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

Paycom Software Inc., ROIC calculation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	297,371)	244,272)	176,158)	214,806)	172,096)
Invested capital²	1,478,485)	1,189,369)	860,024)	724,133)	522,609)
Performance Ratio
ROIC³	20.11%	20.54%	20.48%	29.66%	32.93%

Based on: 10-K (reporting date: 2022-12-31), 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).

¹ NOPAT. See details »

² Invested capital. See details »

³ 2022 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 297,371 ÷ 1,478,485 = 20.11%

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Performance ratio	Description	The company
ROIC	A measure of the periodic, after tax, cash-on-cash yield earned in the business.	Paycom Software Inc. ROIC improved from 2020 to 2021 but then deteriorated significantly from 2021 to 2022.

Paycom Software Inc., decomposition of ROIC


	ROIC	=	OPM¹	×	TO²	×	1 – CTR³
Dec 31, 2022	20.11%	=	29.44%	×	0.94	×	72.60%
Dec 31, 2021	20.54%	=	25.38%	×	0.90	×	89.94%
Dec 31, 2020	20.48%	=	23.18%	×	0.99	×	89.21%
Dec 31, 2019	29.66%	=	32.00%	×	1.03	×	89.60%
Dec 31, 2018	32.93%	=	32.61%	×	1.11	×	91.10%

Based on: 10-K (reporting date: 2022-12-31), 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).

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 decrease in return on invested capital (ROIC) over 2022 year is the increase in effective cash tax rate (CTR).

Paycom Software Inc., OPM calculation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	297,371)	244,272)	176,158)	214,806)	172,096)
Add: Cash operating taxes²	112,250)	27,310)	21,299)	24,932)	16,816)
Net operating profit before taxes (NOPBT)	409,621)	271,582)	197,458)	239,739)	188,912)

Revenues	1,375,218)	1,055,524)	841,434)	737,671)	566,336)
Add: Increase (decrease) in deferred revenue	15,990)	14,600)	10,582)	11,593)	13,027)
Adjusted revenues	1,391,208)	1,070,124)	852,016)	749,264)	579,363)
Profitability Ratio
OPM³	29.44%	25.38%	23.18%	32.00%	32.61%

Based on: 10-K (reporting date: 2022-12-31), 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).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2022 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × 409,621 ÷ 1,391,208 = 29.44%

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Profitability ratio	Description	The company
OPM	The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales.	Paycom Software Inc. OPM improved from 2020 to 2021 and from 2021 to 2022.

Paycom Software Inc., TO calculation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Revenues	1,375,218)	1,055,524)	841,434)	737,671)	566,336)
Add: Increase (decrease) in deferred revenue	15,990)	14,600)	10,582)	11,593)	13,027)
Adjusted revenues	1,391,208)	1,070,124)	852,016)	749,264)	579,363)

Invested capital¹	1,478,485)	1,189,369)	860,024)	724,133)	522,609)
Efficiency Ratio
TO²	0.94	0.90	0.99	1.03	1.11

Based on: 10-K (reporting date: 2022-12-31), 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).

¹ Invested capital. See details »

² 2022 Calculation
TO = Adjusted revenues ÷ Invested capital
= 1,391,208 ÷ 1,478,485 = 0.94

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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.	Paycom Software Inc. TO deteriorated from 2020 to 2021 but then slightly improved from 2021 to 2022.

Paycom Software Inc., CTR calculation

	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018
Selected Financial Data (US$ in thousands)
Net operating profit after taxes (NOPAT)¹	297,371)	244,272)	176,158)	214,806)	172,096)
Add: Cash operating taxes²	112,250)	27,310)	21,299)	24,932)	16,816)
Net operating profit before taxes (NOPBT)	409,621)	271,582)	197,458)	239,739)	188,912)
Tax Rate
CTR³	27.40%	10.06%	10.79%	10.40%	8.90%

Based on: 10-K (reporting date: 2022-12-31), 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).

¹ NOPAT. See details »

² Cash operating taxes. See details »

³ 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 112,250 ÷ 409,621 = 27.40%

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Tax rate	Description	The company
CTR	Effective cash tax rate on operating income.	Paycom Software Inc. CTR decreased from 2020 to 2021 but then increased from 2021 to 2022 exceeding 2020 level.

Paycom Software Inc. (NYSE:PAYC)

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)