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.
Return on Invested Capital (ROIC)
Occidental Petroleum Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 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 | 3,380) | 5,524) | 12,526) | 4,213) | (14,889) | |
| Invested capital2 | 66,896) | 56,860) | 56,295) | 58,059) | 63,270) | |
| Performance Ratio | ||||||
| ROIC3 | 5.05% | 9.72% | 22.25% | 7.26% | -23.53% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Chevron Corp. | 9.64% | 9.17% | 19.68% | 10.04% | — | |
| ConocoPhillips | 9.38% | 15.20% | 28.02% | 13.45% | — | |
| Exxon Mobil Corp. | 8.31% | 12.32% | 21.12% | 12.01% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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 × 3,380 ÷ 66,896 = 5.05%
4 Click competitor name to see calculations.
The financial performance between 2020 and 2024 is characterized by extreme volatility in profitability and a fluctuating capital base, resulting in a cyclical Return on Invested Capital (ROIC) profile. After a period of significant capital erosion and operational losses in 2020, the company experienced a sharp recovery that peaked in 2022, followed by a steady decline in capital efficiency through 2024.
- Net Operating Profit After Taxes (NOPAT)
- A drastic recovery occurred between 2020 and 2022, where NOPAT shifted from a deficit of US$ 14,889 million to a peak of US$ 12,526 million. However, this peak was not sustained; profitability declined significantly in 2023 to US$ 5,524 million and continued to contract to US$ 3,380 million by December 31, 2024.
- Invested Capital Trends
- Invested capital followed a contracting trend from 2020 to 2022, decreasing from US$ 63,270 million to a low of US$ 56,295 million. This trend reversed in 2024, with a substantial increase in the capital base to US$ 66,896 million, marking the highest level of invested capital within the observed five-year period.
- Return on Invested Capital (ROIC) Analysis
- The ROIC exhibits a mirrored trajectory to NOPAT, moving from a deep negative of -23.53% in 2020 to a high of 22.25% in 2022. The 2022 peak was driven by the simultaneous increase in operating profits and the reduction of the invested capital base. The subsequent decline to 5.05% by 2024 is attributed to a dual negative pressure: the reduction in NOPAT and the significant expansion of the invested capital base.
In summary, the data indicates a transition from a period of recovery and high capital efficiency (2021-2022) to a period of diminishing returns (2023-2024). The most recent figures suggest a deterioration in the company's ability to generate operating profits relative to the size of its capital investments.
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Decomposition of ROIC
Occidental Petroleum Corp., decomposition of ROIC
Based on: 10-K (reporting date: 2024-12-31), 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 »
The return on invested capital exhibited extreme volatility between 2020 and 2024, characterized by a severe initial deficit, a sharp recovery peaking in 2022, and a subsequent consistent decline.
- Operating Profit Margin
- A dramatic reversal occurred between 2020 and 2022, where the margin shifted from -79.93% to a peak of 41.51%. This surge was followed by a steady contraction over the next two years, ending at 19.73% in 2024, indicating a significant reduction in operational profitability relative to revenue.
- Turnover of Capital
- Capital efficiency improved significantly in the early part of the period, rising from a ratio of 0.28 in 2020 to a peak of 0.65 in 2022. This efficiency trend subsequently reversed, with the ratio declining to 0.40 by 2024, suggesting a decrease in the asset productivity and revenue generation per unit of invested capital.
- Effective Cash Tax Rate Impact
- The retention of profit after cash taxes showed a general downward trend. From a starting point of 100.00% in 2020, the rate decreased to 64.12% by 2024. This trend reflects an increasing cash tax burden over time, which has acted as a drag on the final return to investors.
- ROIC Synthesis
- The peak return on invested capital of 22.25% in 2022 was driven by the simultaneous maximization of both operating margins and capital turnover. The subsequent decline to 5.05% in 2024 is the result of a compounded negative effect: diminishing profit margins, reduced capital efficiency, and a higher effective cash tax rate.
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Operating Profit Margin (OPM)
Occidental Petroleum Corp., OPM calculation, comparison to benchmarks
| Dec 31, 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 | 3,380) | 5,524) | 12,526) | 4,213) | (14,889) | |
| Add: Cash operating taxes2 | 1,892) | 1,887) | 2,681) | 1,213) | 655) | |
| Net operating profit before taxes (NOPBT) | 5,272) | 7,411) | 15,207) | 5,426) | (14,234) | |
| Net sales | 26,725) | 28,257) | 36,634) | 25,956) | 17,809) | |
| Profitability Ratio | ||||||
| OPM3 | 19.73% | 26.23% | 41.51% | 20.91% | -79.93% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Chevron Corp. | 14.88% | 13.94% | 22.85% | 15.98% | — | |
| ConocoPhillips | 25.80% | 29.62% | 36.63% | 29.99% | — | |
| Exxon Mobil Corp. | 13.67% | 15.71% | 19.95% | 14.69% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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 ÷ Net sales
= 100 × 5,272 ÷ 26,725 = 19.73%
4 Click competitor name to see calculations.
The operational performance from 2020 through 2024 is characterized by a period of extreme volatility, featuring a severe initial deficit followed by a rapid recovery to peak profitability and a subsequent multi-year contraction.
