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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- Common-Size Income Statement
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
- Price to Earnings (P/E) since 2005
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Return on Invested Capital (ROIC)
GE Aerospace, 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 analysis reveals a significant improvement in financial performance as measured by Return on Invested Capital (ROIC) over the observed period. Initially, the company experienced negative profitability relative to capital employed, but subsequently demonstrated substantial gains in efficiency and returns.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT was negative in 2021, registering at -US$1,820 million. A substantial turnaround occurred in 2022, with NOPAT becoming positive at US$1,827 million. This positive trend continued, with NOPAT increasing significantly to US$10,514 million in 2023, before moderating to US$7,561 million in 2024 and further increasing to US$9,398 million in 2025. The overall trend indicates a strong and sustained improvement in core operational profitability.
- Invested Capital
- Invested capital decreased consistently from US$72,026 million in 2021 to US$37,678 million in 2024. The decline slowed in 2025, with invested capital reaching US$38,668 million. This suggests a potential focus on capital discipline or asset divestitures, although the stabilization in 2025 warrants further investigation.
- Return on Invested Capital (ROIC)
- ROIC mirrored the trends in NOPAT. It began at -2.53% in 2021, reflecting the negative NOPAT. A positive ROIC of 2.73% was achieved in 2022, coinciding with the return to positive NOPAT. The most dramatic increase occurred between 2022 and 2023, with ROIC surging to 20.95%. This high level of return was maintained in 2024 at 20.07%, and continued to improve, reaching 24.31% in 2025. The consistent increase in ROIC demonstrates an increasing ability to generate profits from invested capital, even with decreasing invested capital levels.
The combined effect of increasing NOPAT and decreasing invested capital resulted in a substantial and positive trajectory for ROIC. The company’s ability to generate higher returns on a shrinking capital base is a noteworthy observation, potentially indicating improved operational efficiency and strategic capital allocation.
Decomposition of ROIC
GE Aerospace, 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 demonstrates a significant improvement in financial performance, as evidenced by the decomposition of return on invested capital. Initially, the company experienced a negative ROIC, which transitioned to positive and increasingly robust returns over the subsequent years. This improvement is attributable to changes in operating profitability, capital efficiency, and tax effects.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a dramatic increase over the period. Starting from a negative 2.35% in 2021, it rose substantially to 4.46% in 2022, and continued its upward trajectory, reaching 17.53% in 2023. Further gains were observed in 2024 (24.39%) and 2025 (25.73%), indicating a strengthening ability to generate profit from core operations. This represents the most significant driver of the overall ROIC improvement.
- Turnover of Capital (TO)
- The turnover of capital, a measure of capital efficiency, showed initial improvement from 0.99 in 2021 to 1.29 in 2023, suggesting increased effectiveness in utilizing capital to generate revenue. However, a slight decrease to 0.93 was noted in 2024, followed by a recovery to 1.09 in 2025. While fluctuations are present, the metric generally indicates a reasonable level of capital utilization.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate began at 100% in 2021, then decreased significantly to 55.53% in 2022, and continued to rise towards 92.99% in 2023, 88.33% in 2024, and 86.27% in 2025. This suggests a decreasing impact from tax benefits or credits over time, but remains a substantial positive influence on after-tax returns. The initial large decrease in 2022 contributed to the ROIC improvement.
- Return on Invested Capital (ROIC)
- The ROIC mirrored the trends observed in its component parts. A negative return of -2.53% in 2021 was followed by a positive return of 2.73% in 2022. Subsequent years saw substantial growth, with ROIC reaching 20.95% in 2023, 20.07% in 2024, and peaking at 24.31% in 2025. This demonstrates a consistent and significant enhancement in the company’s ability to generate returns from invested capital.
In summary, the substantial improvement in ROIC is primarily driven by the significant increase in the operating profit margin, with contributions from initial improvements in capital turnover and the effect of the cash tax rate adjustment. While capital turnover experienced a slight dip in 2024, the overall trend indicates a strengthening financial position.
Operating Profit Margin (OPM)
GE Aerospace, 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 of equipment and services | ||||||
| Add: Increase (decrease) in deferred income | ||||||
| Adjusted sales of equipment and services | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 of equipment and services
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited a significant upward trend over the observed period. Initially negative in 2021, it demonstrated substantial improvement through 2025. This improvement appears strongly correlated with fluctuations in net operating profit before taxes and adjusted sales of equipment and services.
- Operating Profit Margin (OPM)
- In 2021, the OPM was -2.35%, indicating an operating loss. A substantial increase was observed in 2022, with the OPM rising to 4.46%. This positive trend continued into 2023, with the OPM reaching 17.53%, representing a significant improvement in profitability. Further gains were realized in 2024, as the OPM increased to 24.39%. The OPM peaked at 25.73% in 2025, demonstrating consistent and robust profitability.
