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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Return on Invested Capital (ROIC)
Abbott Laboratories, ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates fluctuations in the Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both exhibit changes over the five-year span, influencing the overall ROIC performance.
- ROIC Trend
- The ROIC experienced a decline from 11.30% in 2021 to 8.87% in 2023. This represents a contraction in profitability relative to capital employed. A subsequent recovery is observed in 2024, with ROIC increasing to 9.22%, followed by a further increase to 11.39% in 2025, returning to the level observed in 2021.
- NOPAT Analysis
- NOPAT decreased from US$7,014 million in 2021 to US$6,718 million in 2022, a modest reduction. A more significant decrease occurred between 2022 and 2023, falling to US$5,289 million. NOPAT then showed a slight increase in 2024 to US$5,543 million, before a substantial rise to US$7,106 million in 2025.
- Invested Capital Analysis
- Invested capital decreased from US$62,076 million in 2021 to US$61,288 million in 2022. This downward trend continued through 2023, reaching US$59,651 million. A slight increase to US$60,086 million was noted in 2024, followed by a further increase to US$62,400 million in 2025.
The decline in ROIC between 2021 and 2023 appears to be primarily driven by the decrease in NOPAT, although a concurrent reduction in invested capital partially offset this effect. The recovery in ROIC from 2024 onwards is attributable to the combined effect of increasing NOPAT and a moderate increase in invested capital. The most substantial improvement in ROIC occurred in 2025, coinciding with the largest increase in NOPAT.
Decomposition of ROIC
Abbott Laboratories, decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates fluctuations in the key components driving return on invested capital. Overall, ROIC experienced a decline from 2021 to 2023, followed by a recovery towards levels seen in 2021 and 2022. This movement is attributable to shifts in operating profit margin, capital turnover, and the impact of the effective cash tax rate.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited relative stability between 2021 and 2022, hovering around 20%. A notable decrease occurred in 2023, falling to 16.84%, before a partial recovery to 17.09% in 2024. The most significant increase was observed in 2025, reaching 19.53%, approaching the levels seen earlier in the period. This suggests potential improvements in cost management or pricing power in the latter years.
- Turnover of Capital (TO)
- The turnover of capital remained relatively consistent throughout the period, fluctuating between 0.67 and 0.71. A slight increase was observed from 2021 to 2022, followed by a minor decline in 2023. The ratio stabilized in 2024 and experienced a further slight increase in 2025, indicating consistent efficiency in utilizing capital to generate revenue.
- Effective Cash Tax Rate (CTR)
- The (1 – Effective cash tax rate) component, representing the portion of operating profit retained after taxes, generally decreased from 79.95% in 2021 to 76.03% in 2022. It then recovered to 78.33% in 2023 and 77.32% in 2024, before increasing substantially to 82.10% in 2025. This suggests a changing tax burden impacting after-tax profitability.
- Return on Invested Capital (ROIC)
- ROIC mirrored the combined effects of the aforementioned factors. The decline from 11.30% in 2021 to 8.87% in 2023 was primarily driven by the decrease in operating profit margin. The subsequent increase to 9.22% in 2024 reflected a partial offset from improvements in both operating profit margin and the effective cash tax rate. The most substantial recovery occurred in 2025, with ROIC reaching 11.39%, driven by improvements in all three components: operating profit margin, capital turnover, and the effective cash tax rate.
The interplay between these components highlights the sensitivity of ROIC to changes in operational efficiency, profitability, and tax considerations. The recovery in ROIC during 2024 and 2025 suggests successful strategic initiatives aimed at improving these areas.
Operating Profit Margin (OPM)
Abbott Laboratories, OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin (OPM) exhibited fluctuations over the five-year period. Net operating profit before taxes and net sales figures support the calculation and understanding of these margin trends.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM demonstrated a generally undulating pattern. It began at 20.37% in 2021, decreased to a low of 16.84% in 2023, and then recovered to 19.53% in 2025. This suggests a period of profitability compression followed by a recovery.
