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.
Return on Invested Capital (ROIC)
Monolithic Power Systems 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 456,676) | 409,452) | 416,610) | 248,394) | 160,282) | |
| Invested capital2 | 1,689,877) | 1,475,541) | 1,231,421) | 683,433) | 635,280) | |
| Performance Ratio | ||||||
| ROIC3 | 27.02% | 27.75% | 33.83% | 36.35% | 25.23% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 1.07% | -0.35% | -0.24% | 56.77% | — | |
| Analog Devices Inc. | 3.09% | 7.11% | 5.76% | 2.37% | 6.95% | |
| Applied Materials Inc. | 33.64% | 36.75% | 46.34% | 41.96% | 29.68% | |
| Broadcom Inc. | 7.86% | 23.04% | 20.75% | 10.98% | 4.78% | |
| Intel Corp. | -14.19% | -1.60% | 4.14% | 22.03% | — | |
| KLA Corp. | 36.99% | 40.63% | 42.51% | 31.64% | — | |
| Lam Research Corp. | 21.94% | 27.10% | 41.68% | 37.13% | — | |
| Marvell Technology Inc. | -3.14% | 0.17% | -1.91% | -2.75% | — | |
| Micron Technology Inc. | 1.59% | -11.18% | 17.39% | 13.01% | — | |
| NVIDIA Corp. | 89.32% | 10.91% | 53.12% | 33.44% | — | |
| Qualcomm Inc. | 26.75% | 18.69% | 45.12% | 42.56% | 27.48% | |
| Texas Instruments Inc. | 19.20% | 28.83% | 49.74% | 48.28% | — | |
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 × 456,676 ÷ 1,689,877 = 27.02%
4 Click competitor name to see calculations.
Analysis of the return on invested capital reveals a period of significant expansion in both operating profits and the capital base, resulting in a fluctuating yet generally strong return profile over the five-year period ending December 31, 2024.
- Net Operating Profit After Taxes (NOPAT)
- A consistent upward trajectory in NOPAT is evident, rising from 160,282 thousand dollars in 2020 to 456,676 thousand dollars by 2024. This trend indicates a substantial increase in the capacity to generate operating earnings after tax obligations.
- Invested Capital
- The capital base has expanded significantly, growing from 635,280 thousand dollars in 2020 to 1,689,877 thousand dollars in 2024. A notable acceleration in capital deployment occurred between 2021 and 2022, where invested capital increased by approximately 81%, suggesting a period of aggressive investment in growth or infrastructure.
- Return on Invested Capital (ROIC)
- The ROIC exhibited a peak of 36.35% in 2021, following an increase from 25.23% in 2020. Subsequently, a gradual downward trend is observed, with the ratio declining to 33.83% in 2022, 27.75% in 2023, and 27.02% in 2024. This compression indicates that while absolute profits have continued to rise, the rate of growth in operating profit has been outpaced by the expansion of the invested capital base since 2021.
Despite the recent decline from the 2021 peak, the ROIC remains above the 2020 baseline. This suggests that while the marginal efficiency of new capital deployments has decreased over the last three years, the overall ability to generate returns on invested capital remains robust.
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Decomposition of ROIC
Monolithic Power Systems Inc., decomposition of ROIC
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 »
Return on invested capital (ROIC) experienced significant volatility between 2020 and 2024, peaking in 2021 before entering a period of gradual contraction. The ROIC increased from 25.23% in 2020 to a high of 36.35% in 2021, subsequently declining to 27.02% by the end of 2024.
- Operating Profit Margin (OPM)
- A growth trend was observed from 2020 to 2022, with margins expanding from 19.51% to a peak of 28.64%. However, this trend reversed in the subsequent two years, with margins compressing to 26.12% in 2023 and 24.25% in 2024, indicating a reduction in operational profitability relative to revenue.
- Turnover of Capital (TO)
- Capital efficiency peaked in 2021 at a ratio of 1.77. A subsequent downward trajectory followed, reaching a low of 1.23 in 2023 before a slight recovery to 1.31 in 2024. This shift indicates a decrease in the effectiveness of the invested capital base in generating sales compared to the 2021 high.
- Tax Effect (1 – Effective Cash Tax Rate)
- The factor representing after-tax retention showed a general decline from 97.28% in 2020 to 81.08% in 2022. While the figure stabilized between 85.32% and 86.08% in the final two years, the overall decrease suggests a higher effective cash tax burden over the period, which exerted downward pressure on the net return.
The decomposition of the return indicates that the peak ROIC in 2021 was primarily driven by the convergence of maximum capital turnover and expanding operating margins. The subsequent decline in ROIC is attributable to a synchronized contraction in operating margins and capital efficiency, compounded by an increased effective tax rate.