The increase in OPM is accompanied by a corresponding change in net operating profit before taxes. NOPBT moved from a loss of US$1,679 million in 2021 to a profit of US$10,894 million in 2025. However, adjusted sales of equipment and services decreased from US$71,356 million in 2021 to US$64,504 million in 2023, before declining sharply to US$35,098 million in 2024, and then partially recovering to US$42,332 million in 2025. Despite the sales decline in 2024, the OPM continued to increase, suggesting improved cost management or pricing strategies.
- Relationship between NOPBT and OPM
- The positive correlation between NOPBT and OPM is evident. As NOPBT increased, so did the OPM, indicating that improvements in operating profitability directly translated to a higher margin. The substantial increase in OPM from 2021 to 2023 occurred alongside a significant recovery in NOPBT.
- Impact of Sales on OPM
- While sales decreased in 2023 and experienced a more substantial decline in 2024, the OPM continued to rise. This suggests that the company was able to maintain or improve its profitability even with lower revenue, potentially through cost reductions or increased pricing power. The partial recovery in sales in 2025 did not significantly alter the high OPM achieved in the prior year.
Overall, the period demonstrates a strong turnaround in operating profitability, as evidenced by the consistently increasing OPM. The ability to maintain high margins despite fluctuations in sales volume suggests effective operational management and a resilient business model.
Turnover of Capital (TO)
GE Aerospace, TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales of equipment and services | ||||||
| Add: Increase (decrease) in deferred income | ||||||
| Adjusted sales of equipment and services | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 of equipment and services ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates fluctuating performance in the relationship between adjusted sales of equipment and services and invested capital. A clear pattern of initial improvement followed by decline and subsequent partial recovery is observed in the turnover of capital.
- Turnover of Capital (TO)
- The turnover of capital ratio increased from 0.99 in 2021 to 1.10 in 2022, indicating improved efficiency in generating sales from invested capital. This positive trend continued with a further increase to 1.29 in 2023, representing the highest value within the observed period. However, a significant decrease to 0.93 occurred in 2024, suggesting a substantial reduction in the efficiency of capital utilization. A partial recovery was noted in 2025, with the ratio rising to 1.09, though remaining below the peak achieved in 2023.
The movement in the turnover of capital appears closely linked to the trends in both adjusted sales of equipment and services and invested capital. The increase in TO from 2021 to 2023 coincided with a period of relatively stable, and initially increasing, sales alongside a decreasing invested capital base. The subsequent decline in TO in 2024 is attributable to a substantial decrease in adjusted sales, despite a further reduction in invested capital. The modest recovery in 2025 reflects a slight increase in sales coupled with a relatively stable capital base.
- Adjusted Sales of Equipment and Services
- Adjusted sales exhibited an initial increase from US$71,356 million in 2021 to US$73,736 million in 2022. A subsequent decline was observed in 2023, with sales falling to US$64,504 million. This downward trend accelerated significantly in 2024, resulting in sales of US$35,098 million. A partial recovery occurred in 2025, with sales reaching US$42,332 million, but still remaining considerably below the levels recorded in 2021 and 2022.
- Invested Capital
- Invested capital decreased consistently throughout the period, moving from US$72,026 million in 2021 to US$66,842 million in 2022, US$50,194 million in 2023, and US$37,678 million in 2024. The rate of decline slowed in 2025, with invested capital reaching US$38,668 million.
The interplay between declining invested capital and fluctuating sales significantly impacted the turnover of capital. While the reduction in invested capital generally contributes to a higher TO, the substantial decrease in sales in 2024 overwhelmed this effect, leading to a notable decline in the ratio. The 2025 results suggest a potential stabilization, but further monitoring is required to confirm a sustained improvement in capital utilization.
Effective Cash Tax Rate (CTR)
GE Aerospace, CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
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 significant fluctuation over the observed period. Initial values are unavailable for 2021, but a substantial increase is noted in 2022, followed by a considerable decrease in subsequent years, with a gradual increase observed towards the end of the period.
- Effective Cash Tax Rate (CTR)
- In 2022, the effective cash tax rate reached 44.47%. This represents a significant jump from the unavailable 2021 figure and suggests a considerable tax liability relative to pre-tax operating profits in that year.
- A marked decline in the effective cash tax rate occurred in 2023, falling to 7.01%. This decrease likely reflects changes in the company’s tax position, potentially due to tax credits, loss carryforwards, or jurisdictional shifts in profitability.
- The effective cash tax rate increased to 11.67% in 2024, indicating a partial reversal of the decrease seen in 2023. This suggests a lessening of the factors that contributed to the lower tax rate in the prior year.
- Further incremental increase to 13.73% is observed in 2025. This continued upward trend, though moderate, suggests a sustained shift towards a higher tax burden relative to operating profits.
The movement in the effective cash tax rate appears closely linked to changes in net operating profit before taxes (NOPBT) and cash operating taxes. The substantial increase in NOPBT from 2021 to 2022 likely contributed to the higher cash tax payments and, consequently, the elevated effective cash tax rate in 2022. The subsequent fluctuations in both NOPBT and cash operating taxes explain the changes in the effective cash tax rate in the following years.
The volatility in the effective cash tax rate warrants further investigation to understand the underlying drivers and potential implications for future cash flows and financial planning.