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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Verizon Communications Inc. pages available for free this week:
- Balance Sheet: Assets
- Analysis of Short-term (Operating) Activity Ratios
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to FCFF (EV/FCFF)
- Present Value of Free Cash Flow to Equity (FCFE)
- Operating Profit Margin since 2005
- Price to Earnings (P/E) since 2005
- Price to Book Value (P/BV) since 2005
- Analysis of Debt
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Return on Invested Capital (ROIC)
Verizon Communications Inc., 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 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
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 fluctuations in Return on Invested Capital (ROIC). Net operating profit after taxes (NOPAT) and invested capital both experienced changes over the five-year span, impacting the overall ROIC performance.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT decreased from US$29,903 million in 2021 to US$28,039 million in 2022, representing a decline of approximately 6.5%. A more substantial decrease was observed in 2023, with NOPAT falling to US$19,450 million. However, NOPAT showed recovery in subsequent years, reaching US$24,675 million in 2024 and further increasing to US$25,872 million in 2025. Despite the recovery, NOPAT in 2025 remained below the level recorded in 2021.
- Invested Capital
- Invested capital generally increased throughout the period. From US$290,004 million in 2021, it rose to US$301,478 million in 2022 and US$304,400 million in 2023. The upward trend continued, reaching US$307,881 million in 2024 and US$329,613 million in 2025. This consistent growth in invested capital suggests ongoing investment in the business.
- Return on Invested Capital (ROIC)
- ROIC followed a declining trend from 10.31% in 2021 to 9.30% in 2022. The most significant decrease occurred in 2023, with ROIC dropping to 6.39%. A partial recovery was seen in 2024, with ROIC increasing to 8.01%. In 2025, ROIC experienced a slight decrease to 7.85%, indicating that while improvement occurred, it did not fully restore the levels achieved earlier in the period. The fluctuations in ROIC appear to be influenced by the combined effect of changes in NOPAT and invested capital.
The observed decline in ROIC in 2023, followed by a partial recovery, warrants further investigation to understand the underlying drivers. The continued growth in invested capital, coupled with the fluctuating NOPAT, suggests a need to assess the efficiency of capital allocation and the profitability of investments.
Decomposition of ROIC
Verizon Communications Inc., 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 fluctuations in the key components driving return on invested capital. Overall, ROIC experienced a decline from 2021 to 2023, followed by a partial recovery in 2024 and a slight decrease in 2025. This performance is attributable to shifts in operating profit margin, capital turnover, and the impact of the effective cash tax rate.
- Operating Profit Margin (OPM)
- Operating profit margin exhibited a decreasing trend from 24.95% in 2021 to 17.33% in 2023. A recovery was then observed in 2024, reaching 22.57%, but this was followed by a modest decline to 21.81% in 2025. This suggests potential pressures on profitability during the 2022-2023 timeframe, with some improvement subsequently, though not a full return to earlier levels.
- Turnover of Capital (TO)
- The turnover of capital showed a consistent, albeit gradual, decline throughout the period. Starting at 0.46 in 2021, it decreased to 0.42 by 2025. This indicates a decreasing efficiency in utilizing capital to generate revenue, potentially suggesting a buildup of assets relative to sales.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The factor representing one minus the effective cash tax rate generally decreased from 89.69% in 2021 to 81.10% in 2024, before increasing to 85.83% in 2025. A lower value indicates a higher effective cash tax rate, which negatively impacts after-tax returns. The increase in 2025 partially offsets the negative impact seen in 2024.
- Return on Invested Capital (ROIC)
- ROIC mirrored the combined effects of the aforementioned factors. The initial decline from 10.31% in 2021 to 6.39% in 2023 was likely driven by the decreasing operating profit margin and capital turnover, compounded by the lower tax adjustment. The subsequent increase to 8.01% in 2024 reflects the improvement in operating profit margin and a slight recovery in the tax adjustment. The marginal decrease to 7.85% in 2025 suggests that the positive momentum experienced in 2024 was not fully sustained.
In summary, the observed ROIC performance is a result of interacting trends in profitability, asset utilization, and tax implications. The decreasing capital turnover is a consistent concern, while fluctuations in operating profit margin and the tax rate adjustment contribute to the overall volatility in ROIC.
Operating Profit Margin (OPM)
Verizon Communications Inc., 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) | ||||||
| Operating revenues | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
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 ÷ Operating revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the five-year period. Net operating profit before taxes also demonstrated variability, influencing the overall margin performance. A review of the figures reveals a distinct pattern of decline followed by partial recovery.
