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)
Oracle Corp., ROIC calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 25,856) | 14,158) | 11,940) | 10,160) | 7,492) | 14,348) | |
| Invested capital2 | 176,661) | 115,423) | 101,930) | 98,251) | 77,262) | 81,745) | |
| Performance Ratio | |||||||
| ROIC3 | 14.64% | 12.27% | 11.71% | 10.34% | 9.70% | 17.55% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Accenture PLC | — | 20.11% | 20.33% | 21.14% | 23.93% | 25.83% | |
| Adobe Inc. | — | 33.16% | 21.19% | 21.68% | 26.93% | 29.44% | |
| AppLovin Corp. | — | 63.82% | 35.87% | 11.27% | -3.27% | 0.83% | |
| Cadence Design Systems Inc. | — | 15.91% | 14.27% | 24.69% | 23.98% | 24.26% | |
| CrowdStrike Holdings Inc. | 7.36% | 6.78% | 11.73% | 15.20% | 12.03% | 9.74% | |
| Datadog Inc. | — | 11.73% | 10.63% | 14.64% | 8.75% | 16.66% | |
| International Business Machines Corp. | — | 10.92% | 4.46% | 7.72% | -0.61% | 3.86% | |
| Intuit Inc. | — | 14.40% | 10.69% | 8.53% | 9.30% | 17.64% | |
| Microsoft Corp. | — | 23.84% | 25.70% | 28.71% | 36.59% | 45.56% | |
| Palantir Technologies Inc. | — | 67.44% | 13.53% | 16.73% | -7.21% | -14.60% | |
| Palo Alto Networks Inc. | — | 14.40% | 23.08% | 28.59% | 19.73% | 11.48% | |
| Salesforce Inc. | 12.76% | 8.20% | 6.31% | 2.31% | 5.42% | 8.25% | |
| ServiceNow Inc. | — | 19.66% | 23.07% | 22.31% | 17.69% | 18.88% | |
| Synopsys Inc. | — | 4.23% | 10.31% | 11.03% | 17.54% | 11.52% | |
| Workday Inc. | 10.47% | 9.13% | 7.80% | 1.25% | 6.56% | 1.38% | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2026 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 25,856 ÷ 176,661 = 14.64%
4 Click competitor name to see calculations.
The analysis of Return on Invested Capital (ROIC) reveals a period of initial contraction followed by a sustained recovery phase. Between 2021 and 2026, there were significant fluctuations in both operational profitability and the capital base, culminating in an improving efficiency trend toward the end of the analyzed period.
- Net Operating Profit After Taxes (NOPAT) Trends
- Operational profitability experienced a sharp decline in 2022, falling from $14,348 million to $7,492 million. This was followed by a consistent recovery trend, with NOPAT increasing annually through 2025 to $14,158 million. A substantial surge occurred in 2026, where NOPAT reached $25,856 million, representing a significant expansion in earnings power.
- Invested Capital Expansion
- The capital base remained relatively stable between 2021 and 2022 before entering a sustained growth phase. Invested capital increased from $77,262 million in 2022 to $115,423 million by 2025. A major capital deployment is observed in 2026, with invested capital rising sharply to $176,661 million, indicating a period of aggressive investment.
- ROIC Performance and Efficiency
- The ROIC peaked at 17.55% in 2021 before dropping to a low of 9.70% in 2022. From 2023 onwards, a steady upward trajectory is observed, with the ratio improving to 10.34% in 2023, 11.71% in 2024, 12.27% in 2025, and finally reaching 14.64% in 2026. The data indicates that the growth in NOPAT has effectively outpaced the increase in invested capital, leading to an overall improvement in the efficiency of capital utilization.
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Decomposition of ROIC
Oracle Corp., decomposition of ROIC
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
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 (ROIC) exhibited a significant contraction between May 2021 and May 2022, falling from 17.55% to 9.70%. Following this decline, a consistent upward trajectory is observed through May 2026, with ROIC recovering to 14.64%. This recovery is primarily driven by improvements in operational profitability and tax efficiency, which mitigated a late-period decline in capital turnover.
- Operating Profit Margin (OPM)
- Operational profitability served as the primary volatility driver. A sharp decrease occurred in 2022, where the margin dropped from 40.03% to 24.11%. Subsequently, a steady recovery trend is evident, culminating in a peak of 42.22% by May 2026. This expansion in margin suggests an improvement in cost management or a shift toward higher-margin revenue streams.
