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
- Capital Asset Pricing Model (CAPM)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Book Value (P/BV) since 2005
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Return on Invested Capital (ROIC)
Humana Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 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 experienced a notable increase from 2019 to 2020, rising from 3,029 million USD to 3,874 million USD. However, in subsequent years, there was a consistent decline, reaching 3,172 million USD in 2021, 3,053 million USD in 2022, and dropping further to 2,726 million USD in 2023. This trend indicates a peak performance in 2020 followed by a steady decrease in profitability.
- Invested capital
- Invested capital demonstrated a steady upward trajectory over the period. Beginning at 18,877 million USD in 2019, it increased to 21,850 million USD in 2020 and saw a significant jump to 30,647 million USD in 2021. The values slightly declined to 29,089 million USD in 2022 but rose again to 30,225 million USD in 2023. This overall growth in invested capital suggests increased resource deployment by the company, with a minor reduction in 2022.
- Return on invested capital (ROIC)
- The return on invested capital showed an initial increase from 16.04% in 2019 to a peak of 17.73% in 2020. However, this metric sharply declined in the following years, falling to 10.35% in 2021 and marginally improving to 10.5% in 2022, before descending again to 9.02% in 2023. This decline in ROIC points to decreasing efficiency in converting invested capital into profits.
- Overall analysis
- The data indicates that while the company increased its invested capital substantially over the years, its profitability and efficiency in deploying capital have weakened since 2020. The peak in profitability and ROIC in 2020 was not sustained, highlighting potential challenges in maintaining operational performance amid increased capital investments.
Decomposition of ROIC
Humana Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
Based on: 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), 10-K (reporting date: 2019-12-31).
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 a downward trend over the period from 2019 to 2023. It initially increased from 5.73% in 2019 to 6.64% in 2020, indicating improved profitability. However, from 2021 onwards, it declined consistently from 4.49% to 3.64% by 2023, suggesting reduced operational efficiency or increased costs impacting profit generation.
- Turnover of capital (TO)
- The turnover of capital showed relative stability with some fluctuations between 2019 and 2023. It increased slightly from 3.41 in 2019 to 3.48 in 2020, then declined to 2.7 in 2021, reflecting potentially less efficient use of capital that year. Following 2021, turnover improved, rising to 3.18 in 2022 and returning to 3.48 in 2023, indicating recovery and more effective capital utilization in later years.
- 1 – Effective cash tax rate (CTR)
- This metric displayed variability throughout the examined years, starting at 82.2% in 2019, decreasing to 76.72% in 2020, then peaking again at 85.38% in 2021. Subsequently, a downward trend was observed with reductions to 76.26% in 2022 and further to 71.09% in 2023, suggesting a decreasing proportion of cash taxes relative to earnings over time, which could indicate tax planning or changes in tax regulations.
- Return on invested capital (ROIC)
- The return on invested capital initially increased from 16.04% in 2019 to a peak of 17.73% in 2020, reflecting strong capital efficiency and profitability. However, a sharp decline occurred in 2021 to 10.35%, followed by a marginal increase to 10.5% in 2022, but then fell again to 9.02% in 2023. This trend points to challenges in maintaining capital returns at earlier high levels during recent years, which may be associated with operational or market factors.
Operating Profit Margin (OPM)
Humana Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| External revenues | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted external revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted external revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited fluctuations over the five-year period. Starting at 3,684 million US dollars in 2019, it increased significantly to 5,049 million in 2020. However, this was followed by a decline to 3,715 million in 2021. Subsequent years showed moderate recovery, with values of 4,003 million in 2022 and 3,834 million in 2023. Overall, the pattern reflects volatility without a sustained upward or downward trend.
- Adjusted External Revenues
- Adjusted external revenues demonstrated a consistent and substantial upward trajectory from 2019 through 2023. Beginning at 64,351 million US dollars in 2019, revenues increased each year, reaching 76,072 million in 2020, 82,813 million in 2021, 92,520 million in 2022, and culminating at 105,285 million in 2023. This steady growth indicates successful revenue expansion efforts or market growth during the period analyzed.
