Return on Capital (ROC)
Advanced level
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Lockheed Martin Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 6,812 | 5,420 | 5,703 | 3,910 | 3,478 | |
| Invested capital2 | 25,671 | 24,942 | 21,063 | 19,892 | 22,569 | |
| Performance Ratio | ||||||
| ROIC3 | 26.53% | 21.73% | 27.07% | 19.66% | 15.41% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | -3.49% | 31.51% | 32.81% | 17.51% | 16.43% | |
| General Dynamics Corp. | 13.02% | 12.30% | 17.16% | 18.24% | 17.81% | |
| Northrop Grumman Corp. | 9.54% | 16.34% | 10.47% | 14.58% | 16.21% | |
| Raytheon Technologies Corp. | 6.88% | 7.48% | 7.61% | 9.74% | 9.41% | |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24).
1 NOPAT. See details »
2 Invested capital. See details »
3 2019 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 6,812 ÷ 25,671 = 26.53%
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. | Lockheed Martin Corp.’s ROIC deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level. |
Decomposition of ROIC
Lockheed Martin Corp., decomposition of ROIC
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24).
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 increase in return on invested capital (ROIC) over 2019 year is the decrease in effective cash tax rate (CTR).
Operating Profit Margin (OPM)
Lockheed Martin Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 6,812 | 5,420 | 5,703 | 3,910 | 3,478 | |
| Add: Cash operating taxes2 | 885 | 1,200 | 90 | 1,602 | 2,034 | |
| Net operating profit before taxes (NOPBT) | 7,696 | 6,620 | 5,793 | 5,512 | 5,512 | |
| Net sales | 59,812 | 53,762 | 51,048 | 47,248 | 46,132 | |
| Profitability Ratio | ||||||
| OPM3 | 12.87% | 12.31% | 11.35% | 11.67% | 11.95% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | -1.80% | 11.91% | 10.98% | 6.18% | 7.75% | |
| General Dynamics Corp. | 12.32% | 12.43% | 13.58% | 14.02% | 13.49% | |
| Northrop Grumman Corp. | 9.26% | 14.50% | 13.43% | 13.31% | 13.24% | |
| Raytheon Technologies Corp. | 12.71% | 14.73% | 13.87% | 13.87% | 13.14% | |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 7,696 ÷ 59,812 = 12.87%
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. | Lockheed Martin Corp.’s OPM improved from 2017 to 2018 and from 2018 to 2019. |
Turnover of Capital (TO)
Lockheed Martin Corp., TO calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 59,812 | 53,762 | 51,048 | 47,248 | 46,132 | |
| Invested capital1 | 25,671 | 24,942 | 21,063 | 19,892 | 22,569 | |
| Efficiency Ratio | ||||||
| TO2 | 2.33 | 2.16 | 2.42 | 2.38 | 2.04 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | 2.15 | 3.25 | 3.54 | 3.79 | 3.11 | |
| General Dynamics Corp. | 1.24 | 1.21 | 1.57 | 1.60 | 1.73 | |
| Northrop Grumman Corp. | 1.44 | 1.25 | 0.94 | 1.45 | 1.43 | |
| Raytheon Technologies Corp. | 0.74 | 0.65 | 0.85 | 0.89 | 0.94 | |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24).
1 Invested capital. See details »
2 2019 Calculation
TO = Net sales ÷ Invested capital
= 59,812 ÷ 25,671 = 2.33
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. | Lockheed Martin Corp.’s TO deteriorated from 2017 to 2018 but then improved from 2018 to 2019 not reaching 2017 level. |
Effective Cash Tax Rate (CTR)
Lockheed Martin Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | Dec 31, 2016 | Dec 31, 2015 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | 6,812 | 5,420 | 5,703 | 3,910 | 3,478 | |
| Add: Cash operating taxes2 | 885 | 1,200 | 90 | 1,602 | 2,034 | |
| Net operating profit before taxes (NOPBT) | 7,696 | 6,620 | 5,793 | 5,512 | 5,512 | |
| Tax Rate | ||||||
| CTR3 | 11.49% | 18.13% | 1.56% | 29.07% | 36.90% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Boeing Co. | — | 18.72% | 15.55% | 25.20% | 31.78% | |
| General Dynamics Corp. | 15.11% | 18.10% | 19.29% | 18.96% | 23.72% | |
| Northrop Grumman Corp. | 28.44% | 9.87% | 17.23% | 24.28% | 14.38% | |
| Raytheon Technologies Corp. | 26.73% | 21.73% | 35.24% | 20.82% | 23.70% | |
Based on: 10-K (filing date: 2020-02-07), 10-K (filing date: 2019-02-08), 10-K (filing date: 2018-02-06), 10-K (filing date: 2017-02-09), 10-K (filing date: 2016-02-24).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2019 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 885 ÷ 7,696 = 11.49%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Lockheed Martin Corp.’s CTR increased from 2017 to 2018 but then slightly decreased from 2018 to 2019. |