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.
Paying user area
Try for free
Johnson & Johnson pages available for free this week:
- Balance Sheet: Assets
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Enterprise Value to EBITDA (EV/EBITDA)
- Price to FCFE (P/FCFE)
- Capital Asset Pricing Model (CAPM)
- Price to Earnings (P/E) since 2005
- Price to Sales (P/S) since 2005
- Aggregate Accruals
The data is hidden behind: . Unhide it.
Get full access to the entire website from $10.42/mo, or
get 1-month access to Johnson & Johnson for $24.99.
This is a one-time payment. There is no automatic renewal.
We accept:
Return on Invested Capital (ROIC)
Johnson & Johnson, ROIC calculation, comparison to benchmarks
| Dec 28, 2025 | Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-28), 10-K (reporting date: 2024-12-29), 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 return on invested capital (ROIC) exhibited considerable fluctuation over the five-year period. Initial values demonstrated a strong return, followed by a period of decline, and then a substantial recovery.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT decreased from US$18,861 million in 2021 to US$16,117 million in 2022, representing a decline of approximately 14.5%. A more significant decrease was observed in 2023, with NOPAT falling to US$8,905 million. A partial recovery occurred in 2024, reaching US$11,461 million, before a substantial increase to US$28,330 million in 2025.
- Invested Capital
- Invested capital increased from US$98,066 million in 2021 to US$113,818 million in 2022, a rise of approximately 16.1%. It experienced a slight decrease in 2023 to US$99,118 million. Further increases were noted in 2024 and 2025, reaching US$106,513 million and US$138,153 million respectively. The largest increase in invested capital occurred between 2024 and 2025.
- Return on Invested Capital (ROIC)
- ROIC began at 19.23% in 2021, indicating a strong return on capital employed. A decline was observed in 2022 to 14.16%, continuing downward to 8.98% in 2023, the lowest value within the observed period. A modest recovery to 10.76% occurred in 2024. The most significant change was the substantial increase in ROIC to 20.51% in 2025, exceeding the initial 2021 value. The ROIC trend largely mirrors the fluctuations in NOPAT, though the increases in invested capital moderate the overall percentage changes.
The significant increase in ROIC in 2025, coupled with the substantial rise in NOPAT, suggests improved operational efficiency or a favorable shift in market conditions. The increase in invested capital in the same period should be considered when evaluating the sustainability of this improved performance.
Decomposition of ROIC
Johnson & Johnson, decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 28, 2025 | = | × | × | ||||
| Dec 29, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-28), 10-K (reporting date: 2024-12-29), 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 under review demonstrates significant fluctuations in the components of return on invested capital. Overall, the ROIC experienced a decline from 2021 to 2023, followed by a recovery in 2024 and substantial growth in 2025. This movement is directly attributable to changes in operating profit margin, capital turnover, and the impact of the effective cash tax rate.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited a notable decrease from 24.39% in 2021 to 17.15% in 2023. A modest recovery to 18.19% occurred in 2024, but a substantial increase to 34.57% was observed in 2025. This suggests improving operational efficiency or pricing power in the most recent year.
- Turnover of Capital (TO)
- Capital turnover decreased consistently from 0.96 in 2021 to 0.68 in 2025. This indicates a declining efficiency in utilizing capital to generate revenue. The company appears to be generating less revenue for each unit of capital employed over time.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate decreased from 82.47% in 2021 to a low of 60.97% in 2023, before recovering to 70.95% in 2024 and reaching a high of 87.00% in 2025. This suggests a changing tax burden impacting after-tax profitability. The increase in 2025 significantly boosts the ROIC calculation.
The decline in ROIC from 2021 to 2023 was primarily driven by the combined effect of decreasing operating profit margin and capital turnover, partially offset by the declining tax rate adjustment. The subsequent increase in ROIC in 2024 and particularly in 2025 is largely attributable to the significant improvement in operating profit margin and a substantial increase in the tax rate adjustment, despite the continued decline in capital turnover. The interplay between these factors highlights the sensitivity of ROIC to changes in operational performance, asset utilization, and tax conditions.
The decreasing capital turnover is a potential area of concern, as it suggests diminishing efficiency in asset utilization. While the improved operating profit margin and tax rate adjustment have positively impacted ROIC in the latest period, sustained improvement will likely require addressing the declining capital turnover.
Operating Profit Margin (OPM)
Johnson & Johnson, OPM calculation, comparison to benchmarks
| Dec 28, 2025 | Dec 29, 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 to customers | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-28), 10-K (reporting date: 2024-12-29), 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 ÷ Sales to customers
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited considerable fluctuation over the five-year period. Initial values demonstrated a strong profitability position, which subsequently experienced a decline before a substantial recovery.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM began at 24.39% in 2021, decreased to 22.67% in 2022, and then experienced a significant drop to 17.15% in 2023. A modest increase to 18.19% was observed in 2024, followed by a dramatic rise to 34.57% in 2025. This indicates a period of profitability challenges followed by a strong rebound.
Net operating profit before taxes mirrored the OPM trend, declining from US$22,871 million in 2021 to US$14,605 million in 2023, before increasing to US$16,153 million in 2024 and reaching US$32,562 million in 2025. This suggests that the changes in OPM are directly linked to changes in underlying profitability.
