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
- Balance Sheet: Liabilities and Stockholders’ Equity
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Enterprise Value (EV)
- Price to FCFE (P/FCFE)
- Present Value of Free Cash Flow to Equity (FCFE)
- Debt to Equity since 2005
- Total Asset Turnover since 2005
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Return on Invested Capital (ROIC)
Sherwin-Williams Co., 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Linde plc | ||||||
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 period under review demonstrates a generally positive trajectory in financial performance as measured by Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) exhibits consistent growth throughout the analyzed timeframe, while invested capital fluctuates. This interplay directly influences the ROIC, resulting in observable shifts in efficiency.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased steadily from US$2,357,407 thousand in 2021 to US$3,193,137 thousand in 2025. The growth rate appears to accelerate in the later years, with a more substantial increase between 2022 and 2023, and again between 2023 and 2024. This suggests improving operational profitability.
- Invested Capital
- Invested capital initially increased from US$15,808,100 thousand in 2021 to US$17,346,300 thousand in 2022. A subsequent decrease is noted in 2023, falling to US$16,412,900 thousand, before stabilizing around US$16,707,900 thousand in 2024. A significant rise is then observed in 2025, reaching US$19,297,800 thousand. This indicates periods of capital expansion and potential capital redeployment or efficiency gains.
- Return on Invested Capital (ROIC)
- ROIC experienced a slight decline from 14.91% in 2021 to 14.29% in 2022, coinciding with the increase in invested capital outpacing the growth in NOPAT. The metric recovered to 15.29% in 2023. A substantial increase is then observed in 2024, with ROIC reaching 17.73%, driven by a significant rise in NOPAT relative to invested capital. While decreasing slightly in 2025 to 16.55%, the ROIC remains at a comparatively high level, indicating improved capital allocation efficiency. The 2025 decrease is likely attributable to the larger increase in invested capital.
Overall, the trend suggests that while invested capital has increased over the period, the company has generally been effective in generating profits from that capital, particularly in 2024. The increase in ROIC in 2024 is a positive indicator, although the 2025 figure warrants continued monitoring to assess the sustainability of this performance.
Decomposition of ROIC
Sherwin-Williams Co., 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. Overall, Return on Invested Capital (ROIC) exhibits an increasing trend, though with some volatility. This performance is driven by changes in operating profit margin, capital turnover, and the effective cash tax rate.
- Operating Profit Margin (OPM)
- The Operating Profit Margin shows a modest increase from 14.56% in 2021 to 14.82% in 2023. A significant jump is then observed in 2024, reaching 16.93%, followed by a slight decrease to 16.65% in 2025. This suggests improving operational efficiency and pricing power, particularly in 2024, though the benefit appears to have partially moderated in the most recent year.
- Turnover of Capital (TO)
- Turnover of capital generally increased from 1.26 in 2021 to 1.40 in 2023, indicating improved efficiency in utilizing capital to generate revenue. However, this trend reverses in 2024 and 2025, with the ratio declining to 1.38 and then 1.22 respectively. This suggests a potential slowdown in revenue generation relative to the capital employed in those years.
- Effective Cash Tax Rate (CTR)
- The (1 – Effective Cash Tax Rate) metric, representing the portion of operating profit retained after taxes, decreased from 81.21% in 2021 to 73.43% in 2023, before recovering to 81.36% in 2025. The decrease in 2023 negatively impacted after-tax profitability, while the increase in 2025 provided a positive contribution. Fluctuations in this rate are likely due to changes in tax laws or the company’s tax planning strategies.
- Return on Invested Capital (ROIC)
- ROIC initially decreased from 14.91% in 2021 to 14.29% in 2022. It then increased to 15.29% in 2023, followed by a substantial rise to 17.73% in 2024. The final year, 2025, shows a slight decrease to 16.55%. The ROIC trajectory largely mirrors the combined effects of the operating profit margin and capital turnover, with the tax rate adjustments also playing a role. The significant increase in 2024 is attributable to the combined positive impacts of a higher operating profit margin and a relatively stable capital turnover, partially offset by the lower (1 – Effective Cash Tax Rate).
In summary, the observed trends suggest a company capable of improving profitability, as evidenced by the operating profit margin. However, maintaining efficient capital utilization appears to be a challenge, as indicated by the fluctuating turnover of capital. Tax rate management also influences overall returns, contributing to the observed volatility in ROIC.
Operating Profit Margin (OPM)
Sherwin-Williams Co., 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 thousands) | ||||||
| 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 | ||||||
| Linde plc | ||||||
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 a generally positive trend over the five-year period. Net operating profit before taxes also demonstrated consistent growth, contributing to the observed margin improvements.
