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 Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value to EBITDA (EV/EBITDA)
- Dividend Discount Model (DDM)
- Debt to Equity since 2005
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Return on Invested Capital (ROIC)
Procter & Gamble Co., ROIC calculation
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes exhibited a strong upward trajectory from 2019 to 2024. Starting at $3,768 million in 2019, it surged significantly to $12,785 million in 2020, marking a substantial increase. This growth trend continued steadily, reaching $15,111 million by 2024, indicating consistent improvement in operational profitability over the analyzed periods.
- Invested Capital
- The invested capital showed fluctuations throughout the period. Beginning at $89,875 million in 2019, it increased to a peak of $101,100 million in 2020. Following this, there was a general decline to $93,924 million in 2022. From 2022 onwards, the invested capital increased slightly, ending at $97,641 million in 2024. Overall, the invested capital exhibited moderate variability with no clear long-term upward or downward trend.
- Return on Invested Capital (ROIC)
- The return on invested capital demonstrated a notable improvement over the years. In 2019, the ROIC was relatively low at 4.19%. It rose sharply to 12.65% in 2020 and continued to increase, reaching a peak of 15.53% in 2022. Although there was a minor decrease to 15.21% in 2023, the figure rebounded slightly to 15.48% in 2024. This pattern suggests enhanced efficiency in generating returns from invested capital, stabilizing at a higher performance level in recent years.
Decomposition of ROIC
Procter & Gamble Co., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Jun 30, 2024 | = | × | × | ||||
| Jun 30, 2023 | = | × | × | ||||
| Jun 30, 2022 | = | × | × | ||||
| Jun 30, 2021 | = | × | × | ||||
| Jun 30, 2020 | = | × | × | ||||
| Jun 30, 2019 | = | × | × |
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
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 shows a significant increase from 9.38% in mid-2019 to above 22% in subsequent years. It peaked at 23.52% in 2021 and has since stabilized around 23%, indicating improved operational efficiency and profitability sustained over the last five years.
- Turnover of Capital (TO)
- The turnover of capital initially declined slightly from 0.75 in 2019 to 0.7 in 2020, then steadily increased to 0.86 by 2024. This upward trend suggests a gradual improvement in the efficiency with which capital assets are utilized to generate revenue over the period analyzed.
- 1 – Effective Cash Tax Rate (CTR)
- This metric experienced a considerable rise from 59.33% in 2019 to nearly 80% in 2020, where it remained relatively stable through 2024. The consistent high values indicate a sustained higher effective tax burden in recent years compared to the initial year.
- Return on Invested Capital (ROIC)
- The return on invested capital increased markedly from 4.19% in 2019 to around 15% from 2021 onwards. This improvement reflects enhanced profitability relative to the capital invested and suggests better value generation from invested resources over the examined timeframe.
Operating Profit Margin (OPM)
Procter & Gamble Co., OPM calculation
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited a significant upward trend over the analyzed periods. Starting from $6,350 million in June 2019, it surged substantially to $16,184 million by June 2020. This strong growth continued more moderately in the subsequent years, reaching $19,246 million by June 2024. The data indicates a consistent enhancement in profitability from operations over the six-year span.
- Net Sales
- Net sales demonstrated steady growth throughout the periods presented. Beginning at $67,684 million in June 2019, sales increased consistently each year, culminating at $84,039 million by June 2024. This progression reflects an ongoing expansion in revenue generation, with no observed declines or volatility.
- Operating Profit Margin (OPM)
- The operating profit margin saw a marked improvement from 9.38% in June 2019 to over 22% in June 2020. This significant jump suggests major gains in operational efficiency or cost management early in the period. Following this increase, the margin stabilized, fluctuating slightly but remaining around 23% through to June 2024. The relatively stable margin in later years indicates maintained profitability relative to sales despite the incremental increase in net sales and NOPBT.
- Summary of Financial Performance Trends
- Overall, the company demonstrated strong growth in both sales and operating profitability during the period analyzed. The substantial improvement in the operating profit margin from 2019 to 2020 signals a pivotal enhancement in cost controls or operational leverage. After this initial leap, both net operating profit before taxes and net sales continued to grow at a steady pace while operating profit margins remained stable, indicating sustained operational efficiency. These patterns reflect positive financial health and effective management of revenue generation and expenses over time.
Turnover of Capital (TO)
Procter & Gamble Co., TO calculation
| Jun 30, 2024 | Jun 30, 2023 | Jun 30, 2022 | Jun 30, 2021 | Jun 30, 2020 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | |||||||
| Invested capital1 | |||||||
| Efficiency Ratio | |||||||
| TO2 | |||||||
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 Invested capital. See details »
2 2024 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
- Net Sales
- The net sales demonstrate a consistent upward trend over the six-year period. Beginning at $67,684 million in June 2019, sales increased each year, reaching $84,039 million by June 2024. This represents a steady growth rate with no interruptions or declines, indicating robust revenue performance.
- Invested Capital
- Invested capital shows a more fluctuating pattern compared to net sales. Starting at $89,875 million in June 2019, it rose to a peak of $101,100 million in June 2020, followed by a decline to $95,095 million in June 2021 and further to $93,924 million in June 2022. From 2023 onwards, invested capital resumed growth, reaching $97,641 million by June 2024. The initial peak and subsequent dip suggest adjustments in capital allocation or asset base management before a modest recovery.
- Turnover of Capital (TO)
- The turnover of capital ratio exhibits moderate improvements over the years. Starting at 0.75 in June 2019, it dips slightly to 0.7 in 2020, corresponding with the peak in invested capital, and then trends upward steadily to 0.86 by June 2024. The increase in the ratio after 2020 indicates improved efficiency in generating net sales from invested capital, aligning with the resurgence in capital investment levels.
- Summary Insights
- The company's financial data reveals consistent revenue growth accompanied by fluctuating but ultimately stabilizing invested capital. Efficiency in capital utilization, as measured by capital turnover, experienced a minor setback in 2020 but improved thereafter, surpassing prior levels by 2024. This suggests enhanced operational effectiveness and potentially better capital management practices following initial adjustments. Overall, the trends point toward positive performance dynamics in both sales growth and asset utilization.
Effective Cash Tax Rate (CTR)
Procter & Gamble Co., CTR calculation
Based on: 10-K (reporting date: 2024-06-30), 10-K (reporting date: 2023-06-30), 10-K (reporting date: 2022-06-30), 10-K (reporting date: 2021-06-30), 10-K (reporting date: 2020-06-30), 10-K (reporting date: 2019-06-30).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
- Cash Operating Taxes
- The amount of cash paid for operating taxes generally increased over the observed period from June 30, 2019, to June 30, 2024. Starting at $2,583 million in 2019, the figure rose significantly to $3,400 million in 2020, followed by a steady increase in subsequent years, reaching a peak of $4,168 million in 2023 before a slight decrease to $4,135 million in 2024. This upward trend indicates growing cash tax payments over time, despite a minor decline in the final year.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT showed a substantial upward trend throughout the period. From $6,350 million in 2019, it nearly tripled in 2020 to $16,184 million, continuing to increase incrementally each year to reach $19,246 million in 2024. This consistent growth suggests improving operating profitability before accounting for taxes, reflecting positive operational performance.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate displayed a marked decrease from 40.67% in 2019 to just above 20% in 2020, where it remained relatively stable through 2024. After the steep decline in 2020, the CTR hovered between approximately 20.19% and 22.1%, indicating a significant reduction in the proportion of operating profits paid as cash taxes compared to 2019. This lower tax rate may suggest changes in tax strategy, regulatory environment, or tax efficiencies achieved over the period.