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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- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Solvency Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Price to FCFE (P/FCFE)
- Selected Financial Data since 2005
- Net Profit Margin since 2005
- Operating Profit Margin since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
Marathon Oil Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 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 exhibited significant volatility over the five-year period. In 2017, the value was negative at -659 million USD, indicating operating losses. This was followed by a strong recovery in 2018, with NOPAT reaching 1,350 million USD. A decline occurred in 2019 to 654 million USD, yet the figure remained positive. The year 2020 marked a sharp downturn, with a substantial negative value of -1,242 million USD. The data shows a rebound in 2021 with a positive NOPAT of 1,116 million USD, indicating recovery from the previous year's loss.
- Invested Capital
- Invested capital showed a declining trend over the period from 2017 to 2021. Starting at 17,726 million USD in 2017, the invested capital slightly decreased to 17,565 million USD in 2018, then modestly increased to 17,954 million USD in 2019. However, a notable decline followed in 2020 to 16,214 million USD and continued further down to 14,862 million USD in 2021. This downward trend may reflect asset divestitures, capital efficiency improvements, or other strategic changes.
- Return on Invested Capital (ROIC)
- The return on invested capital showed considerable fluctuation aligned with changes in profitability. The ROIC started negative at -3.72% in 2017, turned positive in 2018 at 7.68%, then decreased to 3.64% in 2019. The year 2020 presented a significant negative ROIC of -7.66%, reflecting poor performance and operating losses. Recovery was evident in 2021 with ROIC again positive at 7.51%, signaling improved efficiency and profitability over invested capital.
- Summary of Trends
- The financial performance displayed a cyclical pattern with periods of profit and loss, strongly influenced by external or operational factors affecting the company's earnings. The invested capital consistently declined in the last two years, possibly indicating a strategic realignment or asset reduction. ROIC values closely followed the profitability pattern, reinforcing the volatility of the company’s operating efficiency during the period under review.
Decomposition of ROIC
Marathon Oil Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
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 demonstrates substantial volatility over the analyzed period. Beginning with a negative margin of -2.29% in 2017, it sharply increased to 28.51% in 2018, indicating a significant improvement in operational efficiency or profitability. The margin then declined to 12.94% in 2019, followed by a steep decrease to -37.97% in 2020, reflecting considerable operational challenges or adverse conditions. In 2021, the margin recovered to 22.4%, suggesting a notable rebound in operating profitability.
- Turnover of Capital (TO)
- The turnover of capital ratio shows a general upward trend with some fluctuations. Starting at 0.25 in 2017, it increased to 0.34 in 2018, then decreased slightly to 0.28 in 2019. The ratio dropped further to 0.19 in 2020, indicating less efficient use of capital during that year. However, it sharply rose to 0.38 by 2021, marking the highest turnover ratio in the period examined and suggesting improved capital utilization or asset productivity in that year.
- 1 – Effective Cash Tax Rate (CTR)
- The "1 – Effective Cash Tax Rate" remains consistently high, typically close to or at 100%, indicative of minimal cash taxes paid relative to taxable income. The exception is 2018 and 2021, where the values dropped to 80.22% and 88.91%, respectively, suggesting a slightly higher effective cash tax burden during these years. Despite these variations, the company exhibits a pattern of significant tax benefits or credits reducing the effective cash tax outflow.
- Return on Invested Capital (ROIC)
- Return on invested capital mirrors the variability seen in operating profit margin. Starting from a negative value of -3.72% in 2017, it turned positive at 7.68% in 2018, then decreased to 3.64% in 2019. There was a significant negative drop to -7.66% in 2020, indicating a loss in capital efficiency or poor investment returns. By 2021, ROIC recovered to 7.51%, closely aligning with the positive performance seen in 2018, reflecting enhanced returns on the company's investments.
Operating Profit Margin (OPM)
Marathon Oil Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The company experienced significant variability in net operating profit before taxes over the reviewed periods. In 2017, the NOPBT was negative at -100 million USD, indicating an operating loss. This turned positive in 2018, reaching 1,682 million USD, but then declined sharply to 655 million USD in 2019. The year 2020 saw a substantial downturn to -1,176 million USD, reflecting a pronounced operating loss. In 2021, there was a recovery to 1,255 million USD, signaling improved profitability compared to the previous year, though still lower than the 2018 peak.
