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)
Meta Platforms 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 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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 analysis reveals significant fluctuations in Return on Invested Capital (ROIC) over the five-year period. Net operating profit after taxes (NOPAT) and invested capital both demonstrate increasing trends, but their combined effect on ROIC is not linear.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT decreased substantially from 2021 to 2022, falling from US$40,147 million to US$20,828 million. A recovery was then observed, with NOPAT increasing to US$38,290 million in 2023, US$56,844 million in 2024, and further to US$79,619 million in 2025. This indicates a period of profitability challenges followed by a strong resurgence.
- Invested Capital
- Invested capital exhibited a consistent upward trend throughout the period. It increased from US$92,809 million in 2021 to US$101,764 million in 2022, US$141,324 million in 2023, US$165,969 million in 2024, and US$216,060 million in 2025. This suggests ongoing investment in the business operations.
- Return on Invested Capital (ROIC)
- ROIC experienced a marked decline from 43.26% in 2021 to 20.47% in 2022, mirroring the decrease in NOPAT. A subsequent recovery began in 2023, with ROIC reaching 27.09%. This upward momentum continued, with ROIC increasing to 34.25% in 2024 and 36.85% in 2025. While the ROIC has recovered significantly, it has not returned to the levels observed in 2021. The increasing invested capital base appears to be effectively leveraged by the growing NOPAT, resulting in the ROIC improvement in later years.
The period demonstrates a clear correlation between NOPAT and ROIC. The substantial increase in invested capital, while contributing to overall growth, initially diluted ROIC due to the prior decline in profitability. The recent growth in NOPAT, however, has allowed the company to improve its ROIC, though further gains may require a more substantial increase in NOPAT relative to the continued investment.
Decomposition of ROIC
Meta Platforms 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 significant fluctuations in the components contributing to the overall return on invested capital. A notable decline in profitability and capital efficiency occurred between 2021 and 2022, followed by a recovery and stabilization in subsequent years. The interplay between operating profit margin, capital turnover, and the impact of taxes is key to understanding the observed trends in ROIC.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a substantial decrease from 40.15% in 2021 to 25.55% in 2022. This represents a significant contraction in profitability. However, the margin then exhibited a recovery, reaching 34.35% in 2023 and further increasing to 42.33% in 2024 and 42.91% in 2025. This suggests successful cost management or pricing strategies in the later years of the period.
- Turnover of Capital (TO)
- The turnover of capital, a measure of capital efficiency, consistently declined from 1.27 in 2021 to 0.93 in 2025. This indicates a decreasing ability to generate sales from each unit of capital employed. While the rate of decline slowed after 2023, the overall trend suggests increasing capital intensity or potentially underutilized assets.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The factor representing the impact of taxes (1 – Effective Cash Tax Rate) decreased from 84.63% in 2021 to 69.94% in 2022, reducing the benefit from the tax shield. It then partially recovered to 82.55% in 2023 and 81.59% in 2024 before increasing substantially to 92.19% in 2025. This suggests changes in tax planning or applicable tax rates, ultimately impacting after-tax returns.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the trends in its components. A significant drop was observed from 43.26% in 2021 to 20.47% in 2022, driven by the declines in both operating profit margin and capital turnover. ROIC then increased steadily, reaching 27.09% in 2023, 34.25% in 2024, and 36.85% in 2025. The recovery in ROIC was supported by the improvement in operating profit margin and a more favorable tax impact in the later years, despite the continued decline in capital turnover.
In summary, the period began with strong returns, experienced a downturn in 2022, and then demonstrated a recovery and stabilization. While profitability improved, the decreasing capital turnover remains a point of attention. The substantial increase in the tax benefit in 2025 further contributed to the improved ROIC.
Operating Profit Margin (OPM)
Meta Platforms 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) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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 revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited significant fluctuation over the five-year period. Net operating profit before taxes also demonstrated volatility, though ultimately trending upwards. Adjusted revenue consistently increased throughout the period, providing context for the margin performance.
