Return on Capital (ROC)
Advanced level
Return on capital (ROC) is after tax rate of return on net business assets. ROIC is unaffected by changes in interest rates or company’s debt and equity structure. It measures business productivity performance.
Return on Invested Capital (ROIC)
Walmart Inc., ROIC calculation, comparison to benchmarks
| Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2018 | Jan 31, 2017 | Jan 31, 2016 | Jan 31, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 18,200 | 9,089 | 12,319 | 17,141 | 16,356 | 18,490 | |
| Invested capital2 | 167,329 | 158,768 | 142,543 | 148,752 | 155,895 | 150,353 | |
| Performance Ratio | |||||||
| ROIC3 | 10.88% | 5.72% | 8.64% | 11.52% | 10.49% | 12.30% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Amazon.com Inc. | — | 12.59% | 13.28% | 5.94% | 10.40% | 7.00% | |
| Costco Wholesale Corp. | — | 16.91% | 16.47% | 14.89% | 14.63% | 13.82% | |
| Dollar General Corp. | 11.22% | 10.94% | 9.31% | 8.86% | 8.94% | 8.15% | |
| Home Depot Inc. | 34.91% | 35.70% | 27.93% | 25.73% | 23.46% | 22.47% | |
| Lowe’s Cos. Inc. | 18.00% | 12.51% | 15.33% | 14.36% | 12.78% | 13.07% | |
| Target Corp. | 14.30% | 14.14% | 12.07% | 12.75% | 12.12% | 10.31% | |
| TJX Cos. Inc. | 19.13% | 18.60% | 16.31% | 16.38% | 18.59% | 19.20% | |
Based on: 10-K (filing date: 2020-03-20), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01).
1 NOPAT. See details »
2 Invested capital. See details »
3 2020 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 18,200 ÷ 167,329 = 10.88%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Walmart Inc.’s ROIC deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Decomposition of ROIC
Walmart Inc., decomposition of ROIC
Based on: 10-K (filing date: 2020-03-20), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the increase in return on invested capital (ROIC) over 2020 year is the increase in profitability measured by operating profit margin (OPM) ratio.
Operating Profit Margin (OPM)
Walmart Inc., OPM calculation, comparison to benchmarks
| Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2018 | Jan 31, 2017 | Jan 31, 2016 | Jan 31, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 18,200 | 9,089 | 12,319 | 17,141 | 16,356 | 18,490 | |
| Add: Cash operating taxes2 | 5,296 | 5,384 | 5,789 | 6,591 | 8,823 | 9,686 | |
| Net operating profit before taxes (NOPBT) | 23,496 | 14,473 | 18,108 | 23,732 | 25,179 | 28,176 | |
| Net sales | 519,926 | 510,329 | 495,761 | 481,317 | 478,614 | 482,229 | |
| Profitability Ratio | |||||||
| OPM3 | 4.52% | 2.84% | 3.65% | 4.93% | 5.26% | 5.84% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Amazon.com Inc. | — | 6.37% | 6.29% | 3.30% | 4.62% | 3.15% | |
| Costco Wholesale Corp. | — | 3.30% | 3.41% | 3.31% | 3.23% | 3.31% | |
| Dollar General Corp. | 9.65% | 9.52% | 9.56% | 10.23% | 10.43% | 10.17% | |
| Home Depot Inc. | 14.80% | 14.70% | 15.10% | 14.77% | 13.94% | 13.32% | |
| Lowe’s Cos. Inc. | 8.61% | 6.38% | 9.56% | 9.72% | 9.07% | 9.26% | |
| Target Corp. | 6.17% | 5.67% | 6.18% | 7.35% | 7.67% | 6.41% | |
| TJX Cos. Inc. | 11.23% | 11.30% | 11.44% | 11.94% | 12.79% | 13.18% | |
