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)
Air Products & Chemicals Inc., ROIC calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,189,491) | 2,040,608) | 1,476,037) | 1,274,219) | 1,657,195) | 1,418,609) | |
| Invested capital2 | 20,884,500) | 16,921,739) | 16,696,916) | 15,661,095) | 15,185,876) | 14,344,261) | |
| Performance Ratio | |||||||
| ROIC3 | 10.48% | 12.06% | 8.84% | 8.14% | 10.91% | 9.89% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Linde plc | 3.43% | 3.08% | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 NOPAT. See details »
2 Invested capital. See details »
3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,189,491 ÷ 20,884,500 = 10.48%
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. | Air Products & Chemicals Inc. ROIC improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020. |
Decomposition of ROIC
Air Products & Chemicals Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
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 2020 year is the decrease in efficiency measured by turnover of capital (TO) ratio.
Operating Profit Margin (OPM)
Air Products & Chemicals Inc., OPM calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,189,491) | 2,040,608) | 1,476,037) | 1,274,219) | 1,657,195) | 1,418,609) | |
| Add: Cash operating taxes2 | 338,146) | 457,325) | 617,809) | 350,387) | 577,067) | 451,612) | |
| Net operating profit before taxes (NOPBT) | 2,527,637) | 2,497,933) | 2,093,846) | 1,624,607) | 2,234,262) | 1,870,221) | |
| Sales | 8,856,300) | 8,918,900) | 8,930,200) | 8,187,600) | 9,524,400) | 9,894,900) | |
| Profitability Ratio | |||||||
| OPM3 | 28.54% | 28.01% | 23.45% | 19.84% | 23.46% | 18.90% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Linde plc | 14.48% | 12.41% | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × 2,527,637 ÷ 8,856,300 = 28.54%
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. | Air Products & Chemicals Inc. OPM improved from 2018 to 2019 and from 2019 to 2020. |
Turnover of Capital (TO)
Air Products & Chemicals Inc., TO calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Sales | 8,856,300) | 8,918,900) | 8,930,200) | 8,187,600) | 9,524,400) | 9,894,900) | |
| Invested capital1 | 20,884,500) | 16,921,739) | 16,696,916) | 15,661,095) | 15,185,876) | 14,344,261) | |
| Efficiency Ratio | |||||||
| TO2 | 0.42 | 0.53 | 0.53 | 0.52 | 0.63 | 0.69 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Linde plc | 0.35 | 0.36 | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 Invested capital. See details »
2 2020 Calculation
TO = Sales ÷ Invested capital
= 8,856,300 ÷ 20,884,500 = 0.42
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. | Air Products & Chemicals Inc. TO deteriorated from 2018 to 2019 and from 2019 to 2020. |
Effective Cash Tax Rate (CTR)
Air Products & Chemicals Inc., CTR calculation, comparison to benchmarks
| Sep 30, 2020 | Sep 30, 2019 | Sep 30, 2018 | Sep 30, 2017 | Sep 30, 2016 | Sep 30, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,189,491) | 2,040,608) | 1,476,037) | 1,274,219) | 1,657,195) | 1,418,609) | |
| Add: Cash operating taxes2 | 338,146) | 457,325) | 617,809) | 350,387) | 577,067) | 451,612) | |
| Net operating profit before taxes (NOPBT) | 2,527,637) | 2,497,933) | 2,093,846) | 1,624,607) | 2,234,262) | 1,870,221) | |
| Tax Rate | |||||||
| CTR3 | 13.38% | 18.31% | 29.51% | 21.57% | 25.83% | 24.15% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Linde plc | 31.56% | 31.01% | — | — | — | — | |
Based on: 10-K (reporting date: 2020-09-30), 10-K (reporting date: 2019-09-30), 10-K (reporting date: 2018-09-30), 10-K (reporting date: 2017-09-30), 10-K (reporting date: 2016-09-30), 10-K (reporting date: 2015-09-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 338,146 ÷ 2,527,637 = 13.38%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Air Products & Chemicals Inc. CTR decreased from 2018 to 2019 and from 2019 to 2020. |