- Operating Profit Margin (OPM)
- The operating profit margin began at 40.15% in 2021. A substantial decrease was observed in 2022, falling to 25.55%. The margin then recovered in 2023, reaching 34.35%, and continued to improve through 2024 and 2025, attaining 42.33% and 42.91% respectively. This indicates a period of margin compression followed by a strong recovery and stabilization at a level exceeding the initial 2021 value.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased from US$47,436 million in 2021 to US$29,778 million in 2022, aligning with the decline in operating profit margin. A significant increase occurred in 2023, with NOPBT rising to US$46,385 million. This upward trend continued into 2024 and 2025, reaching US$69,671 million and US$86,364 million, respectively. The growth in NOPBT suggests improved operational efficiency or increased revenue leverage in the later years.
- Adjusted Revenue
- Adjusted revenue demonstrated consistent growth throughout the period. It increased from US$118,154 million in 2021 to US$116,539 million in 2022, then rose to US$135,051 million in 2023. Further growth was observed in 2024 and 2025, reaching US$164,598 million and US$201,274 million, respectively. This consistent revenue growth likely contributed to the recovery and stabilization of the operating profit margin.
The combination of increasing revenue and improving operating profit margin in the later years suggests a strengthening of the company’s profitability. The initial decline in margin followed by a recovery warrants further investigation to understand the underlying drivers of these changes.
Turnover of Capital (TO)
Meta Platforms Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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 revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The turnover of capital exhibits a generally declining trend over the five-year period. While adjusted revenue increased consistently, the growth in invested capital outpaced revenue growth, resulting in a decreasing ratio.
- Turnover of Capital (TO) Trend
- The turnover of capital began at 1.27 in 2021. It decreased to 1.15 in 2022, continuing downward to 0.96 in 2023. A slight recovery to 0.99 was observed in 2024, but the ratio further declined to 0.93 in 2025.
The initial decrease in the turnover of capital from 2021 to 2023 suggests that the company was becoming less efficient in generating revenue from its invested capital. The modest increase in 2024 did not reverse this trend, and the subsequent decline in 2025 indicates continued pressure on capital efficiency.
- Relationship to Revenue and Invested Capital
- Adjusted revenue demonstrated consistent year-over-year growth throughout the period. However, invested capital increased at a faster rate from 2021 to 2023, contributing to the initial decline in the turnover of capital. While revenue growth accelerated in 2024 and 2025, invested capital continued to grow, albeit at a potentially slower pace, preventing a substantial recovery in the ratio.
The observed trend warrants further investigation into the drivers of invested capital growth. Understanding whether these investments are strategic and expected to yield future improvements in revenue generation is crucial. The declining turnover of capital suggests a potential need to optimize capital allocation strategies to enhance efficiency.
Effective Cash Tax Rate (CTR)
Meta Platforms 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 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Netflix Inc. | ||||||
| Trade Desk Inc. | ||||||
| Walt Disney Co. | ||||||
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 considerable fluctuation over the five-year period. Initial values increased significantly before stabilizing and then declining substantially. Cash operating taxes demonstrated an initial increase, followed by a decrease and then a substantial rise, before concluding with a decrease.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate began at 15.37% in 2021. A marked increase was observed in 2022, reaching 30.06%. The rate then decreased to 17.45% in 2023 and remained relatively stable at 18.41% in 2024. A significant decline occurred in 2025, with the rate falling to 7.81%. This suggests a substantial change in the company’s tax position or the impact of tax planning strategies in the final year.
- Cash Operating Taxes
- Cash operating taxes increased from US$7,290 million in 2021 to US$8,950 million in 2022. A subsequent decrease to US$8,095 million was noted in 2023. A substantial increase followed in 2024, reaching US$12,827 million. Finally, cash operating taxes decreased to US$6,745 million in 2025. This movement correlates with the fluctuations in net operating profit before taxes and the effective cash tax rate.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased from US$47,436 million in 2021 to US$29,778 million in 2022, representing a significant decline. A recovery was observed in 2023, with NOPBT rising to US$46,385 million. Further growth occurred in 2024, reaching US$69,671 million, and continued into 2025, with NOPBT reaching US$86,364 million. The increasing trend in NOPBT from 2023 onwards likely contributed to the stabilization and subsequent decline in the effective cash tax rate.
The interplay between net operating profit before taxes and cash operating taxes appears to be the primary driver of the observed changes in the effective cash tax rate. The substantial decrease in the effective cash tax rate in 2025 warrants further investigation to determine the underlying causes, such as changes in tax laws, jurisdictional shifts in profitability, or the utilization of tax credits or deductions.