | 1,322) | 1,176) | |
| Add: Cash operating taxes2 | 775) | 278) | 255) | 288) | 471) | |
| Net operating profit before taxes (NOPBT) | 2,572) | 2,005) | 1,820) | 1,610) | 1,646) | |
| Tax Rate | ||||||
| CTR3 | 30.12% | 13.84% | 14.01% | 17.87% | 28.58% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Accenture PLC | 20.47% | — | — | — | — | |
| Adobe Inc. | 10.28% | 9.63% | — | — | — | |
| AppLovin Corp. | 68.18% | — | — | — | — | |
| Cadence Design Systems Inc. | 13.59% | — | — | — | — | |
| Datadog Inc. | 1.83% | — | — | — | — | |
| International Business Machines Corp. | 33.45% | — | — | — | — | |
| Intuit Inc. | 20.15% | — | — | — | — | |
| Microsoft Corp. | 13.05% | — | — | — | — | |
| Oracle Corp. | 13.28% | — | — | — | — | |
| Palantir Technologies Inc. | — | — | — | — | — | |
| Palo Alto Networks Inc. | 8.83% | — | — | — | — | |
| Salesforce Inc. | 6.83% | — | — | — | — | |
| ServiceNow Inc. | 5.03% | — | — | — | — | |
| Synopsys Inc. | 18.39% | 10.36% | — | — | — | |
| Workday Inc. | 19.25% | — | — | — | — | |
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 775 ÷ 2,572 = 30.12%
4 Click competitor name to see calculations.
The effective cash tax rate (CTR) exhibited significant volatility between 2017 and 2021, characterized by a multi-year decline followed by a sharp escalation in the final period. While Net Operating Profit Before Taxes (NOPBT) demonstrated a consistent upward trajectory from 2018 onward, the cash tax burden did not scale proportionally with earnings until 2021.
- Cash Tax Rate Trajectory
- A marked contraction in the CTR is observed from 2017 to 2020, where the rate fell from 28.58% to a low of 13.84%. This period was defined by a reduction in actual cash operating taxes, which decreased from 471 million USD in 2017 to 278 million USD by 2020, despite an overall increase in NOPBT during the same timeframe.
- Operating Profit and Tax Divergence
- Between 2018 and 2020, a divergence is noted between profitability and tax outflows. NOPBT grew from 1,610 million USD to 2,005 million USD, yet cash operating taxes remained relatively stagnant, fluctuating between 255 million USD and 288 million USD. This divergence resulted in the CTR reaching its lowest point in 2020.
- Fiscal Impact in 2021
- A substantial reversal in the tax trend occurred in 2021. Cash operating taxes surged to 775 million USD, representing a nearly threefold increase over the previous year. Although NOPBT reached a period high of 2,572 million USD, the rapid increase in tax payments drove the CTR to 30.12%, the highest level recorded in the analyzed five-year period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?