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
- Cash Flow Statement
- Common-Size Balance Sheet: Assets
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
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Return on Invested Capital (ROIC)
GE Aerospace, ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 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 exhibited significant volatility over the analyzed period. It started at a positive value of 6,132 million US dollars at the end of 2020, declined sharply to a negative 1,820 million in 2021, indicating operational losses that year. A recovery began in 2022 with a modest profit of 1,827 million, followed by a substantial increase to 10,514 million in 2023, before declining somewhat to 7,561 million in 2024. This pattern suggests an unstable profitability trajectory with a notable rebound after 2021 losses, reaching peak performance in 2023.
- Invested Capital
- Invested capital showed a consistent decreasing trend throughout the period. Beginning at 117,528 million US dollars in 2020, this metric decreased markedly each year to 72,026 million in 2021, 66,842 million in 2022, 50,194 million in 2023, and finally to 37,678 million in 2024. The steady reduction in invested capital suggests a strategic divestment or asset optimization over time, potentially contributing to the observed changes in profitability and efficiency.
- Return on Invested Capital (ROIC)
- The return on invested capital reflected the fluctuations in profitability and capital base. Initially, ROIC was a positive 5.22% in 2020 but fell to a negative 2.53% in 2021, mirroring the negative NOPAT. It then improved to 2.73% in 2022, followed by a sharp increase to 20.95% in 2023, and slightly decreased to 20.07% in 2024. The upward trend in ROIC from 2021 onwards indicates improved operational efficiency and effective use of capital, with peak returns occurring in 2023.
- Overall Insights
- The data indicates a period of operational challenges in 2021, reflected in negative profitability and returns. Subsequently, there was a strong recovery and improvement in profitability and capital efficiency, particularly in 2023. The continuous reduction in invested capital alongside rising ROIC suggests a focus on capital optimization contributing to higher returns. The slight decrease in both NOPAT and ROIC in 2024 may warrant monitoring to assess if this indicates a new trend or a temporary adjustment.
Decomposition of ROIC
GE Aerospace, decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 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), 10-K (reporting date: 2020-12-31).
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 exhibits significant volatility over the observed period. Starting at a relatively strong 12.65% in 2020, it sharply declined to -2.35% in 2021, indicating a loss at the operating profit level during that year. Subsequently, the margin recovered gradually to 4.46% in 2022 and then experienced a substantial increase reaching 17.53% in 2023 and further improving to 24.39% in 2024. This upward trend in the last two years suggests enhanced operational efficiency or improved cost management.
- Turnover of Capital (TO)
- The turnover of capital ratio shows an overall increasing trend from 0.63 in 2020 to a peak of 1.29 in 2023, reflecting improved asset utilization and efficiency in generating revenue from capital employed. However, this metric decreases to 0.93 in 2024, suggesting a slight decline in capital productivity during the last year of the period under review.
- 1 – Effective Cash Tax Rate (CTR)
- This ratio indicates significant fluctuation across the years. The value started at 65.94% in 2020, rose markedly to 100% in 2021, dropped to 55.53% in 2022, and then increased again to 92.99% in 2023 and slightly decreased to 88.33% in 2024. These variations suggest instability in the effective cash tax burden, which may be influenced by changes in tax laws, profit composition, or tax planning strategies.
- Return on Invested Capital (ROIC)
- ROIC mirrors the trends observed in operating profit margin with an initial value of 5.22% in 2020, a negative return of -2.53% in 2021, followed by recovery to 2.73% in 2022. The ratio then sharply rises to 20.95% in 2023 and maintains a high level at 20.07% in 2024. This pattern indicates a phase of operational challenges in 2021 but a strong and sustained ability to generate returns on invested capital during the last two years.
Operating Profit Margin (OPM)
GE Aerospace, OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 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) | ||||||
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Adjusted sales of equipment and services
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The NOPBT exhibited considerable volatility during the analyzed period. The value started at 9,300 million US dollars in 2020, followed by a significant decline to a negative 1,679 million in 2021, indicating a loss. In 2022, the company returned to profitability with 3,291 million, and this upward trend continued strongly in 2023, reaching a peak of 11,307 million. However, in 2024, the NOPBT decreased to 8,560 million, which is still considerably higher than the values prior to 2023.
