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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- Income Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Solvency Ratios
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Operating Profit Margin since 2005
- Price to Operating Profit (P/OP) since 2005
- Price to Sales (P/S) since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
RTX Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Invested capital. See details »
3 2025 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
The analysis reveals a fluctuating pattern in Return on Invested Capital (ROIC) over the five-year period. Initially, a decline in ROIC is observed, followed by a significant recovery and subsequent strong growth.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT decreased from US$5,054 million in 2021 to US$4,118 million in 2023, indicating a contraction in operating profitability. However, a substantial increase is then evident, with NOPAT reaching US$6,483 million in 2024 and further growing to US$9,351 million in 2025. This suggests a turnaround in the company’s ability to generate profit from its operations.
- Invested Capital
- Invested capital exhibited a modest, gradual decline from US$111,815 million in 2021 to US$107,593 million in 2024. A slight increase to US$109,085 million is then recorded in 2025. The relative stability of invested capital suggests that changes in ROIC are primarily driven by fluctuations in NOPAT rather than significant shifts in the capital base.
- Return on Invested Capital (ROIC)
- ROIC decreased from 4.52% in 2021 to 3.80% in 2023, reflecting the decline in NOPAT during that period. A marked improvement is then seen in 2024, with ROIC rising to 6.03%. This upward trend continues strongly into 2025, with ROIC reaching 8.57%. The substantial increase in ROIC in the latter years indicates improved efficiency in capital allocation and a stronger ability to generate returns from invested funds. The recovery in ROIC closely mirrors the recovery and growth in NOPAT.
Overall, the period demonstrates an initial period of underperformance followed by a robust recovery in profitability and capital efficiency. The significant increase in ROIC in 2024 and 2025 is a positive indicator, suggesting successful strategic initiatives or favorable market conditions.
Decomposition of ROIC
RTX Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2025 | = | × | × | ||||
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The period under review demonstrates fluctuating performance in key profitability and efficiency metrics, ultimately impacting return on invested capital. Operating profit margin, turnover of capital, and the impact of the effective cash tax rate all contribute to the observed trends in ROIC.
- Operating Profit Margin (OPM)
- Operating profit margin initially increased from 9.65% in 2021 to 10.88% in 2022, indicating improved operational profitability. However, a significant decline to 7.71% occurred in 2023. A recovery followed, with margins reaching 10.06% in 2024 and further increasing to 11.97% in 2025, suggesting a strengthening of core business profitability in the later years of the period.
- Turnover of Capital (TO)
- Turnover of capital exhibited a consistent, albeit gradual, increase throughout the period. Starting at 0.58 in 2021, it rose to 0.61 in 2022, 0.64 in 2023, 0.75 in 2024, and peaked at 0.81 in 2025. This upward trend suggests increasing efficiency in utilizing capital to generate revenue.
- Effective Cash Tax Rate Impact (1 – CTR)
- The impact of the effective cash tax rate, represented as ‘1 – Effective cash tax rate’, showed considerable volatility. It began at a high of 81.36% in 2021, then decreased substantially to 63.90% in 2022. A partial recovery to 77.48% was seen in 2023, followed by increases to 79.83% in 2024 and a significant rise to 88.14% in 2025. This indicates fluctuating tax burdens impacting net profitability.
- Return on Invested Capital (ROIC)
- Return on invested capital mirrored the combined effects of the aforementioned factors. ROIC decreased from 4.52% in 2021 to 4.24% in 2022, and further declined to 3.80% in 2023, likely due to the drop in operating profit margin. A substantial increase to 6.03% occurred in 2024, driven by improvements in both operating profit margin and capital turnover. This positive trend continued into 2025, with ROIC reaching 8.57%, reflecting the combined positive influence of higher operating profitability, increased capital efficiency, and a more favorable tax environment.
The interplay between operating profit margin, capital turnover, and the effective cash tax rate demonstrates a complex relationship with ROIC. While capital turnover consistently improved, the fluctuations in operating profit margin and tax rate significantly influenced the overall return on invested capital. The strong ROIC performance in 2025 suggests successful execution of strategies to improve profitability and capital utilization.
Operating Profit Margin (OPM)
RTX Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net sales | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited fluctuating performance over the five-year period. Initial growth was followed by a contraction, then a subsequent recovery and expansion.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM increased from 9.65% in 2021 to 10.88% in 2022, indicating improved profitability relative to sales. However, 2023 saw a significant decline to 7.71%, suggesting a weakening of operational efficiency or increased cost pressures. A recovery commenced in 2024, with the OPM rising to 10.06%, and continued into 2025, reaching 11.97%, representing the highest level observed during the analyzed period.
