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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- Balance Sheet: Assets
- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Geographic Areas
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Total Asset Turnover since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
Danaher 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 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 a fluctuating pattern in Return on Invested Capital (ROIC). Initially, the metric exhibited a slight decline, followed by a more substantial decrease, and then a modest recovery. A detailed examination of the underlying components reveals the drivers of these changes.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from US$6,722 million in 2021 to US$6,866 million in 2022, representing a marginal improvement. However, a significant reduction occurred in 2023, with NOPAT falling to US$3,099 million. Subsequent years show a slight recovery, reaching US$3,391 million in 2024 and US$3,442 million in 2025, but remaining considerably below the levels observed in 2021 and 2022.
- Invested Capital
- Invested capital generally increased between 2021 and 2022, moving from US$74,633 million to US$78,342 million. It remained relatively stable in 2023 at US$78,561 million before decreasing to US$73,131 million in 2024. A slight increase is observed in 2025, with invested capital reaching US$75,443 million.
- Return on Invested Capital (ROIC)
- ROIC began at 9.01% in 2021 and decreased to 8.76% in 2022. The most pronounced decline occurred in 2023, with ROIC falling to 3.94%. A partial recovery was seen in 2024, with ROIC rising to 4.64%, and this trend continued modestly into 2025, reaching 4.56%. The ROIC trend largely mirrors the fluctuations in NOPAT, although the changes in invested capital also contribute to the overall movement. The substantial drop in ROIC in 2023 is primarily attributable to the significant decrease in NOPAT, despite a relatively stable invested capital base.
The observed trends suggest a period of profitability challenges in 2023, followed by a limited recovery in subsequent years. While invested capital has shown some volatility, the primary driver of the ROIC fluctuations appears to be the performance of NOPAT. Continued monitoring of NOPAT is crucial for assessing future ROIC performance.
Decomposition of ROIC
Danaher 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 under review demonstrates a declining trend in overall profitability as measured by Return on Invested Capital (ROIC). This decline appears to be driven by a combination of decreasing operating profit margins and a reduction in the efficiency with which capital is utilized, though partially offset by changes in the effective cash tax rate.
- Operating Profit Margin (OPM)
- The Operating Profit Margin exhibited a consistent decrease over the five-year period, moving from 27.65% in 2021 to 18.58% in 2025. The most significant decline occurred between 2022 and 2023, falling from 27.12% to 21.44%. While the rate of decline slowed in subsequent years, the overall trend remains downward, indicating increasing pressure on core operational profitability.
- Turnover of Capital (TO)
- The Turnover of Capital ratio, representing the efficiency of capital utilization, decreased from 0.40 in both 2021 and 2022 to 0.30 in 2023. A slight recovery was observed in 2024 and 2025, reaching 0.32 and 0.33 respectively. This suggests a period of reduced efficiency in generating revenue from invested capital, followed by a modest stabilization. The 2023 value represents the lowest efficiency within the observed timeframe.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The factor representing one minus the Effective Cash Tax Rate initially decreased from 81.42% in 2021 to 60.40% in 2023, representing an increase in the effective cash tax rate. However, this factor then increased to 72.69% in 2024 and further to 75.23% in 2025, indicating a decreasing effective cash tax rate. This change partially mitigates the negative impact of declining OPM and TO on ROIC, particularly in the later years of the period.
- Return on Invested Capital (ROIC)
- The ROIC followed the trends of its component parts. It decreased from 9.01% in 2021 to a low of 3.94% in 2023, before showing a slight recovery to 4.64% in 2024 and 4.56% in 2025. The recovery in ROIC in 2024 and 2025 is attributable to the combined effect of a stabilizing Turnover of Capital and an increasing (1 – Effective Cash Tax Rate) factor, which offset the continued decline in Operating Profit Margin.
In summary, the observed decline in ROIC is primarily driven by decreasing operating profitability and reduced capital efficiency. The impact of these factors was partially offset by changes in the effective cash tax rate, particularly in the latter part of the period.
Operating Profit Margin (OPM)
Danaher 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 | ||||||
| Add: Increase (decrease) in contract liabilities | ||||||
| Adjusted sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 ÷ Adjusted sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin (OPM) exhibits a clear downward trend over the five-year period. While initially strong, profitability as a percentage of sales has decreased consistently. Net operating profit before taxes (NOPBT) also demonstrates a decline, though not as consistently as the OPM. Adjusted sales show an initial increase followed by a substantial decrease and a modest recovery.