- Turnover of Capital (TO)
- Capital efficiency remained relatively stable between 2021 and 2025, fluctuating within a narrow range between 0.50 and 0.54. However, a notable decline is observed in May 2026, where the ratio fell to 0.41. This indicates that the growth in the invested capital base began to outpace the growth in operating profit during the final period of analysis.
- After-tax Retention (1 – Effective Cash Tax Rate)
- The after-tax retention ratio experienced a drop from 86.72% in 2021 to 73.80% in 2022. A gradual recovery followed, with the ratio increasing to 85.04% by May 2026. This upward trend reflects a decrease in the effective cash tax burden, which provided a tailwind for the overall ROIC recovery.
The decomposition of ROIC reveals that the recovery in returns was fundamentally supported by the expansion of the operating profit margin and a more favorable tax position. These two factors were sufficiently strong to offset the deterioration in capital turnover observed in the final year, allowing the overall return on invested capital to trend upward despite diminishing asset efficiency.
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Operating Profit Margin (OPM)
Oracle Corp., OPM calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 25,856) | 14,158) | 11,940) | 10,160) | 7,492) | 14,348) | |
| Add: Cash operating taxes2 | 4,547) | 4,134) | 4,137) | 3,507) | 2,659) | 2,197) | |
| Net operating profit before taxes (NOPBT) | 30,404) | 18,292) | 16,077) | 13,667) | 10,151) | 16,545) | |
| Revenues | 67,357) | 57,399) | 52,961) | 49,954) | 42,440) | 40,479) | |
| Add: Increase (decrease) in deferred revenues | 4,662) | 187) | 608) | 828) | (344) | 855) | |
| Adjusted revenues | 72,019) | 57,586) | 53,569) | 50,782) | 42,096) | 41,334) | |
| Profitability Ratio | |||||||
| OPM3 | 42.22% | 31.76% | 30.01% | 26.91% | 24.11% | 40.03% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Accenture PLC | — | 15.87% | 15.15% | 14.56% | 15.48% | 16.65% | |
| Adobe Inc. | — | 38.61% | 32.23% | 35.97% | 36.56% | 40.89% | |
| AppLovin Corp. | — | 75.98% | 40.17% | 20.43% | -1.60% | 5.23% | |
| Cadence Design Systems Inc. | — | 30.42% | 31.87% | 31.47% | 32.28% | 28.51% | |
| CrowdStrike Holdings Inc. | 12.59% | 12.15% | 18.67% | 20.92% | 23.25% | 20.74% | |
| Datadog Inc. | — | 6.59% | 9.47% | 8.91% | 6.57% | 13.48% | |
| International Business Machines Corp. | — | 20.84% | 11.61% | 17.71% | 3.11% | 11.04% | |
| Intuit Inc. | — | 26.71% | 24.30% | 23.08% | 21.00% | 28.02% | |
| Microsoft Corp. | — | 45.60% | 45.67% | 43.20% | 43.28% | 43.49% | |
| Palantir Technologies Inc. | — | 34.55% | 11.18% | 9.03% | -8.42% | -23.57% | |
| Palo Alto Networks Inc. | — | 24.12% | 28.26% | 29.22% | 23.90% | 16.95% | |
| Salesforce Inc. | 29.96% | 24.08% | 19.05% | 8.46% | 16.42% | 20.31% | |
| ServiceNow Inc. | — | 22.90% | 20.13% | 18.76% | 14.87% | 17.20% | |
| Synopsys Inc. | — | 31.74% | 24.97% | 20.63% | 27.91% | 22.47% | |
| Workday Inc. | 13.26% | 10.08% | 8.65% | 3.29% | 8.82% | 2.23% | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2026 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 30,404 ÷ 72,019 = 42.22%
4 Click competitor name to see calculations.
An analysis of the financial performance from May 31, 2021, to May 31, 2026, reveals a volatile but ultimately upward trajectory in operating efficiency. After a significant contraction in profitability between 2021 and 2022, a sustained recovery period is observed, culminating in projected peak performance by 2026.
- Revenue Trends
- Adjusted revenues exhibit consistent growth throughout the period. A modest increase occurred between 2021 and 2022, followed by a more aggressive expansion phase starting in 2023. The most substantial growth is projected for 2026, where revenues are expected to reach 72,019 million USD, representing a significant increase over the 41,334 million USD recorded in 2021.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT experienced a sharp decline in 2022, dropping from 16,545 million USD to 10,151 million USD. Following this trough, a steady recovery was maintained through 2025. A substantial surge is projected for 2026, with NOPBT rising to 30,404 million USD, nearly doubling the figures seen in the 2024 period.
