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
- Cash Flow Statement
- Analysis of Long-term (Investment) Activity Ratios
- Enterprise Value (EV)
- Enterprise Value to EBITDA (EV/EBITDA)
- Enterprise Value to FCFF (EV/FCFF)
- Capital Asset Pricing Model (CAPM)
- Return on Equity (ROE) since 2005
- Return on Assets (ROA) since 2005
- Debt to Equity since 2005
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Return on Invested Capital (ROIC)
Teradyne Inc., ROIC calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| 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. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2023 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × ÷ =
4 Click competitor name to see calculations.
Over the five-year period, the net operating profit after taxes (NOPAT) exhibited notable fluctuations, initially rising significantly from 499,351 thousand US dollars in 2019 to a peak of 1,034,943 thousand US dollars in 2021. Following this peak, there was a marked decline in NOPAT to 659,470 thousand in 2022, with a further drop to 313,918 thousand in 2023, indicating a substantial reduction in operating profitability in the most recent years.
The invested capital increased steadily from 1,845,838 thousand US dollars in 2019 to a high of 2,587,403 thousand in 2022. However, in 2023, invested capital decreased slightly to 2,415,179 thousand, suggesting some capital reduction or asset reallocation after a period of consistent growth.
The return on invested capital (ROIC) followed a similar pattern to NOPAT, starting at 27.05% in 2019 and increasing sharply to a peak of 40.36% in 2021, reflecting highly efficient use of capital during those years. Subsequently, the ROIC declined to 25.49% in 2022 and dropped further to 13% in 2023, signaling a deterioration in capital efficiency and overall profitability.
- Summary of trends:
- There was strong growth in both profitability and capital efficiency from 2019 through 2021.
- A considerable downturn occurred starting in 2022, with NOPAT more than halving by 2023 and ROIC decreasing by nearly two-thirds from its peak.
- Invested capital increased consistently until 2022 but was reduced in 2023, which may reflect strategic adjustments in response to declining returns.
- The data suggest challenges in maintaining profitability and effective capital utilization in the recent period following a peak performance phase.
Decomposition of ROIC
Teradyne Inc., decomposition of ROIC
| ROIC | = | OPM1 | × | TO2 | × | 1 – CTR3 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2023 | = | × | × | ||||
| Dec 31, 2022 | = | × | × | ||||
| Dec 31, 2021 | = | × | × | ||||
| Dec 31, 2020 | = | × | × | ||||
| Dec 31, 2019 | = | × | × |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
- Operating Profit Margin (OPM)
- The operating profit margin exhibited an increasing trend from 24.24% in 2019 to a peak of 32.37% in 2021. Subsequently, it declined notably to 26.22% in 2022 and further to 16.14% in 2023, indicating a significant reduction in profitability relative to revenue in the most recent periods.
- Turnover of Capital (TO)
- The turnover of capital showed growth from 1.27 in 2019 to 1.45 in 2020, maintaining this level in 2021. However, it decreased to 1.22 in 2022 and declined further to 1.08 in 2023, demonstrating a weakening efficiency in generating revenue from invested capital starting from 2022.
- 1 – Effective Cash Tax Rate (CTR)
- The value decreased consistently over the analyzed period, from 88.19% in 2019 to 74.25% in 2023. This decline indicates an increase in the effective cash tax rate paid by the company, reducing the proportion of earnings retained after taxes.
- Return on Invested Capital (ROIC)
- The return on invested capital improved significantly from 27.05% in 2019 to a peak of 40.36% in 2021, followed by a sharp decline to 25.49% in 2022, and a further decrease to 13% in 2023. This trend suggests that the company’s ability to generate returns from its invested capital has deteriorated notably after 2021.
Operating Profit Margin (OPM)
Teradyne Inc., OPM calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | ||||||
| Add: Cash operating taxes2 | ||||||
| Net operating profit before taxes (NOPBT) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue and customer advances | ||||||
| Adjusted revenues | ||||||
| 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. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
OPM = 100 × NOPBT ÷ Adjusted revenues
= 100 × ÷ =
4 Click competitor name to see calculations.
- Net Operating Profit Before Taxes (NOPBT)
- The net operating profit before taxes exhibited a strong upward trend from 2019 to 2021, increasing from 566,192 thousand US dollars in 2019 to a peak of 1,201,116 thousand US dollars in 2021. This was followed by a notable decline in 2022 and 2023, dropping to 825,384 thousand US dollars in 2022 and further down to 422,763 thousand US dollars in 2023.
