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
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Assets
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2011
- Return on Assets (ROA) since 2011
- Total Asset Turnover since 2011
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Return on Invested Capital (ROIC)
HCA Healthcare 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 | ||||||
| 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.
- Net Operating Profit After Taxes (NOPAT)
- The NOPAT exhibited a general upward trend from 2017 to 2021. It increased from 4,332 million USD in 2017 to 5,865 million USD in 2018, followed by a marginal rise to 5,941 million USD in 2019. A slight decline was noted in 2020, with NOPAT decreasing to 5,607 million USD. However, a significant surge occurred in 2021, reaching 9,050 million USD, marking the highest value within the period analyzed.
- Invested Capital
- Invested capital showed consistent growth over the five-year period. Beginning at 27,635 million USD in 2017, it steadily increased each year, reaching 29,729 million USD in 2018, 33,534 million USD in 2019, 34,570 million USD in 2020, and finally 36,837 million USD in 2021. This reflects a strategic accumulation of investment assets or capital deployment during the period.
- Return on Invested Capital (ROIC)
- The ROIC followed a fluctuating but overall positive trend. It started at 15.68% in 2017, rising sharply to 19.73% in 2018. A decline occurred in 2019 and 2020, with ROIC decreasing to 17.72% and 16.22%, respectively. In 2021, ROIC experienced a notable recovery, climbing significantly to 24.57%, the peak value in the observed timeline. This indicates an improvement in the efficiency of capital utilization, particularly in the final year.
- Overall Insights
- The data reveals progressive growth in invested capital accompanied by generally increasing profitability and capital efficiency metrics. Despite minor fluctuations in NOPAT and ROIC during 2019 and 2020, the substantial rebound in 2021 highlights enhanced operational performance and capital management effectiveness. The increase in ROIC in 2021, in particular, suggests that the company achieved higher returns from its invested capital despite the ongoing capital expansion, which is a positive indicator of financial health and strategic resource allocation.
Decomposition of ROIC
HCA Healthcare 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 »
The analysis of the financial ratios over the five-year period demonstrates several key trends in operational efficiency and profitability.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a slight increase from 14.13% in 2017 to 15.39% in 2018, followed by a decrease in the subsequent years to 13.96% in 2019 and 13.8% in 2020. However, there was a significant improvement in 2021, with the margin rising sharply to 19.56%. This indicates an overall positive turnaround in operational efficiency in the most recent year.
- Turnover of Capital (TO)
- The capital turnover ratio showed a gradual decline from 1.58 in 2017 to a low of 1.49 in 2020, indicating a slight reduction in the efficiency of asset utilization over this period. However, the ratio recovered in 2021 to 1.59, slightly surpassing the 2017 level, which suggests an improvement in generating revenue from invested capital.
- 1 – Effective Cash Tax Rate (CTR)
- This ratio increased notably from 70.31% in 2017 to a peak of 82.91% in 2019, indicating a higher proportion of pre-tax earnings retained after cash taxes. There was a moderate decline thereafter, with figures of 78.84% in 2020 and 78.74% in 2021. The elevated values imply a relatively favorable tax environment or tax planning strategies during these years.
- Return on Invested Capital (ROIC)
- The return on invested capital improved markedly from 15.68% in 2017 to 19.73% in 2018, demonstrating enhanced profitability from invested funds. Following this peak, the ROIC decreased to 17.72% in 2019 and 16.22% in 2020. The most notable change occurred in 2021, when ROIC surged to 24.57%, indicating a substantial increase in overall capital efficiency and profitability.
Overall, the data reveal a stable to improving operational performance and capital efficiency, with a significant upward shift in 2021 across several key metrics, suggesting enhanced profitability and more effective use of invested funds in the most recent year analyzed.
Operating Profit Margin (OPM)
HCA Healthcare 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) | ||||||
| Revenues | ||||||
| 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 ÷ Revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited an overall upward trend from 2017 to 2021. Starting at $6,161 million in 2017, it increased to $7,184 million in 2018. A slight decline occurred in 2019 and 2020, with figures of $7,166 million and $7,112 million respectively. However, a significant jump took place in 2021, reaching $11,493 million, representing a notable improvement compared to previous years.
