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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- Income Statement
- Statement of Comprehensive Income
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Reportable Segments
- Analysis of Geographic Areas
- Price to FCFE (P/FCFE)
- Dividend Discount Model (DDM)
- Operating Profit Margin since 2005
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
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Return on Invested Capital (ROIC)
Texas Instruments 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 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm 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 a significant shift in financial performance as measured by Return on Invested Capital (ROIC). Initially, the company exhibited strong profitability, followed by a marked decline and subsequent stabilization at a lower level.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT increased from US$7,923 million in 2021 to US$8,736 million in 2022, indicating improved operational efficiency and profitability. However, NOPAT then decreased substantially to US$6,512 million in 2023, and continued to decline to US$5,023 million in 2024. A slight recovery to US$5,439 million was observed in 2025, but remained below the levels achieved in 2021 and 2022.
- Invested Capital
- Invested capital consistently increased throughout the period, rising from US$16,409 million in 2021 to US$28,591 million in 2025. This growth suggests ongoing investment in the business, potentially through capital expenditures or acquisitions. The rate of increase accelerated between 2022 and 2024.
- Return on Invested Capital (ROIC)
- ROIC peaked at 49.74% in 2022, building on a strong 48.28% in 2021. This demonstrates a highly efficient allocation of capital and strong returns generated from investments. However, ROIC experienced a dramatic decrease to 28.83% in 2023, and further declined to 19.20% in 2024. While ROIC stabilized at 19.02% in 2025, it represents a substantial reduction from the earlier performance. The decline in ROIC is attributable to the combination of decreasing NOPAT and increasing invested capital.
The observed trend suggests that while the company continues to invest in its operations, the returns generated from those investments have diminished significantly. The stabilization of ROIC in 2025 may indicate a leveling off of this decline, but further monitoring is required to determine if this represents a sustained trend or a temporary pause.
Decomposition of ROIC
Texas Instruments 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 a significant shift in financial performance, as evidenced by the decomposition of return on invested capital. A notable decline in ROIC is observed, driven by changes in both profitability and capital efficiency.
- Operating Profit Margin (OPM)
- The operating profit margin exhibited initial growth, increasing from 49.60% in 2021 to a peak of 51.22% in 2022. However, a consistent downward trend followed, with the margin decreasing to 44.51% in 2023, 38.37% in 2024, and further to 35.56% in 2025. This suggests increasing cost pressures or decreasing pricing power over time.
- Turnover of Capital (TO)
- The turnover of capital, a measure of capital efficiency, also shows a declining pattern. It remained relatively stable between 2021 and 2022, at 1.12 and 1.14 respectively, before experiencing a substantial decrease to 0.78 in 2023. This decline continued, reaching 0.60 in 2024 and stabilizing slightly at 0.62 in 2025. This indicates a reduced ability to generate sales from each unit of capital employed.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate remained relatively stable throughout the period, fluctuating between 83.51% and 87.07%. A slight increase is observed in the most recent year, reaching 86.50% in 2025. This suggests that changes in tax rates have not been a primary driver of the overall ROIC trend.
- Return on Invested Capital (ROIC)
- The ROIC followed the trends of its component parts. It peaked at 49.74% in 2022, then experienced a significant and consistent decline, falling to 28.83% in 2023, 19.20% in 2024, and remaining at 19.02% in 2025. The substantial decrease in ROIC is attributable to the combined effect of the declining operating profit margin and the reduced turnover of capital.
The observed trends suggest a weakening of both profitability and capital efficiency. While the tax rate remained relatively consistent, its impact on the overall ROIC decline was limited. The significant reduction in ROIC warrants further investigation into the underlying causes of the decreasing operating profit margin and capital turnover.
Operating Profit Margin (OPM)
Texas Instruments 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) | ||||||
| Revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm 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 ÷ Revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited a fluctuating pattern over the five-year period. Initially, the metric demonstrated growth, followed by a consistent decline.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM increased from 49.60% in 2021 to a peak of 51.22% in 2022. Subsequently, a clear downward trend emerged, with the OPM decreasing to 44.51% in 2023, 38.37% in 2024, and further to 35.56% in 2025. This represents a substantial decrease of 15.64 percentage points from the high in 2022 to the value recorded in 2025.
