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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Delta Air Lines Inc. pages available for free this week:
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Return on Equity (ROE) since 2007
- Total Asset Turnover since 2007
- Analysis of Revenues
- Analysis of Debt
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Return on Invested Capital (ROIC)
Delta Air Lines Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes experienced a generally stable trend from 2017 to 2019, hovering between approximately $6.0 billion and $6.6 billion. However, 2020 saw a sharp and significant decline to a negative figure of about -$13.9 billion, indicating substantial losses during that period. In 2021, a recovery occurred as NOPAT rose back to a positive $1.9 billion, although this level remained well below the pre-2020 values.
- Invested Capital
- Invested capital showed moderate fluctuations across the examined years. Starting at approximately $44.4 billion in 2017, it slightly decreased to $43.3 billion in 2018, then increased to about $47.6 billion in 2019. A decline to $44.2 billion occurred in 2020, followed by a rebound to $47.2 billion in 2021, indicating relatively stable but somewhat volatile capital deployment over the period.
- Return on Invested Capital (ROIC)
- The return on invested capital remained solid and consistent through 2017 to 2019, averaging around 14%, which reflects efficient use of capital. In 2020, ROIC turned sharply negative at approximately -31.5%, correlating with the significant losses noted in NOPAT for the same year. Subsequently, in 2021, ROIC improved to 4.1%, suggesting partial recovery, but still substantially below the historical levels prior to 2020.
- Overall Insights
- The financial performance demonstrated resilience prior to 2020, with stable profitability and efficient capital utilization. The severe downturn in 2020 reflects a major disruption event impacting profitability and capital returns, with some recovery occurring by 2021. However, profitability and returns have not yet returned to pre-2020 levels, indicating ongoing challenges or adjustments in the operating environment.
Decomposition of ROIC
Delta Air Lines Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 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).
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 a decline from 16.48% in 2017 to 13.39% in 2018, followed by a slight recovery to 14.22% in 2019. A significant downturn occurred in 2020, with the margin plummeting to -78.13%, reflecting a substantial operational loss. By 2021, there was a partial recovery to 7.45%, though this remained considerably lower than pre-2020 levels.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrated relative stability from 2017 to 2019, ranging between 0.93 and 1.03. In 2020, a sharp decrease to 0.4 was observed, indicating reduced efficiency in utilizing capital during this period. The ratio improved moderately to 0.64 in 2021, but did not return to the earlier, higher levels.
- 1 – Effective Cash Tax Rate (CTR)
- The complement to the effective cash tax rate remained close to 100% from 2017 through 2020, suggesting minimal net cash taxes were paid during this period. In 2021, the value decreased to 85.68%, indicating an increase in cash tax payments relative to prior years.
- Return on Invested Capital (ROIC)
- Return on invested capital showed a gradual decline from 14.52% in 2017 to 13.92% in 2018 and a marginally improved 13.98% in 2019. The year 2020 saw a drastic collapse to -31.45%, reflecting a severe erosion of capital returns. In 2021, there was a recovery to 4.1%, but this remained significantly below the pre-2020 performance levels.
Operating Profit Margin (OPM)
Delta Air Lines Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Operating revenue | ||||||
| Add: Increase (decrease) in loyalty program deferred revenue | ||||||
| Adjusted operating revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Adjusted operating revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed a general positive trend from 2017 through 2019, with values of 6,828 million USD in 2017, 5,993 million USD in 2018, and 6,695 million USD in 2019. However, a significant decline occurred in 2020, with a substantial negative NOPBT of -13,711 million USD, indicating a major loss in that year. In 2021, the situation improved but remained below pre-2020 levels, with a NOPBT amounting to 2,255 million USD.
- Adjusted Operating Revenue
- Adjusted operating revenue increased steadily from 41,436 million USD in 2017 to 47,094 million USD in 2019. In 2020, there was a sharp decline to 17,549 million USD, representing a significant reduction likely related to extraordinary circumstances during that year. In 2021, revenues partially recovered to 30,276 million USD, though still not reaching the levels of the three years prior to 2020.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a downward trend from 16.48% in 2017 to 13.39% in 2018, then slightly increased to 14.22% in 2019. In 2020, the margin drastically declined to -78.13%, reflecting the severe operating losses encountered. By 2021, the margin recovered to 7.45%, representing a restoration of profitability but at less than half the margin observed in 2017.
Turnover of Capital (TO)
Delta Air Lines Inc., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenue | ||||||
| Add: Increase (decrease) in loyalty program deferred revenue | ||||||
| Adjusted operating revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 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).
1 Invested capital. See details »
2 2021 Calculation
TO = Adjusted operating revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Operating Revenue
- The adjusted operating revenue increased steadily from 41,436 million US dollars in 2017 to 47,094 million US dollars in 2019, indicating a positive growth trend over these years. However, there was a sharp decline to 17,549 million US dollars in 2020, likely reflecting significant operational impacts, followed by a partial recovery to 30,276 million US dollars in 2021, which remains below pre-2020 levels.
- Invested Capital
- The invested capital showed a slight decrease from 44,409 million US dollars in 2017 to 43,326 million US dollars in 2018, then increased to 47,580 million US dollars in 2019. It again dropped to 44,197 million US dollars in 2020 and rose to 47,166 million US dollars in 2021. This pattern suggests adjustments in capital investment corresponding with fluctuating operational circumstances, maintaining a relatively stable overall capital base.
- Turnover of Capital (TO)
- The turnover of capital ratio was close to or above 1 from 2017 through 2019, with values of 0.93, 1.03, and 0.99 respectively, indicating efficient use of invested capital in generating revenue during this period. There was a marked decline to 0.4 in 2020, reflecting decreased efficiency likely due to reduced revenue amidst stable invested capital. A slight improvement to 0.64 occurred in 2021, signifying partial yet incomplete recovery in capital utilization efficiency.
Effective Cash Tax Rate (CTR)
Delta Air Lines Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
| United Parcel Service Inc. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes experienced significant fluctuations over the analyzed period. Initially, there was a high positive value of 381 million USD in 2017, followed by a sharp decline to a negative value of -38 million USD in 2018, indicating possible tax refunds or adjustments. From 2019 onward, cash operating taxes resumed positive values, rising to 44 million USD in 2019, increasing further to 191 million USD in 2020, and reaching 323 million USD in 2021. This upward trend from 2019 suggests improved tax payments or profitability adjustments.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrated a generally volatile pattern. Starting from 6,828 million USD in 2017, it declined to 5,993 million USD in 2018 but rebounded slightly to 6,695 million USD in 2019. A marked downturn occurred in 2020, with a substantial loss recorded at -13,711 million USD, indicative of a significant operational challenge or extraordinary event during that year. Recovery began in 2021 with a positive value of 2,255 million USD, though this remained substantially below pre-2020 levels.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate showed high variability and some missing data. In 2017, the rate was low at 5.58%, dropped to a negative rate of -0.64% in 2018, which may reflect tax credits or losses carried forward. It marginally increased to 0.66% in 2019. No data was reported for 2020, likely due to the significant loss incurred in that year. For 2021, the tax rate rose to 14.32%, which could suggest higher profitability or changes in taxable income and tax obligations following the 2020 downturn.