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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- Income Statement
- Statement of Comprehensive Income
- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Reportable Segments
- Enterprise Value (EV)
- Current Ratio since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
- Price to Sales (P/S) since 2005
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Return on Invested Capital (ROIC)
Ecolab 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 demonstrated a general upward trend from 2017 through 2019, increasing from approximately 1.37 billion to 1.74 billion US dollars. However, there was a notable decline in 2020 to approximately 1.21 billion US dollars, followed by a slight recovery in 2021 reaching approximately 1.35 billion US dollars. This suggests some operational challenges or external factors impacting profitability in 2020, with partial recovery observed the following year.
- Invested Capital
- Invested capital showed a steady increase from 2017 to 2019, rising from about 17.39 billion to 18.09 billion US dollars. A significant decrease occurred in 2020, dropping to approximately 15.60 billion US dollars, before rising again sharply in 2021 to around 18.43 billion US dollars. The fluctuation in 2020 indicates a possible divestment or restructuring, while the rebound in 2021 points to renewed investment activity.
- Return on Invested Capital (ROIC)
- The ROIC increased from 7.88% in 2017 to a peak of 9.93% in 2018, followed by a slight decline to 9.6% in 2019. A more pronounced drop was observed in 2020, decreasing to 7.74%, and further decreasing to 7.32% in 2021. This trend reflects diminishing efficiency in generating returns from invested capital, particularly after 2019, coinciding with the declines noted in NOPAT and invested capital for 2020 and 2021.
Decomposition of ROIC
Ecolab 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 slight downward trend from 14.9% in 2017 to 14.32% in 2018, followed by a marginal increase to 14.37% in 2019. Subsequently, there was a more noticeable decline to 12.61% in 2020, with a partial recovery to 13.1% in 2021. Overall, the margin showed some volatility with a general decreasing tendency over the five-year period.
- Turnover of Capital (TO)
- The turnover of capital demonstrated a gradual decline across the timeline. Starting at a ratio of 0.8 in 2017, it increased slightly to 0.82 in both 2018 and 2019. However, from 2020 onwards, a downward shift occurred with the ratio decreasing to 0.76 and further to 0.69 by 2021. This indicates a reduction in the efficiency of capital utilization over time.
- 1 – Effective Cash Tax Rate (CTR)
- The value representing 1 minus the effective cash tax rate increased significantly from 66.41% in 2017 to a peak of 84.3% in 2018. It then slightly decreased but remained relatively stable around 81% in the subsequent years through 2021. This suggests a higher effective cash tax rate initially followed by stabilization at an elevated level.
- Return on Invested Capital (ROIC)
- Return on invested capital saw an upward movement from 7.88% in 2017 to 9.93% in 2018, indicating improved profitability relative to invested capital. There was a minor decline to 9.6% in 2019, followed by a more pronounced decrease to 7.74% in 2020 and a further drop to 7.32% in 2021. This trajectory reveals initial improvement, succeeded by a weakening trend in recent years.
Operating Profit Margin (OPM)
Ecolab 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
-
The NOPBT showed a gradual increase from 2017 to 2019, rising from approximately 2,062 million USD to about 2,142 million USD. However, in 2020, there was a significant decline to roughly 1,487 million USD, followed by a moderate recovery in 2021, reaching around 1,668 million USD. This indicates a notable disruption in profitability in 2020 with partial improvement the following year.
- Net Sales
-
Net sales displayed a steady upward trend through 2017 to 2019, climbing from approximately 13,838 million USD to nearly 14,906 million USD. Similar to NOPBT, net sales dropped considerably in 2020 to about 11,790 million USD. The sales figures then rebounded in 2021 to approximately 12,733 million USD, indicating a contraction during 2020 with subsequent partial recovery.
- Operating Profit Margin (OPM)
-
The operating profit margin remained relatively stable between 2017 and 2019, fluctuating slightly around 14.3% to 14.9%. A marked decline occurred in 2020, where the margin decreased to about 12.6%, reflecting reduced operational efficiency or pricing power during that period. In 2021, the margin showed a modest increase to 13.1%, suggesting some improvement but still below prior years' levels.
- Summary of Trends
-
The financial data over the analyzed period suggests that the company experienced steady growth in sales and profitability until 2019. The year 2020 represents an inflection point characterized by a significant downturn in both sales and profitability metrics, likely reflecting adverse external conditions. Despite a partial recovery in 2021, financial performance had not yet returned to the pre-2020 levels, and operating margins remained below earlier peak values. These trends highlight resilience but also ongoing challenges in restoring prior financial strength.
Turnover of Capital (TO)
Ecolab 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 thousands) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales showed an overall increasing trend from 2017 to 2019, rising from approximately 13.84 billion to around 14.91 billion US dollars. However, there was a notable decline in 2020, with net sales dropping to about 11.79 billion US dollars. In 2021, net sales rebounded to approximately 12.73 billion US dollars, indicating a partial recovery but still below the pre-2020 peak levels.
- Invested Capital
- Invested capital increased steadily from 2017 through 2019, moving from about 17.39 billion to approximately 18.09 billion US dollars. In 2020, invested capital decreased significantly to around 15.60 billion US dollars. This reduction was followed by a sharp increase in 2021, with invested capital reaching approximately 18.43 billion US dollars, surpassing prior levels.
- Turnover of Capital (TO)
- The turnover of capital ratio exhibited a declining trend over the period analyzed. Starting at 0.8 in 2017, it rose slightly to 0.82 in both 2018 and 2019, suggesting stable efficiency in utilizing invested capital to generate sales during these years. However, the ratio declined to 0.76 in 2020 and further dropped to 0.69 in 2021, indicating reduced efficiency in capital utilization to support sales generation amidst fluctuating net sales and invested capital levels.
Effective Cash Tax Rate (CTR)
Ecolab 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Linde plc | ||||||
| Sherwin-Williams Co. | ||||||
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 show a fluctuating trend over the five-year period. The value starts relatively high at 692,614 thousand USD in 2017, then decreases sharply to 329,842 thousand USD in 2018. In 2019, there is a moderate increase to 405,411 thousand USD, followed by another drop to 280,171 thousand USD in 2020. The value then rises somewhat again to 319,507 thousand USD in 2021. Overall, the cash operating taxes do not follow a consistent upward or downward trajectory but instead demonstrate volatility year-over-year.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes generally maintains a level above 2 billion USD in the initial three years from 2017 through 2019, with values of approximately 2.06 billion, 2.10 billion, and 2.14 billion USD respectively, indicating stability with slight incremental growth. However, there is a notable decline in 2020 to about 1.49 billion USD, which represents a significant reduction relative to previous years. The profit recovers somewhat in 2021, increasing to approximately 1.67 billion USD, but does not return to pre-2020 levels by the end of the period.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate experiences a sharp decline from 33.59% in 2017 to 15.7% in 2018. Following this decrease, the rate rises gradually but remains below the 2017 high, reaching 18.93% in 2019, 18.84% in 2020, and slightly increasing to 19.15% in 2021. This pattern suggests a significant reduction in tax burden post-2017, with the tax rate stabilizing around the 18-19% range in the latter years.
- Overall Insights
- The financial figures reveal that the net operating profit experienced relative stability initially before a marked decline in 2020, which partially recovered in 2021. Cash operating taxes do not follow a steady trend and fluctuate independently of profits, potentially influenced by variations in tax planning or regulatory factors. The effective cash tax rate dropped notably after 2017 and stabilized at a lower level, indicating a significant change in effective taxation during the period under review.