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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- Cash Flow Statement
- Analysis of Profitability Ratios
- Analysis of Short-term (Operating) Activity Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2013
- Return on Equity (ROE) since 2013
- Total Asset Turnover since 2013
- Price to Operating Profit (P/OP) since 2013
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Return on Invested Capital (ROIC)
Twitter Inc., 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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 exhibited significant volatility over the reported periods. Initially, a negative value was recorded, reflecting losses. This was followed by a substantial improvement with positive NOPAT in the subsequent two years, indicating operational profitability. However, this was not sustained, as the NOPAT sharply declined in the final period, returning to negative territory and exceeding previous losses in magnitude. This trend suggests challenges in maintaining profitable operations.
- Invested Capital
- Invested capital demonstrated a consistent upward trend throughout the periods. The capital base increased steadily each year, reflecting continued investments or accumulation of capital resources. The most pronounced increase occurred in the latest period, indicating significant expansion of the capital employed in the business.
- Return on Invested Capital (ROIC)
- The return on invested capital mirrored the fluctuations seen in NOPAT. The initial period showed a negative return, followed by a sharp improvement to a healthy positive return in the next two years. However, the return deteriorated markedly thereafter, falling close to zero and finally becoming negative again, albeit less severe than the initial negative return when considered in absolute terms. This pattern suggests the company struggled to efficiently generate profits relative to the invested capital in the later periods despite ongoing capital investments.
- Overall Insights
- The data indicates a period of operational recovery and profitability in the middle years, preceded and succeeded by loss-making phases. While the capital invested has grown steadily, the company's ability to convert this capital into positive operating returns has been inconsistent, culminating in diminished profitability and negative returns in the latest year. This trend points to potential challenges in sustaining operational efficiency or market conditions impacting profitability despite increasing capital commitments.
Decomposition of ROIC
Twitter Inc., 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 exhibited significant fluctuations over the examined periods. It started with a negative value of -1.19% in 2017, then improved substantially to a peak of 15.41% in 2018. Following this peak, the margin declined to 12.38% in 2019 and further dropped sharply to 1.6% in 2020. By 2021, the margin had turned negative again, reaching -6.6%, indicating increased operational challenges during the latest year.
- Turnover of Capital (TO)
- Turnover of capital demonstrated a generally increasing trend throughout the period. Starting at 0.53 in 2017, it gradually rose to 0.59 in 2018, 0.66 in 2019, saw a slight dip to 0.62 in 2020, and recovered to its highest point of 0.68 by 2021. This suggests a progressive improvement in the efficiency with which capital was employed over time.
- Effective Cash Tax Rate (1 – CTR)
- The effective cash tax rate, presented as 1 – CTR, showed notable variability. It began at 100% in 2017, declining steadily to 94.14% in 2018 and 88.49% in 2019, indicating a progressively lower proportion of pre-tax income retained after tax. A significant drop occurred in 2020, plunging to 29.55%, followed by a return to 100% in 2021, implying dramatic changes in tax circumstances or effective tax management during these years.
- Return on Invested Capital (ROIC)
- Return on invested capital reflected a pattern consistent with operational profitability trends. The ROIC was negative at -1.6% in 2017, rose sharply to 8.54% in 2018, and then decreased to 7.23% in 2019. In 2020, it declined to near zero at 0.29%, and in 2021 it turned negative again to -5.2%. This trajectory indicates diminishing returns from capital invested over the last two years.
Operating Profit Margin (OPM)
Twitter Inc., 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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 ÷ Adjusted revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited significant volatility over the five-year period. Initially, there was a substantial loss of approximately 28.96 million US dollars in 2017. This was followed by a strong recovery in 2018, reaching a peak profit of around 470.53 million US dollars. The profit slightly declined in 2019 to about 432.03 million US dollars, then sharply dropped in 2020 to roughly 59.38 million US dollars. In 2021, the company experienced a reversal back to a negative position, with a loss of approximately 336.07 million US dollars.
- Adjusted Revenue
- The adjusted revenue demonstrated a consistent upward trend throughout the period. Starting at approximately 2.44 billion US dollars in 2017, revenue increased steadily each year, reaching about 3.05 billion in 2018, 3.49 billion in 2019, and 3.71 billion in 2020. The most pronounced growth occurred in 2021, with adjusted revenue rising sharply to approximately 5.09 billion US dollars, indicative of significant expansion in the company's sales or service income.
