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
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Enterprise Value (EV)
- Net Profit Margin since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Analysis of Revenues
- Analysis of Debt
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Return on Invested Capital (ROIC)
United Parcel Service Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 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 experienced a significant increase from 1,136 million USD in 2020 to a peak of 15,125 million USD in 2021. This was followed by a decline to 12,726 million USD in 2022, and a continuing downward trend to 7,622 million USD in 2023, further falling to 6,582 million USD in 2024. The data indicate an initial strong growth phase, succeeded by a substantial reduction in profitability over the subsequent years.
- Invested Capital
- Invested capital showed a consistent upward trend throughout the period, rising from 33,181 million USD in 2020 to 48,150 million USD in 2024. The increments were steady, with notable increases each year, reflecting ongoing investment or asset accumulation despite the volatility in profitability.
- Return on Invested Capital (ROIC)
- The return on invested capital exhibited considerable variability. It increased sharply from 3.42% in 2020 to 34.07% in 2021, indicating a significant improvement in capital efficiency. However, it declined thereafter to 28.42% in 2022, then further to 16.77% in 2023 and 13.67% in 2024. This declining trend aligns with the decreases seen in NOPAT, suggesting diminishing returns on the growing invested capital base over the latter years.
Decomposition of ROIC
United Parcel Service Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2024 | = | × | × | ||||
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × |
Based on: 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), 10-K (reporting date: 2020-12-31).
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 significant increase from 3.14% in 2020 to a peak of 17.83% in 2021. After this peak, the margin showed a declining trend, decreasing to 15.59% in 2022, then further dropping to 10.43% in 2023, and finally reaching 9.3% in 2024. This indicates that although the company improved its operating profitability substantially in 2021, it has faced challenges in maintaining these high margins in subsequent years.
- Turnover of Capital (TO)
- Capital turnover exhibited a steady decline over the period analyzed. Starting at 2.55 in 2020, it decreased to 2.19 in 2021, followed by slight fluctuations near 2.24 in 2022, before continuing the downward trajectory to 2.0 in 2023, and further to 1.89 in 2024. This trend suggests a gradual reduction in the efficiency with which capital is being employed to generate revenue.
- 1 – Effective Cash Tax Rate (CTR)
- The metric showed unusually high values during the period, with a marked increase from 42.76% in 2020 to 87.2% in 2021. Thereafter, it declined slightly to 81.37% in 2022, then to 80.37% in 2023, and further to 77.7% in 2024. These elevated levels could indicate significant cash tax expenses or adjustments impacting net cash flows related to taxes.
- Return on Invested Capital (ROIC)
- Return on invested capital improved dramatically from 3.42% in 2020 to a high of 34.07% in 2021. However, similar to the operating profit margin, it decreased over subsequent years to 28.42% in 2022, then more sharply to 16.77% in 2023, and finally to 13.67% in 2024. This decline points to diminishing returns on the capital invested over time, reflecting either declining profitability or increased capital base relative to earnings.
Operating Profit Margin (OPM)
United Parcel Service Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The NOPBT exhibited a significant increase from 2020 to 2021, rising sharply from 2,656 million US dollars to 17,344 million US dollars. However, this was followed by a consistent decline over the subsequent years, falling to 15,640 million in 2022, then to 9,484 million in 2023, and further down to 8,471 million in 2024. The overall trend suggests a peak in profitability in 2021, with a notable deterioration thereafter.
- Revenue
- Revenue showed a steady upward trend from 2020 through 2022, increasing from 84,628 million US dollars to 100,338 million US dollars. This growth reversed in 2023, with revenue dropping to 90,958 million and remaining almost flat in 2024 at 91,070 million. The data indicates a peak in revenue in 2022, followed by a plateau and slight decline in the following years.
- Operating Profit Margin (OPM)
- The operating profit margin followed a pattern similar to NOPBT, improving markedly from 3.14% in 2020 to 17.83% in 2021. It then decreased steadily to 15.59% in 2022, 10.43% in 2023, and 9.3% in 2024. This trend reflects a strong improvement in operational efficiency or profitability in 2021, with a gradual weakening in margins afterward.
- Summary
- The data reveals that despite revenue growth peaking in 2022, profitability metrics like NOPBT and operating profit margin peaked earlier in 2021 and subsequently declined. This divergence suggests rising costs, operational challenges, or other factors eroding profit margins even as revenue initially rose. The decline in both absolute profit and margin in later years indicates a need for closer examination of cost structures and operational efficiency going forward.
Turnover of Capital (TO)
United Parcel Service Inc., TO calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 Invested capital. See details »
2 2024 Calculation
TO = Revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Revenue Trends
- Revenue increased steadily from 2020 to 2022, rising from approximately 84.6 billion US dollars in 2020 to over 100.3 billion US dollars in 2022. However, in 2023, revenue declined significantly to around 90.9 billion US dollars, and stabilized slightly in 2024 at approximately 91.1 billion US dollars.
- Invested Capital Trends
- Invested capital demonstrated a general upward trend over the period. Starting at roughly 33.2 billion US dollars in 2020, it rose substantially to around 44.4 billion US dollars in 2021 and continued to increase gradually each subsequent year, reaching approximately 48.2 billion US dollars in 2024.
- Turnover of Capital (TO) Trends
- The turnover ratio of invested capital shows a declining pattern. It decreased from 2.55 in 2020 to 2.19 in 2021 and remained relatively stable near 2.24 in 2022. Subsequently, it fell to 2.0 in 2023 and further to 1.89 in 2024, indicative of reduced efficiency in utilizing capital over time.
- Summary Insight
- Despite the increase in invested capital, revenue growth stalled and reversed after 2022, with revenue falling notably in 2023 and remaining at similar levels in 2024. Concurrently, the turnover of capital declined consistently, signaling that the company's capital is generating less revenue per unit of invested capital than in previous years. This suggests potential challenges in operational efficiency or market conditions affecting revenue generation relative to the capital employed.
Effective Cash Tax Rate (CTR)
United Parcel Service Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| 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 | ||||||
| FedEx Corp. | ||||||
| Uber Technologies Inc. | ||||||
| Union Pacific Corp. | ||||||
| United Airlines Holdings Inc. | ||||||
Based on: 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), 10-K (reporting date: 2020-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- Cash operating taxes increased significantly from 1,520 million US dollars in 2020 to 2,219 million in 2021 and further to 2,913 million in 2022. However, a notable decline occurred in 2023 to 1,861 million, followed by a slight increase to 1,889 million in 2024. This pattern suggests fluctuating tax payments with a peak in 2022 and a subsequent reduction in the following years.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes showed strong growth from 2,656 million US dollars in 2020 to a peak of 17,344 million in 2021. After this peak, there was a gradual decline over the next three years: 15,640 million in 2022, 9,484 million in 2023, and 8,471 million in 2024. The data indicate substantial profit expansion initially, followed by a contraction trend in later years.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate displayed a marked decrease from 57.24% in 2020 to 12.8% in 2021, indicating a significant reduction in tax burden relative to operating profits. The rate then gradually increased to 18.63% in 2022, 19.63% in 2023, and 22.3% in 2024. This suggests a lower but incrementally rising tax rate in recent years.