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)
Corning Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 817) | 1,544) | 2,088) | 1,761) | 968) | |
| Invested capital2 | 20,411) | 19,666) | 19,716) | 21,233) | 18,872) | |
| Performance Ratio | ||||||
| ROIC3 | 4.00% | 7.85% | 10.59% | 8.29% | 5.13% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Apple Inc. | 156.53% | 217.85% | 214.07% | — | — | |
| Arista Networks Inc. | 43.29% | 38.80% | 53.84% | — | — | |
| Cisco Systems Inc. | 21.42% | 21.11% | 20.34% | — | — | |
| Dell Technologies Inc. | 9.72% | 14.58% | 9.51% | — | — | |
| Lumentum Holdings Inc. | -5.87% | 9.32% | 22.51% | — | — | |
| Super Micro Computer Inc. | 25.75% | 14.13% | 8.04% | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 817 ÷ 20,411 = 4.00%
4 Click competitor name to see calculations.
The Return on Invested Capital (ROIC) exhibited a cyclical trajectory between 2019 and 2023, characterized by a period of strong expansion followed by a sharp contraction. The metric peaked in 2021 before declining to its lowest level of the five-year sequence by the end of 2023.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT showed significant volatility, increasing from US$ 968 million in 2019 to a peak of US$ 2,088 million in 2021. This growth represented a substantial increase in operational profitability over a two-year period. However, a consistent downward trend followed, with profits falling to US$ 1,544 million in 2022 and further contracting to US$ 817 million in 2023, falling below the initial 2019 baseline.
- Invested Capital
- The capital base remained relatively stable throughout the analyzed period. Following an increase to US$ 21,233 million in 2020, invested capital fluctuated within a narrow range, concluding at US$ 20,411 million in 2023. The lack of significant volatility in invested capital indicates that the fluctuations in ROIC were driven primarily by operational earnings performance rather than structural changes in the capital base.
- Return on Invested Capital (ROIC) Analysis
- ROIC increased steadily from 5.13% in 2019 to a peak of 10.59% in 2021, mirroring the surge in NOPAT. A subsequent decline to 7.85% in 2022 and 4.00% in 2023 reflects a diminished efficiency in generating returns from the invested capital. The final observed value of 4.00% represents a significant erosion of the return profile compared to the 2021 peak.
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Decomposition of ROIC
Corning Inc., decomposition of ROIC
Based on: 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), 10-K (reporting date: 2019-12-31).
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) exhibited a bell-shaped trajectory over the five-year period, peaking in 2021 before experiencing a significant contraction. The movement in ROIC is highly correlated with fluctuations in the operating profit margin, indicating that profitability per unit of revenue has been the primary driver of capital returns.
- Operating Profit Margin (OPM)
- A period of expansion is observed from 2019 to 2021, with the margin rising from 12.71% to a peak of 18.83%. This trend reversed sharply thereafter, with margins declining to 14.61% in 2022 and further dropping to 8.98% in 2023, the lowest point in the analyzed timeframe.
- Turnover of Capital (TO)
- Capital turnover remained relatively stable, with minor fluctuations between a low of 0.58 in 2020 and a peak of 0.72 in 2022. Although asset efficiency improved slightly during the middle of the period, the ratio returned to 0.62 by 2023, closely aligning with the 2019 starting value of 0.61.
- After-Tax Component (1 – Effective Cash Tax Rate)
- The impact of the effective cash tax rate was volatile, peaking at 90.18% in 2020. A gradual downward trend followed, with the value decreasing to 72.31% by 2023, suggesting a higher effective tax burden on operating profits in the later years of the period.
- Return on Invested Capital (ROIC)
- ROIC grew from 5.13% in 2019 to a maximum of 10.59% in 2021, mirroring the growth in operating margins. The subsequent decline to 4.00% in 2023 highlights that the contraction in operating profitability outweighed the relative stability of capital turnover, leading to a substantial erosion of the return on invested capital.
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Operating Profit Margin (OPM)
Corning Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 817) | 1,544) | 2,088) | 1,761) | 968) | |
| Add: Cash operating taxes2 | 313) | 523) | 542) | 192) | 494) | |
| Net operating profit before taxes (NOPBT) | 1,130) | 2,067) | 2,630) | 1,952) | 1,462) | |
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Add: Increase (decrease) in deferred revenue | (9) | (43) | (112) | 1,024) | —) | |
| Adjusted net sales | 12,579) | 14,146) | 13,970) | 12,327) | 11,503) | |
| Profitability Ratio | ||||||
| OPM3 | 8.98% | 14.61% | 18.83% | 15.84% | 12.71% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Apple Inc. | 29.83% | 30.44% | 30.11% | — | — | |
| Arista Networks Inc. | 43.35% | 37.17% | 37.38% | — | — | |
| Cisco Systems Inc. | 29.22% | 29.29% | 28.52% | — | — | |
| Dell Technologies Inc. | 7.05% | 9.11% | 9.27% | — | — | |
| Lumentum Holdings Inc. | -5.76% | 18.07% | 30.09% | — | — | |
| Super Micro Computer Inc. | 11.58% | 7.18% | 3.35% | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 1,130 ÷ 12,579 = 8.98%
4 Click competitor name to see calculations.
The operating performance between 2019 and 2023 is characterized by a period of growth and efficiency gains followed by a significant contraction in both profitability and revenue.
