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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- Cash Flow Statement
- Analysis of Short-term (Operating) Activity Ratios
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
eBay Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2018 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 significant fluctuations over the observed period. Beginning at 2,846 million USD in 2014, it declined sharply to 1,944 million USD in 2015 and remained relatively stable at 1,955 million USD in 2016. A further steep decline occurred in 2017, reaching a low of 821 million USD, followed by a strong recovery in 2018 to 2,553 million USD. This pattern indicates volatility in operational profitability over the years, with a notable trough in 2017 and subsequent rebound.
- Invested Capital
- The invested capital showed a pronounced decrease from 20,937 million USD in 2014 to 7,328 million USD in 2015. In the following years, invested capital remained relatively stable, fluctuating slightly around the 7,000 to 7,700 million USD range, with figures of 7,687 million USD in 2016, 6,903 million USD in 2017, and a small increase to 7,597 million USD in 2018. This considerable reduction between 2014 and 2015 likely reflects strategic changes in capital deployment or asset base management, thereafter maintaining a consistent level.
- Return on Invested Capital (ROIC)
- The return on invested capital paralleled the trends in profitability and invested capital, showing considerable variability. Starting at 13.59% in 2014, ROIC increased markedly to 26.53% in 2015 and remained high at 25.43% in 2016. It then declined significantly to 11.9% in 2017, before reaching the highest value over the entire period at 33.61% in 2018. This indicates that the efficiency of the investment in generating returns was highest in the later years, particularly in 2018, despite the volatility encountered in prior years.
- Summary
- The data reveal a pattern of initial contraction in both profit and invested capital from 2014 to 2015, followed by stabilization in invested capital and fluctuating net operating profits. The return on invested capital demonstrates enhanced capital efficiency in 2015 and 2016, a decline in 2017 coinciding with low profitability, and a peak in 2018 alongside a recovery in profit levels. Overall, the company experienced operational and capital management volatility, culminating in improved returns and profitability by the end of the period.
Decomposition of ROIC
eBay Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × | ||||
| Dec 31, 2016 | = | × | × | ||||
| Dec 31, 2015 | = | × | × | ||||
| Dec 31, 2014 | = | × | × |
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
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 shows an overall increasing trend from 2014 to 2018, starting at 19.55% and peaking at 28.56% in 2015. After a slight decline in 2016 and 2017, it rises again to 27.2% in 2018. This indicates a generally strong and improving efficiency in generating operating profit from revenues, with some minor fluctuations in the middle years.
- Turnover of Capital (TO)
- Capital turnover exhibits a steady upward trend over the five-year period. It increases from 0.86 in 2014 to 1.42 in 2018, with consistent growth each year. This suggests an improving ability to generate sales from invested capital, reflecting potentially better asset utilization or revenue growth relative to capital employed.
- 1 – Effective Cash Tax Rate (CTR)
- The metric representing one minus the effective cash tax rate displays significant volatility across the years. In 2014 and 2015, the values are relatively stable around 80%. A dramatic decrease to approximately 34% occurs in 2017, followed by a sharp return to over 87% in 2018. This fluctuation may imply changes in tax strategy, tax legislation impact, or variability in taxable income affecting cash taxes paid.
- Return on Invested Capital (ROIC)
- Return on invested capital experiences irregular changes over the period. There is a strong increase from 13.59% in 2014 to over 26% in 2015 and 2016. However, a notable drop to 11.9% occurs in 2017 before rising sharply to 33.61% in 2018. This volatility may reflect shifts in operating performance, tax effects, or capital structure adjustments influencing the overall returns derived from invested capital.
Operating Profit Margin (OPM)
eBay Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2018 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes shows a notable decrease from 2014 to 2015, dropping from 3505 million US dollars to 2453 million US dollars. Following this decline, the figure remains relatively stable with minor fluctuations through 2016 and 2017, at 2460 million and 2421 million US dollars respectively. In 2018, there is a clear recovery with NOPBT increasing to 2932 million US dollars, indicating a positive turnaround after several years of stagnation.
- Adjusted net revenues
- Adjusted net revenues exhibit a sharp decline from 17932 million US dollars in 2014 to 8590 million US dollars in 2015, representing a nearly 52% drop. After this steep fall, revenues show a consistent upward trend from 2015 onwards, rising to 8983 million in 2016, 9574 million in 2017, and reaching 10779 million US dollars in 2018. This steady increase suggests effective revenue growth strategies following the initial contraction.
