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)
Palo Alto Networks Inc., ROIC calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,501,707) | 2,610,314) | 1,717,615) | 845,076) | 696,422) | 536,434) | |
| Invested capital2 | 10,841,500) | 9,129,500) | 8,704,600) | 7,360,500) | 7,029,200) | 3,879,623) | |
| Performance Ratio | |||||||
| ROIC3 | 23.08% | 28.59% | 19.73% | 11.48% | 9.91% | 13.83% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Accenture PLC | — | 21.14% | 23.93% | 25.83% | 26.30% | 24.83% | |
| Adobe Inc. | — | 21.68% | 26.93% | 29.44% | 21.67% | 19.74% | |
| Autodesk Inc. | 6.73% | 19.02% | 14.20% | 14.55% | 21.62% | 0.93% | |
| Cadence Design Systems Inc. | — | 24.69% | 23.98% | 24.26% | 25.05% | 19.42% | |
| CrowdStrike Holdings Inc. | 11.73% | 15.20% | 12.03% | 9.74% | 20.78% | — | |
| International Business Machines Corp. | — | 7.63% | -0.68% | 3.78% | 3.44% | 7.64% | |
| Intuit Inc. | 10.69% | 8.53% | 9.30% | 17.64% | 20.65% | 34.71% | |
| Microsoft Corp. | 25.70% | 28.71% | 36.59% | 45.56% | 43.43% | 38.28% | |
| Oracle Corp. | 11.71% | 10.34% | 9.70% | 17.55% | 11.53% | 15.18% | |
| Salesforce Inc. | 5.69% | 3.00% | 5.42% | 8.23% | 5.09% | 8.97% | |
| ServiceNow Inc. | — | 22.31% | 17.69% | 18.88% | 20.49% | 19.87% | |
| Synopsys Inc. | — | 11.03% | 17.54% | 11.52% | 11.63% | 8.35% | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,501,707 ÷ 10,841,500 = 23.08%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Palo Alto Networks Inc. ROIC improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024 not reaching 2022 level. |
Decomposition of ROIC
Palo Alto Networks Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the decrease in return on invested capital (ROIC) over 2024 year is the increase in effective cash tax rate (CTR).
Operating Profit Margin (OPM)
Palo Alto Networks Inc., OPM calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,501,707) | 2,610,314) | 1,717,615) | 845,076) | 696,422) | 536,434) | |
| Add: Cash operating taxes2 | 384,452) | 76,038) | 68,221) | 81,834) | 57,464) | 32,566) | |
| Net operating profit before taxes (NOPBT) | 2,886,159) | 2,686,352) | 1,785,836) | 926,910) | 753,886) | 569,000) | |
| Revenue | 8,027,500) | 6,892,700) | 5,501,500) | 4,256,100) | 3,408,400) | 2,899,600) | |
| Add: Increase (decrease) in deferred revenue | 2,184,100) | 2,302,400) | 1,970,000) | 1,213,800) | 921,500) | 609,400) | |
| Adjusted revenue | 10,211,600) | 9,195,100) | 7,471,500) | 5,469,900) | 4,329,900) | 3,509,000) | |
| Profitability Ratio | |||||||
| OPM3 | 28.26% | 29.22% | 23.90% | 16.95% | 17.41% | 16.22% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Accenture PLC | — | 14.56% | 15.48% | 16.65% | 16.59% | 14.89% | |
| Adobe Inc. | — | 35.97% | 36.56% | 40.89% | 34.42% | 31.93% | |
| Autodesk Inc. | 15.49% | 31.35% | 22.23% | 23.23% | 30.50% | 3.88% | |
| Cadence Design Systems Inc. | — | 31.47% | 32.28% | 28.51% | 27.83% | 21.81% | |
| CrowdStrike Holdings Inc. | 18.67% | 20.92% | 23.25% | 20.74% | 18.60% | — | |
| International Business Machines Corp. | — | 17.57% | 2.98% | 10.91% | 9.64% | 15.99% | |
| Intuit Inc. | 24.30% | 23.08% | 21.00% | 28.02% | 29.42% | 28.33% | |
| Microsoft Corp. | 45.67% | 43.20% | 43.28% | 43.49% | 38.29% | 36.61% | |
| Oracle Corp. | 30.01% | 26.91% | 24.11% | 40.03% | 34.29% | 34.21% | |
| Salesforce Inc. | 17.64% | 10.25% | 16.40% | 20.24% | 15.63% | 19.12% | |
| ServiceNow Inc. | — | 18.76% | 14.87% | 17.20% | 17.77% | 14.93% | |
| Synopsys Inc. | — | 20.63% | 27.91% | 22.47% | 22.28% | 17.29% | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenue
= 100 × 2,886,159 ÷ 10,211,600 = 28.26%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Palo Alto Networks Inc. OPM improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024. |
