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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- Analysis of Profitability Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2008
- Return on Equity (ROE) since 2008
- Return on Assets (ROA) since 2008
- Price to Earnings (P/E) since 2008
- Price to Operating Profit (P/OP) since 2008
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Return on Invested Capital (ROIC)
Warner Bros. Discovery Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 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 exhibited a significant positive shift from a loss of 121 million USD in 2017 to a substantial profit of 1,195 million USD in 2018. This upward trend continued with the NOPAT rising sharply to 2,393 million USD in 2019. However, from 2019 onwards, there was a consistent decline, with NOPAT decreasing to 1,788 million USD in 2020 and further to 1,066 million USD by the end of 2021. This indicates a peak in operational profitability in 2019, followed by a contraction in the subsequent two years.
- Invested Capital
- The invested capital increased markedly from 21,151 million USD in 2017 to 31,259 million USD in 2018, indicating a significant expansion of the capital base. Between 2018 and 2021, the invested capital remained relatively stable, fluctuating slightly but staying around the 30,000 million USD mark, with values of 30,994 million USD in 2019, 30,674 million USD in 2020, and 30,724 million USD in 2021. This points to a stabilization phase after the initial growth in capital investment.
- Return on Invested Capital (ROIC)
- The return on invested capital followed a trend consistent with changes in NOPAT. The ROIC moved from a negative -0.57% in 2017 to a positive 3.82% in 2018, further improving to a peak of 7.72% in 2019. Following this peak, ROIC declined to 5.83% in 2020 and continued to fall to 3.47% in 2021. This decrease in ROIC reflects diminishing efficiency in generating returns from the invested capital in the more recent years, despite the relatively stable level of invested capital.
- Overall Insights
- The data reveals an initial period of significant growth in operational profitability and capital investment between 2017 and 2019, followed by a trend of declining profit and return on invested capital from 2019 through 2021. The stabilization of invested capital during the latter period suggests that the drop in profitability is not directly related to changes in capital investment but may be influenced by operational challenges or market conditions impacting profitability and capital efficiency.
Decomposition of ROIC
Warner Bros. Discovery Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The financial data reveals several notable trends over the five-year period ending December 31, 2021.
- Operating profit margin (OPM)
- The operating profit margin shows a marked improvement from 5.98% in 2017 to a peak of 27.45% in 2019. However, this margin experiences a decline thereafter, reducing to 16.07% by the end of 2021. This pattern suggests an initial period of increasing profitability from core operations, followed by challenges that have compressed margins in the last two years.
- Turnover of capital (TO)
- Turnover of capital exhibits a gradual upward trend over the period. Starting at 0.33 in 2017, it fluctuates slightly but generally increases to 0.39 by 2021. This reflects a modest improvement in the efficiency with which capital is utilized to generate revenue.
- 1 – Effective cash tax rate (CTR)
- The value for 1 minus the effective cash tax rate is notably volatile. It starts negative at -29.02% in 2017, rises sharply to over 65% in 2018 and peaks around 76.67% in 2019. Subsequently, it declines to 54.79% in 2021. These fluctuations indicate significant variability in the effective cash taxes paid, which could be due to changes in tax laws, taxable income, or the utilization of tax benefits during these years.
- Return on invested capital (ROIC)
- Return on invested capital commences at a slightly negative -0.57% in 2017, improving significantly to 7.72% in 2019. Following this peak, ROIC decreases to 3.47% by 2021. The pattern mirrors the trend observed in operating margins, with enhanced value generation from invested capital initially, then a reduction in profitability.
Overall, the data indicates that the company experienced improvements in profitability and capital efficiency until around 2019, followed by diminished returns and narrower margins in the subsequent years. The volatility in tax rate effects also suggests complexities affecting net outcomes during this timeframe.
