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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- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Dividend Discount Model (DDM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
Edwards Lifesciences Corp., 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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.
Analysis of the financial data reveals notable trends in profitability, capital investment, and overall efficiency over the five-year period ending December 31, 2021.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT shows an overall upward trend, increasing from approximately 615 million USD in 2017 to nearly 1.47 billion USD in 2021. There was a significant jump in 2019, peaking at just over 1.05 billion USD, followed by a decline in 2020 to 768 million USD before rebounding sharply in 2021 to the highest level recorded in the period. This indicates variability in operating profitability, with a strong recovery and enhanced profitability in the most recent year.
- Invested Capital
- The invested capital has grown steadily from about 2.86 billion USD in 2017 to around 3.79 billion USD in 2021, with a temporary acceleration in 2019 and 2020. The increase from 2017 through 2020 suggests ongoing investment in business operations or assets, though a slight reduction is observed in 2021 compared to 2020, indicating possible optimization or divestment efforts.
- Return on Invested Capital (ROIC)
- The ROIC reflects the efficiency of capital usage and displays considerable fluctuation. It rose from 21.54% in 2017 to a peak of 28.41% in 2019, indicating improved capital efficiency. However, this was followed by a notable decline to 19.51% in 2020, aligning with the dip in NOPAT during that year. In 2021, ROIC surged impressively to 38.72%, demonstrating a strong enhancement in the company's ability to generate returns from its invested capital and signaling an efficient use of resources in the most recent period.
Decomposition of ROIC
Edwards Lifesciences Corp., 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 displayed considerable variability over the years. Starting at 30.33% in 2017, it declined sharply to 20.56% in 2018. The margin then improved to 26.62% in 2019 before declining again to 20.81% in 2020. A significant increase was observed in 2021, reaching 32.75%, the highest level in the period. This pattern indicates fluctuating operational efficiency and profitability, with a notable recovery and improvement in the latest year.
- Turnover of Capital (TO)
- Turnover of capital remained relatively stable but showed a slight downward trend from 2017 to 2020, starting at 1.20 in 2017 and decreasing to 1.11 in 2020. In 2021, there was a rebound to 1.38, the highest figure in the dataset. This suggests a recent increase in the efficiency of using capital to generate revenues after a period of gradual decline.
- 1 – Effective Cash Tax Rate (CTR)
- The metric representing one minus the effective cash tax rate showed an upward trend from 2017 through 2018, jumping from 59.03% to 92.01%. It remained relatively stable at just above 84% from 2019 to 2021, indicating a consistently lower effective cash tax rate during the latter years. This decrease in tax burden may have contributed positively to the company’s profitability in recent periods.
- Return on Invested Capital (ROIC)
- Return on invested capital demonstrated significant fluctuations throughout the years. It rose from 21.54% in 2017 to a peak of 28.41% in 2019. However, there was a sharp decline to 19.51% in 2020, followed by a marked recovery to 38.72% in 2021, which represents a substantial improvement and the highest return within the observed timeframe. The volatility may reflect changes in operational performance, capital allocation, or external factors affecting profitability.
Operating Profit Margin (OPM)
Edwards Lifesciences Corp., 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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 ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT exhibited variability over the five-year period. Starting at 1,041,886 thousand USD in 2017, it decreased significantly to 765,409 thousand USD in 2018. This was followed by a recovery in 2019, reaching 1,157,563 thousand USD. In 2020, the NOPBT declined again to 912,997 thousand USD but then increased substantially to 1,713,665 thousand USD by the end of 2021. Overall, despite fluctuations, the trend over the period shows a notable increase, with the 2021 value exceeding the 2017 baseline by approximately 64.5%.
- Net Sales
- Net sales demonstrated steady growth throughout the period. Commencing at 3,435,300 thousand USD in 2017, net sales increased year-on-year to reach 5,232,500 thousand USD by 2021. The growth rate was relatively consistent, with a moderate increase each year; the total increase over the five years was approximately 52.3%. The most substantial jump occurred between 2020 and 2021.
