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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Honeywell International Inc. pages available for free this week:
- Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
Honeywell International Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates fluctuations in the Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both exhibit changes over the five-year span, impacting the overall ROIC performance.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT began at US$5,961 million in 2021, decreased to US$5,460 million in 2022, and then recovered to US$5,956 million in 2023. A slight increase to US$5,978 million was observed in 2024, followed by a decrease to US$5,535 million in 2025. This indicates a generally stable, but ultimately declining, profitability trend over the period.
- Invested Capital
- Invested capital experienced a minor decrease from US$48,349 million in 2021 to US$47,332 million in 2022. It then increased to US$48,147 million in 2023 before a substantial rise to US$60,349 million in 2024. This upward trend continued into 2025, reaching US$61,387 million. The significant increases in invested capital in the later years suggest increased investment in operations or acquisitions.
- Return on Invested Capital (ROIC)
- ROIC began at 12.33% in 2021, decreased to 11.54% in 2022, and then rose to 12.37% in 2023. A notable decline was observed in 2024, with ROIC falling to 9.91%. This downward trend continued in 2025, with ROIC reaching 9.02%. The decrease in ROIC in the latter years, despite increasing NOPAT in 2023 and 2024, is primarily attributable to the more substantial growth in invested capital. This suggests that while the company is generating profit, it is requiring increasingly larger investments to do so, resulting in diminishing returns on those investments.
In summary, while NOPAT remained relatively stable, the significant increase in invested capital led to a consistent decline in ROIC from 2023 to 2025. This trend warrants further investigation to determine the efficiency of capital allocation and the sustainability of future returns.
Decomposition of ROIC
Honeywell International Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates fluctuations in the key components driving return on invested capital. Overall, ROIC experienced a decline from 2021 to 2025, despite some intermediate improvements. A closer examination of the contributing factors reveals a complex interplay between profitability, efficiency, and tax effects.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited initial volatility, decreasing from 21.58% in 2021 to 19.83% in 2022, before recovering to 20.28% in 2023 and 20.31% in 2024. A noticeable decrease to 17.82% occurred in 2025, representing the lowest value within the observed timeframe. This suggests increasing cost pressures or declining pricing power towards the end of the period.
- Turnover of Capital (TO)
- The turnover of capital showed a slight increase from 0.72 in 2021 to 0.76 in both 2022 and 2023. However, a subsequent decline was observed, falling to 0.64 in 2024 and further to 0.62 in 2025. This indicates a decreasing efficiency in utilizing capital to generate revenue, potentially due to increased investment in assets without a corresponding increase in sales, or a slowdown in sales relative to the capital base.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate generally remained high, fluctuating between 76.75% and 82.14% throughout the period. A peak of 82.14% was reached in 2025, suggesting a higher proportion of after-tax profit retained. The initial decrease from 79.87% in 2021 to 76.75% in 2022, followed by an increase to 80.59% in 2023, and a dip to 76.40% in 2024, indicates some variability in tax planning or statutory tax rates.
- Return on Invested Capital (ROIC)
- ROIC began at 12.33% in 2021, decreased to 11.54% in 2022, and then slightly recovered to 12.37% in 2023. A more substantial decline was then observed, with ROIC falling to 9.91% in 2024 and 9.02% in 2025. This downward trend in ROIC aligns with the combined effects of the declining turnover of capital and, particularly, the decrease in operating profit margin in 2025. While the tax adjustment provided some offset, it was insufficient to counteract the negative impacts on profitability and efficiency.
In summary, the observed decline in ROIC appears to be primarily driven by a weakening of operational efficiency and profitability, particularly in the latter years of the period. The impact of the turnover of capital and operating profit margin outweigh the positive influence of the effective cash tax rate adjustment.
Operating Profit Margin (OPM)
Honeywell International Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the five-year period. Net operating profit before taxes also demonstrated variability, influencing the overall margin performance. Adjusted net sales generally increased, though a slight decrease is noted in the final year.
