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)
Decomposition of ROIC
Operating Profit Margin (OPM)
Turnover of Capital (TO)
Effective Cash Tax Rate (CTR)

Lowe’s Cos. Inc., ROIC calculation, comparison to benchmarks

	Jan 31, 2020	Feb 1, 2019	Feb 2, 2018	Feb 3, 2017	Jan 29, 2016	Jan 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)¹	4,824	3,118	4,276	3,915	3,139	3,218
Invested capital²	26,805	24,933	27,890	27,262	24,562	24,623
Performance Ratio
ROIC³	18.00%	12.51%	15.33%	14.36%	12.78%	13.07%
Benchmarks
ROIC, Competitors⁴
Amazon.com Inc.	—	12.59%	13.28%	5.94%	10.40%	7.00%
Costco Wholesale Corp.	15.00%	16.91%	16.47%	14.89%	14.63%	13.82%
Dollar General Corp.	11.22%	10.94%	9.31%	8.86%	8.94%	8.15%
Home Depot Inc.	34.91%	35.70%	27.93%	25.73%	23.46%	22.47%
Target Corp.	14.30%	14.14%	12.07%	12.75%	12.12%	10.31%
TJX Cos. Inc.	19.13%	18.60%	16.31%	16.38%	18.59%	19.20%
Walmart Inc.	10.88%	5.72%	8.64%	11.52%	10.49%	12.30%

Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).

¹ NOPAT. See details »

² Invested capital. See details »

³ 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 4,824 ÷ 26,805 = 18.00%

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.	Lowe’s Cos. Inc.’s ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level.

Lowe’s Cos. Inc., decomposition of ROIC


	ROIC	=	OPM¹	×	TO²	×	1 – CTR³
Jan 31, 2020	18.00%	=	8.61%	×	2.69	×	77.68%
Feb 1, 2019	12.51%	=	6.38%	×	2.86	×	68.60%
Feb 2, 2018	15.33%	=	9.56%	×	2.47	×	65.04%
Feb 3, 2017	14.36%	=	9.72%	×	2.39	×	61.75%
Jan 29, 2016	12.78%	=	9.07%	×	2.41	×	58.48%
Jan 30, 2015	13.07%	=	9.26%	×	2.29	×	61.75%

Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).

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 increase in return on invested capital (ROIC) over 2020 year is the increase in profitability measured by operating profit margin (OPM) ratio.

Lowe’s Cos. Inc., OPM calculation, comparison to benchmarks

	Jan 31, 2020	Feb 1, 2019	Feb 2, 2018	Feb 3, 2017	Jan 29, 2016	Jan 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)¹	4,824	3,118	4,276	3,915	3,139	3,218
Add: Cash operating taxes²	1,386	1,427	2,298	2,425	2,229	1,993
Net operating profit before taxes (NOPBT)	6,210	4,545	6,575	6,340	5,368	5,212

Net sales	72,148	71,309	68,619	65,017	59,074	56,223
Add: Increase (decrease) in deferred revenue	(13)	(55)	165	209	98	87
Adjusted net sales	72,135	71,254	68,784	65,226	59,172	56,310
Profitability Ratio
OPM³	8.61%	6.38%	9.56%	9.72%	9.07%	9.26%
Benchmarks
OPM, Competitors⁴
Amazon.com Inc.	—	6.37%	6.29%	3.30%	4.62%	3.15%
Costco Wholesale Corp.	3.37%	3.30%	3.41%	3.31%	3.23%	3.31%
Dollar General Corp.	9.65%	9.52%	9.56%	10.23%	10.43%	10.17%
Home Depot Inc.	14.80%	14.70%	15.10%	14.77%	13.94%	13.32%
Target Corp.	6.17%	5.67%	6.18%	7.35%	7.67%	6.41%
TJX Cos. Inc.	11.23%	11.30%	11.44%	11.94%	12.79%	13.18%
Walmart Inc.	4.52%	2.84%	3.65%	4.93%	5.26%	5.84%

Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2020 Calculation
OPM = 100 × NOPBT ÷ Adjusted net sales
= 100 × 6,210 ÷ 72,135 = 8.61%

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.	Lowe’s Cos. Inc.’s OPM deteriorated from 2018 to 2019 but then improved from 2019 to 2020 not reaching 2018 level.

