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.
Return on Invested Capital (ROIC)
HP Inc., ROIC calculation, comparison to benchmarks
| Oct 31, 2018 | Oct 31, 2017 | Oct 31, 2016 | Oct 31, 2015 | Oct 31, 2014 | Oct 31, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,027) | 3,064) | 2,997) | 3,947) | 4,693) | 4,258) | |
| Invested capital2 | 7,561) | 9,763) | 9,027) | 71,569) | 65,787) | 67,461) | |
| Performance Ratio | |||||||
| ROIC3 | 26.81% | 31.38% | 33.20% | 5.51% | 7.13% | 6.31% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Apple Inc. | 95.84% | — | — | — | — | — | |
| Arista Networks Inc. | — | — | — | — | — | — | |
| Cisco Systems Inc. | 2.85% | — | — | — | — | — | |
| Super Micro Computer Inc. | 12.03% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2018 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,027 ÷ 7,561 = 26.81%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | HP Inc. ROIC deteriorated from 2016 to 2017 and from 2017 to 2018. |
Decomposition of ROIC
HP Inc., decomposition of ROIC
Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the decrease in return on invested capital (ROIC) over 2018 year is the increase in effective cash tax rate (CTR).
Operating Profit Margin (OPM)
HP Inc., OPM calculation, comparison to benchmarks
| Oct 31, 2018 | Oct 31, 2017 | Oct 31, 2016 | Oct 31, 2015 | Oct 31, 2014 | Oct 31, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,027) | 3,064) | 2,997) | 3,947) | 4,693) | 4,258) | |
| Add: Cash operating taxes2 | 1,398) | 612) | 794) | 984) | 1,685) | 1,924) | |
| Net operating profit before taxes (NOPBT) | 3,425) | 3,676) | 3,791) | 4,931) | 6,378) | 6,183) | |
| Net revenue | 58,472) | 52,056) | 48,238) | 103,355) | 111,454) | 112,298) | |
| Add: Increase (decrease) in deferred revenue | 167) | 149) | (79) | 498) | (310) | (481) | |
| Adjusted net revenue | 58,639) | 52,205) | 48,159) | 103,853) | 111,144) | 111,817) | |
| Profitability Ratio | |||||||
| OPM3 | 5.84% | 7.04% | 7.87% | 4.75% | 5.74% | 5.53% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Apple Inc. | 26.63% | — | — | — | — | — | |
| Arista Networks Inc. | — | — | — | — | — | — | |
| Cisco Systems Inc. | 26.21% | — | — | — | — | — | |
| Super Micro Computer Inc. | 4.66% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2018 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenue
= 100 × 3,425 ÷ 58,639 = 5.84%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | HP Inc. OPM deteriorated from 2016 to 2017 and from 2017 to 2018. |
Turnover of Capital (TO)
HP Inc., TO calculation, comparison to benchmarks
| Oct 31, 2018 | Oct 31, 2017 | Oct 31, 2016 | Oct 31, 2015 | Oct 31, 2014 | Oct 31, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net revenue | 58,472) | 52,056) | 48,238) | 103,355) | 111,454) | 112,298) | |
| Add: Increase (decrease) in deferred revenue | 167) | 149) | (79) | 498) | (310) | (481) | |
| Adjusted net revenue | 58,639) | 52,205) | 48,159) | 103,853) | 111,144) | 111,817) | |
| Invested capital1 | 7,561) | 9,763) | 9,027) | 71,569) | 65,787) | 67,461) | |
| Efficiency Ratio | |||||||
| TO2 | 7.76 | 5.35 | 5.34 | 1.45 | 1.69 | 1.66 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Apple Inc. | 10.07 | — | — | — | — | — | |
| Arista Networks Inc. | — | — | — | — | — | — | |
| Cisco Systems Inc. | 1.00 | — | — | — | — | — | |
| Super Micro Computer Inc. | 3.09 | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).
1 Invested capital. See details »
2 2018 Calculation
TO = Adjusted net revenue ÷ Invested capital
= 58,639 ÷ 7,561 = 7.76
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | HP Inc. TO improved from 2016 to 2017 and from 2017 to 2018. |
Effective Cash Tax Rate (CTR)
HP Inc., CTR calculation, comparison to benchmarks
| Oct 31, 2018 | Oct 31, 2017 | Oct 31, 2016 | Oct 31, 2015 | Oct 31, 2014 | Oct 31, 2013 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,027) | 3,064) | 2,997) | 3,947) | 4,693) | 4,258) | |
| Add: Cash operating taxes2 | 1,398) | 612) | 794) | 984) | 1,685) | 1,924) | |
| Net operating profit before taxes (NOPBT) | 3,425) | 3,676) | 3,791) | 4,931) | 6,378) | 6,183) | |
| Tax Rate | |||||||
| CTR3 | 40.82% | 16.65% | 20.94% | 19.96% | 26.42% | 31.12% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Apple Inc. | 64.25% | — | — | — | — | — | |
| Arista Networks Inc. | — | — | — | — | — | — | |
| Cisco Systems Inc. | 89.18% | — | — | — | — | — | |
| Super Micro Computer Inc. | 16.58% | — | — | — | — | — | |
Based on: 10-K (reporting date: 2018-10-31), 10-K (reporting date: 2017-10-31), 10-K (reporting date: 2016-10-31), 10-K (reporting date: 2015-10-31), 10-K (reporting date: 2014-10-31), 10-K (reporting date: 2013-10-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2018 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,398 ÷ 3,425 = 40.82%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | HP Inc. CTR decreased from 2016 to 2017 but then increased from 2017 to 2018 exceeding 2016 level. |