- Operating Profit Margin (OPM) Dynamics
- The operating profit margin demonstrates a V-shaped recovery pattern. The OPM fell from 40.03% in 2021 to a period low of 24.11% in 2022, indicating a temporary misalignment between revenue growth and operating expenses. From 2023 onward, the margin expanded incrementally to 31.76% by 2025. By May 31, 2026, the OPM is projected to reach 42.22%, surpassing the initial 2021 levels and suggesting enhanced operating leverage and cost efficiency.
The overall correlation between increasing revenues and expanding margins from 2023 to 2026 indicates a positive scaling effect. The projection for 2026 suggests a significant optimization of the operational cost structure relative to revenue generation.
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Turnover of Capital (TO)
Oracle Corp., TO calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Revenues | 67,357) | 57,399) | 52,961) | 49,954) | 42,440) | 40,479) | |
| Add: Increase (decrease) in deferred revenues | 4,662) | 187) | 608) | 828) | (344) | 855) | |
| Adjusted revenues | 72,019) | 57,586) | 53,569) | 50,782) | 42,096) | 41,334) | |
| Invested capital1 | 176,661) | 115,423) | 101,930) | 98,251) | 77,262) | 81,745) | |
| Efficiency Ratio | |||||||
| TO2 | 0.41 | 0.50 | 0.53 | 0.52 | 0.54 | 0.51 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Accenture PLC | — | 1.56 | 1.76 | 1.94 | 2.08 | 1.95 | |
| Adobe Inc. | — | 1.11 | 0.88 | 0.80 | 0.86 | 0.80 | |
| AppLovin Corp. | — | 0.97 | 1.04 | 0.73 | 0.53 | 0.50 | |
| Cadence Design Systems Inc. | — | 0.67 | 0.65 | 1.00 | 1.00 | 0.98 | |
| CrowdStrike Holdings Inc. | 0.60 | 0.61 | 0.64 | 0.75 | 0.64 | 0.48 | |
| Datadog Inc. | — | 1.69 | 1.10 | 1.60 | 1.45 | 1.26 | |
| International Business Machines Corp. | — | 0.56 | 0.57 | 0.56 | 0.58 | 0.53 | |
| Intuit Inc. | — | 0.77 | 0.65 | 0.61 | 0.52 | 0.79 | |
| Microsoft Corp. | — | 0.67 | 0.72 | 0.88 | 1.04 | 1.20 | |
| Palantir Technologies Inc. | — | 1.93 | 1.15 | 1.86 | 0.60 | 0.61 | |
| Palo Alto Networks Inc. | — | 0.84 | 0.94 | 1.01 | 0.86 | 0.74 | |
| Salesforce Inc. | 0.47 | 0.46 | 0.43 | 0.40 | 0.36 | 0.44 | |
| ServiceNow Inc. | — | 0.91 | 1.22 | 1.24 | 1.24 | 1.16 | |
| Synopsys Inc. | — | 0.17 | 0.60 | 0.71 | 0.71 | 0.63 | |
| Workday Inc. | 0.83 | 0.94 | 0.90 | 0.82 | 0.74 | 0.77 | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 Invested capital. See details »
2 2026 Calculation
TO = Adjusted revenues ÷ Invested capital
= 72,019 ÷ 176,661 = 0.41
3 Click competitor name to see calculations.
The financial performance over the observed period is characterized by a consistent expansion in adjusted revenues and a significant increase in the invested capital base. While revenue growth was steady for several years, a substantial acceleration in capital investment during the final period has led to a decline in capital efficiency.
- Adjusted Revenues
- A sustained upward trend is observed in adjusted revenues, which grew from 41,334 million US$ in May 2021 to 72,019 million US$ by May 2026. The growth was relatively linear until 2025, followed by a marked increase of approximately 25% in the final year.
- Invested Capital
- Invested capital increased from 81,745 million US$ in May 2021 to 176,661 million US$ in May 2026. The expansion was moderate between 2021 and 2024, but a sharp escalation occurred between May 2025 and May 2026, where the capital base grew by approximately 53%.
- Turnover of Capital (TO)
- The turnover of capital ratio remained stable within a narrow range of 0.50 to 0.54 from May 2021 through May 2025, suggesting a balanced scaling of assets relative to revenue. However, in May 2026, the ratio declined to 0.41. This contraction indicates that the rapid increase in invested capital has not yet yielded a proportional increase in revenue, resulting in lower capital productivity.
