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:
- Balance Sheet: Assets
- Analysis of Liquidity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Earnings (P/E) since 2005
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Return on Invested Capital (ROIC)
Chevron Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The period under review demonstrates significant fluctuations in Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both experienced changes over the five-year span, contributing to the observed ROIC trends.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased substantially from 2021 to 2022, more than doubling to US$41,794 million. However, NOPAT decreased significantly in 2023, falling to US$19,473 million, before a modest increase in 2024 to US$20,090 million. A further decline is observed in 2025, with NOPAT reaching US$13,042 million. This indicates considerable volatility in the company’s operational profitability.
- Invested Capital
- Invested capital showed a consistent increase from 2021 to 2024, rising from US$193,606 million to US$208,395 million. A notable increase is then seen in 2025, with invested capital reaching US$274,202 million. This suggests a growing capital base, potentially through reinvestment of earnings or new financing activities.
- Return on Invested Capital (ROIC)
- ROIC mirrored the NOPAT trend, peaking at 19.68% in 2022, coinciding with the highest NOPAT value. A substantial decrease to 9.17% was recorded in 2023, followed by a slight recovery to 9.64% in 2024. The most significant decline occurred in 2025, with ROIC falling to 4.76%. This decrease in ROIC, despite the increase in invested capital in 2025, suggests diminishing returns on capital employed. The initial increase in ROIC from 2021 to 2022 indicates improved capital efficiency, but subsequent years demonstrate a weakening of this efficiency.
The interplay between NOPAT and invested capital is critical to understanding the ROIC trajectory. While invested capital generally increased, the fluctuations in NOPAT had a dominant effect on ROIC, resulting in a substantial decline by the end of the period. The 2025 figures, in particular, suggest a potential need to evaluate capital allocation strategies and operational performance.
Decomposition of ROIC
Chevron Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period demonstrates significant fluctuations in Return on Invested Capital (ROIC), driven by changes in its component parts. Overall, ROIC peaked in 2022 before declining through 2025. A detailed examination of the underlying factors reveals the key drivers of this performance.
- Operating Profit Margin (OPM)
- The Operating Profit Margin exhibited a substantial increase from 15.98% in 2021 to 22.85% in 2022. However, this was followed by a decline to 13.94% in 2023 and a further decrease to 10.64% in 2025. This suggests a weakening ability to translate sales into operating profit over the observed timeframe.
- Turnover of Capital (TO)
- The Turnover of Capital ratio increased from 0.80 in 2021 to 1.11 in 2022, indicating improved efficiency in utilizing capital to generate revenue. This improvement was not sustained, as the ratio decreased to 0.93 in both 2023 and 2024, and then fell more substantially to 0.67 in 2025. This indicates a decreasing ability to generate sales from each unit of capital employed.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The factor representing one minus the Effective Cash Tax Rate remained relatively stable between 2021 and 2023, fluctuating between 77.60% and 78.21%. A noticeable downward trend emerged in 2024 and 2025, decreasing to 69.83% and 66.47% respectively. This suggests an increasing effective tax burden, reducing the portion of operating profit available to investors.
- Return on Invested Capital (ROIC)
- ROIC mirrored the trends observed in its components. The peak of 19.68% in 2022 was driven by improvements in both Operating Profit Margin and Turnover of Capital. The subsequent decline in ROIC to 4.76% by 2025 reflects the combined impact of decreasing profitability, reduced capital efficiency, and a rising effective tax rate. The most significant decrease in ROIC occurred between 2024 and 2025, coinciding with the largest declines in both Turnover of Capital and the tax rate adjustment factor.
The decomposition of ROIC highlights that the 2022 performance was an outlier, and the subsequent years demonstrate a weakening of fundamental profitability and capital efficiency. The increasing tax burden further exacerbates the decline in returns.
Operating Profit Margin (OPM)
Chevron Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| 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. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Sales and other operating revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited significant fluctuation over the five-year period. Initial values demonstrated a substantial increase, followed by a decline, culminating in the lowest observed margin in the final year.
- Operating Profit Margin (OPM) - Trend Analysis
- The operating profit margin began at 15.98% in 2021. A marked increase was observed in 2022, reaching 22.85%, representing the highest margin within the observed timeframe. Subsequently, the margin decreased to 13.94% in 2023 and experienced a modest increase to 14.88% in 2024. The most significant decline occurred between 2024 and 2025, with the margin falling to 10.64%.
