Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.

Return on Invested Capital (ROIC)
Decomposition of ROIC
Operating Profit Margin (OPM)
Turnover of Capital (TO)
Effective Cash Tax Rate (CTR)

Air Products & Chemicals Inc., ROIC calculation, comparison to benchmarks

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	2,040,608	1,476,037	1,274,219	1,657,195	1,418,609	1,142,309
Invested capital²	16,921,739	16,696,916	15,661,095	15,185,876	14,344,261	14,625,688
Performance Ratio
ROIC³	12.06%	8.84%	8.14%	10.91%	9.89%	7.81%
Benchmarks
ROIC, Competitors⁴
Ecolab Inc.	9.60%	9.93%	7.88%	7.88%	5.69%	—
Linde plc	2.83%	5.00%	6.78%	7.91%	8.87%	—

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

¹ NOPAT. See details »

² Invested capital. See details »

³ 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,040,608 ÷ 16,921,739 = 12.06%

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.’s ROIC improved from 2017 to 2018 and from 2018 to 2019.

Air Products & Chemicals Inc., decomposition of ROIC


	ROIC	=	OPM¹	×	TO²	×	1 – CTR³
Sep 30, 2019	12.06%	=	28.01%	×	0.53	×	81.69%
Sep 30, 2018	8.84%	=	23.45%	×	0.53	×	70.49%
Sep 30, 2017	8.14%	=	19.84%	×	0.52	×	78.43%
Sep 30, 2016	10.91%	=	23.46%	×	0.63	×	74.17%
Sep 30, 2015	9.89%	=	18.90%	×	0.69	×	75.85%
Sep 30, 2014	7.81%	=	13.69%	×	0.71	×	79.93%

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

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 increase in return on invested capital (ROIC) over 2019 year is the increase in profitability measured by operating profit margin (OPM) ratio.

Air Products & Chemicals Inc., OPM calculation, comparison to benchmarks

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	2,040,608	1,476,037	1,274,219	1,657,195	1,418,609	1,142,309
Add: Cash operating taxes²	457,325	617,809	350,387	577,067	451,612	286,759
Net operating profit before taxes (NOPBT)	2,497,933	2,093,846	1,624,607	2,234,262	1,870,221	1,429,068

Sales	8,918,900	8,930,200	8,187,600	9,524,400	9,894,900	10,439,000
Profitability Ratio
OPM³	28.01%	23.45%	19.84%	23.46%	18.90%	13.69%
Benchmarks
OPM, Competitors⁴
Ecolab Inc.	14.37%	14.32%	14.90%	14.29%	11.38%	—
Linde plc	11.70%	35.62%	22.08%	21.93%	22.03%	—

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2019 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × 2,497,933 ÷ 8,918,900 = 28.01%

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.’s OPM improved from 2017 to 2018 and from 2018 to 2019.

Air Products & Chemicals Inc., TO calculation, comparison to benchmarks

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Selected Financial Data (US$ in thousands)
Sales	8,918,900	8,930,200	8,187,600	9,524,400	9,894,900	10,439,000
Invested capital¹	16,921,739	16,696,916	15,661,095	15,185,876	14,344,261	14,625,688
Efficiency Ratio
TO²	0.53	0.53	0.52	0.63	0.69	0.71
Benchmarks
TO, Competitors³
Ecolab Inc.	0.82	0.82	0.80	0.80	0.85	—
Linde plc	0.36	0.18	0.54	0.50	0.53	—

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

¹ Invested capital. See details »

² 2019 Calculation
TO = Sales ÷ Invested capital
= 8,918,900 ÷ 16,921,739 = 0.53

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.’s TO improved from 2017 to 2018 but then slightly deteriorated from 2018 to 2019 not reaching 2017 level.

Air Products & Chemicals Inc., CTR calculation, comparison to benchmarks

	Sep 30, 2019	Sep 30, 2018	Sep 30, 2017	Sep 30, 2016	Sep 30, 2015	Sep 30, 2014
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	2,040,608	1,476,037	1,274,219	1,657,195	1,418,609	1,142,309
Add: Cash operating taxes²	457,325	617,809	350,387	577,067	451,612	286,759
Net operating profit before taxes (NOPBT)	2,497,933	2,093,846	1,624,607	2,234,262	1,870,221	1,429,068
Tax Rate
CTR³	18.31%	29.51%	21.57%	25.83%	24.15%	20.07%
Benchmarks
CTR, Competitors⁴
Ecolab Inc.	18.93%	15.70%	33.59%	31.45%	41.11%	—
Linde plc	32.89%	19.80%	42.93%	27.46%	24.15%	—

Based on: 10-K (filing date: 2019-11-26), 10-K (filing date: 2018-11-20), 10-K (filing date: 2017-11-16), 10-K (filing date: 2016-11-21), 10-K (filing date: 2015-11-24), 10-K (filing date: 2014-11-24).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 457,325 ÷ 2,497,933 = 18.31%

⁴ Click competitor name to see calculations.

Tax rate	Description	The company
CTR	Effective cash tax rate on operating income.	Air Products & Chemicals Inc.’s CTR increased from 2017 to 2018 but then decreased significantly from 2018 to 2019.

Air Products & Chemicals Inc. (NYSE:APD)

Return on Capital (ROC)

Return on Invested Capital (ROIC)

Decomposition of ROIC

Operating Profit Margin (OPM)

Turnover of Capital (TO)

Effective Cash Tax Rate (CTR)