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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Micron Technology Inc. pages available for free this week:
- Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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Return on Invested Capital (ROIC)
Micron Technology Inc., ROIC calculation, comparison to benchmarks
| Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | Sep 3, 2020 | Aug 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| ROIC3 | |||||||
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Applied Materials Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
Based on: 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02), 10-K (reporting date: 2020-09-03), 10-K (reporting date: 2019-08-29).
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 exhibited notable fluctuations over the observed periods. It started at a level of 6,650 million US dollars in 2019, sharply declined to 2,891 million in 2020, then rebounded to 5,967 million in 2021. In 2022, the NOPAT peaked at 9,071 million, indicating significant operational profitability. However, this was followed by a substantial negative dip to -5,885 million in 2023, signaling an operational loss that year. By 2024, the NOPAT showed a recovery trend, albeit modest, reaching 857 million.
- Invested Capital
- The invested capital consistently increased year over year from 38,774 million US dollars in 2019 to a peak of 53,741 million in 2022. After 2022, the growth slowed considerably, with marginal increases to 53,467 million in 2023 and a slight decrease to 53,327 million in 2024. The data reflects a sustained capital investment effort predominantly through 2022, followed by stabilization.
- Return on Invested Capital (ROIC)
- The ROIC followed a trend partly mirroring the volatility observed in NOPAT. Initially, the ROIC dropped from 17.15% in 2019 to 6.84% in 2020. It then recovered to 12.88% in 2021 and peaked again at 17.20% in 2022, reflecting periods of strong operational efficiency relative to capital invested. However, this was followed by a steep decline into negative territory at -11.01% in 2023, coinciding with the negative NOPAT observed that year. By 2024, ROIC improved slightly to 1.61%, indicating a partial recovery but still far below prior positive levels.
- Summary of Trends
- The overall financial performance shows significant volatility over the six-year period. Operational profitability, as measured by NOPAT, and efficiency in capital use, indicated by ROIC, experienced pronounced swings, with exceptional growth and returns until 2022, followed by a sharp downturn in 2023. Invested capital steadily increased until 2022, suggesting ongoing investments in the business, with stabilization thereafter. The negative financial performance in 2023 suggests possible operational challenges or market difficulties, with early signs of recovery in 2024. Monitoring the subsequent periods will be critical to determine if the recovery trends in profitability and capital efficiency are sustained.
Decomposition of ROIC
Micron Technology Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Aug 29, 2024 | = | × | × | ||||
| Aug 31, 2023 | = | × | × | ||||
| Sep 1, 2022 | = | × | × | ||||
| Sep 2, 2021 | = | × | × | ||||
| Sep 3, 2020 | = | × | × | ||||
| Aug 29, 2019 | = | × | × |
Based on: 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02), 10-K (reporting date: 2020-09-03), 10-K (reporting date: 2019-08-29).
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 exhibits significant fluctuations across the periods. It started at a high level of 29.89% in 2019, sharply declined to 14.37% in 2020, then recovered to 23.15% in 2021 and increased further to 31.5% in 2022. However, a pronounced deterioration occurred in 2023, with the margin turning negative to -36.77%, followed by a partial recovery to 5.12% in 2024. This pattern indicates volatility in operating efficiency and profitability, with a substantial challenge faced in 2023.
- Turnover of Capital (TO)
- Turnover of capital has generally declined over the observed timeframe. From 0.6 in 2019, it dipped slightly to 0.51 in 2020, recovered to 0.6 in 2021, and then declined gradually to 0.58 in 2022. The most notable decrease was in 2023, where turnover halved to 0.29, with a modest rebound to 0.47 in 2024. The trend suggests a reduction in the efficiency of asset utilization, especially pronounced in the recent years.
- 1 – Effective Cash Tax Rate (CTR)
- The value for 1 minus the effective cash tax rate (CTR) remained relatively stable around the low to mid-90% range from 2019 through 2022, suggesting a consistently high cash tax rate. In 2023, this ratio reached 100%, indicating no effective cash tax benefit or possibly full tax payment. In 2024, a significant drop to 66.71% is observed, which implies either a reduced tax burden or increased tax benefits, introducing variability in tax expense management.
- Return on Invested Capital (ROIC)
- Return on invested capital follows a trend that mirrors operating profit margin movements but with smaller magnitude. Starting at 17.15% in 2019, it dropped to 6.84% in 2020, rose to 12.88% in 2021, and increased further to 17.2% in 2022, showing recovery in capital returns. However, it plummeted to a negative value of -11.01% in 2023, reflecting operational challenges and loss generation on invested capital, before recovering slightly to 1.61% in 2024. This indicates the firm’s invested capital returns have been unstable and were significantly impaired in 2023.
Operating Profit Margin (OPM)
Micron Technology Inc., OPM calculation, comparison to benchmarks
| Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | Sep 3, 2020 | Aug 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Add: Cash operating taxes2 | |||||||
| Net operating profit before taxes (NOPBT) | |||||||
| Revenue | |||||||
| Profitability Ratio | |||||||
| OPM3 | |||||||
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Applied Materials Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
Based on: 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02), 10-K (reporting date: 2020-09-03), 10-K (reporting date: 2019-08-29).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT experienced significant fluctuations over the observed periods. Starting at 6,995 million USD in 2019, it declined sharply to 3,080 million USD in 2020. In 2021, it rebounded to 6,413 million USD, followed by a peak at 9,688 million USD in 2022. However, 2023 saw a substantial reversal, with a negative NOPBT of -5,714 million USD, before a partial recovery to 1,285 million USD in 2024.
- Revenue
- Revenue showed a general upward trajectory from 2019 through 2022. It increased from 23,406 million USD in 2019 to a peak of 30,758 million USD in 2022. This was followed by a marked drop to 15,540 million USD in 2023. In 2024, revenue rebounded to 25,111 million USD, though it did not reach previous peak levels.
