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
- Balance Sheet: Liabilities and Stockholders’ Equity
- Analysis of Liquidity Ratios
- Analysis of Short-term (Operating) Activity Ratios
- DuPont Analysis: Disaggregation of ROE, ROA, and Net Profit Margin
- Common Stock Valuation Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Net Profit Margin since 2005
- Return on Equity (ROE) since 2005
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Return on Invested Capital (ROIC)
Intuitive Surgical 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Invested capital2 | ||||||
| Performance Ratio | ||||||
| ROIC3 | ||||||
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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) alongside changes in both Net Operating Profit After Taxes (NOPAT) and Invested Capital. Initial observations reveal a significant decrease in ROIC followed by a period of recovery and subsequent stabilization.
- Net Operating Profit After Taxes (NOPAT)
- NOPAT experienced a notable decline from US$1,700,018 thousand in 2021 to US$1,187,823 thousand in 2022. A recovery was then observed, with NOPAT increasing to US$1,596,933 thousand in 2023, and continuing its upward trajectory to US$2,242,154 thousand in 2024. This positive trend continued into 2025, reaching US$2,976,548 thousand. The overall trend indicates a strong recovery and growth in profitability after the initial downturn.
- Invested Capital
- Invested Capital consistently increased throughout the observed period. Starting at US$4,517,800 thousand in 2021, it rose to US$5,396,200 thousand in 2022, US$7,159,800 thousand in 2023, and US$7,798,800 thousand in 2024. The most substantial increase occurred between 2024 and 2025, reaching US$11,374,500 thousand. This consistent growth suggests ongoing investment in the business.
- Return on Invested Capital (ROIC)
- ROIC began at 37.63% in 2021, representing a high level of profitability relative to invested capital. A substantial decrease was then recorded in 2022, falling to 22.01%. ROIC showed modest improvement in 2023, reaching 22.30%, before increasing to 28.75% in 2024. In 2025, ROIC settled at 26.17%. While the ROIC recovered from its low in 2022, it did not return to the levels observed in 2021, despite the significant growth in NOPAT. This suggests that the growth in invested capital outpaced the growth in NOPAT, impacting overall returns.
The interplay between NOPAT and Invested Capital indicates a period of adjustment. The initial decline in ROIC appears linked to a decrease in NOPAT coupled with increasing invested capital. Subsequent improvements in NOPAT drove ROIC recovery, but the continued expansion of invested capital moderated further gains in ROIC. The trend suggests a potential need to evaluate the efficiency of capital allocation as the business scales.
Decomposition of ROIC
Intuitive Surgical 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 drivers of return on invested capital. Overall, ROIC experienced a significant decline from 2021 to 2022, followed by a period of recovery, but with indications of potential future challenges. The analysis below details the trends in operating profit margin, capital turnover, and the impact of the effective cash tax rate on ROIC.
- Operating Profit Margin (OPM)
- Operating profit margin decreased substantially from 33.56% in 2021 to 26.19% in 2022. A partial recovery was observed in 2023, reaching 28.14%, and continued through 2025, culminating in 33.47%. This suggests improving operational efficiency or pricing power in recent years, returning the margin to levels comparable to those seen in 2021.
- Turnover of Capital (TO)
- The turnover of capital exhibited a consistent downward trend from 2021 to 2025. Starting at 1.27 in 2021, it decreased to 0.89 in 2025. This indicates a declining efficiency in utilizing capital to generate revenue, potentially due to increased investment in assets without a corresponding increase in sales, or a slowdown in sales growth. The rate of decline slowed between 2024 and 2025.
- Effective Cash Tax Rate Adjustment (1 – CTR)
- The adjustment for the effective cash tax rate showed volatility. It began at a high of 88.24% in 2021, then decreased significantly to 72.60% in 2022. A recovery was seen in 2023 (79.06%) and 2024 (82.58%), with a further increase to 87.70% in 2025, approaching the 2021 level. This suggests changes in tax benefits or the composition of taxable income.
- Return on Invested Capital (ROIC)
- ROIC mirrored the combined effects of the other factors. The most significant decline occurred between 2021 (37.63%) and 2022 (22.01%), primarily driven by the decrease in operating profit margin and capital turnover. ROIC experienced modest improvement in 2023 (22.30%) and a more substantial increase in 2024 (28.75%) as the operating profit margin recovered. However, ROIC decreased slightly in 2025 to 26.17%, potentially due to the continued decline in capital turnover offsetting the benefits of a higher operating profit margin and tax rate adjustment.
In summary, while operating profitability has largely recovered to 2021 levels, the decreasing efficiency of capital utilization is a potential concern. The fluctuations in the effective cash tax rate also contribute to the overall ROIC performance, but appear to be less impactful than the trends in operating margin and capital turnover.
Operating Profit Margin (OPM)
Intuitive Surgical 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 thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Profitability Ratio | ||||||
| OPM3 | ||||||
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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 ÷ Adjusted revenue
= 100 × ÷ =
4 Click competitor name to see calculations.
The operating profit margin exhibited fluctuations over the five-year period. Initial performance showed a decline followed by a recovery and subsequent stabilization towards the end of the observed timeframe. Net operating profit before taxes also demonstrated a similar pattern of initial decrease, recovery, and growth.