- Operating Profit Margin (OPM)
- The OPM began at 27.65% in 2021 and decreased to 18.58% in 2025. A relatively small decline occurred between 2021 and 2022, from 27.65% to 27.12%. However, a more significant decrease is observed between 2022 and 2023, falling to 21.44%. This downward trajectory continues in subsequent years, with OPM reaching 19.69% in 2024 and further declining to 18.58% in 2025. This suggests increasing cost pressures or decreasing pricing power.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT increased slightly from US$8,256 million in 2021 to US$8,550 million in 2022. A substantial decrease is then observed in 2023, with NOPBT falling to US$5,131 million. This decline continues into 2024, reaching US$4,665 million, before stabilizing somewhat at US$4,576 million in 2025. The decrease in NOPBT, while significant, is less pronounced than the decline in OPM, indicating that sales volume changes are also contributing to the overall profitability picture.
- Adjusted Sales
- Adjusted sales increased from US$29,862 million in 2021 to US$31,528 million in 2022. A considerable decrease is then noted in 2023, with sales dropping to US$23,927 million. Sales remain relatively flat in 2024 at US$23,692 million, before showing a slight recovery to US$24,621 million in 2025. The decline in sales, particularly between 2022 and 2023, likely contributes to the observed decrease in NOPBT.
The combined effect of declining sales and a decreasing OPM results in a significant reduction in overall profitability. The stabilization of NOPBT in the final year, despite continued OPM decline, suggests that cost management efforts may be partially offsetting the impact of lower margins and sales.
Turnover of Capital (TO)
Danaher Corp., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales | ||||||
| Add: Increase (decrease) in contract liabilities | ||||||
| Adjusted sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 = Adjusted sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis reveals a fluctuating pattern in the turnover of capital over the five-year period. While initially stable, a noticeable decline occurred, followed by a modest recovery.
- Adjusted Sales
- Adjusted sales exhibited an initial increase from $29,862 million in 2021 to $31,528 million in 2022. However, a significant decrease was observed in 2023, falling to $23,927 million. Sales remained relatively flat in 2024 at $23,692 million before experiencing a slight increase to $24,621 million in 2025.
- Invested Capital
- Invested capital increased from $74,633 million in 2021 to $78,342 million in 2022, and continued to rise slightly to $78,561 million in 2023. A decrease was then recorded in 2024, with invested capital falling to $73,131 million. It subsequently increased again in 2025, reaching $75,443 million.
- Turnover of Capital (TO)
- The turnover of capital remained constant at 0.40 in both 2021 and 2022. A substantial decline was then observed in 2023, with the ratio decreasing to 0.30. A partial recovery occurred in 2024, with the ratio increasing to 0.32, and this upward trend continued modestly in 2025, reaching 0.33. This indicates that for each dollar of invested capital, the company generated less sales in 2023 compared to the prior two years, but efficiency improved slightly in the subsequent years.
The decrease in the turnover of capital in 2023 aligns with the significant reduction in adjusted sales during the same period, suggesting a direct relationship between sales performance and the efficiency with which capital is utilized. The subsequent, albeit small, increases in the ratio in 2024 and 2025 correspond with the stabilization and slight growth in sales, indicating a potential improvement in capital utilization efficiency.
Effective Cash Tax Rate (CTR)
Danaher Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Johnson & Johnson | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
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 considerable fluctuation over the five-year period. While cash operating taxes generally increased from 2021 to 2023, they subsequently decreased in 2024 and 2025. Simultaneously, net operating profit before taxes decreased significantly from 2021 to 2023, followed by modest declines in 2024 and 2025.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate began at 18.58% in 2021 and increased to 19.69% in 2022, indicating a slight rise in the proportion of pre-tax profits paid as cash taxes. A substantial increase was then observed in 2023, with the CTR reaching 39.60%. This significant jump suggests a change in the company’s tax profile, potentially due to alterations in tax laws, the geographic distribution of profits, or the utilization of tax credits and deductions. The rate then decreased to 27.31% in 2024 and further to 24.77% in 2025. This recent decline, despite decreasing cash operating taxes, could be attributed to the substantial decrease in net operating profit before taxes.
The relationship between cash operating taxes and net operating profit before taxes is not linear. The increase in cash taxes from 2021 to 2023 did not proportionally increase the CTR, suggesting other factors were at play. However, the sharp decline in net operating profit before taxes in 2023 had a pronounced effect on the CTR, driving it to its highest point during the observed period. The subsequent decrease in both figures in 2024 and 2025 resulted in a moderating effect on the CTR.
- Cash Operating Taxes - Trend Analysis
- Cash operating taxes increased from US$1,534 million in 2021 to US$1,684 million in 2022, representing a moderate increase. The largest increase occurred between 2022 and 2023, reaching US$2,032 million. This growth then reversed, with taxes decreasing to US$1,274 million in 2024 and US$1,134 million in 2025. This decrease in cash taxes in the later years coincides with the decline in net operating profit before taxes, indicating a potential correlation between profitability and tax payments.
The observed fluctuations in the effective cash tax rate warrant further investigation to understand the underlying drivers. Changes in tax legislation, accounting practices, or the company’s operational structure could all contribute to these variations.