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
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Analysis of Long-term (Investment) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Enterprise Value to FCFF (EV/FCFF)
- Price to FCFE (P/FCFE)
- Return on Equity (ROE) since 2005
- Current Ratio since 2005
- Debt to Equity since 2005
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Return on Invested Capital (ROIC)
Johnson & Johnson, ROIC calculation, comparison to benchmarks
| Dec 29, 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 | ||||||
| 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: 2024-12-29), 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 showed an increase from 13,736 million US dollars in 2020 to a peak of 18,861 million in 2021. Following this peak, there was a decline in 2022 to 16,117 million and a more significant drop in 2023 to 8,905 million. In 2024, NOPAT partially recovered to 11,461 million, although it remained well below the earlier peak observed in 2021.
- Invested Capital
- The invested capital remained relatively stable between 2020 and 2021, with values around 98,344 and 98,066 million US dollars, respectively. There was a notable increase in 2022 reaching 113,818 million, followed by a decrease in 2023 to 99,118 million. In 2024, the invested capital again increased to 106,513 million, indicating some volatility but overall a higher capital base compared to 2020 and 2021.
- Return on Invested Capital (ROIC)
- The ROIC displayed a peak in 2021 at 19.23%, representing strong profitability relative to invested capital for that period. This was followed by a decline to 14.16% in 2022 and a more pronounced decrease in 2023 to 8.98%. The ROIC recovered slightly to 10.76% in 2024, mirroring the trend seen in NOPAT, although profitability remained significantly lower than the peak years.
- Overall Trends and Insights
- The data demonstrates a period of strong profitability and efficient capital use in 2021, evidenced by the peak in both NOPAT and ROIC. Subsequently, there was a period of contraction in profitability in 2022 and 2023, accompanied by fluctuations in invested capital. Despite a partial recovery in 2024, both profitability measures remained below their earlier highs. The invested capital exhibited some volatility but increased over the analyzed period, which may indicate ongoing investments or changes in asset base. The decline in ROIC suggests that the effectiveness in generating returns from the invested capital diminished after 2021, signaling potential challenges in operational efficiency or market conditions during the later years.
Decomposition of ROIC
Johnson & Johnson, decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 29, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 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), 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 showed an initial increase from 20.2% in 2020 to a peak of 24.39% in 2021. Following this peak, it declined steadily to 17.15% in 2023, before stabilizing slightly higher at 18.19% in 2024. This suggests that profitability on operations experienced volatility, with a notable decline after 2021, potentially indicating rising costs or reduced pricing power.
- Turnover of Capital (TO)
- Turnover of capital fluctuated moderately during the period, beginning at 0.84 in 2020, increasing to 0.96 in 2021, then decreasing to 0.83 by 2022, and remaining relatively stable around the 0.83 to 0.86 range thereafter. This pattern implies minor changes in asset utilization efficiency, without a clear upward or downward trend, possibly reflecting consistent management of capital assets.
- Effective Cash Tax Rate (CTR)
- The metric expressed as "1 – Effective cash tax rate" declined markedly from around 82.32% in 2020 and 82.47% in 2021, down to 60.97% in 2023, with some recovery to 70.95% in 2024. This indicates that the effective cash tax rate increased notably until 2023, reducing net cash benefits from tax, but slightly eased in the latest period.
- Return on Invested Capital (ROIC)
- ROIC exhibited a notable decrease across the five-year span. Starting at 13.97% in 2020, it rose to a high of 19.23% in 2021, then declined sharply in the subsequent years to reach 8.98% in 2023, followed by a moderate improvement to 10.76% in 2024. This trajectory indicates a significant reduction in the efficiency of capital investment returns after 2021, with a partial recovery in the most recent year.
- Overall Insights
- The financial ratios indicate that the period following 2021 was characterized by a decrease in operating profitability and returns on capital, along with increased effective tax burdens. Capital utilization remained fairly stable, suggesting operational stability in asset management despite other challenges. The alignment of declining profit margins and ROIC points to pressures on both operational efficiency and investment performance. The slight improvements in 2024 could signal initial responses to these challenges, but overall the trend suggests a need for strategic focus on profitability enhancement and tax management going forward.
Operating Profit Margin (OPM)
Johnson & Johnson, OPM calculation, comparison to benchmarks
| Dec 29, 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 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: 2024-12-29), 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 ÷ Sales to customers
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited a fluctuating trend over the analyzed period. Starting at $16,685 million in 2020, it increased significantly to $22,871 million in 2021. In 2022, the profit level slightly decreased to $21,528 million, followed by a more notable drop to $14,605 million in 2023. In 2024, the profit showed a marginal recovery, rising to $16,153 million.
- Sales to Customers
- The sales volumes demonstrated an overall upward trend with some variability. Beginning at $82,584 million in 2020, sales increased to $93,775 million in 2021 and slightly rose again to $94,943 million in 2022. Sales then declined to $85,159 million in 2023 but moderately rebounded to $88,821 million by the end of 2024. Despite fluctuations, sales remained higher than the 2020 baseline throughout most of the period.