- Net Operating Profit Before Taxes (NOPBT)
- A significant turnaround is observed between 2020 and 2022, as NOPBT shifted from a loss of US$ 14,234 million to a peak gain of US$ 15,207 million. Following this peak, profitability entered a downward trend, decreasing to US$ 7,411 million in 2023 and further declining to US$ 5,272 million by the end of 2024.
- Net Sales Trends
- Revenue experienced substantial growth in the early part of the period, rising from US$ 17,809 million in 2020 to a maximum of US$ 36,634 million in 2022. This peak was followed by a steady decline in sales, which reached US$ 26,725 million by December 31, 2024.
- Operating Profit Margin (OPM)
- The operating profit margin reflected the volatility of both sales and operating profit, recovering from a low of -79.93% in 2020 to a high of 41.51% in 2022. A consistent compression of the margin occurred thereafter, falling to 26.23% in 2023 and concluding the period at 19.73% in 2024, suggesting a reduction in the efficiency of converting sales into operating profit.
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Turnover of Capital (TO)
Occidental Petroleum Corp., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | 26,725) | 28,257) | 36,634) | 25,956) | 17,809) | |
| Invested capital1 | 66,896) | 56,860) | 56,295) | 58,059) | 63,270) | |
| Efficiency Ratio | ||||||
| TO2 | 0.40 | 0.50 | 0.65 | 0.45 | 0.28 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Chevron Corp. | 0.93 | 0.93 | 1.11 | 0.80 | — | |
| ConocoPhillips | 0.51 | 0.69 | 1.04 | 0.60 | — | |
| Exxon Mobil Corp. | 0.90 | 1.09 | 1.34 | 1.01 | — | |
Based on: 10-K (reporting date: 2024-12-31), 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 = Net sales ÷ Invested capital
= 26,725 ÷ 66,896 = 0.40
3 Click competitor name to see calculations.
The capital efficiency of the organization experienced a period of significant expansion followed by a contraction between 2020 and 2024. The peak of operational productivity occurred in 2022, after which a noticeable decline in the ability to generate sales from the invested capital base was observed.
- Turnover of Capital (TO)
- The turnover ratio exhibited a sharp upward trajectory from 0.28 in 2020 to a peak of 0.65 in 2022. This improvement indicates a period of increasing efficiency in utilizing invested capital to drive revenue. However, this trend reversed after 2022, with the ratio declining to 0.50 in 2023 and further to 0.40 by the end of 2024.
- Net Sales Performance
- Revenue growth was aggressive between 2020 and 2022, with net sales increasing from US$ 17,809 million to a peak of US$ 36,634 million. Following this peak, sales figures contracted to US$ 28,257 million in 2023 and US$ 26,725 million in 2024, which directly contributed to the reduction in the capital turnover ratio.
- Invested Capital Dynamics
- Invested capital showed a downward trend from 2020 to 2022, decreasing from US$ 63,270 million to US$ 56,295 million. This reduction in the capital base, occurring simultaneously with rising sales, accelerated the growth of the turnover ratio. In contrast, invested capital increased significantly in 2024 to US$ 66,896 million; this expansion of the capital base, coupled with softening net sales, resulted in a lower efficiency ratio.
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Effective Cash Tax Rate (CTR)
Occidental Petroleum Corp., CTR calculation, comparison to benchmarks
| Dec 31, 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 | 3,380) | 5,524) | 12,526) | 4,213) | (14,889) | |
| Add: Cash operating taxes2 | 1,892) | 1,887) | 2,681) | 1,213) | 655) | |
| Net operating profit before taxes (NOPBT) | 5,272) | 7,411) | 15,207) | 5,426) | (14,234) | |
| Tax Rate | ||||||
| CTR3 | 35.88% | 25.46% | 17.63% | 22.36% | — | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Chevron Corp. | 30.17% | 29.08% | 22.40% | 21.79% | — | |
| ConocoPhillips | 29.38% | 25.68% | 26.41% | 25.25% | — | |
| Exxon Mobil Corp. | 32.15% | 27.99% | 21.11% | 19.45% | — | |
Based on: 10-K (reporting date: 2024-12-31), 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 × 1,892 ÷ 5,272 = 35.88%
4 Click competitor name to see calculations.
The financial data reveals a period of significant volatility in operating profitability and corresponding fluctuations in the effective cash tax rate. A transition from a substantial operating loss in 2020 to a peak in profitability in 2022 is observed, followed by a gradual contraction in net operating profit before taxes through 2024.
- Net Operating Profit Before Taxes (NOPBT) Trends
- A sharp recovery is evident following a loss of 14,234 million US$ in 2020, with profitability peaking at 15,207 million US$ in 2022. However, a downward trajectory followed this peak, with NOPBT declining to 7,411 million US$ in 2023 and further to 5,272 million US$ by 2024.
- Cash Operating Taxes Performance
- Cash tax payments increased steadily from 655 million US$ in 2020 to a high of 2,681 million US$ in 2022. For the subsequent two years, these payments remained relatively stable, recording 1,887 million US$ in 2023 and 1,892 million US$ in 2024.
- Effective Cash Tax Rate (CTR) Analysis
- The effective cash tax rate has exhibited an upward trend since 2022. After hitting a low of 17.63% in 2022, the rate rose to 25.46% in 2023 and climbed significantly to 35.88% in 2024. This increase in the CTR occurred despite the decline in NOPBT, indicating that cash tax obligations did not decrease proportionally with the reduction in operating profit.
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