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)
Walgreens Boots Alliance Inc., ROIC calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 5,719) | 5,934) | 5,246) | 4,855) | 5,501) | 3,086) | |
| Invested capital2 | 77,429) | 76,286) | 76,485) | 85,356) | 80,730) | 55,001) | |
| Performance Ratio | |||||||
| ROIC3 | 7.39% | 7.78% | 6.86% | 5.69% | 6.81% | 5.61% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Costco Wholesale Corp. | 16.61% | 16.15% | — | — | — | — | |
| Target Corp. | 14.14% | — | — | — | — | — | |
| Walmart Inc. | 5.72% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 5,719 ÷ 77,429 = 7.39%
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. | Walgreens Boots Alliance Inc. ROIC improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019. |
Decomposition of ROIC
Walgreens Boots Alliance Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
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 2019 year is the decrease in profitability measured by operating profit margin (OPM) ratio.
Operating Profit Margin (OPM)
Walgreens Boots Alliance Inc., OPM calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 5,719) | 5,934) | 5,246) | 4,855) | 5,501) | 3,086) | |
| Add: Cash operating taxes2 | 831) | 1,723) | 1,767) | 1,856) | 1,667) | 1,707) | |
| Net operating profit before taxes (NOPBT) | 6,550) | 7,657) | 7,013) | 6,711) | 7,167) | 4,792) | |
| Sales | 136,866) | 131,537) | 118,214) | 117,351) | 103,444) | 76,392) | |
| Profitability Ratio | |||||||
| OPM3 | 4.79% | 5.82% | 5.93% | 5.72% | 6.93% | 6.27% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Costco Wholesale Corp. | 3.30% | 3.41% | — | — | — | — | |
| Target Corp. | 5.67% | — | — | — | — | — | |
| Walmart Inc. | 2.84% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × 6,550 ÷ 136,866 = 4.79%
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. | Walgreens Boots Alliance Inc. OPM deteriorated from 2017 to 2018 and from 2018 to 2019. |
Turnover of Capital (TO)
Walgreens Boots Alliance Inc., TO calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Sales | 136,866) | 131,537) | 118,214) | 117,351) | 103,444) | 76,392) | |
| Invested capital1 | 77,429) | 76,286) | 76,485) | 85,356) | 80,730) | 55,001) | |
| Efficiency Ratio | |||||||
| TO2 | 1.77 | 1.72 | 1.55 | 1.37 | 1.28 | 1.39 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Costco Wholesale Corp. | 6.23 | 6.67 | — | — | — | — | |
| Target Corp. | 2.86 | — | — | — | — | — | |
| Walmart Inc. | 3.21 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 Invested capital. See details »
2 2019 Calculation
TO = Sales ÷ Invested capital
= 136,866 ÷ 77,429 = 1.77
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. | Walgreens Boots Alliance Inc. TO improved from 2017 to 2018 and from 2018 to 2019. |
Effective Cash Tax Rate (CTR)
Walgreens Boots Alliance Inc., CTR calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 5,719) | 5,934) | 5,246) | 4,855) | 5,501) | 3,086) | |
| Add: Cash operating taxes2 | 831) | 1,723) | 1,767) | 1,856) | 1,667) | 1,707) | |
| Net operating profit before taxes (NOPBT) | 6,550) | 7,657) | 7,013) | 6,711) | 7,167) | 4,792) | |
| Tax Rate | |||||||
| CTR3 | 12.69% | 22.50% | 25.19% | 27.66% | 23.25% | 35.61% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Costco Wholesale Corp. | 19.18% | 28.98% | — | — | — | — | |
| Target Corp. | 12.76% | — | — | — | — | — | |
| Walmart Inc. | 37.20% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 831 ÷ 6,550 = 12.69%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Walgreens Boots Alliance Inc. CTR decreased from 2017 to 2018 and from 2018 to 2019. |