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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Gilead Sciences Inc. pages available for free this week:
- Income Statement
- Analysis of Liquidity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Return on Assets (ROA) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Gilead Sciences Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| 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. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 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 demonstrates significant volatility over the observed period. Starting at a relatively low level in 2020, it surged sharply in 2021, indicating a strong operational performance that year. However, there was a notable decline in 2022, followed by a partial recovery in 2023. In the latest period, the metric turned negative, which suggests operational challenges or extraordinary losses affecting profitability.
- Invested Capital
- The invested capital shows a gradual but consistent decrease from 2020 through 2024. This reduction in invested capital suggests that the company may be divesting assets, reducing capital expenditure, or optimizing asset utilization over time. Despite fluctuations in profitability, the capital base has been steadily trimmed.
- Return on Invested Capital (ROIC)
- Return on invested capital displays a notable pattern closely aligned with NOPAT trends. It rises markedly in 2021 to a high double-digit percentage, reflecting improved efficiency and profitability relative to the capital invested. Nevertheless, the following years see a decline in ROIC, with a mild rebound in 2023 before falling into negative territory by 2024. The negative ROIC in the final period highlights a deterioration in the company's ability to generate profit from its invested capital.
- Overall Analysis
- The financial data portrays a company experiencing periods of strong profitability and capital efficiency, followed by steep declines, culminating in a challenging recent period marked by losses and negative returns on invested capital. The consistent reduction in invested capital suggests strategic shifts or asset realignments which have not been sufficient to stabilize profit and return metrics. Continued observation and analysis would be advisable to understand underlying causes and to anticipate future performance trends.
Decomposition of ROIC
Gilead Sciences Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
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 exhibited notable fluctuations over the observed period. It increased sharply from 10.83% in 2020 to a peak of 34.43% in 2021, before declining to 24.71% in 2022. This was followed by a moderate recovery to 27.67% in 2023, then a steep drop to 4.92% in 2024. The trend indicates a period of strong profitability in 2021 and 2023, with significant volatility and a marked decline in the most recent year.
- Turnover of Capital (TO)
- The turnover of capital ratio displayed a gradual and consistent upward trend throughout the period, increasing from 0.48 in 2020 to 0.65 in 2024. This steady improvement suggests enhanced efficiency in the company's use of capital to generate revenue over time.
- 1 – Effective Cash Tax Rate (CTR)
- This metric showed considerable variability, starting at 23.99% in 2020 and rising significantly to 74.16% in 2021. It then decreased to 55.3% in 2022, increased again to 68.25% in 2023, but experienced an unusual and substantial negative value of -56.51% in 2024. The negative value in the final year indicates extraordinary tax circumstances, likely linked to tax credits, deferred tax assets, or other accounting adjustments.
- Return on Invested Capital (ROIC)
- The return on invested capital improved from a low base of 1.26% in 2020 to a high of 14.43% in 2021. Subsequently, it decreased to 8.09% in 2022, rose again to 11.1% in 2023, but fell into negative territory at -1.8% in 2024. This trend follows a similar pattern to the operating profit margin, reflecting fluctuating profitability and efficiency in capital deployment, with a noteworthy deterioration in the most recent period.
Operating Profit Margin (OPM)
Gilead Sciences Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Product sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Product sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes experienced significant fluctuations over the five-year period. Starting at $2,639 million in 2020, it surged dramatically in 2021 to $9,300 million, indicating a substantial improvement in operational profitability. However, this was followed by a notable decline to $6,668 million in 2022. The profitability rebounded somewhat in 2023, reaching $7,453 million, before dropping sharply to $1,409 million in 2024, showing considerable volatility and a significant decrease from previous highs.
