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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Carrier Global Corp. pages available for free this week:
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Profitability Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2020
- Return on Assets (ROA) since 2020
- Price to Earnings (P/E) since 2020
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Return on Invested Capital (ROIC)
Carrier Global Corp., ROIC calculation, comparison to benchmarks
| 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 | ||||
| Boeing Co. | ||||
| Caterpillar Inc. | ||||
| Eaton Corp. plc | ||||
| GE Aerospace | ||||
| Honeywell International Inc. | ||||
| Lockheed Martin Corp. | ||||
| RTX Corp. | ||||
Based on: 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 2022 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 initially declined from 2,367 million USD in 2020 to 1,932 million USD in 2021, representing a reduction of approximately 18.4%. However, in 2022, there was a substantial increase to 3,800 million USD, nearly doubling the previous year's figure and exceeding the 2020 level by a significant margin.
- Invested Capital
- Invested capital exhibited moderate fluctuations over the three-year period. It decreased slightly from 19,032 million USD in 2020 to 18,835 million USD in 2021, a decline of around 1%. In 2022, invested capital rose to 19,880 million USD, marking an increase of approximately 5.5% compared to 2021 and surpassing the 2020 value.
- Return on Invested Capital (ROIC)
- The return on invested capital followed a pattern consistent with NOPAT changes. ROIC decreased from 12.44% in 2020 to 10.26% in 2021, indicating reduced profitability relative to capital invested. Subsequently, ROIC rose sharply to 19.12% in 2022, reflecting a marked improvement in capital efficiency and earnings generation compared to the prior years.
Decomposition of ROIC
Carrier Global Corp., decomposition of ROIC
Based on: 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 demonstrates variability over the three-year period. It decreased from 18.26% in 2020 to 13.47% in 2021, indicating a reduction in operational efficiency or increased costs relative to revenue in that year. However, this was followed by a significant recovery and improvement to 23.02% in 2022, surpassing the 2020 level and suggesting enhanced profitability and effective cost management in the most recent year.
- Turnover of Capital (TO)
- The turnover of capital shows a moderate upward trend from 0.92 in 2020 to 1.09 in 2021, indicating a more efficient use of capital assets to generate sales. In 2022, there was a slight decline to 1.03, but turnover remained above the initial 2020 figure, reflecting generally favorable capital utilization across the timeline.
- Effective Cash Tax Rate (1 – CTR)
- The effective cash tax rate, expressed as 1 minus the tax rate, fluctuated across the years. It decreased from 74.26% in 2020 to 69.59% in 2021, implying a higher cash tax burden during that period. In 2022, the rate increased markedly to 80.85%, indicating a reduced cash tax expense or enhanced tax efficiency for the company in the most recent year.
- Return on Invested Capital (ROIC)
- Return on invested capital exhibited a downward trend from 12.44% in 2020 to 10.26% in 2021, signaling a decline in the company's ability to generate returns from its invested capital. This trend reversed sharply in 2022, where ROIC rose to 19.12%, reflecting a strong improvement in capital efficiency and overall financial performance.
Operating Profit Margin (OPM)
Carrier Global Corp., OPM calculation, comparison to benchmarks
| 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) | ||||
| Net sales | ||||
| Profitability Ratio | ||||
| OPM3 | ||||
| Benchmarks | ||||
| OPM, Competitors4 | ||||
| Boeing Co. | ||||
| Caterpillar Inc. | ||||
| Eaton Corp. plc | ||||
| GE Aerospace | ||||
| Honeywell International Inc. | ||||
| Lockheed Martin Corp. | ||||
| RTX Corp. | ||||
Based on: 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 2022 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes declined from 3,187 million USD in 2020 to 2,776 million USD in 2021, representing a decrease. However, there was a significant recovery and growth in 2022, with NOPBT increasing markedly to 4,700 million USD. This indicates a substantial improvement in profitability after the dip observed in 2021.
