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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- Statement of Comprehensive Income
- Common-Size Income Statement
- Common-Size Balance Sheet: Assets
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Long-term (Investment) Activity Ratios
- Analysis of Reportable Segments
- Common Stock Valuation Ratios
- Enterprise Value to EBITDA (EV/EBITDA)
- Selected Financial Data since 2005
- Aggregate Accruals
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Return on Invested Capital (ROIC)
Advanced Micro Devices Inc., ROIC calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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 return on invested capital (ROIC) exhibited significant volatility over the observed period. Initially strong, the metric experienced a substantial decline before recovering in later years. This analysis details the observed trends in ROIC alongside its constituent components, net operating profit after taxes (NOPAT) and invested capital.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT demonstrated a dramatic fluctuation. A value of US$3,517 million was recorded in 2021, followed by negative values in both 2022 (US$-138 million) and 2023 (US$-201 million). A recovery began in 2024, with NOPAT reaching US$621 million, and continued into 2025, achieving US$4,525 million. This indicates a period of profitability challenges followed by a strong rebound.
- Invested Capital
- Invested capital increased substantially from US$6,195 million in 2021 to US$58,525 million in 2022. Following this large increase, invested capital remained relatively stable, fluctuating between US$57,883 million and US$61,734 million from 2023 to 2025. The significant jump in 2022 suggests a considerable expansion of the company’s asset base or a change in financing structure.
- Return on Invested Capital (ROIC)
- The ROIC mirrored the volatility in NOPAT. In 2021, ROIC stood at a high of 56.77%. This was followed by a sharp decrease to -0.24% in 2022 and further decline to -0.35% in 2023, coinciding with the negative NOPAT values. A modest recovery to 1.07% occurred in 2024, and a more substantial increase to 7.33% was observed in 2025, aligning with the improved NOPAT. The negative ROIC values in 2022 and 2023 indicate that the company was not generating returns sufficient to cover the cost of its invested capital during those periods. The increase in 2025 suggests improved capital allocation efficiency.
The substantial increase in invested capital in 2022, coupled with the simultaneous decline in NOPAT, significantly impacted ROIC. The subsequent recovery in NOPAT, while invested capital remained relatively stable, drove the improvement in ROIC observed in 2024 and 2025. Further investigation into the drivers behind the NOPAT fluctuations and the large increase in invested capital would be beneficial.
Decomposition of ROIC
Advanced Micro Devices Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 27, 2025 | = | × | × | ||||
| Dec 28, 2024 | = | × | × | ||||
| Dec 30, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 25, 2021 | = | × | × |
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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 significant volatility in the components of return on invested capital. Initial performance was strong, followed by substantial declines, and a subsequent recovery, though not to the initial levels. The decomposition of ROIC, through operating profit margin, capital turnover, and the impact of taxes, reveals the drivers behind these fluctuations.
- Operating Profit Margin (OPM)
- The operating profit margin experienced a dramatic decrease from 22.70% in 2021 to 5.31% in 2022, and further declined to a low of 2.02% in 2023. A recovery is then observed, with margins increasing to 8.35% in 2024 and 12.01% in 2025. This suggests a period of eroding profitability followed by improving operational efficiency or pricing power.
- Turnover of Capital (TO)
- Capital turnover exhibited a sharp decline from 2.65 in 2021 to 0.40 in 2022, remaining low at 0.39 in 2023. A modest increase to 0.44 in 2024 is followed by a more substantial rise to 0.56 in 2025. This indicates a significant reduction in the efficiency with which capital is used to generate revenue, with a partial recovery in later periods.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate shows considerable fluctuation. A high value of 94.27% in 2021 is followed by negative values in 2022 (-11.01%) and 2023 (-43.92%), suggesting the benefit of tax credits or loss carryforwards. This is then reversed, with a value of 28.85% in 2024 and a very high value of 108.77% in 2025, potentially indicating a change in tax circumstances or the expiration of prior benefits.
- Return on Invested Capital (ROIC)
- The ROIC mirrors the trends observed in its components. A substantial decline from 56.77% in 2021 to -0.24% in 2022 and -0.35% in 2023 is evident. The ROIC then recovers to 1.07% in 2024 and 7.33% in 2025, though it does not reach the levels seen in 2021. The negative ROIC values in 2022 and 2023 indicate that the company was not generating returns sufficient to cover the cost of its invested capital during those years.
The interplay between declining margins, reduced capital efficiency, and fluctuating tax benefits significantly impacted the ROIC. The recovery in 2024 and 2025 is driven by improvements in both operating profit margin and capital turnover, alongside a substantial, though potentially unsustainable, benefit from the tax rate adjustment.
Operating Profit Margin (OPM)
Advanced Micro Devices Inc., OPM calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Net revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2025 Calculation
OPM = 100 × NOPBT ÷ Net revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited significant fluctuation over the observed five-year period. Initial values were strong, followed by a substantial decline, and then a recovery towards levels approaching the initial period.