Turnover of Capital (TO)
Palo Alto Networks Inc., TO calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Revenue | 8,027,500) | 6,892,700) | 5,501,500) | 4,256,100) | 3,408,400) | 2,899,600) | |
| Add: Increase (decrease) in deferred revenue | 2,184,100) | 2,302,400) | 1,970,000) | 1,213,800) | 921,500) | 609,400) | |
| Adjusted revenue | 10,211,600) | 9,195,100) | 7,471,500) | 5,469,900) | 4,329,900) | 3,509,000) | |
| Invested capital1 | 10,841,500) | 9,129,500) | 8,704,600) | 7,360,500) | 7,029,200) | 3,879,623) | |
| Efficiency Ratio | |||||||
| TO2 | 0.94 | 1.01 | 0.86 | 0.74 | 0.62 | 0.90 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Accenture PLC | — | 1.94 | 2.08 | 1.95 | 1.97 | 2.16 | |
| Adobe Inc. | — | 0.80 | 0.86 | 0.80 | 0.70 | 0.67 | |
| Autodesk Inc. | 0.71 | 0.79 | 0.70 | 0.72 | 0.76 | 0.61 | |
| Cadence Design Systems Inc. | — | 1.00 | 1.00 | 0.98 | 0.99 | 1.03 | |
| CrowdStrike Holdings Inc. | 0.64 | 0.75 | 0.64 | 0.48 | 1.14 | — | |
| International Business Machines Corp. | — | 0.56 | 0.58 | 0.52 | 0.58 | 0.59 | |
| Intuit Inc. | 0.65 | 0.61 | 0.52 | 0.79 | 0.89 | 1.50 | |
| Microsoft Corp. | 0.72 | 0.88 | 1.04 | 1.20 | 1.35 | 1.35 | |
| Oracle Corp. | 0.53 | 0.52 | 0.54 | 0.51 | 0.44 | 0.55 | |
| Salesforce Inc. | 0.43 | 0.39 | 0.36 | 0.44 | 0.41 | 0.51 | |
| ServiceNow Inc. | — | 1.24 | 1.24 | 1.16 | 1.23 | 1.36 | |
| Synopsys Inc. | — | 0.71 | 0.71 | 0.63 | 0.58 | 0.58 | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Adjusted revenue ÷ Invested capital
= 10,211,600 ÷ 10,841,500 = 0.94
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Palo Alto Networks Inc. TO improved from 2022 to 2023 but then slightly deteriorated from 2023 to 2024. |
Effective Cash Tax Rate (CTR)
Palo Alto Networks Inc., CTR calculation, comparison to benchmarks
| Jul 31, 2024 | Jul 31, 2023 | Jul 31, 2022 | Jul 31, 2021 | Jul 31, 2020 | Jul 31, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,501,707) | 2,610,314) | 1,717,615) | 845,076) | 696,422) | 536,434) | |
| Add: Cash operating taxes2 | 384,452) | 76,038) | 68,221) | 81,834) | 57,464) | 32,566) | |
| Net operating profit before taxes (NOPBT) | 2,886,159) | 2,686,352) | 1,785,836) | 926,910) | 753,886) | 569,000) | |
| Tax Rate | |||||||
| CTR3 | 13.32% | 2.83% | 3.82% | 8.83% | 7.62% | 5.72% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Accenture PLC | — | 25.34% | 25.55% | 20.47% | 19.34% | 22.96% | |
| Adobe Inc. | — | 24.54% | 14.22% | 10.28% | 9.63% | 7.06% | |
| Autodesk Inc. | 38.57% | 22.84% | 9.38% | 13.48% | 6.38% | 60.79% | |
| Cadence Design Systems Inc. | — | 21.85% | 25.88% | 13.59% | 9.34% | 13.53% | |
| CrowdStrike Holdings Inc. | 1.48% | 2.46% | 18.96% | 2.38% | 1.95% | — | |
| International Business Machines Corp. | — | 22.56% | 139.75% | 33.85% | 37.95% | 18.49% | |
| Intuit Inc. | 32.36% | 39.49% | 14.74% | 20.15% | 20.99% | 18.37% | |
| Microsoft Corp. | 21.33% | 24.32% | 18.98% | 13.05% | 15.80% | 22.65% | |
| Oracle Corp. | 25.73% | 25.66% | 26.20% | 13.28% | 23.42% | 19.20% | |
| Salesforce Inc. | 25.31% | 25.51% | 8.31% | 6.79% | 19.81% | 7.62% | |
| ServiceNow Inc. | — | 4.32% | 4.41% | 5.03% | 5.90% | 2.51% | |
| Synopsys Inc. | — | 24.60% | 11.45% | 18.39% | 10.36% | 16.50% | |
Based on: 10-K (reporting date: 2024-07-31), 10-K (reporting date: 2023-07-31), 10-K (reporting date: 2022-07-31), 10-K (reporting date: 2021-07-31), 10-K (reporting date: 2020-07-31), 10-K (reporting date: 2019-07-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 384,452 ÷ 2,886,159 = 13.32%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Palo Alto Networks Inc. CTR decreased from 2022 to 2023 but then increased from 2023 to 2024 exceeding 2022 level. |