- Revenues
- Revenues followed a fluctuating pattern across the years. Starting at 4,373 million USD in 2017, revenues increased to a peak of 5,902 million USD in 2018. They then declined to 5,063 million USD in 2019, followed by a more pronounced reduction to 3,097 million USD in 2020. Revenues recovered in 2021 to 5,601 million USD, nearly reaching the 2018 level. This trend suggests sensitivity to external factors influencing sales, with a notable dip in 2020.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited considerable volatility. It was negative at -2.29% in 2017, indicating operating losses relative to revenue. The margin improved dramatically to 28.51% in 2018, before declining to 12.94% in 2019. In 2020, the margin plummeted to -37.97%, reflecting substantial operational inefficiency or extraordinary expenses during that period. In 2021, the margin rebounded strongly to 22.4%, showing enhanced operational performance, though not reaching the heights of 2018.
- Summary of Trends and Insights
- The data reveals cyclical and volatile financial performance over the five-year span. The company endured marked fluctuations in profitability and revenues, with 2020 representing a particularly challenging year characterized by sharp declines in both income and operating margin. A notable recovery phase occurred in 2021, with improvements in profitability margins and revenues, though operational profitability had not fully returned to the 2018 peak levels. These patterns may reflect the impact of external economic conditions, commodity price movements, or company-specific operational challenges and adjustments.
Turnover of Capital (TO)
Marathon Oil Corp., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 Invested capital. See details »
2 2021 Calculation
TO = Revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenues
- Revenues exhibited a fluctuating pattern over the five-year period. Starting at $4,373 million in 2017, revenues increased significantly to $5,902 million in 2018. This was followed by a decline to $5,063 million in 2019 and a sharper decrease to $3,097 million in 2020. In 2021, revenues rebounded noticeably to $5,601 million, approaching levels similar to those seen in 2018.
- Invested Capital
- Invested capital showed a generally declining trend over the period analyzed. It began at $17,726 million in 2017, experienced a slight decrease in 2018 to $17,565 million, and then a marginal increase to $17,954 million in 2019. From 2019 onward, there was a consistent decline, reaching $16,214 million in 2020 and further decreasing to $14,862 million by 2021.
- Turnover of Capital (TO)
- The turnover of capital ratio reflected considerable variability across the years. It increased from 0.25 in 2017 to 0.34 in 2018, indicating improved efficiency in utilizing invested capital to generate revenues during that period. This efficiency dipped to 0.28 in 2019 and declined further to 0.19 in 2020, coinciding with the drop in revenues. A marked recovery occurred in 2021, with the ratio rising to 0.38, suggesting a notable improvement in capital utilization efficiency in that year.
- Summary Insights
- The data reveal a correlation between revenues and turnover of capital, both of which decreased significantly in 2020, likely reflecting operational or market challenges during that year. Despite the reduction in invested capital over the period, the company's capital utilization efficiency fluctuated, ultimately improving in 2021. The rebound in revenues in 2021 accompanied by the highest turnover of capital ratio in the five-year span suggests enhanced operational effectiveness or favorable market conditions contributing to better performance.
Effective Cash Tax Rate (CTR)
Marathon Oil Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Chevron Corp. | ||||||
| ConocoPhillips | ||||||
| Exxon Mobil Corp. | ||||||
| Occidental Petroleum Corp. | ||||||
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes exhibited significant fluctuation over the five-year period. Starting at $559 million in 2017, there was a marked decrease to $333 million in 2018, followed by a sharp drop to $1 million in 2019. In 2020, the value increased slightly to $66 million and then rose further to $139 million in 2021. This trend suggests variability in taxable income or changes in tax regulation and company operations impacting tax liability.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes showed considerable volatility during the period. In 2017, the company reported a loss of $100 million, followed by a significant profit of $1,682 million in 2018. In 2019, the profit decreased to $655 million. The year 2020 saw a substantial loss of $1,176 million, reflecting a severe downturn, before rebounding with a profit of $1,255 million in 2021. These fluctuations may reflect changes in operational efficiency, market conditions, or external economic factors affecting profitability.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate data is incomplete but shows low rates where available. In 2018, the rate was 19.78%, dropping sharply to 0.2% in 2019. The rate data for 2017 and 2020 is missing, which limits trend analysis. In 2021, the rate increased moderately to 11.09%. This pattern could indicate the impact of losses on taxable income reducing tax payments or potential tax planning strategies.