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)
Danaher Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,999 | 2,089 | 2,614 | 2,261 | 1,869 | |
| Invested capital2 | 67,209 | 58,367 | 44,837 | 42,890 | 42,551 | |
| Performance Ratio | ||||||
| ROIC3 | 7.44% | 3.58% | 5.83% | 5.27% | 4.39% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | 8.01% | 6.47% | 6.13% | 0.03% | 3.51% | |
| Anthem Inc. | 8.67% | 9.75% | 8.29% | 6.62% | 6.65% | |
| Becton, Dickinson & Co. | 2.14% | 2.44% | 1.21% | 3.75% | 3.22% | |
| Bristol-Myers Squibb Co. | -7.57% | 3.06% | 26.85% | 13.23% | 25.13% | |
| CVS Health Corp. | 6.63% | 5.97% | 1.67% | 8.07% | 8.25% | |
| Edwards Lifesciences Corp. | 19.51% | 28.41% | 24.25% | 21.54% | 21.33% | |
| HCA Healthcare Inc. | 16.22% | 17.72% | 19.73% | 15.68% | 18.37% | |
| Intuitive Surgical Inc. | 25.62% | 42.29% | 47.50% | 45.15% | 37.14% | |
| Medtronic PLC | 5.86% | 7.20% | 3.43% | 4.57% | 4.81% | |
| Stryker Corp. | 6.88% | 10.09% | 10.10% | 6.78% | 10.11% | |
| UnitedHealth Group Inc. | 20.83% | 21.12% | 19.67% | 17.70% | 14.19% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 4,999 ÷ 67,209 = 7.44%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Danaher Corp. ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Decomposition of ROIC
Danaher Corp., decomposition of ROIC
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the increase in return on invested capital (ROIC) over 2020 year is the decrease in effective cash tax rate (CTR).
Operating Profit Margin (OPM)
Danaher Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,999 | 2,089 | 2,614 | 2,261 | 1,869 | |
| Add: Cash operating taxes2 | 380 | 1,287 | 871 | 930 | 833 | |
| Net operating profit before taxes (NOPBT) | 5,378 | 3,376 | 3,485 | 3,191 | 2,702 | |
| Sales | 22,284 | 17,911 | 19,893 | 18,330 | 16,882 | |
| Add: Increase (decrease) in deferred revenue | 611 | 69 | 28 | 138 | 99 | |
| Adjusted sales | 22,895 | 17,980 | 19,921 | 18,468 | 16,981 | |
| Profitability Ratio | ||||||
| OPM3 | 23.49% | 18.77% | 17.49% | 17.28% | 15.91% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | 16.05% | 14.97% | 11.67% | 11.07% | 12.18% | |
| Anthem Inc. | 6.03% | 6.47% | 6.24% | 5.57% | 6.19% | |
| Becton, Dickinson & Co. | 8.76% | 10.50% | 11.60% | 11.65% | 11.73% | |
| Bristol-Myers Squibb Co. | -12.65% | 21.63% | 26.91% | 26.03% | 31.63% | |
| CVS Health Corp. | 4.79% | 4.69% | 2.59% | 5.80% | 6.31% | |
| Edwards Lifesciences Corp. | 20.81% | 26.62% | 20.56% | 30.33% | 25.36% | |
| HCA Healthcare Inc. | 13.80% | 13.96% | 15.39% | 14.13% | 15.91% | |
| Intuitive Surgical Inc. | 28.14% | 34.15% | 35.50% | 36.03% | 36.62% | |
| Medtronic PLC | 16.84% | 21.19% | 21.24% | 18.06% | 18.64% | |
| Stryker Corp. | 15.48% | 18.35% | 18.49% | 18.18% | 18.74% | |
| UnitedHealth Group Inc. | 9.12% | 8.37% | 7.85% | 7.83% | 7.13% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted sales