- Operating Profit Margin (OPM)
- The operating profit margin began at 24.95% in 2021. A decrease was observed in 2022, with the margin falling to 23.74%. This downward trend continued into 2023, resulting in a substantial decline to 17.33%, the lowest point in the observed period. A recovery commenced in 2024, with the margin increasing to 22.57%. This positive momentum continued into 2025, though at a slower pace, reaching 21.81%.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes generally tracked the OPM trend. It decreased from US$33,339 million in 2021 to US$32,490 million in 2022. A more significant reduction occurred in 2023, with NOPBT falling to US$23,224 million. The figure then rose to US$30,425 million in 2024 and remained relatively stable in 2025 at US$30,145 million.
- Operating Revenues
- Operating revenues showed a modest increase over the period. Revenues rose from US$133,613 million in 2021 to US$136,835 million in 2022. A slight decrease was noted in 2023, with revenues at US$133,974 million. Revenues then increased to US$134,788 million in 2024 and continued to rise to US$138,191 million in 2025. The revenue growth was not sufficient to offset the decline in NOPBT in 2023, contributing to the significant drop in OPM that year.
The correlation between NOPBT and OPM is evident. The recovery in OPM from 2023 to 2025 aligns with the increase in NOPBT during the same period. While operating revenues increased overall, the impact on profitability was moderated by fluctuations in NOPBT.
Turnover of Capital (TO)
Verizon Communications Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Operating revenues | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
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 = Operating revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis reveals a consistent, albeit gradual, decline in the turnover of capital over the five-year period. Operating revenues demonstrate relative stability with a slight increase in the final year, while invested capital consistently increases. This combination drives the observed trend in capital turnover.
- Turnover of Capital (TO)
- The turnover of capital ratio decreased from 0.46 in 2021 to 0.42 in 2025. This indicates a diminishing ability to generate revenue from each dollar of invested capital. The decline is incremental, with a decrease of 0.01 from 2021 to 2022, 0.01 from 2022 to 2023, and remaining constant from 2023 to 2024 before decreasing again to 0.42 in 2025.
Operating revenues experienced a modest increase from US$133,613 million in 2021 to US$138,191 million in 2025. However, this growth was outpaced by the increase in invested capital, which rose from US$290,004 million to US$329,613 million over the same period. This disparity is the primary driver of the declining turnover of capital.
- Operating Revenues
- Revenues peaked at US$136,835 million in 2022 before experiencing a slight dip to US$133,974 million in 2023. A recovery is observed in the final two years, reaching US$138,191 million in 2025. The overall revenue growth is relatively flat.
- Invested Capital
- Invested capital shows a consistent upward trend throughout the period, increasing each year. The largest absolute increase occurred between 2024 and 2025, with an increase of US$21,732 million. This continuous investment, without a corresponding proportional increase in revenue, contributes to the decreasing capital turnover.
The consistent increase in invested capital, coupled with relatively stable revenue, suggests the company is reinvesting in its operations or expanding its asset base. While this may be a strategic decision for long-term growth, it currently results in a less efficient utilization of capital as measured by the turnover ratio.
Effective Cash Tax Rate (CTR)
Verizon Communications Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| AT&T Inc. | ||||||
| T-Mobile US Inc. | ||||||
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 a generally increasing trend over the five-year period, although with some fluctuation. Cash operating taxes also demonstrated variability, while net operating profit before taxes experienced a notable decline in 2023 before recovering.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate increased from 10.31% in 2021 to 13.70% in 2022, representing a substantial rise. This upward trajectory continued into 2023, reaching 16.25%, and peaked at 18.90% in 2024. A subsequent decrease was observed in 2025, with the rate settling at 14.17%. This suggests increasing tax obligations relative to pre-tax profits, followed by a partial reversal in the most recent year.
- Cash Operating Taxes
- Cash operating taxes increased from US$3,436 million in 2021 to US$4,451 million in 2022, aligning with the increase in the effective cash tax rate. A decrease to US$3,774 million was recorded in 2023, coinciding with the decline in net operating profit before taxes. Taxes then rose significantly to US$5,750 million in 2024, reflecting both a higher tax rate and increased profitability. Finally, cash operating taxes decreased to US$4,273 million in 2025, despite a still-elevated effective tax rate, indicating a potential impact from changes in pre-tax income.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes remained relatively stable between 2021 and 2022, at US$33,339 million and US$32,490 million respectively. A significant decrease was observed in 2023, falling to US$23,224 million. NOPBT then rebounded in 2024 to US$30,425 million and remained relatively consistent in 2025 at US$30,145 million. This fluctuation in pre-tax profits likely influenced the observed changes in cash operating taxes.
The interplay between NOPBT and cash operating taxes demonstrates a clear relationship, with changes in profitability directly impacting tax payments. The increasing CTR suggests a diminishing benefit from tax planning strategies or changes in the applicable tax laws over the period.