- Adjusted Revenues
- Adjusted revenues increased significantly from 2,335,354 thousand US dollars in 2019 to a high of 3,710,966 thousand US dollars in 2021. However, the revenues then decreased in the subsequent years, falling to 3,147,355 thousand US dollars in 2022 and further down to 2,619,968 thousand US dollars in 2023. This shows a rising trend in the early years followed by a downward adjustment in recent years.
- Operating Profit Margin (OPM)
- The operating profit margin followed a similar pattern to net operating profit and revenues. It increased steadily from 24.24% in 2019 to 32.37% in 2021, indicating improving operational efficiency and profitability during that period. Thereafter, the margin narrowed significantly to 26.22% in 2022 and sharply declined to 16.14% in 2023, signaling reduced profitability relative to revenue.
- Summary of Trends
- The data shows a strong growth phase in both profitability and revenues from 2019 through 2021, accompanied by increasing operating margins. Starting in 2022, the company experienced a pronounced downturn characterized by decreases in revenues, profits, and profit margins through 2023. This suggests the presence of challenges affecting operational performance and demand in the most recent periods.
Turnover of Capital (TO)
Teradyne Inc., TO calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Revenues | ||||||
| Add: Increase (decrease) in deferred revenue and customer advances | ||||||
| Adjusted revenues | ||||||
| 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. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Invested capital. See details »
2 2023 Calculation
TO = Adjusted revenues ÷ Invested capital
= ÷ =
3 Click competitor name to see calculations.
- Adjusted Revenues
- The adjusted revenues displayed significant growth from 2019 to 2021, rising from approximately $2.34 billion to $3.71 billion. This represents a continuous upward trajectory over the first three years. However, in 2022, there was a notable decline to about $3.15 billion, followed by a further decrease in 2023 to approximately $2.62 billion, indicating a reversal of the previous growth trend in the most recent two years.
- Invested Capital
- Invested capital showed a consistent increase from 2019 through 2022, moving from around $1.85 billion to roughly $2.59 billion. This reflects ongoing capital investment during this period. In 2023, a slight reduction occurred, with invested capital dropping to approximately $2.42 billion, suggesting a modest contraction or reallocation of capital resources.
- Turnover of Capital (TO)
- Turnover of capital improved from 1.27 in 2019 to 1.45 in 2020 and remained steady at 1.45 in 2021, indicating enhanced efficiency in utilizing capital to generate revenues during these years. Nevertheless, in 2022, the ratio declined to 1.22 and fell further to 1.08 in 2023, signaling a reduction in capital turnover efficiency consistent with the decreases observed in both revenues and invested capital.
Overall, the data reveals a phase of growth and improved capital efficiency from 2019 to 2021, followed by a period of decline in both revenues and capital efficiency over the last two years. Despite prior increases, invested capital also began to reduce slightly in 2023, which may reflect strategic adjustments in response to the downturn in revenues and turnover.
Effective Cash Tax Rate (CTR)
Teradyne Inc., CTR calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ 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 | ||||||
| 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. | ||||||
| Texas Instruments Inc. | ||||||
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2023 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × ÷ =
4 Click competitor name to see calculations.
- Cash Operating Taxes
- The cash operating taxes have demonstrated a general increasing trend from 2019 to 2022, rising from $66,842 thousand to a peak of $165,914 thousand. However, in 2023, there was a notable decline to $108,845 thousand, which may indicate changes in taxable income, tax planning strategies, or tax policy impacts during that year.
- Net Operating Profit Before Taxes (NOPBT)
- Net operating profit before taxes increased significantly from $566,192 thousand in 2019 to a high of $1,201,116 thousand in 2021. Following this peak, there was a considerable decrease over the next two years, falling to $825,384 thousand in 2022 and further to $422,763 thousand in 2023. This downward trend post-2021 could suggest challenges such as increased costs, reduced revenues, or adverse market conditions impacting profitability.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate showed a generally rising pattern throughout the period. Starting at 11.81% in 2019, it gradually increased each year, reaching 25.75% in 2023. The sharp rise, particularly between 2021 and 2023, may have contributed to the decline in cash operating taxes in 2023 despite the drop in profit, reflecting either less favorable tax structures or diminished tax credits or deductions.