Net operating profit before taxes mirrored the overall trend in operating profit margin, peaking in 2022 at US$53,862 million before decreasing in subsequent years. Sales and other operating revenues also increased substantially from 2021 to 2022, but then decreased for the following three years.
- Relationship between NOPBT and OPM
- The increase in operating profit margin in 2022 coincided with a substantial increase in net operating profit before taxes. Conversely, the decline in operating profit margin from 2022 to 2025 was accompanied by a corresponding decrease in net operating profit before taxes. This suggests a strong correlation between the two metrics.
- Sales Revenue Impact
- While the operating profit margin decreased in later years, the decrease in sales and other operating revenues may have contributed to the lower net operating profit before taxes. The combined effect of a lower margin and lower revenue resulted in a significant reduction in overall profitability by 2025.
The observed volatility in the operating profit margin warrants further investigation to determine the underlying drivers. Factors such as changes in input costs, pricing strategies, and operational efficiency could be contributing to these fluctuations.
Turnover of Capital (TO)
Chevron Corp., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales and other operating revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Invested capital. See details »
2 2025 Calculation
TO = Sales and other operating revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The turnover of capital exhibited fluctuating performance over the five-year period. Initial increases were followed by stabilization and then a notable decline.
- Sales and other operating revenues
- Sales demonstrated a substantial increase from 2021 to 2022, rising from US$155,606 million to US$235,717 million. However, subsequent years witnessed a decline, reaching US$196,913 million in 2023, US$193,414 million in 2024, and further decreasing to US$184,432 million in 2025. This indicates a peak in revenue in 2022 followed by a consistent downward trend.
- Invested capital
- Invested capital experienced a moderate increase from 2021 to 2022, moving from US$193,606 million to US$212,342 million. It remained relatively stable in 2023 at US$212,337 million, decreased slightly in 2024 to US$208,395 million, and then increased significantly in 2025 to US$274,202 million. The substantial rise in 2025 suggests a considerable reinvestment or capital expenditure during that period.
- Turnover of capital (TO)
- The turnover of capital ratio increased from 0.80 in 2021 to 1.11 in 2022, reflecting improved efficiency in generating sales from invested capital. This ratio then stabilized at 0.93 in both 2023 and 2024. A significant decrease was observed in 2025, with the ratio falling to 0.67. This decline suggests a reduced ability to generate sales relative to the amount of capital invested, potentially due to the increased invested capital base without a corresponding increase in sales.
The combined effect of declining sales and increasing invested capital in 2025 resulted in the most pronounced decrease in the turnover of capital ratio during the observed period. The ratio’s performance suggests a weakening relationship between invested capital and revenue generation in the most recent year.
Effective Cash Tax Rate (CTR)
Chevron Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited a consistent upward trend over the five-year period. Simultaneously, cash operating taxes and net operating profit before taxes demonstrated fluctuations, influencing the observed rate changes.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate began at 21.79% in 2021 and increased to 33.53% by 2025. A moderate increase was observed from 2021 to 2022, moving to 22.40%. The rate then experienced a more substantial rise, reaching 29.08% in 2023 and 30.17% in 2024, before concluding at 33.53% in 2025. This indicates a growing proportion of pre-tax profits being paid as cash taxes.
- Cash Operating Taxes
- Cash operating taxes increased significantly from US$5,416 million in 2021 to US$12,067 million in 2022. However, these taxes decreased to US$7,986 million in 2023, before slightly increasing to US$8,681 million in 2024. A further decrease was noted in 2025, with cash operating taxes totaling US$6,579 million. These fluctuations suggest changes in taxable income or applicable tax regulations.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes peaked at US$53,862 million in 2022, a substantial increase from the US$24,859 million reported in 2021. NOPBT then declined to US$27,459 million in 2023 and US$28,772 million in 2024. The most significant decrease occurred in 2025, with NOPBT falling to US$19,620 million. The interplay between NOPBT and cash operating taxes is a key driver of the observed CTR trend.
The increasing CTR, despite fluctuations in both NOPBT and cash operating taxes, suggests that the company is paying a larger percentage of its pre-tax income in taxes. The substantial increase in CTR from 2022 to 2025, coupled with the decline in NOPBT in those years, warrants further investigation into the underlying factors influencing the company’s tax position.