- Operating Profit Margin (OPM)
- In 2021, the operating profit margin stood at 33.56%. A notable decrease was observed in 2022, with the margin falling to 26.19%. This represents the lowest point within the analyzed period. A recovery commenced in 2023, with the OPM increasing to 28.14%. The upward trend continued into 2024, reaching 32.39%, and further strengthened in 2025, culminating in a margin of 33.47%. This final value is approaching the level seen in 2021.
- Relationship between NOPBT and OPM
- The decline in the operating profit margin in 2022 coincided with a decrease in net operating profit before taxes, from US$1,926,675 thousand in 2021 to US$1,636,114 thousand. However, subsequent increases in NOPBT, reaching US$3,393,961 thousand in 2025, aligned with the recovery and stabilization of the operating profit margin. The adjusted revenue also increased consistently throughout the period, from US$5,741,800 thousand in 2021 to US$10,139,900 thousand in 2025, suggesting that revenue growth contributed to the improved profitability observed in later years.
The observed trends suggest a period of operational challenges in 2022, followed by successful corrective actions and a return to stronger profitability. The consistent growth in adjusted revenue, coupled with the improving operating profit margin, indicates increasing efficiency and effective cost management in the later years of the period.
Turnover of Capital (TO)
Intuitive Surgical Inc., TO calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenue | ||||||
| Add: Increase (decrease) in deferred revenue | ||||||
| Adjusted revenue | ||||||
| Invested capital1 | ||||||
| Efficiency Ratio | ||||||
| TO2 | ||||||
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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 = Adjusted revenue ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
The turnover of capital exhibited a fluctuating pattern over the five-year period. Initial values decreased, followed by a slight increase, and then a subsequent decline.
- Turnover of Capital (TO) Trend
- The turnover of capital began at 1.27 in 2021, indicating that for every dollar of invested capital, the company generated $1.27 in revenue. A decrease was observed in 2022, with the ratio falling to 1.16. This suggests a less efficient utilization of invested capital in generating revenue during that year.
- In 2023, the ratio further decreased to 1.00, signifying that revenue generated was equal to the amount of invested capital. This represents the lowest point in the observed period. A modest recovery occurred in 2024, with the ratio increasing to 1.07. However, this improvement was short-lived, as the ratio declined again in 2025 to 0.89.
- The 2025 value indicates that for every dollar of invested capital, the company generated only $0.89 in revenue, representing a reduced efficiency in capital utilization compared to all prior years in the period.
The observed trend suggests a potential weakening in the company’s ability to generate revenue from its invested capital base, particularly in the later years of the period. Further investigation into the drivers of revenue and invested capital would be necessary to understand the underlying causes of these fluctuations.
- Relationship to Revenue and Invested Capital
- Adjusted revenue consistently increased throughout the period, rising from US$5,741.8 million in 2021 to US$10,139.9 million in 2025. However, invested capital also increased, albeit at a varying rate. The faster growth of invested capital relative to revenue in 2022 and 2023 contributed to the declining turnover of capital.
- While revenue continued to grow in 2024, the rate of increase in invested capital slowed, resulting in a slight improvement in the turnover ratio. The substantial increase in invested capital in 2025, exceeding the revenue growth, led to the final decrease in the ratio.
Effective Cash Tax Rate (CTR)
Intuitive Surgical Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2025 | Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Tax Rate | ||||||
| CTR3 | ||||||
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Abbott Laboratories | ||||||
| Elevance Health Inc. | ||||||
| Medtronic PLC | ||||||
| UnitedHealth Group 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 considerable fluctuation over the five-year period. Cash operating taxes increased significantly from 2021 to 2022, then experienced a decrease in 2023, followed by increases in 2024 and a slight decrease in 2025. Net operating profit before taxes also demonstrated volatility, decreasing from 2021 to 2022, then increasing substantially through 2025.
- Effective Cash Tax Rate (CTR) - Trend Analysis
- The effective cash tax rate began at 11.76% in 2021. A substantial increase was observed in 2022, reaching 27.40%. This was followed by a decrease to 20.94% in 2023, and a further decline to 17.42% in 2024. The most recent year, 2025, shows a continued downward trend, with the rate falling to 12.30%. This suggests increasing tax efficiency or changes in the composition of taxable income.
- Relationship between NOPBT and Cash Taxes
- While net operating profit before taxes decreased from 2021 to 2022, cash operating taxes nearly doubled. This contributed to the significant increase in the effective cash tax rate in 2022. The subsequent increase in NOPBT from 2022 through 2025, coupled with relatively stable cash operating taxes, resulted in a decreasing effective cash tax rate over that period. The correlation between NOPBT and cash taxes is not linear, indicating factors beyond pre-tax income influence the actual cash taxes paid.
The fluctuations in the effective cash tax rate warrant further investigation to understand the underlying drivers. These could include changes in tax legislation, the utilization of tax credits or deductions, or shifts in the geographic distribution of profits. The observed trends suggest a dynamic tax position that requires ongoing monitoring.