Operating Profit Margin (OPM)
Warner Bros. Discovery Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes displayed a significant increase from 2017 to 2019, rising from 416 million USD to 3,122 million USD. However, following this peak, there was a decline in subsequent years, falling to 2,485 million USD in 2020 and further to 1,946 million USD by the end of 2021. This indicates a trend of rapid growth followed by a gradual decrease in operating profitability before taxes over the examined period.
- Adjusted Revenues
- Revenues experienced a steady upward trajectory from 6,952 million USD in 2017 to 11,372 million USD in 2019. Despite a slight dip in 2020 to 10,723 million USD, revenues rebounded in 2021, reaching the highest value in the dataset at 12,115 million USD. This pattern suggests overall growth in revenue with a temporary contraction likely correlated with broader market or economic conditions in 2020.
- Operating Profit Margin (OPM)
- The operating profit margin improved markedly from 5.98% in 2017 to a peak of 27.45% in 2019, reflecting increasing efficiency or profitability relative to sales. After 2019, the margin decreased, falling to 23.18% in 2020 and then to 16.07% in 2021. Despite the decline in later years, margins in 2020 and 2021 remained significantly higher than in 2017, indicating that profitability per unit of revenue was substantially improved over the longer term but faced challenges following the peak year.
- Overall Insights
- The financial data reveal a period of strong growth and profitability improvements leading up to 2019, followed by a period of decline in profitability and net operating profits before taxes in the subsequent two years. Revenues showed resilience, with only a minor dip in 2020, and ultimately reached new highs by 2021. This suggests that while the company maintained and increased its revenue base, costs or other factors impacted operating profit margins and operating profits after 2019. The trends may reflect external market conditions or internal operational challenges affecting profitability despite continued top-line growth.
Turnover of Capital (TO)
Warner Bros. Discovery Inc., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenues | ||||||
| Adjusted revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Invested capital. See details »
2 2021 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
-
Adjusted revenues exhibited a consistent upward trend over the analyzed period. Starting at $6,952 million in 2017, revenues increased substantially to $10,558 million in 2018, marking a significant growth. Revenue growth continued, albeit at a slower pace, reaching $11,372 million in 2019. There was a slight decline to $10,723 million in 2020, which may indicate an adverse impact from external factors. However, revenues rebounded to their highest level in the period at $12,115 million in 2021, suggesting recovery and expansion.
- Invested Capital
-
Invested capital showed a notable increase from $21,151 million in 2017 to $31,259 million in 2018, indicating substantial investment activities or acquisitions during that year. Following this peak, invested capital remained relatively stable at around $30,000 million for the next three years, experiencing minor fluctuations but without any major upward or downward movement. This stability may suggest a period focused on optimizing existing capital rather than expanding investment.
- Turnover of Capital (TO)
-
The turnover of capital ratio steadily improved over the period under review. Beginning at 0.33 in 2017, the ratio experienced incremental increases each year, reaching 0.34 in 2018, 0.37 in 2019, dipping slightly to 0.35 in 2020, and ultimately rising to 0.39 in 2021. This trend indicates an improvement in the efficiency with which the company utilized its invested capital to generate revenues, despite the minor decline noted in 2020.
Effective Cash Tax Rate (CTR)
Warner Bros. Discovery Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes increased steadily from 537 million USD in 2017 to 880 million USD in 2021, indicating a consistent rise in tax payments over the five-year period.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed significant fluctuations. It rose sharply from 416 million USD in 2017 to a peak of 3,122 million USD in 2019. Subsequently, it declined to 2,485 million USD in 2020 and further decreased to 1,946 million USD in 2021. This trend suggests a peak in operational profitability in 2019 followed by a downward trend in the following years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated considerable variability. It was exceptionally high at 129.02% in 2017, indicating tax payments exceeding reported profits that year. It then declined sharply to 34.42% in 2018 and decreased further to 23.33% in 2019. However, it increased to 28.07% in 2020 and rose notably to 45.21% in 2021. This pattern highlights fluctuations in the tax burden relative to operating profits, with a marked increase in the tax rate in the later years.