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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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
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Return on Invested Capital (ROIC)
Linde plc, 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 | ||||||
| Sherwin-Williams Co. | ||||||
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 NOPAT shows a consistent upward trend over the five-year period. It increased from 2,699 million US dollars in 2020 to 3,800 million in 2021, indicating a strong performance improvement. The growth slowed slightly between 2021 and 2022, with NOPAT reaching 3,833 million. However, a significant jump occurred in 2023, where NOPAT rose to 6,386 million. This positive momentum continued into 2024 with an increase to 6,814 million, reflecting enhanced operational profitability in recent years.
- Invested capital
- Invested capital experienced a decline from 78,771 million US dollars in 2020 to 72,560 million in 2021, followed by a marginal decrease to 72,341 million in 2022. From 2022 onwards, the invested capital showed a slow but steady increase, reaching 73,409 million in 2023 and 74,884 million in 2024. Overall, the invested capital has remained relatively stable with slight fluctuations over the five-year span.
- Return on invested capital (ROIC)
- ROIC demonstrated a marked improvement over the period. Starting at a low base of 3.43% in 2020, the return increased significantly to 5.24% in 2021 and stabilized slightly at 5.3% in 2022. The years 2023 and 2024 saw a notable rise in ROIC to 8.7% and 9.1%, respectively, suggesting that the company has enhanced its efficiency in generating returns from its invested capital, consistent with the growth in NOPAT.
- Overall analysis
- The data indicate a strengthening operational profitability with NOPAT more than doubling from 2020 to 2024. The relatively stable invested capital combined with the increased NOPAT has driven a significant improvement in ROIC. The sharp rise from 2022 onwards highlights improved capital utilization and operational efficiency. The trends suggest a positive trajectory in financial performance and capital management over the period analyzed.
Decomposition of ROIC
Linde plc, 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 shows a positive and consistent upward trend over the observed period. Starting at 14.48% in 2020, it increased to 17.33% in 2021, slightly declined to 16.99% in 2022, then sharply rose to 25.36% in 2023, and further increased to 27.32% in 2024. This indicates a significant improvement in operational efficiency and profitability over the years, particularly marked by the sharp gains in the last two years.
- Turnover of Capital (TO)
- Turnover of Capital displays a moderate improvement from 0.35 in 2020 to 0.46 in 2022, suggesting enhanced utilization of capital resources in generating sales. However, this ratio slightly declined to 0.45 in 2023 and further to 0.44 in 2024, indicating a marginal decrease in capital efficiency in the most recent periods.
- 1 – Effective Cash Tax Rate (CTR)
- The metric representing one minus the effective cash tax rate has fluctuated over time, with values mostly above 67%, indicating a relatively stable but high impact of cash taxes. It increased from 68.44% in 2020 to a peak of 71.2% in 2021, dropped to 67.63% in 2022, and then rose sharply to 76.64% in 2023, maintaining a similar level at 75.55% in 2024. This suggests variability in tax rates or tax efficiency, with a notably higher effective cash tax component in the last two years.
- Return on Invested Capital (ROIC)
- ROIC shows a steady and marked improvement throughout the period. From a low base of 3.43% in 2020, it increased to 5.24% in 2021 and remained relatively stable at 5.3% in 2022. A significant rise is observed in 2023 to 8.7%, with a further increase to 9.1% in 2024. This trend highlights enhanced profitability and better returns generated from the invested capital over time.
Operating Profit Margin (OPM)
Linde plc, 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) | ||||||
| Sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Sherwin-Williams Co. | ||||||
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 ÷ Sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes demonstrates a consistent upward trajectory from 2020 through 2024. Starting at $3,944 million in 2020, it increased significantly to $9,019 million by the end of 2024. The most notable growth occurred between 2022 and 2023, where the NOPBT rose sharply from $5,669 million to $8,332 million. This indicates a strong improvement in profitability before tax obligations over the period.
- Sales
- Sales figures also show an increasing trend from 2020 to 2024 but with less volatility than NOPBT. Sales rose from $27,243 million in 2020 to $33,005 million in 2024. The growth pace was steady from 2020 through 2022, followed by a small decline in 2023 to $32,854 million, and a slight recovery in 2024. This suggests relatively stable revenue generation with minor fluctuations in the last two years.