- Net Sales
- Net sales showed a rising trend from 17,456 million USD in 2020 to 20,613 million USD in 2021. In 2022, net sales experienced a slight decrease to 20,421 million USD, nearly maintaining the level seen in 2021. Overall, sales increased significantly over the three-year period, despite the small decline in the final year.
- Operating Profit Margin (OPM)
- The operating profit margin gradually decreased from 18.26% in 2020 to 13.47% in 2021, reflecting decreased profitability efficiency relative to sales. In 2022, the margin substantially improved to 23.02%, exceeding the margin from 2020 by a wide margin. This trend indicates a marked enhancement in operational efficiency and profitability in the last reported year.
Turnover of Capital (TO)
Carrier Global Corp., TO calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||
| Net sales | ||||
| Invested capital1 | ||||
| Efficiency Ratio | ||||
| TO2 | ||||
| Benchmarks | ||||
| TO, Competitors3 | ||||
| Boeing Co. | ||||
| Caterpillar Inc. | ||||
| Eaton Corp. plc | ||||
| GE Aerospace | ||||
| Honeywell International Inc. | ||||
| Lockheed Martin Corp. | ||||
| RTX Corp. | ||||
Based on: 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 2022 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated an upward trend from 2020 to 2021, increasing from 17,456 million USD to 20,613 million USD. However, in 2022, net sales experienced a slight decline to 20,421 million USD, indicating a marginal decrease compared to the prior year but remaining significantly higher than the 2020 level.
- Invested Capital
- Invested capital showed a slight decrease between 2020 and 2021, moving from 19,032 million USD to 18,835 million USD. This was followed by an increase in 2022 to 19,880 million USD, surpassing the 2020 figure and reflecting a renewed capital investment during the most recent period.
- Turnover of Capital (TO)
- The turnover of capital ratio improved notably from 0.92 in 2020 to 1.09 in 2021, indicating enhanced efficiency in the use of invested capital to generate sales. In 2022, this ratio decreased slightly to 1.03, though it remained above the 2020 level, suggesting a generally strong but slightly reduced capital utilization efficiency compared to the peak in 2021.
Effective Cash Tax Rate (CTR)
Carrier Global Corp., CTR calculation, comparison to benchmarks
| 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 | ||||
| Boeing Co. | ||||
| Caterpillar Inc. | ||||
| Eaton Corp. plc | ||||
| GE Aerospace | ||||
| Honeywell International Inc. | ||||
| Lockheed Martin Corp. | ||||
| RTX Corp. | ||||
Based on: 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 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The amount of cash paid in operating taxes has shown a consistent upward trend over the analyzed periods, increasing from 820 million US dollars in 2020 to 844 million in 2021, and further to 900 million in 2022. This indicates a steady rise in tax expenses associated with operations.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT decreased from 3,187 million US dollars in 2020 to 2,776 million in 2021, indicating a decline in operating profitability before tax expenses. However, there was a significant recovery and improvement in 2022, with NOPBT rising sharply to 4,700 million. This suggests a strong rebound in operational performance during the last reported year.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate experienced notable fluctuations. It rose from 25.74% in 2020 to 30.41% in 2021, suggesting higher relative tax burdens in relation to pre-tax operating profits. In 2022, the effective tax rate dropped substantially to 19.15%, indicating a more favorable tax environment or tax management strategies that significantly reduced cash tax liabilities relative to profits.
- Summary of Trends
- Overall, operational profitability before taxes demonstrated volatility, with a dip in 2021 followed by a robust increase in 2022. Despite the recovery in profits, the cash operating taxes paid increased steadily, reflecting either higher tax rates in nominal terms or expanded operational scale. Meanwhile, the effective cash tax rate showed an inverse relationship to profit trends, peaking during a period of lower profitability and declining markedly as profits surged. These patterns suggest efficient tax management during the period of increased earnings and a generally improving operating performance by the end of the period analyzed.