- Revenue and Profitability Trends
- Adjusted net sales experienced a steady increase from 11,503 million USD in 2019 to a peak of 14,146 million USD in 2022. However, this growth trend reversed in 2023, with sales falling to 12,579 million USD.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT followed a bell-shaped trajectory, rising from 1,462 million USD in 2019 to a peak of 2,630 million USD in 2021. A subsequent decline occurred in 2022, followed by a sharp reduction to 1,130 million USD in 2023, marking the lowest absolute operating profit within the five-year period.
- Operating Profit Margin (OPM) Analysis
- Operational efficiency expanded significantly in the early part of the period, with the OPM increasing from 12.71% in 2019 to a high of 18.83% in 2021. This trend reversed sharply thereafter, with the margin contracting to 14.61% in 2022 and further declining to 8.98% in 2023. The 2023 margin indicates a substantial erosion of profitability, falling well below the 2019 baseline.
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Turnover of Capital (TO)
Corning Inc., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 12,588) | 14,189) | 14,082) | 11,303) | 11,503) | |
| Add: Increase (decrease) in deferred revenue | (9) | (43) | (112) | 1,024) | —) | |
| Adjusted net sales | 12,579) | 14,146) | 13,970) | 12,327) | 11,503) | |
| Invested capital1 | 20,411) | 19,666) | 19,716) | 21,233) | 18,872) | |
| Efficiency Ratio | ||||||
| TO2 | 0.62 | 0.72 | 0.71 | 0.58 | 0.61 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Apple Inc. | 6.36 | 8.46 | 8.61 | — | — | |
| Arista Networks Inc. | 1.32 | 1.45 | 1.71 | — | — | |
| Cisco Systems Inc. | 1.01 | 0.89 | 0.90 | — | — | |
| Dell Technologies Inc. | 1.81 | 1.91 | 1.16 | — | — | |
| Lumentum Holdings Inc. | 0.61 | 0.68 | 0.89 | — | — | |
| Super Micro Computer Inc. | 2.95 | 2.35 | 2.77 | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Invested capital. See details »
2 2023 Calculation
TO = Adjusted net sales ÷ Invested capital
= 12,579 ÷ 20,411 = 0.62
3 Click competitor name to see calculations.
The efficiency of capital utilization exhibited significant volatility between 2019 and 2023, characterized by a mid-period improvement followed by a recent decline. The fluctuations in the turnover of capital were driven by the diverging trajectories of adjusted net sales and the total invested capital base.
- Revenue and Capital Deployment Trends
- Adjusted net sales showed a consistent upward trend from 2019 through 2022, increasing from 11,503 million to a peak of 14,146 million. This growth reversed in 2023, with sales contracting to 12,579 million. Concurrently, invested capital increased from 18,872 million in 2019 to 21,233 million in 2020, followed by a period of contraction in 2021 and 2022, and a final increase to 20,411 million by the end of 2023.
- Turnover of Capital Performance
- The turnover of capital ratio experienced a decline in 2020 to 0.58, as the expansion of the invested capital base exceeded the growth in net sales. A significant recovery in asset productivity was observed in 2021 and 2022, with the ratio rising to 0.71 and 0.72, respectively. This improvement was the result of increasing sales volume coinciding with a reduction in invested capital. However, in 2023, the ratio dropped to 0.62, reflecting a simultaneous decrease in revenue and an increase in invested capital, effectively returning the turnover efficiency to levels near those seen in 2019.
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Effective Cash Tax Rate (CTR)
Corning Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 817) | 1,544) | 2,088) | 1,761) | 968) | |
| Add: Cash operating taxes2 | 313) | 523) | 542) | 192) | 494) | |
| Net operating profit before taxes (NOPBT) | 1,130) | 2,067) | 2,630) | 1,952) | 1,462) | |
| Tax Rate | ||||||
| CTR3 | 27.69% | 25.31% | 20.62% | 9.82% | 33.82% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Apple Inc. | 17.45% | 15.42% | 17.39% | — | — | |
| Arista Networks Inc. | 24.62% | 28.07% | 15.62% | — | — | |
| Cisco Systems Inc. | 27.06% | 19.15% | 20.48% | — | — | |
| Dell Technologies Inc. | 23.81% | 16.21% | 11.88% | — | — | |
| Lumentum Holdings Inc. | — | 24.68% | 15.64% | — | — | |
| Super Micro Computer Inc. | 24.68% | 16.27% | 13.44% | — | — | |
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 313 ÷ 1,130 = 27.69%
4 Click competitor name to see calculations.
The analysis of the effective cash tax rate (CTR) and its relationship to net operating profit before taxes (NOPBT) from 2019 to 2023 reveals significant volatility and a divergent trend between operating profitability and cash tax obligations.
- Effective Cash Tax Rate Trends
- A sharp contraction in the CTR is observed in 2020, where the rate fell to 9.82% from 33.82% in 2019. Following this trough, the CTR entered a period of consistent annual escalation, rising to 20.62% in 2021, 25.31% in 2022, and reaching 27.69% by the end of 2023.
- Correlation Between NOPBT and Tax Incidence
- An inverse relationship is evident between profitability and the tax rate from 2021 through 2023. While NOPBT peaked at 2,630 million US$ in 2021 and declined steadily to 1,130 million US$ by 2023, the effective cash tax rate climbed steadily during the same period. This indicates that the cash tax burden as a percentage of operating profit increased even as the absolute level of operating profit diminished.
- Cash Operating Tax Volatility
- Cash operating tax payments exhibited substantial fluctuations, dropping to a five-year low of 192 million US$ in 2020 despite an increase in NOPBT during that year. Although cash taxes peaked in 2021 at 542 million US$, the 2023 figures reflect a situation where lower nominal tax payments (313 million US$) were driven by significantly lower operating profits, yet represented a higher effective tax percentage than in any year since 2019.
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