= 100 × 5,378 ÷ 22,895 = 23.49%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Danaher Corp. OPM improved from 2018 to 2019 and from 2019 to 2020. |
Turnover of Capital (TO)
Danaher Corp., TO calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | 22,284 | 17,911 | 19,893 | 18,330 | 16,882 | |
| Add: Increase (decrease) in deferred revenue | 611 | 69 | 28 | 138 | 99 | |
| Adjusted sales | 22,895 | 17,980 | 19,921 | 18,468 | 16,981 | |
| Invested capital1 | 67,209 | 58,367 | 44,837 | 42,890 | 42,551 | |
| Efficiency Ratio | ||||||
| TO2 | 0.34 | 0.31 | 0.44 | 0.43 | 0.40 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | 0.57 | 0.55 | 0.52 | 0.42 | 0.46 | |
| Anthem Inc. | 2.13 | 1.86 | 1.75 | 1.79 | 1.87 | |
| Becton, Dickinson & Co. | 0.37 | 0.38 | 0.34 | 0.35 | 0.56 | |
| Bristol-Myers Squibb Co. | 0.47 | 0.26 | 1.19 | 1.26 | 1.10 | |
| CVS Health Corp. | 1.96 | 1.83 | 1.40 | 2.19 | 2.08 | |
| Edwards Lifesciences Corp. | 1.11 | 1.18 | 1.28 | 1.20 | 1.14 | |
| HCA Healthcare Inc. | 1.49 | 1.53 | 1.57 | 1.58 | 1.63 | |
| Intuitive Surgical Inc. | 0.98 | 1.35 | 1.47 | 1.86 | 1.31 | |
| Medtronic PLC | 0.41 | 0.42 | 0.42 | 0.37 | 0.37 | |
| Stryker Corp. | 0.53 | 0.64 | 0.65 | 0.71 | 0.66 | |
| UnitedHealth Group Inc. | 2.96 | 3.13 | 3.20 | 3.20 | 3.24 | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 Invested capital. See details »
2 2020 Calculation
TO = Adjusted sales ÷ Invested capital
= 22,895 ÷ 67,209 = 0.34
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Danaher Corp. TO deteriorated from 2018 to 2019 but then slightly improved from 2019 to 2020. |
Effective Cash Tax Rate (CTR)
Danaher Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 4,999 | 2,089 | 2,614 | 2,261 | 1,869 | |
| Add: Cash operating taxes2 | 380 | 1,287 | 871 | 930 | 833 | |
| Net operating profit before taxes (NOPBT) | 5,378 | 3,376 | 3,485 | 3,191 | 2,702 | |
| Tax Rate | ||||||
| CTR3 | 7.06% | 38.13% | 24.99% | 29.14% | 30.84% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Abbott Laboratories | 12.92% | 21.15% | -1.36% | 99.37% | 37.12% | |
| Anthem Inc. | 32.42% | 18.95% | 24.06% | 33.54% | 42.54% | |
| Becton, Dickinson & Co. | 33.90% | 39.16% | 69.26% | 7.72% | 51.06% | |
| Bristol-Myers Squibb Co. | — | 45.70% | 16.09% | 59.53% | 27.47% | |
| CVS Health Corp. | 29.36% | 30.33% | 53.80% | 36.46% | 37.21% | |
| Edwards Lifesciences Corp. | 15.83% | 9.27% | 7.99% | 40.97% | 26.20% | |
| HCA Healthcare Inc. | 21.16% | 17.09% | 18.36% | 29.69% | 29.05% | |
| Intuitive Surgical Inc. | 6.67% | 8.23% | 8.99% | 32.70% | 22.68% | |
| Medtronic PLC | 14.33% | 19.22% | 61.78% | 31.90% | 30.20% | |
| Stryker Corp. | 15.94% | 14.04% | 16.59% | 47.55% | 18.49% | |
| UnitedHealth Group Inc. | 22.89% | 19.28% | 21.66% | 29.24% | 38.50% | |
Based on: 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 380 ÷ 5,378 = 7.06%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Danaher Corp. CTR increased from 2018 to 2019 but then decreased significantly from 2019 to 2020. |