- Operating Profit Margin (OPM)
- The operating profit margin showed a declining trend over the analyzed years. It started at 5.73% in 2019, then rose to 6.64% in 2020, possibly linked to the peak in NOPBT observed that year. Afterward, the margin steadily decreased to 4.49% in 2021, 4.33% in 2022, and further down to 3.64% in 2023. Despite growth in revenues, the diminishing margin suggests pressure on profitability or increased operating costs relative to revenue.
- Summary Insight
- While revenues have consistently grown, the fluctuating net operating profits and declining operating profit margins highlight challenges in maintaining profitability efficiency. The peak in operating profit and margin in 2020 contrasts with subsequent declines, indicating potential external influences or internal efficiency issues impacting profit generation despite revenue gains.
Turnover of Capital (TO)
Humana Inc., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| External revenues | ||||||
| Add: Increase (decrease) in unearned revenues | ||||||
| Adjusted external revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 Invested capital. See details »
2 2023 Calculation
TO = Adjusted external revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The financial data over the five-year period demonstrates a general upward trend in adjusted external revenues, invested capital, and fluctuating capital turnover ratios.
- Adjusted External Revenues
- The revenues show consistent growth year over year. Starting at 64,351 million USD in 2019, revenues increased to 76,072 million USD in 2020, representing an approximate 18.2% rise. The upward trajectory continued in 2021 with 82,813 million USD, 2022 with 92,520 million USD, and further to 105,285 million USD in 2023. This reflects strong revenue expansion, with an overall growth of approximately 63.7% from 2019 to 2023.
- Invested Capital
- Invested capital exhibited an increasing trend with some volatility. Beginning at 18,877 million USD in 2019, capital investments rose to 21,850 million USD in 2020, and then increased sharply to 30,647 million USD in 2021. In 2022, invested capital slightly decreased to 29,089 million USD but rebounded to 30,225 million USD in 2023. Overall, invested capital increased by approximately 60.1% over the period, indicating significant investment to support business operations and growth.
- Turnover of Capital (TO)
- The turnover of capital, which is a measure of how efficiently capital is used to generate revenues, showed variability during the period. It remained relatively stable at 3.41 and 3.48 in 2019 and 2020 respectively, before declining to 2.7 in 2021. This decline indicates reduced efficiency or more intensive capital use relative to revenue growth in that year. However, the ratio improved in the following two years, moving back up to 3.18 in 2022 and reaching the initial high level of 3.48 in 2023. This suggests a recovery in capital efficiency after the dip in 2021.
In summary, the data portrays a company with strong revenue growth accompanied by substantial capital investment. The efficiency of capital use experienced a temporary decline but subsequently returned to previous higher levels, indicating effective management of capital resources in recent years.
Effective Cash Tax Rate (CTR)
Humana Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes show significant fluctuations over the five-year period. Starting at $656 million in 2019, there was a notable increase to $1,175 million in 2020. Subsequently, the cash operating taxes decreased sharply to $543 million in 2021, followed by a rise to $950 million in 2022 and a further increase to $1,108 million in 2023. This pattern suggests variability in tax payments, possibly influenced by changes in taxable income or tax regulations.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT exhibited volatility during the observed periods. It rose significantly from $3,684 million in 2019 to a peak of $5,049 million in 2020. However, it declined in the following years to $3,715 million in 2021, slightly increasing to $4,003 million in 2022, before a marginal decrease to $3,834 million in 2023. This trend indicates fluctuating operational profitability, with 2020 representing a peak year and subsequent years showing a reversion to a range closer to the initial level in 2019.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate varied considerably throughout the period. It started at 17.8% in 2019, increased to 23.28% in 2020, then decreased to a low of 14.62% in 2021. This was followed by a rise to 23.74% in 2022 and a further increase to 28.91% in 2023. The trend indicates an overall upward movement in the tax rate in the latter years, potentially reflecting changes in tax policies, tax planning strategies, or shifts in the composition of pre-tax profits.
- Overall Analysis
- The data reveals a degree of volatility in both profitability and tax parameters. The spike in NOPBT in 2020 did not correspond proportionally to cash taxes, which also peaked that year but at a higher rate relative to profit. The subsequent decline in profits was accompanied by an increase in the effective cash tax rate, leading to relatively higher tax expenses in 2022 and 2023 despite lower profit levels compared to 2020. This divergence suggests possible changes in tax structures or taxable income characteristics. Overall, the financial indicators imply a dynamic operating environment with significant fluctuations in profitability and tax obligations over the five-year span.