- Operating Profit Margin (OPM)
- The operating profit margin increased from 14.56% in 2021 to 14.76% in 2022, indicating a slight improvement in profitability relative to sales. This upward trajectory continued into 2023, reaching 14.82%. A more substantial increase was then observed in 2024, with the OPM rising to 16.93%. While remaining high, the OPM experienced a modest decrease in 2025, settling at 16.65%.
Net sales showed consistent growth throughout the period, increasing from US$19,944,600 thousand in 2021 to US$23,574,300 thousand in 2025. The largest year-over-year increase in net sales occurred between 2021 and 2022. However, the rate of sales growth decelerated in subsequent years.
The significant jump in operating profit margin in 2024 suggests improved operational efficiency or pricing power. The slight decline in the OPM in 2025, despite continued sales growth, warrants further investigation to determine the underlying causes, such as increased costs of goods sold or operating expenses.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT increased steadily from US$2,903,012 thousand in 2021 to US$3,924,509 thousand in 2025. This consistent growth in absolute profit levels supports the observed improvements in the operating profit margin, particularly the substantial increase seen in 2024.
Overall, the financial performance, as indicated by these metrics, demonstrates a positive trend in profitability, although the slight decrease in OPM in the most recent year suggests a potential need for monitoring and analysis of cost structures.
Turnover of Capital (TO)
Sherwin-Williams Co., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Linde plc | ||||||
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 turnover of capital exhibits fluctuations over the observed period. Initially, a modest increase is noted, followed by a peak and subsequent decline.
- Net Sales Trend
- Net sales demonstrate a consistent upward trajectory from 2021 to 2025, although the rate of growth decelerates over time. Sales increased from US$19,944.6 million in 2021 to US$23,574.3 million in 2025.
- Invested Capital Trend
- Invested capital increased from US$15,808.1 million in 2021 to US$17,346.3 million in 2022. A decrease to US$16,412.9 million is observed in 2023, followed by a slight increase to US$16,707.9 million in 2024. A more substantial increase is then seen in 2025, reaching US$19,297.8 million.
- Turnover of Capital (TO) Analysis
- The turnover of capital ratio, which measures how efficiently invested capital is used to generate sales, began at 1.26 in 2021. It increased to 1.28 in 2022, then rose more significantly to 1.40 in 2023. A slight decrease to 1.38 occurred in 2024, and a more pronounced decline to 1.22 is observed in 2025. This suggests that while sales continued to grow in 2025, the efficiency with which capital was utilized to generate those sales diminished.
- Relationship between Sales and Capital
- The initial increase in TO from 2021 to 2023 coincided with both increasing sales and, initially, increasing invested capital. However, the decline in TO in 2024 and 2025, despite continued sales growth, indicates that the growth in invested capital outpaced the growth in sales during those periods. This suggests a potential need to evaluate capital allocation strategies.
Overall, the trend in turnover of capital suggests a period of improving capital efficiency followed by a recent decline, warranting further investigation into the drivers of invested capital growth relative to sales generation.
Effective Cash Tax Rate (CTR)
Sherwin-Williams Co., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Linde plc | ||||||
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 fluctuations over the five-year period. Cash operating taxes increased from 2021 to 2023, then decreased in 2025. Simultaneously, net operating profit before taxes generally increased, though with a slight dip between 2023 and 2024.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate increased from 18.79% in 2021 to 26.57% in 2023, representing a substantial rise over two years. This suggests a growing proportion of pre-tax profits being paid as cash taxes. A subsequent decrease to 24.25% in 2024 indicates a moderation of this trend. The rate then declined further to 18.64% in 2025, returning to a level comparable to that observed in 2021. This final decrease could be attributable to changes in tax regulations, tax planning strategies, or shifts in the geographic distribution of profits.
- Relationship between NOPBT and Cash Taxes
- Net operating profit before taxes increased consistently from 2021 to 2024, from US$2,903,012 thousand to US$3,910,546 thousand. This growth in profitability likely contributed to the initial increase in cash operating taxes. While NOPBT remained relatively stable between 2024 and 2025, cash operating taxes decreased significantly, which is a primary driver of the lower CTR in 2025. This divergence suggests factors beyond profitability influenced the cash tax payments.
The observed fluctuations in the effective cash tax rate warrant further investigation to determine the underlying causes. Potential areas of inquiry include changes in deferred tax assets and liabilities, the impact of tax credits, and alterations in the jurisdictional mix of earnings.