- Adjusted sales of equipment and services
- The adjusted sales showed a general downward trend over the five-year period. Starting at 73,538 million US dollars in 2020, sales slightly decreased to 71,356 million in 2021, and then marginally increased to 73,736 million in 2022. From 2023 onwards, there was a noticeable decline with a reduction to 64,504 million, followed by a sharp drop to 35,098 million in 2024. This significant decrease in the last year suggests a substantial contraction in sales volumes or pricing.
- Operating profit margin (OPM)
- The operating profit margin mirrored the volatility observed in NOPBT. Beginning at 12.65% in 2020, it fell into negative territory in 2021 at -2.35%, reflecting operational difficulties. The margin improved to 4.46% in 2022 and then increased significantly to 17.53% in 2023. The upward momentum continued with a margin of 24.39% in 2024, indicating enhanced operational efficiency or better cost management despite the sharp drop in adjusted sales during the same period.
Turnover of Capital (TO)
GE Aerospace, TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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: 2024-12-31), 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Adjusted sales of equipment and services ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Sales of Equipment and Services
- The adjusted sales of equipment and services exhibited a fluctuating trend over the observed period. Beginning at 73,538 million US dollars at the end of 2020, sales slightly decreased to 71,356 million in 2021 before rebounding to 73,736 million in 2022. Subsequently, there was a notable decline to 64,504 million in 2023, followed by a significant reduction to 35,098 million in 2024. This downward trajectory in the last two years suggests a contraction in sales performance or possible changes in market conditions or company operations.
- Invested Capital
- The invested capital showed a consistent downward trend throughout the period. Starting from 117,528 million US dollars at the end of 2020, it dropped sharply to 72,026 million in 2021, then further decreased to 66,842 million in 2022. This negative trend continued through 2023 and 2024, reaching 50,194 million and 37,678 million respectively. The steady reduction in invested capital indicates a possible divestment, asset sales, or strategic downsizing over the years.
- Turnover of Capital (TO)
- The turnover of capital ratio demonstrated a positive trend initially, rising from 0.63 at the end of 2020 to a peak of 1.29 in 2023. This indicates improving efficiency in utilizing capital to generate sales during that period. However, in 2024, the ratio declined to 0.93, marking a reversal from the previous upward trend. Despite this decline, the ratio in 2024 remains higher than that in 2020, indicating that efficiency is still relatively improved compared to the start of the period.
- Overall Insights
- The data reveals a complex dynamic between sales, invested capital, and capital turnover over the five years. While the invested capital steadily decreased, the company initially improved its efficiency in using capital to generate sales, as reflected by the rising turnover ratio up to 2023. The sharp decline in sales in 2023 and 2024, coupled with the drop in turnover ratio in 2024, suggests challenges that may have impacted sales volumes and overall operational efficiency. The company's shrinking capital base and declining sales in the most recent years could reflect strategic retrenchment or adverse market conditions impacting business performance.
Effective Cash Tax Rate (CTR)
GE Aerospace, CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibit a notable fluctuation over the five-year period. Beginning at a high level of 3,167 million US dollars in 2020, the amount sharply decreased to 141 million in 2021. Subsequently, it rebounded to 1,464 million in 2022, before declining again to 793 million in 2023, and slightly increasing to 999 million by 2024. This volatile pattern indicates inconsistent tax payments, likely reflective of varying profitability and tax planning strategies during these years.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes demonstrates significant variability. In 2020, the company earned 9,300 million US dollars; however, this turned into a loss of 1,679 million in 2021. The performance recovered in 2022 with a profit of 3,291 million, and further improved markedly to 11,307 million in 2023. A decline is observed again in 2024, with NOPBT decreasing to 8,560 million. The large swings suggest sensitivity to operational factors or market conditions that impact profitability substantially from year to year.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate shows considerable inconsistency. It was 34.06% in 2020, with missing data for 2021. In 2022, the rate increased to 44.47%, indicating a higher tax burden relative to operating profits. Thereafter, there was a steep decline to 7.01% in 2023, followed by a slight increase to 11.67% in 2024. The declining tax rate from 2022 onward suggests possible changes in tax planning, credits, or jurisdictions benefiting the company in later years, resulting in a reduced tax expense relative to profits.
- Overall Analysis
- There is a clear pattern of volatility in profitability and tax payments. The sharp loss in 2021 contrasts with the strong rebounds in 2022 and 2023, which drive fluctuations in tax payments and effective tax rates. The reduced tax burden in the last two years, coupled with strong operating profits, may enhance net earnings. However, the evident variability implies exposure to operational and tax-related uncertainties that could warrant closer management attention.