- Sales to Customers
- Sales to customers remained relatively stable between 2021 and 2023, fluctuating around the US$90 billion mark. A slight decrease was noted in 2023 to US$85,159 million. Sales then increased to US$88,821 million in 2024 and further to US$94,193 million in 2025. The increase in sales in the final two years, coupled with the substantial OPM improvement in 2025, suggests potential operating leverage benefits.
The most significant observation is the substantial improvement in OPM in 2025. This suggests either a significant improvement in cost control, a favorable shift in the sales mix towards higher-margin products, or a combination of both. Further investigation would be required to determine the specific drivers of this improvement.
- Year-over-Year Changes
- The largest year-over-year decrease in OPM occurred between 2022 and 2023, with a decline of 5.52 percentage points. Conversely, the largest year-over-year increase occurred between 2024 and 2025, with an increase of 16.38 percentage points. These represent the most pronounced shifts in profitability during the analyzed period.
Turnover of Capital (TO)
Johnson & Johnson, TO calculation, comparison to benchmarks
| Dec 28, 2025 | Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Sales to customers | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-28), 10-K (reporting date: 2024-12-29), 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 = Sales to customers ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The period under review demonstrates fluctuating performance in the turnover of capital. Sales to customers experienced an initial increase, followed by a decline, and then a recovery, while invested capital generally increased over the five-year period. These movements significantly impacted the calculated turnover ratio.
- Sales to Customers
- Sales to customers increased from US$93,775 million in 2021 to US$94,943 million in 2022, representing a modest growth rate. A subsequent decrease was observed in 2023, with sales falling to US$85,159 million. Sales partially recovered in 2024 to US$88,821 million, and then increased more substantially in 2025, reaching US$94,193 million. This indicates a period of volatility followed by a return to near-2022 levels.
- Invested Capital
- Invested capital exhibited a consistent upward trend for the majority of the period. It rose from US$98,066 million in 2021 to US$113,818 million in 2022. A slight decrease occurred in 2023, falling to US$99,118 million, but it resumed its upward trajectory in 2024, reaching US$106,513 million. The most significant increase was observed between 2024 and 2025, with invested capital reaching US$138,153 million. This suggests ongoing investment and expansion activities.
- Turnover of Capital (TO)
- The turnover of capital ratio, which reflects how efficiently capital is being used to generate sales, decreased overall during the period. The ratio began at 0.96 in 2021, declined to 0.83 in 2022, and showed a slight recovery to 0.86 in 2023. It then decreased again to 0.83 in 2024, before falling to 0.68 in 2025. This downward trend suggests a diminishing ability to generate sales relative to the amount of capital invested. The substantial increase in invested capital in 2025, coupled with a more moderate increase in sales, likely contributed to the most significant decline in the ratio during that year.
The observed trends indicate that while sales have fluctuated, invested capital has generally increased. This combination has resulted in a declining turnover of capital, suggesting a potential need to evaluate capital allocation strategies and operational efficiency to improve the utilization of invested funds.
Effective Cash Tax Rate (CTR)
Johnson & Johnson, CTR calculation, comparison to benchmarks
| Dec 28, 2025 | Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| AbbVie Inc. | ||||||
| Amgen Inc. | ||||||
| Bristol-Myers Squibb Co. | ||||||
| Danaher Corp. | ||||||
| Eli Lilly & Co. | ||||||
| Gilead Sciences Inc. | ||||||
| Merck & Co. Inc. | ||||||
| Pfizer Inc. | ||||||
| Regeneron Pharmaceuticals Inc. | ||||||
| Thermo Fisher Scientific Inc. | ||||||
| Vertex Pharmaceuticals Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-28), 10-K (reporting date: 2024-12-29), 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 considerable fluctuation over the five-year period. Cash operating taxes generally increased from 2021 to 2022, then plateaued before declining in the later years. Simultaneously, net operating profit before taxes experienced a decrease in 2022 and a more substantial decline in 2023, followed by recovery in 2024 and significant growth in 2025.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate increased from 17.53% in 2021 to 25.14% in 2022. This increase coincided with a rise in cash operating taxes, while net operating profit before taxes decreased slightly. A significant jump to 39.03% occurred in 2023, despite a further decrease in net operating profit before taxes, suggesting a change in the composition of income or the utilization of tax credits. The rate then decreased to 29.05% in 2024 as net operating profit before taxes began to recover. Finally, a substantial decline to 13.00% was observed in 2025, coinciding with a significant increase in net operating profit before taxes.
The relationship between cash operating taxes and net operating profit before taxes appears to be non-linear. While an increase in profit generally suggests a potential for higher tax payments, the effective cash tax rate’s volatility indicates the presence of other influencing factors, such as changes in tax laws, jurisdictional mix of earnings, or the impact of tax planning strategies. The substantial decrease in the effective cash tax rate in 2025, coupled with a large increase in net operating profit before taxes, warrants further investigation to understand the underlying drivers.
- Cash Operating Taxes - Trend Analysis
- Cash operating taxes increased from US$4,010 million in 2021 to US$5,411 million in 2022, representing a 34.9% increase. They remained relatively stable at US$5,700 million in 2023 before decreasing to US$4,692 million in 2024 and further to US$4,232 million in 2025. This decline in later years does not align directly with the trend in net operating profit before taxes, particularly in 2025, reinforcing the importance of the effective cash tax rate as a key metric.
The observed fluctuations in the effective cash tax rate suggest a dynamic tax environment and the potential for significant impacts on after-tax profitability. Continued monitoring of these trends, alongside a detailed understanding of the factors influencing the rate, is recommended.