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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Chevron Corp. pages available for free this week:
- Statement of Comprehensive Income
- Balance Sheet: Liabilities and Stockholders’ Equity
- Cash Flow Statement
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Current Ratio since 2005
- Analysis of Revenues
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Chevron 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 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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.
The analyzed financial data reveals notable fluctuations and trends across the examined periods.
- Net Operating Profit After Taxes (NOPAT)
- The company experienced a significant turnaround in NOPAT, moving from a substantial loss of approximately -$10.3 billion in 2020 to a notable profit of $19.4 billion in 2021. This positive momentum continued with a further increase to $41.8 billion in 2022, representing the peak in the observed period. However, in 2023, NOPAT dropped sharply to $19.5 billion and remained relatively stable into 2024 with a modest increase to $20.1 billion. This indicates considerable volatility in profitability, with a strong recovery after 2020 but a decline after the 2022 peak.
- Invested Capital
- Invested capital showed a generally stable pattern with slight fluctuations over the years. It decreased marginally from about $197.3 billion in 2020 to $193.6 billion in 2021, then increased to a high of approximately $212.3 billion in both 2022 and 2023. A slight reduction was observed in 2024, with invested capital falling to $208.4 billion. This suggests relative consistency in capital invested with moderate adjustments, particularly after 2021.
- Return on Invested Capital (ROIC)
- ROIC underwent significant changes corresponding with fluctuations in NOPAT. It was negative at -5.22% in 2020, reflecting the operating losses. There was a marked improvement to 10.04% in 2021 and a peak of 19.68% in 2022, highlighting enhanced efficiency and profitability in capital utilization. However, ROIC declined notably in 2023 to 9.17% and showed a slight recovery in 2024 to 9.64%. Despite this drop from the 2022 peak, the ROIC in the most recent years remains positive and substantially improved compared to 2020.
In summary, the data indicates a strong recovery and profitability improvement after 2020, with peak performance in 2022 both in terms of NOPAT and ROIC. Invested capital remained relatively stable, demonstrating consistent capital management. The decline in profitability and returns after 2022 suggests external or internal challenges affecting earnings, warranting further investigation to understand underlying causes and sustain improved financial performance.
Decomposition of ROIC
Chevron Corp., 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 significant improvement from a negative value of -8.9% in 2020 to a positive 15.98% in 2021. This upward trajectory continued in 2022, reaching a peak of 22.85%, indicating enhanced operational efficiency or improved pricing power during this period. However, in 2023, the margin declined noticeably to 13.94% and showed a modest recovery to 14.88% in 2024, suggesting some challenges affecting profitability, though still maintaining a positive margin.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrated a consistent increase from 0.48 in 2020 to 0.8 in 2021, followed by a further rise to 1.11 in 2022. This trend indicates an increasing efficiency in utilizing capital for revenue generation during these years. However, this ratio decreased to 0.93 in both 2023 and 2024, implying a slight reduction in capital efficiency or possibly greater capital investment not yet translating into proportional revenue growth.
- 1 – Effective Cash Tax Rate (CTR)
- This metric, representing the complement of the effective cash tax rate, showed a decreasing trend across the period. Starting at 100% in 2020, it declined steadily to 78.21% in 2021, then remained relatively stable at 77.6% in 2022, followed by further decreases to 70.92% in 2023 and 69.83% in 2024. This trend suggests an increase in effective cash tax payments or a reduction in tax benefits, affecting cash flows tied to tax obligations.
- Return on Invested Capital (ROIC)
- The return on invested capital shifted from a negative -5.22% in 2020 to a positive 10.04% in 2021, indicating a recovery in generating returns from invested capital. This improvement continued in 2022 with a peak of 19.68%. Subsequently, ROIC declined in 2023 to 9.17% and slightly increased to 9.64% in 2024. These fluctuations mirror the patterns observed in operating profit margin, reflecting variations in operational performance and capital effectiveness over time.
Operating Profit Margin (OPM)
Chevron 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 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Sales and other operating revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 ÷ Sales and other operating revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT experienced significant fluctuations over the observed period. In 2020, it was negative, indicating a loss before taxes. However, it dramatically improved in 2021, reaching a positive value of 24,859 million US dollars, and further increased substantially in 2022 to 53,862 million US dollars. This was followed by a decline in 2023 to 27,459 million and a slight increase in 2024 to 28,772 million US dollars. Overall, the company demonstrated a recovery from loss to considerable profitability, despite some volatility in the last two years.
