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)
CVS Health Corp., 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 | 5,319) | 9,523) | 3,871) | 9,170) | 9,067) | |
| Invested capital2 | 131,642) | 134,694) | 123,703) | 130,882) | 136,669) | |
| Performance Ratio | ||||||
| ROIC3 | 4.04% | 7.07% | 3.13% | 7.01% | 6.63% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | 9.22% | 8.87% | 10.96% | 11.30% | — | |
| Elevance Health Inc. | 8.97% | 9.21% | 10.24% | 11.26% | — | |
| Intuitive Surgical Inc. | 28.75% | 22.30% | 22.01% | 37.63% | — | |
| Medtronic PLC | 5.44% | 5.89% | 7.02% | 5.59% | — | |
| UnitedHealth Group Inc. | 9.54% | 14.59% | 13.68% | 13.51% | — | |
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 × 5,319 ÷ 131,642 = 4.04%
4 Click competitor name to see calculations.
The return on invested capital (ROIC) exhibits significant volatility over the five-year period ending December 31, 2024. The fluctuations in this metric are primarily driven by substantial variance in operating profitability rather than significant shifts in the invested capital base.
- Net Operating Profit After Taxes (NOPAT)
- Operating profitability shows a highly inconsistent trend. After remaining stable between 2020 and 2021, NOPAT experienced a sharp decline in 2022 to US$ 3,871 million. A strong recovery occurred in 2023, reaching a peak of US$ 9,523 million, followed by another significant contraction to US$ 5,319 million by the end of 2024.
- Invested Capital
- The invested capital base remained relatively stable, fluctuating within a range of approximately US$ 123.7 billion to US$ 136.7 billion. A gradual decrease was observed from 2020 through 2022, followed by a moderate increase in 2023 and a slight reduction in 2024, indicating a consistent level of capital deployment throughout the period.
- Return on Invested Capital (ROIC)
- The ROIC percentage closely mirrors the volatility of NOPAT. The ratio peaked at 7.07% in 2023 and reached a period low of 3.13% in 2022. The most recent figure of 4.04% for 2024 confirms a pattern of unstable capital efficiency, where the company's ability to generate returns from its invested assets has fluctuated significantly.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Decomposition of ROIC
CVS Health Corp., decomposition of ROIC
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 »
The Return on Invested Capital (ROIC) exhibits significant volatility over the five-year period ending December 31, 2024, characterized by sharp declines in 2022 and 2024. While asset efficiency shows a consistent upward trajectory, overall returns have been constrained by contracting operating margins and fluctuating tax impacts.
- Operating Profit Margin (OPM)
- A general downward trend is observed in operational profitability. The margin declined from 4.79% in 2020 to a low of 2.10% in 2024. Despite a temporary recovery to 3.78% in 2023, the overall trajectory indicates a sustained reduction in the ability to convert revenue into operating profit.
- Turnover of Capital (TO)
- Capital turnover demonstrates steady and uninterrupted growth, increasing from 1.96 in 2020 to 2.82 in 2024. This trend reflects a consistent improvement in capital efficiency and a higher capacity to generate revenue from the invested capital base.
- Effective Cash Tax Rate Impact (1 – CTR)
- The after-tax retention rate remained relatively stable between 68% and 73% for most of the period, with the notable exception of 2022, where it dropped sharply to 49.10%. This contraction in the tax-adjusted component acted as a primary catalyst for the ROIC trough observed in 2022.
