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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Monolithic Power Systems Inc. pages available for free this week:
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value (EV)
- Present Value of Free Cash Flow to Equity (FCFE)
- Net Profit Margin since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
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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 | ||||||
| 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. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 net operating profit after taxes shows a strong upward trend overall, increasing significantly from approximately 160 million USD in 2020 to an estimated 457 million USD in 2024. There was a noticeable acceleration in growth from 2021 to 2022, where NOPAT rose from about 248 million USD to over 416 million USD. However, a slight decline is observed in 2023 before rebounding in 2024, indicating some volatility but sustained overall growth.
- Invested capital
- Invested capital has demonstrated a consistent increase each year, rising from around 635 million USD in 2020 to nearly 1.69 billion USD in 2024. The most significant expansions occurred between 2021 and 2024, where the capital more than doubled. This growth suggests increasing investments to support business operations or expansion initiatives.
- Return on invested capital (ROIC)
- The return on invested capital exhibits a peak in 2021 at over 36%, following which it declines steadily over the next three years to about 27% by 2024. Despite this downward trend, the ROIC remains relatively high, above 25%, indicating efficient use of capital, though the decreasing rate suggests that the growth in invested capital may be outpacing profit generation.
- Summary of Trends
- The data reflects robust profit growth alongside substantial increases in invested capital. While profitability measured by NOPAT has generally risen, the efficiency of capital utilization as reflected in ROIC has diminished since its peak in 2021. This pattern may imply that although the company is expanding its asset base and generating higher profits, the incremental returns on new investments are declining. Monitoring this trend will be important for assessing future capital allocation effectiveness.
Decomposition of ROIC
Monolithic Power Systems Inc., 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 displays an overall upward trend from 19.51% in 2020 to a peak of 28.64% in 2022. After reaching this high point, the margin declines to 26.12% in 2023 and further to 24.25% in 2024. This suggests increasing operating efficiency initially, with some contraction in profitability margins in the subsequent years.
- Turnover of Capital (TO)
- The turnover of capital ratio improves from 1.33 in 2020 to 1.77 in 2021, indicating enhanced effectiveness in utilizing capital to generate revenue. However, from 2022 onwards, the ratio declines to 1.46 and then further drops to 1.23 in 2023, before a slight recovery to 1.31 in 2024. This pattern may reflect challenges in maintaining asset utilization efficiency after 2021.
- 1 – Effective Cash Tax Rate (CTR)
- This metric shows a decreasing trend from 97.28% in 2020 to 81.08% in 2022, suggesting a reduction in the proportion of profits paid as cash taxes during this period. It rises again slightly to 86.08% in 2023 and slightly decreases to 85.32% in 2024, indicating some variability but remaining below the initial high level.
- Return on Invested Capital (ROIC)
- The return on invested capital increases substantially from 25.23% in 2020 to a peak of 36.35% in 2021, pointing to highly efficient use of invested capital at that time. Afterward, it decreases to 33.83% in 2022 and more sharply to 27.75% and 27.02% in 2023 and 2024 respectively. Despite the decline, ROIC levels in the later years remain above the 2020 baseline, suggesting continued relatively strong capital performance.
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 | ||||||
| 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. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits a consistent upward trend over the years, starting at 164,768 thousand US$ in 2020 and increasing to 535,265 thousand US$ by 2024. The most significant increase occurred between 2021 and 2022, where the NOPBT almost doubled, rising from 274,759 to 513,837 thousand US$. A slight decline is observed in 2023, with a value of 475,639 thousand US$, before recovering to the highest reported figure in 2024.
- Revenue
- Revenue shows a robust and steady growth trajectory, expanding from 844,452 thousand US$ in 2020 to 2,207,100 thousand US$ in 2024. The largest annual increase is noted between 2021 and 2022, where revenue surged by nearly 48%, followed by more modest yet consistent growth in subsequent years. This growth pattern underlines a strong market demand and business expansion throughout the period.