- Sales and Other Operating Revenues
- There was a continuous upward trend from 2020 through 2022, with revenues rising from 94,471 million US dollars in 2020 to a peak of 235,717 million US dollars in 2022. However, in 2023 and 2024, revenues declined to 196,913 million and 193,414 million US dollars, respectively. This pattern indicates strong growth followed by a notable contraction in sales and operating revenues in recent years.
- Operating Profit Margin (OPM)
- The operating profit margin mirrored the trend in NOPBT, beginning with a negative margin of -8.9% in 2020, suggesting operational losses. The margin improved significantly in 2021 to 15.98% and peaked at 22.85% in 2022, reflecting increasing profitability and operational efficiency. However, the margin decreased thereafter, settling at 13.94% in 2023 and slightly improving to 14.88% in 2024. This decline after 2022 suggests reduced operational profitability despite still maintaining a positive margin.
- Summary
- The data indicate that the company experienced a turnaround from operating losses in 2020 to robust profitability by 2022, driven by strong revenue growth and enhanced operating margins. The subsequent period from 2023 to 2024 shows signs of both revenue and profitability contraction, although the company remains profitable. These patterns suggest cyclical or market-related factors impacting performance after a period of significant improvement.
Turnover of Capital (TO)
Chevron 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) | ||||||
| Sales and other operating revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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 = Sales and other operating revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Sales and Other Operating Revenues
- There was a substantial increase in sales and other operating revenues from 2020 to 2022, rising from 94,471 million USD to 235,717 million USD. This represents significant growth over two years. However, revenues declined in 2023 to 196,913 million USD and showed a slight further decrease in 2024 to 193,414 million USD, indicating a reversal of the prior growth trend in the most recent two years.
- Invested Capital
- Invested capital experienced a marginal decline from 197,314 million USD in 2020 to 193,606 million USD in 2021. It then increased steadily through 2022 and 2023, reaching a peak of 212,337 million USD. A small reduction occurred in 2024, bringing the total to 208,395 million USD. Overall, the invested capital exhibited moderate upward movement with some fluctuations.
- Turnover of Capital (TO)
- The turnover of capital ratio grew significantly from 0.48 in 2020 to 1.11 in 2022, indicating improved efficiency in generating sales relative to invested capital during this period. After peaking in 2022, the ratio declined to 0.93 in 2023 and remained steady in 2024. This suggests that while the company improved asset utilization initially, it faced a decrease in capital turnover following 2022, though still maintaining a better turnover rate than in 2020 and 2021.
- Summary of Trends
- The data reveal a phase of strong growth in revenues and capital turnover up to 2022, accompanied by a gradual rise in invested capital. After 2022, the company experienced a downturn in sales and a decline in turnover of capital, while invested capital stabilized at a slightly lower level. This pattern suggests that operational efficiency and revenue generation faced headwinds in the latter two years following a period of robust expansion.
Effective Cash Tax Rate (CTR)
Chevron 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 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
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.
- Cash Operating Taxes
- Cash operating taxes exhibited a significant increase from 2020 to 2022, rising from 1,885 million USD to a peak of 12,067 million USD. Subsequently, there was a notable decline in 2023 to 7,986 million USD, followed by a moderate increase to 8,681 million USD in 2024.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed strong volatility across the observed period. In 2020, it was negative at -8,410 million USD, then sharply increased to a positive 24,859 million USD in 2021. This upward trend continued with a peak of 53,862 million USD in 2022, before decreasing to 27,459 million USD in 2023 and slightly improving to 28,772 million USD in 2024.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate started being recorded from 2021 onward, where it was 21.79%. It showed a gradual growth trend, rising to 22.4% in 2022, then more sharply increasing to 29.08% in 2023 and a further slight increase to 30.17% in 2024. This indicates a rising proportion of cash operating taxes relative to operating profits over this period.
- Summary of Trends and Insights
- Overall, the data indicate a period of recovery and growth in operating profitability from 2020 to 2022, followed by a correction in 2023 and stabilization into 2024. The cash operating taxes mirrored this profit trend closely but with a lag in reduction after the peak year of 2022. The increasing effective cash tax rate suggests a growing tax burden relative to profits, which may impact net earnings and cash flow generation going forward. These patterns highlight the importance of monitoring tax efficiency and profitability dynamics within this timeframe.