- Operating profit margin (OPM)
- The operating profit margin experiences a significant improvement from 19.55% in 2014 to a peak of 28.56% in 2015 despite the revenue decline. It then slightly decreases in the subsequent years to 27.38% in 2016 and 25.29% in 2017. By 2018, the margin recovers again to 27.2%. Overall, the profit margin remains elevated compared to the 2014 level, indicating enhanced operational efficiency over the period despite fluctuations in absolute profit and revenue values.
- Overall Insights
- The data reveals an initial sharp decrease in both net operating profit before taxes and adjusted net revenues in 2015, followed by a stabilization and gradual recovery through 2018. The operating profit margin improves markedly in 2015 and remains relatively high, suggesting that the company improved cost management or operational efficiency even during the revenue contraction. The concurrent increase in revenues and profit in the later years underscores a positive trend in financial performance and profitability.
Turnover of Capital (TO)
eBay Inc., TO calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenues | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted net revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 Invested capital. See details »
2 2018 Calculation
TO = Adjusted net revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Net Revenues
- The adjusted net revenues exhibit a notable decline from 17,932 million US dollars in 2014 to 8,590 million in 2015, nearly halving in one year. From 2015 onwards, a gradual recovery is observed, with revenues increasing steadily to 8,983 million in 2016, 9,574 million in 2017, and reaching 10,779 million by the end of 2018. This trend indicates an initial significant downturn followed by a consistent upward trajectory over the subsequent years.
- Invested Capital
- Invested capital follows a similar sharp decrease from 20,937 million US dollars in 2014 to 7,328 million in 2015. After this decline, the invested capital stabilizes with minor fluctuations: a slight increase to 7,687 million in 2016, a decrease to 6,903 million in 2017, and a recovery to 7,597 million in 2018. Overall, invested capital remains relatively flat after the substantial drop in 2015.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrates a consistent improvement over the period under review. Starting at 0.86 in 2014, it rises to 1.17 in 2015 and remains steady at this level in 2016. From 2017 onwards, it increases further to 1.39 and then to 1.42 in 2018. This upward trend suggests enhanced efficiency in utilizing invested capital to generate revenues.
- Summary Insight
- The financial data reveals a significant contraction in adjusted net revenues and invested capital between 2014 and 2015, indicating a restructuring or major change in the company's operations or assets. Despite the initial drop, adjusted net revenues exhibit a recovery trend over the following years, while invested capital remains relatively stable at a lower level than in 2014. The increasing turnover of capital ratio reflects improved effectiveness in capital utilization, indicating that the company has been able to generate higher revenues per unit of invested capital as time progressed.
Effective Cash Tax Rate (CTR)
eBay Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | Dec 31, 2014 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Amazon.com Inc. | ||||||
| Home Depot Inc. | ||||||
| Lowe’s Cos. Inc. | ||||||
| TJX Cos. Inc. | ||||||
Based on: 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2018 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes exhibited a fluctuating pattern over the five-year period. Starting at 659 million US dollars at the end of 2014, the amount decreased to 509 million in 2015 and remained relatively stable in 2016 at 505 million. A significant spike occurred in 2017, with cash operating taxes reaching 1600 million, before sharply declining to 378 million in 2018.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes showed a downward trend from the end of 2014 through 2017, starting at 3505 million US dollars in 2014 and declining to 2421 million in 2017. In 2018, the NOPBT increased notably to 2932 million, indicating a partial recovery in profitability after several years of decline.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate displayed considerable volatility across the years analyzed. The rate was relatively stable around 19-21% between 2014 and 2016, peaking dramatically in 2017 at 66.08%. In 2018, the tax rate dropped sharply to 12.91%, marking the lowest rate in the five-year span.
- Overall Analysis
- The fluctuations in cash operating taxes and the effective cash tax rate suggest changes in tax obligations or tax planning strategies, especially the notable increase in 2017 followed by decreases in 2018. The divergent trends in NOPBT and cash operating taxes in 2017 point to a potential non-operational impact or adjustments in the tax environment. The recovery in NOPBT in 2018, combined with a low effective cash tax rate, may indicate improved profitability and tax efficiency for that year.