- Revenues
- Revenues displayed consistent growth over the five-year period. Beginning at $43,614 million in 2017, revenues rose steadily each year to $46,677 million in 2018 and $51,336 million in 2019. The increase continued in 2020 with $51,533 million, followed by a more substantial rise in 2021, reaching $58,752 million. This reflects a positive revenue growth trajectory over the timeframe analyzed.
- Operating Profit Margin (OPM)
- The operating profit margin fluctuated somewhat but showed a strong upward trend by the end of the period. In 2017, the margin stood at 14.13%, increasing to 15.39% in 2018. It then decreased to 13.96% in 2019 and remained relatively stable at 13.80% in 2020. A marked improvement occurred in 2021 when the margin increased substantially to 19.56%, indicating enhanced operational efficiency and profitability in that year.
Turnover of Capital (TO)
HCA Healthcare Inc., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| 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 = Revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The financial data exhibits several notable trends over the five-year period from 2017 to 2021. Revenues demonstrate a consistent upward trajectory, increasing each year from $43,614 million in 2017 to $58,752 million in 2021. This represents a significant overall growth in the company's sales or service income, indicating successful expansion efforts or increased market demand.
Invested capital also shows a steady increase throughout the period, rising from $27,635 million in 2017 to $36,837 million in 2021. This gradual increase suggests ongoing investment in assets or capital resources to support business operations. The growth in invested capital is generally aligned with the growth in revenues, reflecting the company's strategy to bolster capacity or efficiency.
The turnover of capital (TO) ratio, which measures the efficiency of using invested capital to generate revenues, reveals a slight decline from 1.58 in 2017 to 1.49 in 2020, followed by a recovery to 1.59 in 2021. The decrease over the first four years indicates a marginal reduction in capital efficiency, potentially due to increasing capital base not immediately matched by proportional revenue increases. However, the rebound in 2021 suggests improved utilization of invested capital or stronger revenue growth relative to investments in that year.
- Revenues
- Increased steadily annually with an overall gain of approximately 35% from 2017 to 2021.
- Invested Capital
- Consistent growth, expanding total capital employed by about 33% over five years.
- Turnover of Capital (TO)
- Initially declined slightly, indicating reduced efficiency, but returned to above initial levels by 2021, reflecting improved capital utilization.
Overall, the data suggests a positive financial performance trend characterized by growing revenues accompanied by increasing investments, with capital efficiency experiencing short-term fluctuations but ultimately improving by the end of the period.
Effective Cash Tax Rate (CTR)
HCA Healthcare Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| 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.
- Cash Operating Taxes
- Cash operating taxes exhibited a fluctuating trend over the analyzed period. The amount decreased from $1,829 million in 2017 to $1,225 million in 2019, reflecting a consistent decline over the first three years. However, this figure increased in 2020 to $1,505 million and rose further significantly in 2021 to $2,444 million, the highest value during the period.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT showed an overall upward trajectory throughout the period. Starting at $6,161 million in 2017, it increased steadily to $7,184 million in 2018 and maintained a similar level in 2019 and 2020 with values of $7,166 million and $7,112 million, respectively. In 2021, there was a sharp rise, with NOPBT reaching $11,493 million, indicating a notable improvement in operating profitability.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrated a marked decline from 29.69% in 2017 to 17.09% in 2019, indicating improved tax efficiency or tax-related benefits during this period. In 2020, the rate increased to 21.16% and remained relatively stable in 2021 at 21.26%. Despite a recent rise, the CTR in 2021 remained substantially lower than the rate observed in 2017.
- Overall Insights
- The data reflects a complex interaction between operating profits and cash taxes. While operating profit remained relatively stable from 2018 through 2020 before a significant increase in 2021, cash operating taxes first declined and then experienced a sharp increment in the last year. The effective cash tax rate decreased considerably in the early years, suggesting enhanced tax management or changing tax policies, but partially reversed the trend in the final two years. The sharp rise in NOPBT in 2021 was met with a proportional increase in cash taxes, although the tax rate remained below earlier levels.