Lowe’s Cos. Inc., TO calculation, comparison to benchmarks

	Jan 31, 2020	Feb 1, 2019	Feb 2, 2018	Feb 3, 2017	Jan 29, 2016	Jan 30, 2015
Selected Financial Data (US$ in millions)
Net sales	72,148	71,309	68,619	65,017	59,074	56,223
Add: Increase (decrease) in deferred revenue	(13)	(55)	165	209	98	87
Adjusted net sales	72,135	71,254	68,784	65,226	59,172	56,310

Invested capital¹	26,805	24,933	27,890	27,262	24,562	24,623
Efficiency Ratio
TO²	2.69	2.86	2.47	2.39	2.41	2.29
Benchmarks
TO, Competitors³
Amazon.com Inc.	—	2.21	2.28	2.26	3.20	3.24
Costco Wholesale Corp.	5.76	6.35	6.80	6.81	6.29	6.55
Dollar General Corp.	1.45	1.42	1.35	1.35	1.35	1.27
Home Depot Inc.	3.01	3.17	2.87	2.75	2.62	2.59
Target Corp.	2.83	2.86	2.66	2.57	2.57	2.41
TJX Cos. Inc.	2.29	2.30	2.22	2.22	2.30	2.23
Walmart Inc.	3.11	3.21	3.48	3.24	3.07	3.21

Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).

¹ Invested capital. See details »

² 2020 Calculation
TO = Adjusted net sales ÷ Invested capital
= 72,135 ÷ 26,805 = 2.69

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.	Lowe’s Cos. Inc.’s TO improved from 2018 to 2019 but then slightly deteriorated from 2019 to 2020.

Lowe’s Cos. Inc., CTR calculation, comparison to benchmarks

	Jan 31, 2020	Feb 1, 2019	Feb 2, 2018	Feb 3, 2017	Jan 29, 2016	Jan 30, 2015
Selected Financial Data (US$ in millions)
Net operating profit after taxes (NOPAT)¹	4,824	3,118	4,276	3,915	3,139	3,218
Add: Cash operating taxes²	1,386	1,427	2,298	2,425	2,229	1,993
Net operating profit before taxes (NOPBT)	6,210	4,545	6,575	6,340	5,368	5,212
Tax Rate
CTR³	22.32%	31.40%	34.96%	38.25%	41.52%	38.25%
Benchmarks
CTR, Competitors⁴
Amazon.com Inc.	—	10.59%	7.26%	20.39%	29.64%	31.33%
Costco Wholesale Corp.	22.65%	19.18%	28.98%	34.06%	27.96%	36.17%
Dollar General Corp.	19.88%	18.75%	27.64%	35.82%	36.32%	36.89%
Home Depot Inc.	21.74%	23.26%	35.67%	36.71%	35.80%	34.80%
Target Corp.	18.12%	12.76%	26.52%	32.40%	38.55%	33.25%
TJX Cos. Inc.	25.59%	28.37%	35.80%	38.22%	36.75%	34.74%
Walmart Inc.	22.54%	37.20%	31.97%	27.77%	35.04%	34.38%

Based on: 10-K (filing date: 2020-03-23), 10-K (filing date: 2019-04-02), 10-K (filing date: 2018-04-02), 10-K (filing date: 2017-04-04), 10-K (filing date: 2016-03-29), 10-K (filing date: 2015-03-31).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 1,386 ÷ 6,210 = 22.32%

⁴ Click competitor name to see calculations.

Tax rate	Description	The company
CTR	Effective cash tax rate on operating income.	Lowe’s Cos. Inc.’s CTR decreased from 2018 to 2019 and from 2019 to 2020.

Lowe’s Cos. Inc. (NYSE:LOW)

Return on Capital (ROC)

Return on Invested Capital (ROIC)

Decomposition of ROIC

Operating Profit Margin (OPM)

Turnover of Capital (TO)

Effective Cash Tax Rate (CTR)