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Effective Cash Tax Rate (CTR)
Oracle Corp., CTR calculation, comparison to benchmarks
| May 31, 2026 | May 31, 2025 | May 31, 2024 | May 31, 2023 | May 31, 2022 | May 31, 2021 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 25,856) | 14,158) | 11,940) | 10,160) | 7,492) | 14,348) | |
| Add: Cash operating taxes2 | 4,547) | 4,134) | 4,137) | 3,507) | 2,659) | 2,197) | |
| Net operating profit before taxes (NOPBT) | 30,404) | 18,292) | 16,077) | 13,667) | 10,151) | 16,545) | |
| Tax Rate | |||||||
| CTR3 | 14.96% | 22.60% | 25.73% | 25.66% | 26.20% | 13.28% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Accenture PLC | — | 18.62% | 23.87% | 25.34% | 25.55% | 20.47% | |
| Adobe Inc. | — | 22.29% | 25.54% | 24.54% | 14.22% | 10.28% | |
| AppLovin Corp. | — | 13.66% | 13.75% | 24.45% | — | 68.18% | |
| Cadence Design Systems Inc. | — | 21.53% | 31.39% | 21.85% | 25.88% | 13.59% | |
| CrowdStrike Holdings Inc. | 2.01% | 8.16% | 1.48% | 2.46% | 18.96% | 2.38% | |
| Datadog Inc. | — | -5.69% | -1.95% | -2.78% | 7.98% | 1.83% | |
| International Business Machines Corp. | — | 6.96% | 32.07% | 22.38% | 133.97% | 33.45% | |
| Intuit Inc. | — | 30.34% | 32.36% | 39.49% | 14.74% | 20.15% | |
| Microsoft Corp. | — | 22.05% | 21.33% | 24.32% | 18.98% | 13.05% | |
| Palantir Technologies Inc. | — | -1.13% | -4.95% | 0.60% | — | — | |
| Palo Alto Networks Inc. | — | 29.25% | 13.32% | 2.83% | 3.82% | 8.83% | |
| Salesforce Inc. | 8.82% | 26.52% | 23.51% | 31.02% | 8.32% | 6.83% | |
| ServiceNow Inc. | — | 5.30% | 5.72% | 4.32% | 4.41% | 5.03% | |
| Synopsys Inc. | — | 22.23% | 30.80% | 24.60% | 11.45% | 18.39% | |
| Workday Inc. | 5.00% | 3.78% | -0.43% | 53.58% | -0.77% | 19.25% | |
Based on: 10-K (reporting date: 2026-05-31), 10-K (reporting date: 2025-05-31), 10-K (reporting date: 2024-05-31), 10-K (reporting date: 2023-05-31), 10-K (reporting date: 2022-05-31), 10-K (reporting date: 2021-05-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2026 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 4,547 ÷ 30,404 = 14.96%
4 Click competitor name to see calculations.
The analysis of the effective cash tax rate (CTR) and its relationship with net operating profit before taxes (NOPBT) reveals a period of initial volatility followed by a marked divergence between profitability and tax obligations.
- Profitability and Tax Expenditure Trends
- Cash operating taxes exhibited a consistent upward trajectory, increasing from US$ 2,197 million in 2021 to US$ 4,547 million by 2026. In contrast, NOPBT displayed significant fluctuations, experiencing a sharp decline in 2022 to US$ 10,151 million before initiating a strong recovery phase. This recovery culminated in a substantial increase to US$ 30,404 million by May 31, 2026.
- Effective Cash Tax Rate (CTR) Fluctuations
- The CTR surged from 13.28% in 2021 to 26.20% in 2022, effectively doubling the rate. This higher tax burden remained stable for three years, maintaining a plateau between 25.66% and 26.20% through 2024. A subsequent downward trend is observed from 2025 onward, with the rate falling to 22.60% and eventually reaching 14.96% in 2026.
- Operating Performance and Tax Correlation
- A significant decoupling between operating profit and the tax rate occurred in the final period. While NOPBT reached its peak of US$ 30,404 million in 2026, the CTR dropped to its lowest level since 2021. This indicates that the substantial increase in operating profit during the final year was not accompanied by a proportional increase in cash tax payments, resulting in a significantly lower effective tax burden relative to the company's earning capacity.
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