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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Elevance Health Inc. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Assets
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
Elevance Health Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 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 showed an increasing trend from 2020 to 2021, rising significantly from 4,739 million USD to 7,193 million USD. However, this was followed by a decline in 2022 to 6,841 million USD, and a further decrease in 2023 to 6,415 million USD. In 2024, NOPAT increased again to 7,015 million USD, indicating some recovery but not surpassing the peak level observed in 2021.
- Invested Capital
- Invested capital demonstrated a steady increase over the entire period, growing from 56,634 million USD in 2020 to 78,241 million USD in 2024. This consistent growth suggests ongoing investments or expansion efforts by the company.
- Return on Invested Capital (ROIC)
- The return on invested capital peaked in 2021 at 11.26%, following the increase in NOPAT that year. Afterward, ROIC declined progressively each year, falling to 10.24% in 2022, 9.21% in 2023, and further to 8.97% in 2024. Despite the rise in NOPAT during the last year, the continuously growing invested capital resulted in a decreasing ROIC, indicating diminishing efficiency in generating returns from the capital invested over the latter years.
Decomposition of ROIC
Elevance Health Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 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), 10-K (reporting date: 2020-12-31).
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 exhibited a slight increase from 5.88% in 2020 to a peak of 6.58% in 2021, followed by a gradual decline over the subsequent years to 5.32% in 2023. There was a modest recovery to 5.46% in 2024. Overall, the margin remained within a relatively narrow range, indicating some variability but no drastic shifts in operational profitability.
- Turnover of Capital (TO)
- Turnover of capital displayed a generally upward trend from 2.13 in 2020 to a high point of 2.44 in 2023, indicating increasing efficiency in utilizing capital to generate revenue. However, this was followed by a decline to 2.24 in 2024, suggesting a slight reduction in capital turnover efficiency in the most recent year.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate, expressed as 1 minus the rate, showed a marked increase from 66.73% in 2020 to approximately 78% in both 2021 and 2022, reflecting higher effective tax payments relative to profits. Subsequently, the rate decreased to 70.87% in 2023 before slightly rising again to 73.34% in 2024. The fluctuations indicate variability in tax efficiency or changes in tax regulation impacts over time.
- Return on Invested Capital (ROIC)
- Return on invested capital rose significantly from 8.37% in 2020 to a peak of 11.26% in 2021, suggesting improved capital allocation or profitability. However, a continuous decline followed, reaching 8.97% in 2024. This trend points to diminishing returns on the capital invested, possibly reflecting increased costs or reduced profit margins notwithstanding the earlier efficiency gains.
Operating Profit Margin (OPM)
Elevance Health Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Operating revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Operating revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The NOPBT exhibited a general upward trend over the five-year period. It increased from 7,102 million USD in 2020 to 9,564 million USD in 2024, with a noticeable jump between 2020 and 2021. Although there was a slight dip in 2022, the profit levels recovered and grew steadily in the subsequent years.
- Operating revenue
- Operating revenue showed consistent growth throughout the period, rising from 120,808 million USD in 2020 to 175,204 million USD in 2024. The growth was particularly strong between 2021 and 2023, indicating a robust expansion in the company’s core operations.
- Operating profit margin (OPM)
- The operating profit margin fluctuated during the period. It increased from 5.88% in 2020 to a peak of 6.58% in 2021 but then declined to 5.32% by 2023. A modest recovery occurred in 2024, with the margin reaching 5.46%. This pattern suggests that despite rising revenues and profits, the company faced variation in cost efficiency or pricing power over the years.
- Overall analysis
- The company demonstrated solid growth in both operating revenue and NOPBT over the five-year span, reflecting successful revenue generation and profitability expansion. However, the operating profit margin's variability points to some underlying pressures on operational efficiency or increased costs. The partial recovery in margin in 2024 is a positive sign but remains below the peak observed in 2021. These dynamics suggest ongoing efforts to balance growth with cost management.
Turnover of Capital (TO)
Elevance Health Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Operating revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The financial data reveals a consistent upward trend in operating revenue over the analyzed period. From 2020 to 2024, operating revenue increased steadily from approximately $120.8 billion to $175.2 billion, indicating robust growth in the company's business activities and market demand.
Invested capital also experienced a gradual increase throughout the years. Starting at around $56.6 billion in 2020, it rose to $78.2 billion by the end of 2024. This growth suggests ongoing capital investment, likely supporting the expansion of operations and capacity enhancement.
The turnover of capital ratio exhibited some fluctuations but overall showed an improving pattern until 2023, followed by a slight decline in 2024. The ratio increased from 2.13 in 2020 to a peak of 2.44 in 2023, reflecting improved efficiency in utilizing the invested capital to generate operating revenue. However, the drop to 2.24 in 2024 may indicate a marginal decrease in capital utilization efficiency or a shift in the capital structure relative to revenue generation.
- Operating Revenue
- Steady growth from $120.8 billion (2020) to $175.2 billion (2024), signaling expanding business activities.
- Invested Capital
- Gradual increase from $56.6 billion (2020) to $78.2 billion (2024), indicating continuous investment in assets and operations.
- Turnover of Capital (TO)
- Improved efficiency from 2.13 (2020) to a peak of 2.44 (2023), then a slight reduction to 2.24 (2024), suggesting relatively effective capital deployment with a minor recent efficiency decline.
Effective Cash Tax Rate (CTR)
Elevance Health Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The financial data over the five-year period reveals several noteworthy trends regarding cash operating taxes, net operating profit before taxes (NOPBT), and the effective cash tax rate (CTR).
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT increased from $7,102 million in 2020 to $9,564 million in 2024. The growth was steady, with a notable jump between 2020 and 2021 from $7,102 million to $9,016 million. Although there was a slight decline in 2022 to $8,772 million, the figure rebounded in the subsequent years, reaching its highest point in 2024. This indicates an overall upward trend in profitability before taxes over the evaluated period.
- Cash Operating Taxes
- Cash operating taxes exhibited some fluctuation over the years. Starting at $2,363 million in 2020, taxes decreased significantly to $1,823 million in 2021 despite the increase in NOPBT, suggesting either tax deferrals, credits, or other mitigating factors. Taxes then experienced a gradual increase, reaching $2,637 million in 2023 before slightly declining to $2,550 million in 2024. The rise in 2023 corresponds with the peak in taxes paid within the observed timeline.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate shows variability over the period, fluctuating between a low of 20.22% in 2021 and a high of 33.27% in 2020. After the substantial decline in 2021, the rate increased to 22.01% in 2022, then rose further to 29.13% in 2023, before slightly decreasing to 26.66% in 2024. These changes indicate a dynamic tax environment and potentially varying tax planning strategies or changes in tax regulations impacting the company’s tax obligations as a percentage of its operating profits.
Overall, the data illustrates an improvement in profitability before taxes, accompanied by fluctuations in both cash operating taxes paid and the effective cash tax rate. The fluctuations in tax rates and cash taxes paid, despite rising operating profits, suggest active tax management or changing tax circumstances during the period.