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.

Return on Invested Capital (ROIC)
Decomposition of ROIC
Operating Profit Margin (OPM)
Turnover of Capital (TO)
Effective Cash Tax Rate (CTR)

Waste Management Inc., ROIC calculation

	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	2,064)	2,018)	2,119)	2,286)	1,952)
Invested capital²	22,932)	23,729)	22,640)	18,435)	17,686)
Performance Ratio
ROIC³	9.00%	8.50%	9.36%	12.40%	11.04%

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 × 2,064 ÷ 22,932 = 9.00%

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Performance ratio	Description	The company
ROIC	A measure of the periodic, after tax, cash-on-cash yield earned in the business.	Waste Management Inc. ROIC deteriorated from 2019 to 2020 but then improved from 2020 to 2021 not reaching 2019 level.

Waste Management Inc., decomposition of ROIC


	ROIC	=	OPM¹	×	TO²	×	1 – CTR³
Dec 31, 2021	9.00%	=	15.32%	×	0.78	×	74.98%
Dec 31, 2020	8.50%	=	15.38%	×	0.64	×	86.16%
Dec 31, 2019	9.36%	=	16.44%	×	0.68	×	83.34%
Dec 31, 2018	12.40%	=	18.73%	×	0.81	×	81.74%
Dec 31, 2017	11.04%	=	17.78%	×	0.82	×	75.72%

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 »

The primary reason for the increase in return on invested capital (ROIC) over 2021 year is the increase in efficiency measured by turnover of capital (TO) ratio.

Waste Management Inc., OPM calculation

	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	2,064)	2,018)	2,119)	2,286)	1,952)
Add: Cash operating taxes²	689)	324)	424)	511)	626)
Net operating profit before taxes (NOPBT)	2,753)	2,342)	2,543)	2,797)	2,578)

Operating revenues	17,931)	15,218)	15,455)	14,914)	14,485)
Add: Increase (decrease) in deferred revenues	32)	5)	12)	19)	10)
Adjusted operating revenues	17,963)	15,223)	15,467)	14,933)	14,495)
Profitability Ratio
OPM³	15.32%	15.38%	16.44%	18.73%	17.78%

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 operating revenues
= 100 × 2,753 ÷ 17,963 = 15.32%

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Profitability ratio	Description	The company
OPM	The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales.	Waste Management Inc. OPM deteriorated from 2019 to 2020 and from 2020 to 2021.

Waste Management Inc., TO calculation

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Selected Financial Data (US$ in millions)
Operating revenues	17,931)	15,218)	15,455)	14,914)	14,485)
Add: Increase (decrease) in deferred revenues	32)	5)	12)	19)	10)
Adjusted operating revenues	17,963)	15,223)	15,467)	14,933)	14,495)

Invested capital¹	22,932)	23,729)	22,640)	18,435)	17,686)
Efficiency Ratio
TO²	0.78	0.64	0.68	0.81	0.82

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 operating revenues ÷ Invested capital
= 17,963 ÷ 22,932 = 0.78

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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.	Waste Management Inc. TO deteriorated from 2019 to 2020 but then improved from 2020 to 2021 exceeding 2019 level.

Waste Management Inc., CTR calculation

	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	2,064)	2,018)	2,119)	2,286)	1,952)
Add: Cash operating taxes²	689)	324)	424)	511)	626)
Net operating profit before taxes (NOPBT)	2,753)	2,342)	2,543)	2,797)	2,578)
Tax Rate
CTR³	25.02%	13.84%	16.66%	18.26%	24.28%

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 × 689 ÷ 2,753 = 25.02%

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Tax rate	Description	The company
CTR	Effective cash tax rate on operating income.	Waste Management Inc. CTR decreased from 2019 to 2020 but then increased from 2020 to 2021 exceeding 2019 level.

Waste Management Inc. (NYSE:WM)

Return on Capital (ROC)

Return on Invested Capital (ROIC)

Decomposition of ROIC

Operating Profit Margin (OPM)

Turnover of Capital (TO)

Effective Cash Tax Rate (CTR)