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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Dell Technologies Inc. pages available for free this week:
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2019
- Operating Profit Margin since 2019
- Debt to Equity since 2019
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Return on Invested Capital (ROIC)
Dell Technologies Inc., ROIC calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | |||||||
| Invested capital2 | |||||||
| Performance Ratio | |||||||
| ROIC3 | |||||||
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
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.
- Net Operating Profit After Taxes (NOPAT)
- Over the observed periods, net operating profit after taxes exhibited a rising trend from 2020 to 2021, increasing from 5,052 million USD to 7,942 million USD. This peak was closely maintained into 2022 with a slight decrease to 7,874 million USD. However, from 2023 onward, a significant downward trend is evident, with NOPAT falling sharply to 5,638 million USD in 2023, continuing to decline further to 2,835 million USD in 2024 and reaching 2,070 million USD in 2025. This suggests a reduction in operating profitability in the most recent years.
- Invested Capital
- Invested capital shows a different pattern from NOPAT. It remained relatively stable between 2020 and 2021, increasing slightly from 81,348 million USD to 83,528 million USD. Thereafter, it underwent a substantial reduction in 2022 to 53,988 million USD, a trend that generally continued with minimal fluctuations—slightly rising to 57,982 million USD in 2023, then decreasing again to 53,565 million USD in 2024, and further to 49,926 million USD in 2025. This overall decline indicates a contraction of the capital base invested in the business.
- Return on Invested Capital (ROIC)
- ROIC demonstrates an initial strong improvement from 6.21% in 2020 to 9.51% in 2021, then reaching a peak of 14.58% in 2022. This improvement corresponds with the period of reduced invested capital while maintaining high profitability. However, after 2022, ROIC experienced a notable decline, falling to 9.72% in 2023 and then further to 5.29% in 2024, eventually reaching 4.15% in 2025. The decreasing ROIC reflects weaker efficiency in generating returns from the invested capital amid declining profitability.
- Overall Insights
- The financial data highlight a phase of enhanced profitability and capital efficiency through 2021 and 2022, likely driven by effective use of a reduced capital base. Nevertheless, the significant and continuous decline in both NOPAT and ROIC from 2023 to 2025 indicates challenges in sustaining operational profitability and efficient deployment of capital. The concurrently decreasing invested capital suggests active management of asset levels, but without a corresponding improvement in profit generation, leading to a diminished return profile by the end of the period.
Decomposition of ROIC
Dell Technologies Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Jan 31, 2025 | = | × | × | ||||
| Feb 2, 2024 | = | × | × | ||||
| Feb 3, 2023 | = | × | × | ||||
| Jan 28, 2022 | = | × | × | ||||
| Jan 29, 2021 | = | × | × | ||||
| Jan 31, 2020 | = | × | × |
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
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 an overall declining trend over the period analyzed. Starting at 6.67% in early 2020, it increased to a peak of 9.27% in early 2021 and remained relatively stable through early 2022 at 9.11%. However, beginning in early 2023, there was a noticeable decline, dropping to 7.05%, then further decreasing to 4.44% by early 2024 and reaching 3.27% in early 2025. This indicates a diminishing efficiency in generating operating profits relative to sales over time after the initial peak.
- Turnover of Capital (TO)
- The turnover of capital ratio showed fluctuations throughout the period. Initially, it was 1.18 in 2020 and slightly decreased to 1.16 in 2021. Afterwards, it experienced a significant increase to 1.91 in 2022, indicating improved utilization of capital resources. This was followed by a slight decline to 1.81 in 2023 and further to 1.63 in 2024. However, there was a rebound in early 2025 to 1.85, suggesting some recovery in capital turnover efficiency.
- Effective Cash Tax Rate (1 – CTR)
- The metric representing one minus the effective cash tax rate demonstrated a clear decreasing pattern across the entire timeframe. Starting at 78.93% in 2020, it increased to 88.12% in 2021, then dropped to 83.79% by early 2022. From 2023 onwards, a consistent decline was observed, reaching 76.19% in 2023, 73.12% in 2024, and finally 68.6% in 2025. This trend implies a progressive decrease in the retained portion after cash taxes, meaning the effective cash tax rate itself is increasing over the years.
- Return on Invested Capital (ROIC)
- The return on invested capital showed a positive trend initially, rising from 6.21% in 2020 to a high of 14.58% in 2022. Subsequent years, however, marked a notable decline, falling to 9.72% in 2023, then decreasing more sharply to 5.29% in 2024, and finally reaching 4.15% in 2025. This indicates that the efficiency and profitability of the company’s invested capital improved significantly early in the period but weakened considerably in the latter years.
Operating Profit Margin (OPM)
Dell Technologies Inc., OPM calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 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) | |||||||
| Net revenue | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net revenue | |||||||
| Profitability Ratio | |||||||
| OPM3 | |||||||
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited an overall declining trend from 2020 through 2025. Initially, there was a significant increase from 6,400 million USD in 2020 to a peak of 9,397 million USD in 2022. Afterward, the figure declined sharply to 3,017 million USD by 2025, marking a substantial reduction of approximately 68% from the peak in 2022.
- Adjusted Net Revenue
- Adjusted net revenue showed an upward trajectory from 2020 to 2023, increasing from 95,944 million USD to a peak of 105,014 million USD in 2023. This growth was followed by a noticeable decline to 87,284 million USD in 2024, with a slight recovery to 92,387 million USD in 2025. Despite fluctuations, the revenue in 2025 remained below the peak levels observed in 2023 and 2022.