- OPM - 2021 to 2022
- From 2021 to 2022, the OPM experienced a slight decline, moving from 20.37% to 20.24%. This indicates a marginal decrease in profitability during this period, despite a modest increase in net sales.
- OPM - 2022 to 2023
- A more substantial decrease in OPM was observed between 2022 and 2023, falling from 20.24% to 16.84%. This coincided with a decrease in net sales and a more pronounced reduction in net operating profit before taxes, suggesting increased cost pressures or reduced pricing power.
- OPM - 2023 to 2025
- The OPM showed a recovery from 2023 to 2025. It increased from 16.84% in 2023 to 17.09% in 2024 and further to 19.53% in 2025. This improvement aligns with increases in both net operating profit before taxes and net sales, indicating improved operational efficiency or increased demand.
- Relationship between NOPBT and OPM
- The fluctuations in net operating profit before taxes directly correlate with the changes in OPM. Decreases in NOPBT consistently resulted in lower OPM values, and increases in NOPBT corresponded with higher OPM values. This confirms that the OPM is sensitive to changes in underlying profitability.
Turnover of Capital (TO)
Abbott Laboratories, TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Invested capital. See details »
2 2025 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates a generally stable, albeit slightly fluctuating, relationship between net sales and invested capital. Net sales experienced a modest increase through 2022, followed by a decrease in 2023, and then a partial recovery in 2024 and 2025. Invested capital exhibited a slight downward trend from 2021 to 2023, followed by stabilization and a minor increase in subsequent years.
- Turnover of Capital (TO)
- The Turnover of Capital ratio remained relatively consistent throughout the observed period, ranging from 0.67 to 0.71. A slight increase was noted from 2021 to 2022, moving from 0.69 to 0.71. This was followed by a minor decrease to 0.67 in 2023, coinciding with the decrease in net sales. The ratio recovered to 0.70 in 2024 and further increased to 0.71 in 2025, mirroring the sales recovery. This suggests a direct correlation between the efficiency of capital utilization and sales performance.
The consistency in the Turnover of Capital ratio indicates that, despite fluctuations in net sales and invested capital, the company maintained a relatively stable level of efficiency in generating sales from its invested capital base. The slight variations observed suggest a sensitivity to changes in sales volume, but the overall trend implies effective capital management.
The modest increase in the ratio in the final two years of the period suggests a potential improvement in capital utilization efficiency, possibly due to enhanced operational performance or strategic capital allocation decisions. Further investigation into the underlying drivers of these changes would be beneficial.
Effective Cash Tax Rate (CTR)
Abbott Laboratories, CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited fluctuations over the five-year period. Cash operating taxes and net operating profit before taxes both demonstrate variability, influencing the observed rate changes.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate increased from 20.05% in 2021 to 23.97% in 2022, representing a rise of approximately 3.92 percentage points. This increase suggests a higher proportion of cash taxes were paid relative to pre-tax operating profits during that year.
- In 2023, the rate decreased to 21.67%, a reduction of 2.30 percentage points from the prior year. This decline could be attributed to a decrease in cash operating taxes, despite a significant reduction in net operating profit before taxes.
- A further increase was observed in 2024, with the rate reaching 22.68%, a 1.01 percentage point rise. This coincided with a modest increase in net operating profit before taxes and a slight increase in cash operating taxes.
- The most substantial change occurred in 2025, where the effective cash tax rate fell to 17.90%, a decrease of 4.78 percentage points. This decrease occurred alongside an increase in net operating profit before taxes, and a slight decrease in cash operating taxes, indicating a more favorable tax position in that year.
Cash operating taxes generally followed the trend of net operating profit before taxes, though the relationship was not perfectly linear. The largest absolute decrease in cash operating taxes occurred between 2022 and 2023, while the largest absolute increase occurred between 2021 and 2022. Net operating profit before taxes experienced a substantial decrease between 2022 and 2023, followed by a recovery in 2024 and a further increase in 2025.
The interplay between cash operating taxes and net operating profit before taxes resulted in a dynamic effective cash tax rate, demonstrating the impact of tax obligations on overall profitability.