- Product Sales
- Product sales showed a generally stable yet gradually increasing trend. From $24,355 million in 2020, sales increased to $27,008 million in 2021, remaining relatively flat in 2022 at $26,982 million and 2023 at $26,934 million. In 2024, there was a noticeable increase to $28,610 million. Overall, sales growth appears modest with minor fluctuations, indicating steady market demand or pricing strategies.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited significant variability. It improved substantially from 10.83% in 2020 to a peak of 34.43% in 2021, reflecting enhanced operational efficiency or cost management during that year. However, it then decreased to 24.71% in 2022 and slightly increased to 27.67% in 2023. By 2024, the margin had sharply declined to 4.92%, which aligns with the substantial reduction in net operating profit before taxes during the same period. This suggests increased costs or reduced profitability despite higher sales.
- Summary Insight
- Overall, while product sales have grown steadily over the years, profitability indicators have shown considerable volatility. The sharp rise and subsequent decline in net operating profit before taxes, along with fluctuating operating profit margins, point to varying cost structures, pricing pressures, or operational challenges affecting profitability. The marked decrease in profitability metrics in 2024, despite increased sales, may warrant further investigation into expense management or market conditions impacting earnings quality.
Turnover of Capital (TO)
Gilead Sciences Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Product sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Product sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Product Sales
- Product sales exhibit a generally positive trend over the observed periods. Starting at $24,355 million in 2020, sales increased significantly to $27,008 million in 2021, followed by a marginal decrease to $26,982 million in 2022. The figures then stabilized around $26,934 million in 2023 before rising again to $28,610 million in 2024, indicating sustained growth and recovery after a slight plateau.
- Invested Capital
- Invested capital shows a consistent downward trend over the five years analyzed. Beginning at $50,285 million in 2020, the invested capital decreased annually, reaching $44,333 million in 2024. This steady reduction suggests a possible divestment or more efficient capital management strategy over the period.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrates an improving efficiency in utilizing invested capital to generate sales. Starting from 0.48 in 2020, the ratio increased to 0.57 in 2021, and further rose slightly to 0.59 in both 2022 and 2023. By 2024, the turnover of capital reached 0.65, the highest value in the timeframe, indicating enhanced productivity and asset utilization.
- Overall Analysis
- The combination of rising product sales and decreasing invested capital, accompanied by an increasing turnover of capital ratio, suggests an improvement in operational efficiency and capital management. The company appears to be able to generate higher sales volumes while employing less invested capital over time. This trend points to enhanced profitability potential and effective use of resources.
Effective Cash Tax Rate (CTR)
Gilead Sciences Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| 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. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibit variability over the five-year period. Starting at $2,006 million in 2020, the figure increased to $2,403 million in 2021, followed by a further rise to $2,981 million in 2022. However, in subsequent years, cash operating taxes decreased to $2,366 million in 2023 and further to $2,205 million in 2024. The overall pattern shows an initial upward trend until 2022, succeeded by a downward trend through 2024.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes displays significant fluctuations. In 2020, NOPBT stood at $2,639 million, with a substantial surge to $9,300 million in 2021. This was followed by a decline to $6,668 million in 2022 and a modest recovery to $7,453 million in 2023. In 2024, there is a pronounced decrease to $1,409 million, the lowest point in the five-year span after the initial year. This reveals considerable volatility, with the peak in 2021 and a sharp fall by 2024.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibits pronounced variability and an atypical spike in the final year. In 2020, the rate was notably high at 76.01%, then dropped sharply to 25.84% in 2021. It increased moderately to 44.7% in 2022 before decreasing again to 31.75% in 2023. In 2024, the tax rate escalates dramatically to 156.51%, indicating that the cash taxes exceeded the profit before taxes substantially. This suggests unusual tax circumstances or accounting adjustments in 2024, diverging significantly from prior years.
- Overall Observations
- The period from 2020 to 2024 is characterized by considerable fluctuations in both profitability and taxation metrics. The net operating profit before taxes peaked in 2021 but subsequently declined, with a sharp drop in 2024. Cash operating taxes generally followed an upward trend until 2022, then declined through 2024. The effective cash tax rate fluctuated around moderate levels prior to 2024 but increased anomalously in the final year. This combination points to instability in operating profitability and an unusual tax impact in 2024 that warrants further investigation.