- ROIC Synthesis
- The decomposition of ROIC reveals a conflict between improving asset productivity and declining profitability. The gains achieved through capital turnover were insufficient to offset the erosion of the operating profit margin, particularly in 2024. Consequently, the peak ROIC of 7.07% in 2023 was followed by a decline to 4.04% in 2024, driven primarily by the compression of the operating margin to its lowest level in the analyzed period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Operating Profit Margin (OPM)
CVS Health Corp., 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 | 5,319) | 9,523) | 3,871) | 9,170) | 9,067) | |
| Add: Cash operating taxes2 | 2,464) | 3,965) | 4,013) | 3,407) | 3,769) | |
| Net operating profit before taxes (NOPBT) | 7,783) | 13,488) | 7,884) | 12,577) | 12,836) | |
| Revenues from customers | 370,656) | 356,623) | 321,629) | 290,912) | 267,908) | |
| Profitability Ratio | ||||||
| OPM3 | 2.10% | 3.78% | 2.45% | 4.32% | 4.79% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | 17.09% | 16.84% | 20.24% | 20.37% | — | |
| Elevance Health Inc. | 5.46% | 5.32% | 5.64% | 6.58% | — | |
| Intuitive Surgical Inc. | 32.39% | 28.14% | 26.19% | 33.56% | — | |
| Medtronic PLC | 17.14% | 19.63% | 19.15% | 16.48% | — | |
| UnitedHealth Group Inc. | 6.31% | 9.14% | 9.13% | 8.33% | — | |
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 ÷ Revenues from customers
= 100 × 7,783 ÷ 370,656 = 2.10%
4 Click competitor name to see calculations.
Analysis of the financial performance between 2020 and 2024 reveals a significant divergence between revenue growth and operating efficiency. While top-line expansion has been consistent, the ability to convert these revenues into operating profit has experienced substantial volatility and an overall downward trajectory.
- Revenue Growth Trajectory
- Revenues from customers exhibited a continuous upward trend throughout the analyzed period, increasing from US$ 267,908 million in 2020 to US$ 370,656 million by 2024. This represents a steady and uninterrupted expansion of the scale of operations over the five-year window.
- Net Operating Profit Before Taxes (NOPBT) Volatility
- In contrast to the stable revenue growth, NOPBT demonstrated marked instability. Profitability remained relatively stable between 2020 and 2021, followed by a sharp decline in 2022 to US$ 7,884 million. Although a recovery occurred in 2023, reaching a period peak of US$ 13,488 million, profits retracted sharply again in 2024 to US$ 7,783 million, marking the lowest absolute operating profit in the observed timeframe.
- Operating Profit Margin (OPM) Compression
- The operating profit margin reflects a general compression trend, starting at 4.79% in 2020 and ending at 2.10% in 2024. A significant dip to 2.45% occurred in 2022, followed by a temporary recovery to 3.78% in 2023. The subsequent decline to 2.10% in 2024 suggests that operating costs have increased at a rate exceeding revenue growth, leading to a deterioration of operating efficiency.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Turnover of Capital (TO)
CVS Health Corp., 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) | ||||||
| Revenues from customers | 370,656) | 356,623) | 321,629) | 290,912) | 267,908) | |
| Invested capital1 | 131,642) | 134,694) | 123,703) | 130,882) | 136,669) | |
| Efficiency Ratio | ||||||
| TO2 | 2.82 | 2.65 | 2.60 | 2.22 | 1.96 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | 0.70 | 0.67 | 0.71 | 0.69 | — | |
| Elevance Health Inc. | 2.24 | 2.44 | 2.33 | 2.14 | — | |
| Intuitive Surgical Inc. | 1.07 | 1.00 | 1.16 | 1.27 | — | |
| Medtronic PLC | 0.47 | 0.44 | 0.46 | 0.42 | — | |
| UnitedHealth Group Inc. | 1.99 | 2.01 | 1.95 | 2.04 | — | |
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 = Revenues from customers ÷ Invested capital
= 370,656 ÷ 131,642 = 2.82
3 Click competitor name to see calculations.
A consistent improvement in operational efficiency is evident between 2020 and 2024, characterized by a steady increase in the turnover of capital. This trend is primarily driven by robust and continuous revenue growth coupled with a relatively stable base of invested capital.
- Revenue Growth Trends
- Revenues from customers exhibited an uninterrupted upward trajectory over the five-year period, rising from 267,908 million US$ in 2020 to 370,656 million US$ by 2024. This represents a substantial expansion in top-line performance, with the most significant annual increases occurring between 2021 and 2023.