- Operating Profit Margin (OPM) - Overall Trend
- The OPM began at 22.70% in 2021, representing a robust level of profitability. A marked decrease was then observed in 2022, falling to 5.31%. This downward trend continued into 2023, reaching a low of 2.02%. A recovery commenced in 2024, with the OPM increasing to 8.35%, and this positive momentum continued into 2025, reaching 12.01%.
- OPM - Key Observations
- The most substantial change occurred between 2021 and 2023, a decline of over 20 percentage points. The subsequent increase from 2023 to 2025 indicates a potential stabilization or improvement in the company’s operational efficiency and pricing power. The 2025 OPM, while improved, remains below the 2021 level.
- Relationship to Net Operating Profit Before Taxes (NOPBT)
- The decline in OPM from 2021 to 2023 coincided with a decrease in NOPBT. While NOPBT increased in 2024 and 2025, the OPM recovery lagged behind the NOPBT increase, suggesting that revenue growth played a larger role in the NOPBT improvement than margin expansion. The substantial increase in net revenue in 2025 appears to have contributed significantly to the OPM improvement.
- Relationship to Net Revenue
- Net revenue increased significantly between 2021 and 2025. However, the OPM did not consistently track this revenue growth. The period of revenue increase from 2021 to 2022 did not translate into a higher OPM, indicating potential cost pressures or pricing challenges during that time. The stronger correlation between revenue and OPM observed in 2024 and 2025 suggests improved cost management or pricing strategies.
Turnover of Capital (TO)
Advanced Micro Devices Inc., TO calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Net revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
1 Invested capital. See details »
2 2025 Calculation
TO = Net revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The analysis reveals a fluctuating pattern in the turnover of capital over the five-year period. Initially, a substantial decline is observed, followed by a period of relative stability and then an increasing trend.
- Net Revenue
- Net revenue demonstrates an initial increase from 2021 to 2022, followed by a decrease in 2023. Revenue then recovers in 2024 and continues to grow significantly in 2025, reaching its highest value in the observed period.
- Invested Capital
- Invested capital experiences a dramatic increase between 2021 and 2022. Subsequently, it remains relatively stable from 2022 through 2024, with a slight increase observed in 2025.
- Turnover of Capital (TO)
- The turnover of capital ratio begins at 2.65 in 2021. A significant decrease is then noted in 2022, falling to 0.40, and remains low at 0.39 in 2023. The ratio experiences a modest increase to 0.44 in 2024, and further improves to 0.56 in 2025. This suggests an improving efficiency in generating revenue from invested capital in the later years of the period, although it remains considerably lower than the initial value observed in 2021.
The substantial increase in invested capital in 2022, coupled with a simultaneous increase in net revenue, appears to have initially lowered the turnover ratio. The subsequent stabilization of invested capital, combined with increasing revenue in 2024 and 2025, contributes to the observed improvement in the turnover of capital ratio during those years. The 2025 value, while improved, still indicates a less efficient utilization of capital compared to 2021.
Effective Cash Tax Rate (CTR)
Advanced Micro Devices Inc., CTR calculation, comparison to benchmarks
| Dec 27, 2025 | Dec 28, 2024 | Dec 30, 2023 | Dec 31, 2022 | Dec 25, 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 | ||||||
| Analog Devices Inc. | ||||||
| Applied Materials Inc. | ||||||
| Broadcom Inc. | ||||||
| Intel Corp. | ||||||
| KLA Corp. | ||||||
| Lam Research Corp. | ||||||
| Micron Technology Inc. | ||||||
| NVIDIA Corp. | ||||||
| Qualcomm Inc. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2025-12-27), 10-K (reporting date: 2024-12-28), 10-K (reporting date: 2023-12-30), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-25).
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 exhibits significant volatility over the observed period. Initial values are relatively low, increasing substantially before fluctuating considerably and ultimately becoming negative.
- Cash Operating Taxes
- Cash operating taxes demonstrate a substantial increase from 2021 to 2022, followed by a decrease in 2023, and a subsequent rise in 2024. A significant negative value is recorded in 2025, indicating a net tax benefit rather than a cash outflow.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes decreased markedly from 2021 to 2022, continued to decline in 2023, before increasing in both 2024 and 2025. The 2025 value represents the highest level observed during the period.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate began at 5.73% in 2021. It increased dramatically to 111.01% in 2022, and further to 143.92% in 2023. A substantial decrease to 71.15% occurred in 2024. Finally, the rate became negative in 2025, registering at -8.77%. This negative value suggests the realization of tax benefits exceeding cash tax liabilities.
- The large fluctuations in the effective cash tax rate are likely driven by changes in the timing and realization of tax credits, deferred tax assets, or other tax-related items, relative to net operating profit. The high rates in 2022 and 2023, exceeding 100%, suggest a significant impact from non-operating tax effects or adjustments.
The relationship between NOPBT and cash operating taxes is not consistently proportional, as evidenced by the dramatic swings in the effective cash tax rate. Further investigation into the specific tax items impacting cash taxes is warranted to understand the drivers of these fluctuations.