- Operating Profit Margin (OPM)
- The operating profit margin showed significant fluctuations. It started at a high of 30.33% in 2017 but dropped notably to 20.56% in 2018. Thereafter, it improved to 26.62% in 2019 before falling again to 20.81% in 2020. By 2021, the OPM rose markedly to 32.75%, the highest point in the period analyzed. This volatility suggests varying cost efficiency or expense management against sales across the years, with a strong rebound in profitability in the final year.
Turnover of Capital (TO)
Edwards Lifesciences Corp., 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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 = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales demonstrated a consistent upward trajectory throughout the five-year period. Starting at approximately 3.44 billion US dollars in 2017, net sales increased moderately in 2018 by around 8.3%, followed by a more substantial rise in 2019 to about 4.35 billion. The growth plateaued somewhat in 2020 with a marginal increase over the previous year, before accelerating sharply in 2021 to approximately 5.23 billion US dollars. This overall pattern indicates robust revenue growth, with a significant surge in the final year under review.
- Invested Capital
- The invested capital figures reveal a general expansion over the period from 2017 to 2020, increasing from roughly 2.86 billion to nearly 3.94 billion US dollars. In 2021, however, there was a noticeable decline to approximately 3.79 billion US dollars, indicating a contraction in capital investment after several years of growth. This reduction in capital invested could reflect strategic adjustments in asset allocation or operational efficiencies.
- Turnover of Capital (TO)
- The turnover of capital ratio began at 1.2 in 2017 and experienced a slight improvement to 1.28 in 2018, suggesting enhanced efficiency in using invested capital to generate sales. This ratio then declined steadily in 2019 and 2020, reaching a low of 1.11, implying a reduction in capital utilization efficiency during those years. However, a strong rebound occurred in 2021, with the ratio rising to 1.38, the highest in the period analyzed. This increase points to improved operational efficacy or better asset utilization in the most recent year.
- Overall Trends and Insights
- The data highlights a company experiencing steady sales growth alongside fluctuating capital investment levels. The turnover of capital ratio's trends suggest that while efficiency dipped after 2018, it reversed positively in 2021. The simultaneous rise in net sales and turnover of capital in 2021, despite a decrease in invested capital, may indicate more efficient use of resources and enhanced profitability potential. The prior decline in turnover ratio alongside increased invested capital may warrant further investigation into capital deployment strategies during those years.
Effective Cash Tax Rate (CTR)
Edwards Lifesciences Corp., 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes fluctuated over the five-year period. It decreased from approximately 1,041,886 thousand USD in 2017 to 765,409 thousand USD in 2018, showing a decline in operating profitability. In 2019, the profit rebounded significantly to 1,157,563 thousand USD, followed by a decrease to 912,997 thousand USD in 2020. The year 2021 marked a strong recovery and the highest value in the period at 1,713,665 thousand USD, indicating improved operational performance.
- Cash operating taxes
- Cash operating taxes exhibited a substantial decline between 2017 and 2018, dropping from 426,820 thousand USD to 61,158 thousand USD. After this sharp fall, taxes increased gradually over the subsequent years to 107,265 thousand USD in 2019, 144,533 thousand USD in 2020, and further to 245,413 thousand USD in 2021. Despite the increase from 2018 onwards, the tax payments in 2021 remained below the 2017 level, suggesting overall lower tax outflows relative to the initial year.
- Effective cash tax rate (CTR)
- The effective cash tax rate experienced a marked decline from 40.97% in 2017 to below 10% in both 2018 (7.99%) and 2019 (9.27%), reflecting a significant reduction in the tax burden relative to operating profit. A gradual increase followed in the next two years, rising to 15.83% in 2020 and slightly decreasing to 14.32% in 2021. This indicates a modest recovery of the tax rate but still well below the level observed in 2017.