- Invested Capital Stability
- Invested capital remained relatively range-bound, fluctuating between a low of 123,703 million US$ in 2022 and a high of 136,669 million US$ in 2020. While there was a notable increase in invested capital in 2023, the overall capital base in 2024 was lower than it was at the start of the analyzed period, indicating that growth was not dependent on a proportional increase in capital investment.
- Capital Turnover Performance
- The turnover of capital ratio improved every year, ascending from 1.96 in 2020 to 2.82 in 2024. This progression demonstrates an enhanced ability to generate sales from the existing capital base. The acceleration in the ratio suggests that the organization has successfully optimized its asset utilization, achieving higher productivity per unit of invested capital.
The divergence between the steadily increasing revenues and the oscillating invested capital has resulted in a strengthened capital turnover ratio. This indicates a high degree of efficiency in converting invested resources into customer-facing revenue streams over the observed period.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?
Effective Cash Tax Rate (CTR)
CVS Health Corp., 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 | 5,319) | 9,523) | 3,871) | 9,170) | 9,067) | |
| Add: Cash operating taxes2 | 2,464) | 3,965) | 4,013) | 3,407) | 3,769) | |
| Net operating profit before taxes (NOPBT) | 7,783) | 13,488) | 7,884) | 12,577) | 12,836) | |
| Tax Rate | ||||||
| CTR3 | 31.66% | 29.40% | 50.90% | 27.09% | 29.36% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Abbott Laboratories | 22.68% | 21.67% | 23.97% | 20.05% | — | |
| Elevance Health Inc. | 26.66% | 29.13% | 22.01% | 20.22% | — | |
| Intuitive Surgical Inc. | 17.42% | 20.94% | 27.40% | 11.76% | — | |
| Medtronic PLC | 32.75% | 32.28% | 19.53% | 18.59% | — | |
| UnitedHealth Group Inc. | 24.04% | 20.64% | 23.25% | 20.32% | — | |
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 × 2,464 ÷ 7,783 = 31.66%
4 Click competitor name to see calculations.
The effective cash tax rate (CTR) exhibited significant volatility between 2020 and 2024, characterized by a baseline fluctuation around 27% to 32% and a substantial outlier in 2022. While net operating profit before taxes (NOPBT) experienced sharp contractions and expansions, the cash operating taxes did not always correlate proportionally with these earnings shifts.
- Analysis of Net Operating Profit Before Taxes (NOPBT)
- NOPBT demonstrated high instability throughout the period. After maintaining levels above 12 billion USD in 2020 and 2021, profitability dropped sharply to 7.88 billion USD in 2022. A strong recovery occurred in 2023, with NOPBT reaching a five-year peak of 13.49 billion USD, before falling again to its lowest point of 7.78 billion USD by the end of 2024.
- Cash Operating Tax Trends
- Cash tax payments remained relatively stable between 2020 and 2023, ranging from 3.41 billion USD to 4.01 billion USD. A notable divergence occurred in 2024, where cash taxes decreased significantly to 2.46 billion USD, marking the lowest cash tax expenditure in the analyzed five-year window.
- The 2022 Effective Cash Tax Rate Anomaly
- The most prominent trend is the spike in the CTR to 50.90% in 2022. This surge was driven by a simultaneous decline in NOPBT and an increase in cash operating taxes, which rose to 4.01 billion USD despite the profit contraction. This indicates a period where cash tax obligations were decoupled from current-year operating performance.
- Comparative Analysis of 2023 and 2024
- In 2023, the CTR normalized to 29.40% as profitability surged while cash taxes remained flat. In 2024, despite another sharp decline in NOPBT to 7.78 billion USD, the CTR remained relatively stable at 31.66%. This stability in the 2024 rate was achieved because cash taxes decreased in tandem with the reduced operating profit, unlike the inverse relationship observed in 2022.
AI Ask an analyst for more
Hi, I’m an AI-powered financial analyst at Stock Analysis on Net.
How can I help you?