Based on: 10-K (filing date: 2020-03-20), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
OPM = 100 × NOPBT ÷ Net sales
= 100 × 23,496 ÷ 519,926 = 4.52%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Walmart Inc.’s OPM deteriorated from 2018 to 2019 but then improved from 2019 to 2020 exceeding 2018 level. |
Turnover of Capital (TO)
Walmart Inc., TO calculation, comparison to benchmarks
| Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2018 | Jan 31, 2017 | Jan 31, 2016 | Jan 31, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net sales | 519,926 | 510,329 | 495,761 | 481,317 | 478,614 | 482,229 | |
| Invested capital1 | 167,329 | 158,768 | 142,543 | 148,752 | 155,895 | 150,353 | |
| Efficiency Ratio | |||||||
| TO2 | 3.11 | 3.21 | 3.48 | 3.24 | 3.07 | 3.21 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Amazon.com Inc. | — | 2.21 | 2.28 | 2.26 | 3.20 | 3.24 | |
| Costco Wholesale Corp. | — | 6.35 | 6.80 | 6.81 | 6.29 | 6.55 | |
| Dollar General Corp. | 1.45 | 1.42 | 1.35 | 1.35 | 1.35 | 1.27 | |
| Home Depot Inc. | 3.01 | 3.17 | 2.87 | 2.75 | 2.62 | 2.59 | |
| Lowe’s Cos. Inc. | 2.69 | 2.86 | 2.47 | 2.39 | 2.41 | 2.29 | |
| Target Corp. | 2.83 | 2.86 | 2.66 | 2.57 | 2.57 | 2.41 | |
| TJX Cos. Inc. | 2.29 | 2.30 | 2.22 | 2.22 | 2.30 | 2.23 | |
Based on: 10-K (filing date: 2020-03-20), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01).
1 Invested capital. See details »
2 2020 Calculation
TO = Net sales ÷ Invested capital
= 519,926 ÷ 167,329 = 3.11
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Walmart Inc.’s TO deteriorated from 2018 to 2019 and from 2019 to 2020. |
Effective Cash Tax Rate (CTR)
Walmart Inc., CTR calculation, comparison to benchmarks
| Jan 31, 2020 | Jan 31, 2019 | Jan 31, 2018 | Jan 31, 2017 | Jan 31, 2016 | Jan 31, 2015 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 18,200 | 9,089 | 12,319 | 17,141 | 16,356 | 18,490 | |
| Add: Cash operating taxes2 | 5,296 | 5,384 | 5,789 | 6,591 | 8,823 | 9,686 | |
| Net operating profit before taxes (NOPBT) | 23,496 | 14,473 | 18,108 | 23,732 | 25,179 | 28,176 | |
| Tax Rate | |||||||
| CTR3 | 22.54% | 37.20% | 31.97% | 27.77% | 35.04% | 34.38% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Amazon.com Inc. | — | 10.59% | 7.26% | 20.39% | 29.64% | 31.33% | |
| Costco Wholesale Corp. | — | 19.18% | 28.98% | 34.06% | 27.96% | 36.17% | |
| Dollar General Corp. | 19.88% | 18.75% | 27.64% | 35.82% | 36.32% | 36.89% | |
| Home Depot Inc. | 21.74% | 23.26% | 35.67% | 36.71% | 35.80% | 34.80% | |
| Lowe’s Cos. Inc. | 22.32% | 31.40% | 34.96% | 38.25% | 41.52% | 38.25% | |
| Target Corp. | 18.12% | 12.76% | 26.52% | 32.40% | 38.55% | 33.25% | |
| TJX Cos. Inc. | 25.59% | 28.37% | 35.80% | 38.22% | 36.75% | 34.74% | |
Based on: 10-K (filing date: 2020-03-20), 10-K (filing date: 2019-03-28), 10-K (filing date: 2018-03-30), 10-K (filing date: 2017-03-31), 10-K (filing date: 2016-03-30), 10-K (filing date: 2015-04-01).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2020 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 5,296 ÷ 23,496 = 22.54%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Walmart Inc.’s CTR increased from 2018 to 2019 but then decreased significantly from 2019 to 2020. |