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Operating Profit Margin (OPM)
Monolithic Power Systems 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 456,676) | 409,452) | 416,610) | 248,394) | 160,282) | |
| Add: Cash operating taxes2 | 78,589) | 66,188) | 97,226) | 26,365) | 4,486) | |
| Net operating profit before taxes (NOPBT) | 535,265) | 475,639) | 513,837) | 274,759) | 164,768) | |
| Revenue | 2,207,100) | 1,821,072) | 1,794,148) | 1,207,798) | 844,452) | |
| Profitability Ratio | ||||||
| OPM3 | 24.25% | 26.12% | 28.64% | 22.75% | 19.51% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 8.35% | 2.02% | 5.31% | 22.70% | — | |
| Analog Devices Inc. | 20.23% | 32.00% | 27.59% | 20.52% | 26.98% | |
| Applied Materials Inc. | 29.32% | 29.22% | 30.32% | 30.54% | 25.67% | |
| Broadcom Inc. | 26.40% | 45.19% | 42.94% | 30.96% | 17.06% | |
| Intel Corp. | -21.05% | -0.86% | 13.58% | 28.05% | — | |
| KLA Corp. | 37.54% | 39.78% | 41.73% | 36.39% | — | |
| Lam Research Corp. | 27.18% | 28.38% | 35.59% | 34.25% | — | |
| Marvell Technology Inc. | -9.58% | 4.55% | -7.16% | -8.08% | — | |
| Micron Technology Inc. | 5.03% | -36.91% | 31.43% | 23.10% | — | |
| NVIDIA Corp. | 55.52% | 15.97% | 37.99% | 28.45% | — | |
| Qualcomm Inc. | 26.67% | 21.48% | 35.06% | 30.10% | 24.17% | |
| Texas Instruments Inc. | 38.37% | 44.51% | 51.22% | 49.60% | — | |
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 ÷ Revenue
= 100 × 535,265 ÷ 2,207,100 = 24.25%
4 Click competitor name to see calculations.
Between 2020 and 2024, a sustained growth trajectory is evident in both total revenue and net operating profit before taxes (NOPBT), although the efficiency of converting revenue into operating profit has fluctuated over the period.
- Revenue Expansion
- Revenue grew consistently over the five-year period, increasing from US$ 844.45 million in 2020 to US$ 2.21 billion in 2024. The most significant acceleration in top-line growth occurred between 2021 and 2022, where revenue increased by approximately 48%.
- Net Operating Profit Trends
- NOPBT followed a general upward trend, rising from US$ 164.77 million in 2020 to US$ 535.27 million in 2024. A brief contraction in profitability was observed in 2023, with NOPBT dipping to US$ 475.64 million from the 2022 high of US$ 513.84 million, before returning to growth in the final year.
- Operating Profit Margin Analysis
- The operating profit margin experienced a period of expansion followed by a gradual compression. The margin rose from 19.51% in 2020 to a peak of 28.64% in 2022. However, a downward trend emerged thereafter, with the margin declining to 26.12% in 2023 and further to 24.25% in 2024. This indicates that while absolute operating profit reached its highest point in 2024, the operational efficiency relative to revenue has decreased since 2022.
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Turnover of Capital (TO)
Monolithic Power Systems 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 thousands) | ||||||
| Revenue | 2,207,100) | 1,821,072) | 1,794,148) | 1,207,798) | 844,452) | |
| Invested capital1 | 1,689,877) | 1,475,541) | 1,231,421) | 683,433) | 635,280) | |
| Efficiency Ratio | ||||||
| TO2 | 1.31 | 1.23 | 1.46 | 1.77 | 1.33 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Advanced Micro Devices Inc. | 0.44 | 0.39 | 0.40 | 2.65 | — | |
| Analog Devices Inc. | 0.22 | 0.28 | 0.27 | 0.16 | 0.31 | |
| Applied Materials Inc. | 1.44 | 1.49 | 1.73 | 1.57 | 1.31 | |
| Broadcom Inc. | 0.37 | 0.57 | 0.53 | 0.42 | 0.36 | |
| Intel Corp. | 0.58 | 0.59 | 0.71 | 0.89 | — | |
| KLA Corp. | 1.17 | 1.26 | 1.18 | 1.01 | — | |
| Lam Research Corp. | 0.99 | 1.14 | 1.35 | 1.24 | — | |
| Marvell Technology Inc. | 0.29 | 0.30 | 0.22 | 0.33 | — | |
| Micron Technology Inc. | 0.48 | 0.29 | 0.59 | 0.61 | — | |
| NVIDIA Corp. | 1.98 | 1.26 | 1.49 | 1.28 | — | |
| Qualcomm Inc. | 1.26 | 1.14 | 1.50 | 1.66 | 1.33 | |
| Texas Instruments Inc. | 0.60 | 0.78 | 1.14 | 1.12 | — | |
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 = Revenue ÷ Invested capital
= 2,207,100 ÷ 1,689,877 = 1.31
3 Click competitor name to see calculations.
An analysis of the relationship between revenue and invested capital reveals a period of significant operational expansion. Revenue grew from US$ 844.45 million in 2020 to US$ 2,207.10 million by the end of 2024. During this same interval, invested capital increased from US$ 635.28 million to US$ 1,689.88 million, indicating a substantial commitment of resources to support the growth in top-line performance.