- Relationship to Net Operating Profit Before Taxes (NOPBT)
- While NOPBT increased from 2021 to 2022, mirroring the OPM increase, the subsequent decline in NOPBT from 2022 to 2024 coincided with the OPM decrease. NOPBT showed a slight recovery in 2025, but not enough to reverse the OPM decline. This suggests that the decreasing OPM is not solely attributable to changes in NOPBT, but also to revenue fluctuations.
- Relationship to Revenue
- Revenue increased from 2021 to 2022, aligning with the increase in OPM. However, revenue decreased in both 2023 and 2024, contributing to the observed decline in OPM. A modest increase in revenue in 2025 did not fully offset the prior declines, and the OPM continued to fall. The consistent decline in OPM despite a revenue increase in the latest year suggests potential increases in the cost of goods sold or operating expenses as a percentage of revenue.
The observed trends indicate a weakening profitability relative to revenue generation over the analyzed period. Further investigation into the underlying cost structure would be necessary to fully understand the drivers behind the declining OPM.
Turnover of Capital (TO)
Texas Instruments 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) | ||||||
| Revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm 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 = Revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The turnover of capital exhibited a declining trend over the observed period. Initially, the ratio demonstrated a slight increase before experiencing a substantial decrease.
- Revenue
- Revenue increased from US$18,344 million in 2021 to US$20,028 million in 2022, representing a growth of approximately 9.2%. However, revenue subsequently decreased to US$17,519 million in 2023, US$15,641 million in 2024, and reached US$17,682 million in 2025. This indicates a period of revenue contraction followed by a modest recovery in the most recent year.
- Invested Capital
- Invested capital consistently increased throughout the period, rising from US$16,409 million in 2021 to US$28,591 million in 2025. The rate of increase accelerated between 2022 and 2024, suggesting significant capital deployment during those years.
- Turnover of Capital (TO)
- The turnover of capital ratio, which measures how efficiently invested capital is used to generate revenue, began at 1.12 in 2021 and rose slightly to 1.14 in 2022. A significant decline was then observed, with the ratio falling to 0.78 in 2023, 0.60 in 2024, and stabilizing at 0.62 in 2025. This decrease suggests a diminishing ability to generate revenue from each dollar of invested capital.
The combination of increasing invested capital and decreasing revenue, particularly evident in 2023 and 2024, directly contributed to the observed decline in the turnover of capital. While revenue showed a slight increase in 2025, it was not sufficient to reverse the downward trend in capital turnover. The ratio’s stabilization in 2025 may indicate a leveling off of these opposing forces, but the overall efficiency of capital utilization remains lower than in the earlier years of the period.
Effective Cash Tax Rate (CTR)
Texas Instruments Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| Advanced Micro Devices Inc. | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm 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 an increasing trend from 2021 to 2023, followed by a decrease in 2024 and a further decline in 2025. Simultaneously, both cash operating taxes and net operating profit before taxes (NOPBT) demonstrated fluctuations over the five-year period.
- Effective Cash Tax Rate (CTR)
- The CTR increased from 12.93% in 2021 to 14.83% in 2022, representing a rise of approximately 1.9 percentage points. This upward trajectory continued into 2023, reaching 16.49%. A slight decrease to 16.30% was observed in 2024. The most significant change occurred in 2025, with the CTR falling to 13.50%, a reduction of 2.8 percentage points from the prior year. This suggests potential changes in the company’s tax profile or the impact of tax-related legislation.
- Cash Operating Taxes
- Cash operating taxes increased from US$1,176 million in 2021 to US$1,521 million in 2022, a rise of approximately 29.1%. A subsequent decrease to US$1,286 million was recorded in 2023. This decline continued in 2024, with taxes falling to US$978 million, and further decreased to US$849 million in 2025. The fluctuations in cash operating taxes appear to correlate with changes in NOPBT.
- Net Operating Profit Before Taxes (NOPBT)
- NOPBT increased from US$9,099 million in 2021 to US$10,257 million in 2022, an increase of approximately 12.8%. A substantial decrease was then observed in 2023, with NOPBT falling to US$7,798 million. This downward trend continued into 2024, reaching US$6,001 million. A modest recovery occurred in 2025, with NOPBT rising to US$6,288 million, though remaining below levels seen in 2021 and 2022. The decrease in NOPBT likely contributed to the fluctuations observed in cash operating taxes.
The interplay between NOPBT and cash operating taxes suggests that changes in profitability directly influence the company’s tax obligations. The observed decrease in the CTR in 2025, despite a relatively low NOPBT, warrants further investigation to determine the underlying drivers, such as changes in tax credits or jurisdictional mix of earnings.