- Operating Profit Margin (OPM)
- The operating profit margin showed marked fluctuations over the period. It was initially negative at -1.19% in 2017, reflecting operating losses relative to revenue. The margin improved substantially to 15.41% in 2018, signaling enhanced operational efficiency or profitability. However, a decline followed with a margin of 12.38% in 2019 and a sharp reduction to 1.6% in 2020. In 2021, the margin turned negative again, at -6.6%, indicating a deterioration in operating profitability relative to sales.
- Summary
- Overall, the financial data illustrates a period of growth in revenue alongside considerable instability in profitability metrics. Despite increasing revenues, both net operating profit before taxes and operating profit margin suffered significant volatility, with losses reported in the initial and final years. The peak profitability observed in 2018 and 2019 was not sustained, as operating margins and profits decreased sharply by 2021. This pattern suggests challenges in controlling costs or other operational expenses relative to growing revenue, impacting the company's overall profitability and operational efficiency.
Turnover of Capital (TO)
Twitter Inc., 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 thousands) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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 = Adjusted revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenue
- The adjusted revenue exhibited a consistent upward trend over the analyzed period. Starting at approximately 2.44 billion US dollars in 2017, it increased steadily each year, reaching around 5.09 billion US dollars in 2021. This represents more than a twofold increase over five years, reflecting strong growth in revenue generation capabilities.
- Invested Capital
- Invested capital also showed a rising trajectory throughout the period. Beginning at roughly 4.63 billion US dollars in 2017, the invested capital rose incrementally each year to about 7.45 billion US dollars in 2021. This steady increase indicates ongoing investments, expansions, or asset accumulation supporting the company's operations.
- Turnover of Capital (TO)
- The turnover of capital ratio exhibited moderate fluctuations but overall maintained an increasing trend. It started at 0.53 in 2017, increased to a peak of 0.66 in 2019, declined slightly to 0.62 in 2020, and then rose again to 0.68 in 2021. This ratio indicates improved efficiency in generating revenue from the invested capital over time, despite a minor setback in 2020.
- Overall Insights
- The data reflects consistent growth in both revenue and invested capital, suggesting expansion activity and enhanced market presence. The improving turnover of capital ratio suggests better utilization of invested resources to generate revenue. The slight dip in capital turnover in 2020 may be attributable to external factors affecting operational efficiency, but the recovery in 2021 points to regained momentum.
Effective Cash Tax Rate (CTR)
Twitter Inc., 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Alphabet Inc. | ||||||
| Comcast Corp. | ||||||
| Meta Platforms Inc. | ||||||
| Netflix Inc. | ||||||
| Walt Disney Co. | ||||||
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
- The cash operating taxes show fluctuations over the analyzed years. Starting from approximately $44,987 thousand in 2017, the taxes decreased significantly to $27,591 thousand in 2018. However, there was a notable increase in 2019, rising to $49,720 thousand. This value slightly declined in 2020 to $41,833 thousand before increasing again to $51,562 thousand in 2021. Overall, cash operating taxes appear volatile, with no clear consistent upward or downward long-term trend.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibits considerable variability. In 2017, the figure was negative at approximately -$28,961 thousand, indicating an operating loss before taxes. This reversed drastically in 2018 and 2019, with strong positive values of $470,525 thousand and $432,026 thousand respectively, showing substantial profitability in those years. However, profitability sharply dropped in 2020 to $59,379 thousand and turned negative again in 2021, reaching -$336,074 thousand. This pattern highlights significant fluctuations between profitable and loss-making years, with strong gains in the middle years followed by a return to losses.
- Effective Cash Tax Rate (CTR)
- Data on the effective cash tax rate is incomplete, with no reported value for 2017 and 2021. In 2018, the effective cash tax rate was 5.86%, increasing to 11.51% in 2019, indicating a rising tax burden relative to the net operating profit before taxes. In 2020, there was a dramatic increase in the effective cash tax rate to 70.45%. This could suggest a higher tax expense relative to cash profitability or effects from lower pre-tax profits. The absence of data for 2021 limits the ability to assess tax rate trends for that year.
- Overall Observations
- The analysis reveals considerable volatility in operational profitability, tax payments, and effective tax rates over the five-year period. While the company achieved substantial operating profits in 2018 and 2019, it faced losses in 2017 and 2021 with a modest profit in 2020. Cash operating taxes generally followed profitability but fluctuated independently in some years. The sharp increase in the effective cash tax rate in 2020 is noteworthy, reflecting possible tax impacts related to profit fluctuations. These trends suggest an unstable operating environment with considerable variation in profitability and tax burdens annually.