- Operating Profit Margin (OPM)
- The operating profit margin, expressed as a percentage, displayed a pattern similar to that of the net operating profit before taxes. The margin was 20.2% in 2020, improved to a peak of 24.39% in 2021, then decreased slightly to 22.67% in 2022. The margin declined more substantially to 17.15% in 2023, followed by a moderate increase to 18.19% in 2024. This indicates some erosion of profitability margin relative to sales after 2021, with partial improvement by 2024.
- Overall Analysis
- The data reflect a strong performance in 2021 with both net operating profit and profit margins reaching their highest points during the period. However, the subsequent years show a decline in profitability despite fluctuating sales figures, which suggests potential cost pressures, changes in product mix, or other operational challenges affecting profit generation. The recovery signs in 2024, both in profit and margin, could indicate initial corrective measures or favorable market conditions returning. Sales, although variable, have generally stayed above pre-2021 levels, signifying sustained revenue generation capacity despite margin pressures.
Turnover of Capital (TO)
Johnson & Johnson, TO calculation, comparison to benchmarks
| Dec 29, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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: 2024-12-29), 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 = Sales to customers ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Sales to Customers
- Sales experienced a notable increase from 82,584 million USD in 2020 to 93,775 million USD in 2021, reflecting a strong growth phase. However, sales plateaued in 2022 at 94,943 million USD and then declined significantly in 2023 to 85,159 million USD. In 2024, sales demonstrated partial recovery, reaching 88,821 million USD, yet still remained below the peak levels observed in 2021 and 2022.
- Invested Capital
- Invested capital remained relatively stable between 2020 and 2021, with a slight decrease from 98,344 million USD to 98,066 million USD. In 2022, there was a marked increase to 113,818 million USD, suggesting additional investment or asset accumulation during that period. This was followed by a reduction to 99,118 million USD in 2023, before rising again in 2024 to 106,513 million USD, indicating some volatility but an overall upward trend from 2021.
- Turnover of Capital (TO)
- The turnover of capital ratio exhibited considerable fluctuations throughout the observed years. It improved significantly from 0.84 in 2020 to 0.96 in 2021, indicating enhanced efficiency in using capital to generate sales. This efficiency declined sharply in 2022 to 0.83, improved slightly to 0.86 in 2023, and then fell back to 0.83 in 2024. These oscillations imply challenges in maintaining consistent capital utilization efficiency corresponding with the changes in sales and invested capital.
- Overall Analysis
- The data presents a scenario where sales growth was strong initially but faced headwinds from 2022 onwards, with a dip in 2023 and partial recovery in 2024. Invested capital rose significantly in 2022, which may indicate strategic investments, though this was not immediately accompanied by sustained sales growth or improved capital turnover. The turnover of capital ratio's variability suggests that operational efficiency in capital use was inconsistent, potentially exacerbated by fluctuating sales performance and shifting capital levels. This pattern points to a need for focus on optimizing asset utilization as well as stabilizing sales to enhance overall financial health.
Effective Cash Tax Rate (CTR)
Johnson & Johnson, CTR calculation, comparison to benchmarks
| Dec 29, 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 | ||||||
| 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: 2024-12-29), 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
- Cash operating taxes exhibit a generally increasing trend from 2020 through 2023, rising from $2,949 million in 2020 to a peak of $5,700 million in 2023. However, in 2024 there is a noticeable decline to $4,692 million, indicating a reduction in the cash tax outflow relative to the previous year.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT shows significant fluctuations over the five-year period. It increases sharply from $16,685 million in 2020 to a high of $22,871 million in 2021, followed by a decline to $21,528 million in 2022. A more pronounced drop occurs in 2023 to $14,605 million, with a modest recovery to $16,153 million in 2024. This pattern suggests volatility in operating profitability, with a notable contraction in profitability in the most recent years after an initial strong performance.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate displays considerable variation, starting at 17.68% in 2020 and remaining relatively stable in 2021 at 17.53%. It then increases sharply in 2022 to 25.14%, peaks in 2023 at 39.03%, and decreases to 29.05% in 2024. This indicates rising tax burdens relative to operating profits, particularly between 2022 and 2023, followed by some alleviation in the last recorded year.
- Summary of Observations
- The data reflect a period of growth in operating profits and cash taxes early in the timeline, succeeded by a decline in profitability and a corresponding rise in the effective tax rate in later years. The increase in the tax rate alongside decreasing profits in 2023 implicates higher tax pressure relative to earnings, which may have impacted net profitability. The subsequent decrease in cash taxes and tax rate in 2024 suggests some improvement in tax efficiency or changes in taxable income or tax regulations. Overall, the financial indicators portray a challenging period with increased tax burdens and fluctuating profitability.