- Operating Profit Margin (OPM)
- The operating profit margin increased from 6.67% in 2020 to a peak of 9.27% in 2021, maintaining a similar level in 2022 at 9.11%. Subsequently, the margin declined significantly each year, dropping to 3.27% by 2025. This downward trend indicates a reduction in profitability relative to revenue over the latter part of the period.
- Overall Analysis
- The data indicates a period of growth in both revenue and profitability up to around 2022-2023, followed by a pronounced decline in profitability and a drop in net revenue thereafter. The reduction in operating profit margin alongside falling NOPBT suggests that cost management or pricing power may have deteriorated after 2022, resulting in diminished financial performance. The slight recovery in adjusted net revenue in 2025 is insufficient to offset the decreased profit margins, highlighting potential operational challenges or market pressures impacting earnings.
Turnover of Capital (TO)
Dell Technologies Inc., TO calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 31, 2020 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net revenue | |||||||
| Add: Increase (decrease) in deferred revenue | |||||||
| Adjusted net revenue | |||||||
| Invested capital1 | |||||||
| Efficiency Ratio | |||||||
| TO2 | |||||||
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
1 Invested capital. See details »
2 2025 Calculation
TO = Adjusted net revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted net revenue
- The adjusted net revenue displayed a general upward trend from 2020 through 2023, increasing from 95,944 million USD in 2020 to a peak of 105,014 million USD in 2023. However, this trend reversed in 2024, with revenue declining sharply to 87,284 million USD, followed by a partial recovery to 92,387 million USD in 2025. This indicates a period of revenue growth interrupted by a significant downturn, with signs of stabilization or modest improvement in the latest period.
- Invested capital
- Invested capital showed a declining trend over the period analyzed. Beginning at 81,348 million USD in 2020 and slightly increasing to 83,528 million USD in 2021, it then decreased substantially to 53,988 million USD in 2022. Following this drop, invested capital continued to decline, reaching 49,926 million USD by 2025. This consistent reduction suggests a strategic withdrawal or divestment in capital assets or decreased investment activity over recent years.
- Turnover of capital (TO)
- The turnover of capital ratio experienced significant fluctuations. Starting at 1.18 in 2020 and slightly decreasing to 1.16 in 2021, the ratio then sharply increased to 1.91 in 2022, indicating improved efficiency in utilizing capital to generate revenue. Though it slightly decreased to 1.81 in 2023 and further to 1.63 in 2024, it rebounded to 1.85 in 2025. Overall, these movements suggest enhanced capital productivity, especially after 2021, despite some volatility in subsequent years.
- Overall analysis
- The data reveals a complex interaction between revenue generation and capital investment. While revenue growth was evident until 2023, the significant reduction in invested capital, particularly from 2022 onward, accompanied by an improvement in capital turnover ratio, suggests the company has managed to increase capital efficiency. The decline in revenue in 2024 implies external or internal challenges impacting sales, but the partial recovery in 2025 may indicate adaptive measures or market conditions improving. The continued decrease in invested capital raises questions about long-term capacity or asset strategy moving forward.
Effective Cash Tax Rate (CTR)
Dell Technologies Inc., CTR calculation, comparison to benchmarks
| Jan 31, 2025 | Feb 2, 2024 | Feb 3, 2023 | Jan 28, 2022 | Jan 29, 2021 | Jan 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 | |||||||
| Apple Inc. | |||||||
| Arista Networks Inc. | |||||||
| Cisco Systems Inc. | |||||||
| Super Micro Computer Inc. | |||||||
Based on: 10-K (reporting date: 2025-01-31), 10-K (reporting date: 2024-02-02), 10-K (reporting date: 2023-02-03), 10-K (reporting date: 2022-01-28), 10-K (reporting date: 2021-01-29), 10-K (reporting date: 2020-01-31).
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.
- Cash Operating Taxes
- The cash operating taxes exhibited variability over the observed periods. There was a decline from US$1,348 million in early 2020 to US$1,071 million in early 2021, followed by an increase to US$1,523 million in early 2022. Subsequently, the amount peaked at US$1,762 million in early 2023 before declining sharply in the next two years to US$1,042 million in early 2024 and further to US$947 million in early 2025. This decline after 2023 suggests either reduced taxable income or changes in tax strategies or regulations affecting cash tax payments.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed a strong upward trend from US$6,400 million in 2020 to US$9,397 million in 2022, with a peak at US$9,012 million in 2021. However, a significant decline followed from 2023 onwards, with NOPBT falling to US$7,400 million and further dropping notably to US$3,878 million in 2024 and US$3,017 million in 2025. This downward trend in the last three years indicates perhaps operational challenges, increased costs, or market conditions adversely affecting profitability.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate generally increased across the analyzed period. Starting from 21.07% in 2020, it decreased markedly to 11.88% in 2021, before rising again to 16.21% in 2022. From 2023 onwards, the rate increased steadily, reaching 23.81%, then 26.88% in 2024, and finally 31.4% in 2025. This upward trend in the effective tax rate amidst declining pre-tax profits suggests a worsening tax burden relative to earnings, which may reflect changes in tax legislation, the expiration of tax benefits, or less favorable tax planning outcomes.
- Overall Analysis
- The data reveals a period of growing profitability until early 2022, followed by a pronounced contraction in operating profit. Despite the decline in profit, cash operating taxes did not decrease proportionally, and the effective cash tax rate increased substantially in the latter years. These factors combined point toward increased tax pressure on reduced earnings and may signal the need for a reassessment of tax strategies. The fluctuation in cash taxes along with the steady rise in tax rates despite declining profits highlights a potentially less efficient tax position or changing external tax environment impacting net profitability.