- Operating Profit Margin (OPM)
- The operating profit margin demonstrates an initial upward trend, increasing from 19.51% in 2020 to a peak of 28.64% in 2022. Post-2022, the margin declines to 26.12% in 2023 and further to 24.25% in 2024. Although the margin decreases after the peak, it remains substantially higher than the initial value in 2020, indicating improved operational efficiency overall despite some contraction in profitability ratio in the later years.
- Overall Insights
- The data reflects strong financial performance with significant revenue and profit growth over the five-year span. The peak in profitability margin in 2022 suggests highly effective cost management or favorable operational conditions during that year. The slight reduction in margin afterward, despite revenue increasing, could indicate rising costs or increased investments. Nevertheless, the company's ability to grow net operating profit before taxes consistently highlights solid operational leverage and scalable profitability.
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 | ||||||
| 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. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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
= ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- The revenue demonstrates a consistent upward trajectory over the five-year period. It increased from 844,452 thousand US dollars in 2020 to 2,207,100 thousand US dollars in 2024. The rate of growth was particularly significant between 2021 and 2022, followed by a slight deceleration in growth pace in 2023 and a renewed acceleration in 2024.
- Invested Capital Trends
- Invested capital shows a continuous increase throughout the period, rising from 635,280 thousand US dollars in 2020 to 1,689,877 thousand US dollars in 2024. The most substantial increment occurred between 2021 and 2022, indicating significant capital deployment during that timeframe. Growth in invested capital continued steadily in the subsequent years.
- Turnover of Capital (TO) Analysis
- The turnover of capital ratio exhibits variability across the years. It improved from 1.33 in 2020 to a peak of 1.77 in 2021, suggesting enhanced efficiency in generating revenue relative to invested capital during that year. However, the ratio declined to 1.46 in 2022 and further dropped to 1.23 in 2023, indicating a diminishing efficiency in capital utilization despite growing revenue and capital base. The ratio then slightly rebounded to 1.31 in 2024, implying some recovery in capital turnover efficiency.
- Overall Insights
- The company has shown strong growth in both revenue and invested capital over the analyzed period. However, the turnover of capital ratio suggests that the rate of revenue growth has not consistently kept pace with the expanded invested capital, especially after 2021. The initial improvement in efficiency was followed by a decline, with a minor recovery in the final year. This pattern may indicate challenges in maintaining high capital productivity amidst rapid expansion or increased capital investments.
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 | ||||||
| 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. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
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.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits a general upward trend from 2020 through 2024. Starting at approximately 164.8 million USD in 2020, it increased significantly to around 274.8 million USD in 2021. This growth accelerated further in 2022, reaching about 513.8 million USD. A slight decline is observed in 2023 with NOPBT decreasing to approximately 475.6 million USD; however, it rebounds in 2024 to about 535.3 million USD. This pattern indicates strong profitability with some fluctuation in the middle years.
- Cash Operating Taxes
- Cash operating taxes increased markedly from 2020 to 2022, beginning at roughly 4.5 million USD, rising substantially to 26.4 million USD in 2021, and peaking at approximately 97.2 million USD in 2022. Subsequently, this figure fell to around 66.2 million USD in 2023 before increasing again to about 78.6 million USD in 2024. The fluctuations in cash operating taxes generally mirror changes in profitability but with comparatively sharper percentage changes, suggesting variability in tax obligations or tax planning strategies over the period.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrates an increasing trend from 2020 through 2022, starting at a low 2.72%, then increasing to 9.6% in 2021, and peaking at 18.92% in 2022. Thereafter, the rate decreases to 13.92% in 2023 and slightly rises to 14.68% in 2024. This pattern denotes that while the cash taxes paid increased substantially in earlier years in line with profit growth, the tax burden, relative to profits, peaked in 2022 and stabilized at a moderate rate thereafter.