- Operating profit margin (OPM)
- The operating profit margin reveals substantial improvement over the five-year period. Starting at 14.48% in 2020, the margin increased steadily, jumping notably to 25.36% in 2023 and further to 27.32% in 2024. The margin growth outpaces sales growth, indicating improvements in operational efficiency, cost control, or pricing strategy, which positively influenced profitability.
- Overall trends and insights
- The company demonstrates a robust enhancement in operating profitability from 2020 to 2024. Despite relatively moderate sales growth and small fluctuations, the operating profit margin and NOPBT have increased markedly, especially after 2022. This suggests successful management actions that improved operational leverage, enabling the company to convert a higher proportion of sales into profit. The strong margin expansion and NOPBT growth, even with sales stabilization, reflect strengthened cost management or higher value-added activities contributing to overall financial health and performance.
Turnover of Capital (TO)
Linde plc, TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Sherwin-Williams Co. | ||||||
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 = Sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Sales Trend
- Sales have shown a consistent upward trajectory from 2020 through 2024. The value increased from US$27,243 million in 2020 to US$33,005 million in 2024. The most substantial absolute increase occurred between 2020 and 2021, with a growth of approximately US$3,550 million, followed by smaller increments in the years thereafter. Notably, there was a slight decline in sales from 2022 to 2023 before a marginal recovery in 2024.
- Invested Capital Trend
- Invested capital demonstrates a declining pattern from 2020 to 2022, decreasing from US$78,771 million to US$72,341 million. However, from 2022 onward, there is a gradual increase in invested capital, reaching US$74,884 million in 2024. The reduction observed in the initial years may indicate asset optimization or divestment, followed by reinvestment or expansion activities in the later years.
- Turnover of Capital (TO) Ratio
- The turnover of capital ratio exhibits a notable improvement from 0.35 in 2020 to a peak of 0.46 in 2022, reflecting enhanced efficiency in utilizing invested capital to generate sales. After 2022, there is a slight decline in the ratio, descending to 0.44 by 2024. This decline suggests a modest reduction in capital efficiency despite the increase in sales and invested capital.
- Overall Insights
- The data collectively indicate an overall positive sales growth with a phase of capital reduction followed by reinvestment. Efficiency in capital utilization improved significantly during 2021-2022, though this trend slightly reversed in the following years. The interplay between rising sales and fluctuations in invested capital suggests strategic adjustments in capital management. The slight dip in turnover ratios in the last two reported years may warrant analysis to understand impacts on operational efficiency or capital deployment strategies.
Effective Cash Tax Rate (CTR)
Linde plc, CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Sherwin-Williams Co. | ||||||
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 have shown a consistent upward trend over the five-year period. Starting at $1,245 million in 2020, the amount increased each year, reaching $2,205 million in 2024. This represents a significant rise, nearly doubling the amount over the period, indicating either an increase in taxable income or changes in tax obligations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrates a strong upward trajectory throughout the same timeframe. Beginning at $3,944 million in 2020, NOPBT increased steadily to $9,019 million by 2024. The most notable jump occurred between 2022 and 2023, where the figure rose substantially from $5,669 million to $8,332 million, suggesting either enhanced operating efficiency, higher revenues, or both.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate reflects some variability, with a peak of 32.37% in 2022 and a low of 23.36% in 2023. The rate started at 31.56% in 2020, decreased to 28.8% in 2021, then increased again in 2022 before dropping to its lowest point in 2023 and slightly rising in 2024 to 24.45%. The downward trend in the later years indicates improved tax efficiency or utilization of tax planning strategies, as the company managed to reduce its cash tax burden relative to its operating profit.
- Overall Insights
- Over the five-year period, the company experienced robust growth in its operating profits before taxes, which more than doubled. Despite rising absolute cash tax payments aligning with the profit growth, the effective cash tax rate showed a decreasing trend in the last two years, which may reflect strategic tax management or changes in the tax environment. The combination of these trends suggests strong financial performance coupled with effective tax planning.