- Turnover of Capital Trend
- The turnover of capital ratio experienced a peak of 1.77 in 2021, representing the highest level of asset efficiency within the observed period. This was followed by a consistent decline over the next two years, reaching a minimum of 1.23 in 2023. This downward trajectory suggests that the growth in the capital base outpaced the growth in revenue during this window.
- Capital Investment Velocity
- A notable surge in invested capital occurred between 2021 and 2022, where the amount increased by approximately 81%. While revenue also grew significantly during this time, the magnitude of the capital injection led to a reduction in the turnover ratio from 1.77 to 1.46, reflecting a temporary decrease in the efficiency of capital utilization.
- Recent Performance Recovery
- An upward inflection in the turnover ratio is observed in 2024, rising to 1.31. This indicates a recovery in capital efficiency, as the growth in revenue began to outpace the rate of increase in invested capital, signaling a more balanced alignment between resource deployment and sales generation.
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Effective Cash Tax Rate (CTR)
Monolithic Power Systems 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 456,676) | 409,452) | 416,610) | 248,394) | 160,282) | |
| Add: Cash operating taxes2 | 78,589) | 66,188) | 97,226) | 26,365) | 4,486) | |
| Net operating profit before taxes (NOPBT) | 535,265) | 475,639) | 513,837) | 274,759) | 164,768) | |
| Tax Rate | ||||||
| CTR3 | 14.68% | 13.92% | 18.92% | 9.60% | 2.72% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Advanced Micro Devices Inc. | 71.15% | 143.92% | 111.01% | 5.73% | — | |
| Analog Devices Inc. | 29.57% | 20.23% | 21.73% | 25.70% | 16.31% | |
| Applied Materials Inc. | 20.15% | 15.68% | 11.76% | 12.33% | 12.01% | |
| Broadcom Inc. | 18.61% | 10.78% | 9.59% | 16.50% | 22.68% | |
| Intel Corp. | — | — | 57.13% | 12.07% | — | |
| KLA Corp. | 15.45% | 18.86% | 13.88% | 14.30% | — | |
| Lam Research Corp. | 18.07% | 16.15% | 13.55% | 12.57% | — | |
| Marvell Technology Inc. | — | 87.58% | — | — | — | |
| Micron Technology Inc. | 33.51% | — | 6.35% | 6.93% | — | |
| NVIDIA Corp. | 18.77% | 45.94% | 6.28% | 8.10% | — | |
| Qualcomm Inc. | 20.47% | 23.51% | 14.27% | 14.84% | 14.19% | |
| Texas Instruments Inc. | 16.30% | 16.49% | 14.83% | 12.93% | — | |
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 × 78,589 ÷ 535,265 = 14.68%
4 Click competitor name to see calculations.
An examination of the financial performance from 2020 to 2024 reveals a period of significant growth in operating profitability accompanied by a corresponding increase in the cash tax burden. Net operating profit before taxes (NOPBT) experienced a substantial upward trajectory, rising from 164,768 thousand USD in 2020 to a peak of 535,265 thousand USD by 2024, despite a marginal contraction in 2023.
- Cash Operating Taxes Trend
- Cash taxes paid exhibited a sharp escalation between 2020 and 2022, increasing from 4,486 thousand USD to 97,226 thousand USD. This surge represents a significant shift in the company's cash outflows for taxation. Following this peak, a reduction occurred in 2023 to 66,188 thousand USD, followed by a moderate increase to 78,589 thousand USD in 2024.
- Effective Cash Tax Rate (CTR) Analysis
- The effective cash tax rate demonstrated high volatility during the early part of the period. Starting at a minimal 2.72% in 2020, the CTR climbed aggressively to 18.92% by 2022. This indicates a transition from a period of high tax efficiency or significant tax shielding to a more normalized tax environment.
- Tax Rate Stabilization
- Following the peak in 2022, the CTR stabilized, recording 13.92% in 2023 and 14.68% in 2024. This stabilization suggests that the company has reached a consistent cash tax baseline relative to its operating profits, moving away from the extreme lows of 2020 and 2021.
- Correlation Between Profitability and Taxation
- The growth in NOPBT and the increase in cash taxes moved in tandem from 2020 through 2022. However, the subsequent stabilization of the CTR indicates that while operating profits have continued to expand or remain high, the rate at which those profits are converted into cash tax payments has leveled off, providing more predictability for cash flow forecasting.
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