- Operating Profit Margin (OPM)
- The OPM mirrored the trends observed in profitability. Initially, the margin was strong at 29.89% in 2019 but decreased to 14.37% in 2020. It recovered significantly to 23.15% in 2021 and peaked at 31.50% in 2022. The margin then plummeted to a negative -36.77% in 2023, consistent with the negative profitability recorded, before partially recovering to 5.12% in 2024.
- Summary of Trends
- The data reveals volatility in both profitability and revenue across the six-year span, with the highest performance observed in 2022. The sharp decline in 2023 in all key metrics indicates a significant adverse event or operational challenge during that period. The subsequent recovery in 2024 signals a partial turnaround, though the financial performance remains below the pre-2023 peak levels.
Turnover of Capital (TO)
Micron Technology Inc., TO calculation, comparison to benchmarks
| Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | Sep 3, 2020 | Aug 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Revenue | |||||||
| Invested capital1 | |||||||
| Efficiency Ratio | |||||||
| TO2 | |||||||
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Applied Materials Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
Based on: 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02), 10-K (reporting date: 2020-09-03), 10-K (reporting date: 2019-08-29).
1 Invested capital. See details »
2 2024 Calculation
TO = Revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- Over the six-year period, revenue experiences fluctuations with an overall upward tendency until 2022, followed by a sharp decline in 2023 and a significant recovery in 2024. Specifically, revenue peaked in 2022 at 30,758 million US dollars, then dropped drastically to 15,540 million in 2023, nearly halving the previous year's figure. The following year, 2024, shows a strong rebound to 25,111 million, although not fully returning to the 2022 peak.
- Invested Capital Trends
- The invested capital steadily increases from 38,774 million US dollars in 2019 to 53,327 million in 2024. This continuous rise suggests ongoing investment and asset accumulation, with particularly noticeable increases between 2020 and 2022, slowing down somewhat in the most recent years.
- Turnover of Capital (TO) Trends
- The turnover of capital ratio, reflecting how efficiently the company uses its invested capital to generate revenue, shows some variability. Starting at 0.6 in 2019, it decreases to 0.51 in 2020, recovers to 0.6 in 2021, and slightly declines to 0.58 in 2022. In 2023, the ratio falls sharply to 0.29, corresponding with the significant drop in revenue, indicating reduced capital efficiency. The ratio improves to 0.47 in 2024 but remains below levels seen before 2023.
- Overall Insights
- The company increases its invested capital consistently over time while revenue demonstrates a more volatile pattern, with a notable dip in 2023. The sharp decline in turnover of capital in 2023 reflects challenges in converting invested capital into revenue effectively during that year. The partial recovery in 2024 suggests improving operational efficiency, although capital turnover has not yet returned to prior peak levels. The data imply a period of adjustment or external challenges around 2023, affecting revenue and asset utilization metrics.
Effective Cash Tax Rate (CTR)
Micron Technology Inc., CTR calculation, comparison to benchmarks
| Aug 29, 2024 | Aug 31, 2023 | Sep 1, 2022 | Sep 2, 2021 | Sep 3, 2020 | Aug 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| 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 | |||||||
| Advanced Micro Devices Inc. | |||||||
| Analog Devices Inc. | |||||||
| Applied Materials Inc. | |||||||
| Broadcom Inc. | |||||||
| Intel Corp. | |||||||
| KLA Corp. | |||||||
| Lam Research Corp. | |||||||
| NVIDIA Corp. | |||||||
| Qualcomm Inc. | |||||||
| Texas Instruments Inc. | |||||||
Based on: 10-K (reporting date: 2024-08-29), 10-K (reporting date: 2023-08-31), 10-K (reporting date: 2022-09-01), 10-K (reporting date: 2021-09-02), 10-K (reporting date: 2020-09-03), 10-K (reporting date: 2019-08-29).
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
- Cash operating taxes exhibited fluctuations over the analyzed periods. Starting at $345 million in 2019, the amount declined to $189 million in 2020, then increased significantly to $446 million in 2021 and further to $618 million in 2022. A notable decrease occurred in 2023, with cash operating taxes dropping to $172 million, followed by a rise to $428 million in 2024. This pattern indicates variability in tax payments, possibly influenced by changes in profitability and tax planning strategies.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT showed significant volatility during the reviewed timeframe. It began at $6,995 million in 2019 and declined sharply to $3,080 million in 2020. A strong recovery followed in 2021 and 2022, reaching $6,413 million and $9,688 million respectively. However, in 2023, the company recorded a substantial loss before taxes of -$5,714 million, indicating operational challenges or extraordinary items affecting profitability. In 2024, a partial recovery occurred with NOPBT rising to $1,285 million, though still considerably lower than the peak levels observed in 2022.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated a generally low and stable trend from 2019 to 2022, ranging between approximately 5% and 7%. Data for 2023 is missing, but in 2024 there was a marked increase in the tax rate to 33.29%. This sharp rise in 2024 may reflect changes in taxable income, tax policy adjustments, or the impact of the significant loss recorded in the previous year, possibly resulting in deferred tax liabilities being settled.
- Overall Analysis
- The company experienced considerable fluctuations in its operating profitability and tax expenses between 2019 and 2024. After a peak in profitability in 2022, the subsequent year showed a pronounced downturn, with negative operating profit before taxes and reduced cash tax payments. The increase in effective cash tax rate in 2024 amid recovering profitability suggests altered tax dynamics that could warrant further investigation. The variability in cash operating taxes and the effective tax rate, coupled with swings in operating profit, indicate a potentially volatile operating environment impacting financial performance and tax liabilities.