- Operating Profit Margin (OPM)
- The operating profit margin began at 21.58% in 2021. A decrease was observed in 2022, falling to 19.83%. The margin then recovered in subsequent years, reaching 20.28% in 2023 and 20.31% in 2024. However, a notable decline occurred in 2025, with the OPM decreasing to 17.82%.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased from US$7,464 million in 2021 to US$7,114 million in 2022. An increase followed, reaching US$7,390 million in 2023 and peaking at US$7,825 million in 2024. A substantial decrease is evident in 2025, with NOPBT falling to US$6,738 million.
- Adjusted Net Sales
- Adjusted net sales increased steadily from US$34,591 million in 2021 to US$35,868 million in 2022 and further to US$36,443 million in 2023. This upward trend continued in 2024, reaching US$38,524 million. However, a slight decrease was recorded in 2025, with adjusted net sales amounting to US$37,818 million.
The decline in operating profit margin in 2025, despite relatively stable sales, suggests potential increases in operating costs or pricing pressures. The peak in NOPBT in 2024 coincided with a high OPM, indicating efficient operations during that period. The interplay between NOPBT and adjusted net sales demonstrates the impact of profitability on overall revenue generation.
Turnover of Capital (TO)
Honeywell International Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Add: Increase (decrease) in customer advances and deferred income | ||||||
| Adjusted net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Invested capital. See details »
2 2025 Calculation
TO = Adjusted net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates fluctuations in the turnover of capital alongside changes in adjusted net sales and invested capital. Adjusted net sales exhibited a general upward trajectory from 2021 to 2024, before experiencing a slight decrease in 2025. Invested capital initially decreased between 2021 and 2022, then increased substantially in 2024 and 2025. These movements in the underlying components have impacted the calculated turnover of capital.
- Turnover of Capital (TO)
- The turnover of capital ratio began at 0.72 in 2021, increasing to 0.76 in 2022 and remaining stable at that level in 2023. A noticeable decline was then observed in 2024, with the ratio falling to 0.64. This downward trend continued into 2025, with the ratio reaching 0.62. This suggests a decreasing efficiency in generating sales from each dollar of invested capital.
- The initial increase in TO from 2021 to 2023 coincided with a modest increase in adjusted net sales and a slight decrease in invested capital. However, the subsequent decrease in TO from 2024 onwards occurred despite continued growth in adjusted net sales, indicating that the increase in invested capital outpaced the growth in sales.
- The decline in TO in the latter years of the period warrants further investigation. While sales increased, the significant rise in invested capital suggests potential inefficiencies in capital allocation or a shift towards investments with longer payback periods.
In summary, while adjusted net sales generally increased over the period, the turnover of capital decreased, particularly in the final two years. This suggests that the company is becoming less efficient at utilizing its invested capital to generate revenue, potentially due to substantial increases in capital investment.
Effective Cash Tax Rate (CTR)
Honeywell International Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited fluctuations over the five-year period. Cash operating taxes and net operating profit before taxes both demonstrate variability year-to-year, influencing the calculated rate.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate began at 20.13% in 2021, increasing to 23.25% in 2022. A subsequent decrease to 19.41% was observed in 2023, followed by another increase to 23.60% in 2024. The rate concluded the period at 17.86% in 2025. This indicates a lack of consistent directional movement, with peaks in 2022 and 2024 and troughs in 2021 and 2025.
- Cash Operating Taxes
- Cash operating taxes increased from US$1,503 million in 2021 to US$1,654 million in 2022. A decline to US$1,434 million occurred in 2023, before rising again to US$1,847 million in 2024. The final year, 2025, saw a decrease to US$1,204 million. This pattern suggests tax payments are sensitive to changes in profitability and potentially tax planning strategies.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased from US$7,464 million in 2021 to US$7,114 million in 2022. An increase to US$7,390 million was noted in 2023, followed by a further increase to US$7,825 million in 2024. The period ended with a decrease to US$6,738 million in 2025. The fluctuations in NOPBT directly impact the effective cash tax rate, as the tax expense is calculated as a percentage of this profit.
The interplay between cash operating taxes and net operating profit before taxes explains the observed volatility in the effective cash tax rate. The highest rate coincided with a period of relatively stable NOPBT and increased tax payments, while the lowest rates occurred with either lower tax payments or higher NOPBT.