- OPM - Year-over-Year Changes
- The largest year-over-year increase in OPM occurred between 2024 and 2025, with a change of 1.91 percentage points. The most substantial decrease was observed between 2022 and 2023, a decline of 3.17 percentage points. The increase from 2021 to 2022 was 1.23 percentage points, while the increase from 2023 to 2024 was 2.35 percentage points.
- Relationship to Net Sales and NOPBT
- The fluctuations in OPM correlate with changes in both net sales and net operating profit before taxes. While net sales generally increased throughout the period, the impact on OPM was not linear. The decline in OPM in 2023 occurred despite a modest increase in net sales, suggesting that NOPBT decreased at a faster rate than sales. Conversely, the strong OPM performance in 2025 was supported by both a substantial increase in net sales and a significant rise in NOPBT.
The observed volatility in the OPM suggests potential sensitivity to external factors or internal operational changes. The recent upward trend, culminating in the highest OPM in 2025, is a positive indicator, but continued monitoring is warranted to assess the sustainability of this improvement.
Turnover of Capital (TO)
RTX Corp., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 Invested capital. See details »
2 2025 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis reveals a consistent upward trend in the turnover of capital over the five-year period. This indicates increasing efficiency in generating sales from the company’s invested capital. Net sales demonstrate a positive trajectory, while invested capital remains relatively stable, contributing to the observed improvement in capital turnover.
- Net Sales
- Net sales increased from US$64,388 million in 2021 to US$88,603 million in 2025. The growth was not linear, with a more substantial increase occurring between 2023 and 2024 (US$11,818 million) and continuing into 2025 (US$7,865 million). This suggests accelerating revenue generation in the latter part of the period.
- Invested Capital
- Invested capital experienced a slight decrease from US$111,815 million in 2021 to US$107,593 million in 2024, before increasing to US$109,085 million in 2025. The relative stability of invested capital, despite growing sales, is a key driver of the increasing turnover of capital.
- Turnover of Capital (TO)
- The turnover of capital ratio rose steadily from 0.58 in 2021 to 0.81 in 2025. This represents a 39.66% increase over the five-year period. The most significant increase occurred between 2023 and 2024, moving from 0.64 to 0.75, indicating a substantial improvement in the efficiency with which capital was used to generate sales during that year. The continued increase into 2025 suggests this improved efficiency is being sustained.
In summary, the company demonstrates a positive trend in its ability to generate sales from its invested capital. The combination of increasing net sales and relatively stable invested capital has resulted in a notable improvement in the turnover of capital ratio, suggesting enhanced operational efficiency.
Effective Cash Tax Rate (CTR)
RTX Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
Based on: 10-K (reporting date: 2025-12-31), 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).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
The effective cash tax rate exhibited considerable fluctuation over the five-year period. Cash operating taxes and net operating profit before taxes both demonstrate variability, influencing the observed rate changes.
- Effective Cash Tax Rate (CTR)
- In 2021, the CTR stood at 18.64%. A significant increase was observed in 2022, rising to 36.10%. This was followed by a decrease to 22.52% in 2023. The rate continued to decline in 2024, reaching 20.17%, before experiencing a substantial drop to 11.86% in 2025. This represents the lowest rate within the observed timeframe.
Cash operating taxes increased substantially from 2021 to 2022, more than doubling. However, these taxes decreased in 2023, and then increased again in 2024, before leveling off with a slight increase in 2025. This volatility in cash taxes contributes to the fluctuations in the CTR.
Net operating profit before taxes (NOPBT) generally trended upward, with the exception of a decrease between 2022 and 2023. NOPBT experienced a significant increase from 2024 to 2025. The interplay between NOPBT and cash operating taxes is a key driver of the CTR’s movement. The largest increase in NOPBT, from 2024 to 2025, coincided with the largest decrease in CTR.
The substantial increase in the CTR from 2021 to 2022 suggests a change in the company’s tax profile or the impact of specific tax events. The subsequent declines in 2023, 2024, and particularly 2025, indicate a reversal of these factors or the realization of tax benefits. Further investigation into the specific drivers of these changes would be necessary for a more comprehensive understanding.