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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Return on Invested Capital (ROIC)
Stryker Corp., ROIC calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2021 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit After Taxes (NOPAT)
- The net operating profit after taxes demonstrated a significant increase from 2017 to 2019, rising from 1,187 million US dollars to 2,347 million US dollars. However, there was a noticeable decline in 2020, with NOPAT decreasing to 1,867 million US dollars. The figure showed a partial recovery in 2021, reaching 2,015 million US dollars, though not returning to the peak level observed in 2019.
- Invested Capital
- Invested capital exhibited a consistent upward trend from 2017 through 2020, increasing steadily from 17,502 million US dollars to 27,132 million US dollars. In 2021, there was a slight reduction in invested capital to 26,516 million US dollars, indicating a minor decrease after several years of growth.
- Return on Invested Capital (ROIC)
- ROIC increased considerably from 6.78% in 2017 to slightly above 10% in both 2018 and 2019, reflecting improving efficiency and profitability relative to invested capital during that period. However, a sharp decline occurred in 2020, with ROIC dropping back to 6.88%, aligning with the decrease in NOPAT and increase in invested capital. In 2021, ROIC showed moderate improvement to 7.6%, indicating some recovery but remaining well below the two-year high seen in 2018 and 2019.
- Overall Insight
- The data reveal a period of growth and improved profitability through 2019, followed by a downturn in 2020 likely influenced by external factors affecting operational performance. Invested capital expansion contributed to lowered efficiency as measured by ROIC during the downturn. While 2021 presents signs of recovery in profit and efficiency, the levels have not returned to the peaks noted prior to 2020. The slight reduction in invested capital in 2021 may reflect strategic capital management in response to changing conditions.
Decomposition of ROIC
Stryker Corp., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × | ||||
| Dec 31, 2018 | = | × | × | ||||
| Dec 31, 2017 | = | × | × |
Based on: 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), 10-K (reporting date: 2017-12-31).
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 experienced a slight overall decline over the five-year period. It started at 18.18% in 2017, slightly increased to 18.49% in 2018, then marginally decreased to 18.35% in 2019. A more noticeable drop occurred in 2020, falling to 15.48%, and it further decreased slightly to 15.19% in 2021. This trend indicates a reduction in operational profitability, especially during the latter part of the period.
- Turnover of Capital (TO)
- The turnover of capital ratio showed a declining trend from 2017 through 2020, starting at 0.71 in 2017 and decreasing to 0.53 by 2020. However, in 2021, there was a recovery to 0.65. This pattern suggests a decrease in the efficiency of capital utilization over the first four years, followed by some improvement in the final year.
- 1 – Effective Cash Tax Rate (CTR)
- The measure of 1 minus the effective cash tax rate reveals a significant increase from 52.45% in 2017 to a peak above 85% in 2019, remaining high in 2020 and slightly declining to 77.56% in 2021. This implies the effective cash tax rate decreased markedly after 2017, leading to a relatively lower tax burden in later years, with some variation after 2019.
- Return on Invested Capital (ROIC)
- The return on invested capital rose considerably from 6.78% in 2017 to a peak of approximately 10.1% in 2018 and 2019. Subsequently, there was a sharp decline to 6.88% in 2020, with a modest recovery to 7.6% in 2021. The overall trend highlights volatility in the ability to generate returns on invested capital, with a peak in the middle of the period and weakening in the later years.
Operating Profit Margin (OPM)
Stryker Corp., OPM calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net operating profit before taxes (NOPBT)
- The net operating profit before taxes showed an overall increasing trend from 2017 to 2021, with some fluctuations. The figure rose from $2,263 million in 2017 to a peak of $2,731 million in 2019. However, in 2020, a decline to $2,221 million was observed, which was then followed by a recovery to $2,598 million in 2021. This suggests some impact on profitability in 2020, possibly due to external factors, with a subsequent rebound in the following year.
- Net sales
- Net sales exhibited a consistent upward trajectory throughout the five-year period. From $12,444 million in 2017, sales increased steadily each year, reaching $17,108 million in 2021. Despite a slight decline in 2020 compared to 2019, the overall growth trend remained strong, indicating an expanding revenue base and possibly successful market penetration or pricing strategies.
- Operating profit margin (OPM)
- The operating profit margin demonstrated a downward trend over the years analyzed. The margin started at 18.18% in 2017, remaining relatively stable around 18.3% through 2019. However, a significant decrease occurred in 2020, dropping to 15.48%, which was maintained at a similar level of 15.19% in 2021. This decline in OPM despite increasing sales suggests rising costs, reduced operational efficiency, or pricing pressures impacting profitability margins.
Turnover of Capital (TO)
Stryker Corp., TO calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net sales | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 Invested capital. See details »
2 2021 Calculation
TO = Net sales ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Net Sales
- Net sales exhibited a generally upward trend over the five-year period, increasing from 12,444 million US dollars in 2017 to 17,108 million US dollars in 2021. There was consistent growth from 2017 through 2019, reaching 14,884 million. However, a slight dip occurred in 2020 where net sales decreased to 14,351 million, before rebounding strongly in 2021 with the highest value recorded in the period.
- Invested Capital
- Invested capital showed a continuous increase from 17,502 million US dollars in 2017 to a peak of 27,132 million in 2020. In the final year, invested capital decreased modestly to 26,516 million, indicating a slight reduction in capital deployment or asset base after several years of expansion.
- Turnover of Capital (TO)
- The turnover of capital ratio experienced a downward trend from 0.71 in 2017 to a low point of 0.53 in 2020, reflecting reduced efficiency in generating sales from the invested capital during that period. In 2021, the ratio improved to 0.65, suggesting a partial recovery in capital utilization efficiency, yet still below the earlier years of the data set.
Effective Cash Tax Rate (CTR)
Stryker Corp., CTR calculation, comparison to benchmarks
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| Abbott Laboratories | ||||||
| CVS Health Corp. | ||||||
| Elevance Health Inc. | ||||||
| Intuitive Surgical Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group Inc. | ||||||
Based on: 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), 10-K (reporting date: 2017-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2021 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes exhibit a marked decline from 2017 to 2020, decreasing from 1,076 million USD to 354 million USD. This represents a reduction of approximately 67%. However, in 2021, there is a noticeable increase to 583 million USD, suggesting a partial rebound in the tax cash outflows after the previous downward trend.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT shows a general upward trend from 2017 through 2019, growing from 2,263 million USD to a peak of 2,731 million USD. In 2020, there is a significant decline to 2,221 million USD, likely reflecting operational challenges during that year. The figure recovers in 2021 to 2,598 million USD, indicating a near return to pre-2020 profit levels, although still slightly below the peak of 2019.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate demonstrates a steep decrease from 47.55% in 2017 to 16.59% in 2018, followed by a further moderate decline to 14.04% in 2019. The rate remains relatively stable in 2020 at 15.94%, before increasing to 22.44% in 2021. Despite this increase, the 2021 tax rate remains significantly lower than the 2017 level, suggesting a sustained reduction in the cash tax burden relative to operating profits.
- Summary of Trends
- The data reveals that while net operating profits experienced growth until 2019, the subsequent dip in 2020 was partially reversed in 2021. Cash operating taxes decreased sharply through 2020, aligning with the reduction in profit and a lower effective tax rate. The increased cash tax outflows and tax rate in 2021 reflect a recovery phase, although taxes as a proportion of profits have not returned to the high levels observed in 2017. This pattern indicates improved tax efficiency or benefits in the intervening years, with some moderation in the most recent period.