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.
Return on Invested Capital (ROIC)
Sysco Corp., ROIC calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,500) | 2,164) | 1,757) | 861) | 665) | 1,850) | |
| Invested capital2 | 16,003) | 14,268) | 14,109) | 14,339) | 18,092) | 12,842) | |
| Performance Ratio | |||||||
| ROIC3 | 15.62% | 15.17% | 12.45% | 6.01% | 3.68% | 14.41% | |
| Benchmarks | |||||||
| ROIC, Competitors4 | |||||||
| Costco Wholesale Corp. | 21.31% | 16.31% | 20.27% | 18.56% | — | — | |
| Target Corp. | 14.44% | 12.64% | 26.11% | 16.47% | — | — | |
| Walmart Inc. | 11.92% | 9.28% | 9.80% | 11.03% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 NOPAT. See details »
2 Invested capital. See details »
3 2024 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,500 ÷ 16,003 = 15.62%
4 Click competitor name to see calculations.
The analysis of return on invested capital reveals a pronounced V-shaped recovery pattern over the six-year period ending June 29, 2024. Following a significant contraction in operational efficiency in 2020, there has been a consistent upward trajectory in both profitability and the effectiveness of capital deployment.
- Net Operating Profit After Taxes (NOPAT)
- A severe decline in NOPAT is observed between 2019 and 2020, where figures dropped from 1,850 million to 665 million. This decline was followed by a sustained recovery period. NOPAT grew steadily from 861 million in 2021 to a period high of 2,500 million in 2024, indicating a strong restoration and expansion of operating profitability.
- Invested Capital Trends
- Invested capital experienced a sharp spike in 2020, reaching 18,092 million. For the subsequent three years, the capital base was streamlined and stabilized, fluctuating narrowly between 14,109 million and 14,339 million. A new increase in invested capital was noted in 2024, rising to 16,003 million.
- Return on Invested Capital (ROIC)
- The ROIC reflects the combined impact of the profitability crash and the capital spike in 2020, falling from 14.41% to a trough of 3.68%. From 2021 onward, a recovery trend is evident, with ROIC returning to double digits by 2022 (12.45%) and surpassing pre-2020 levels by 2023 (15.17%). The period concluded with a peak ROIC of 15.62% in 2024, suggesting that current operating profits are being generated more efficiently relative to the invested capital than at any other point in the analyzed timeframe.
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Decomposition of ROIC
Sysco Corp., decomposition of ROIC
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The Return on Invested Capital (ROIC) exhibited a significant V-shaped trajectory over the analyzed six-year period. A sharp contraction occurred in 2020, where ROIC dropped from 14.41% to 3.68%. This was followed by a consistent multi-year recovery, with the metric surpassing pre-2020 levels by 2023 and reaching a period peak of 15.62% by June 2024.
- Operating Profit Margin (OPM)
- Profitability experienced a severe compression in 2020, falling to 1.93% from 3.97% in 2019. Since that low point, a steady upward trend has been observed. The margin expanded incrementally each year, eventually reaching 4.08% in 2024, indicating a successful recovery and improvement in operational efficiency and pricing power.
- Turnover of Capital (TO)
- Capital efficiency showed the most volatility among the ROIC drivers. After a significant decline to 2.92 in 2020, the turnover ratio recovered strongly, peaking at 5.35 in 2023. A slight moderation occurred in 2024, with the ratio settling at 4.93, though it remains higher than the 2019 baseline of 4.68.
- Effective Cash Tax Rate Factor (1 – CTR)
- The tax component experienced a dip in 2020 to 65.00%, suggesting a higher effective tax burden or a change in tax dynamics during that period. This figure recovered steadily over the subsequent four years, returning to 77.64% by 2024, which aligns closely with the 77.47% observed in 2019.
The decomposition of ROIC reveals that the 2020 performance collapse was a result of a simultaneous decline in operational margins, capital turnover, and tax efficiency. The subsequent recovery was driven by a balanced improvement across all three dimensions. By 2024, the expansion of the operating profit margin and the maintenance of high capital turnover became the primary catalysts for the observed increase in overall return on invested capital.
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Operating Profit Margin (OPM)
Sysco Corp., OPM calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,500) | 2,164) | 1,757) | 861) | 665) | 1,850) | |
| Add: Cash operating taxes2 | 720) | 648) | 588) | 408) | 358) | 538) | |
| Net operating profit before taxes (NOPBT) | 3,220) | 2,812) | 2,345) | 1,269) | 1,023) | 2,388) | |
| Sales | 78,844) | 76,325) | 68,636) | 51,298) | 52,893) | 60,114) | |
| Profitability Ratio | |||||||
| OPM3 | 4.08% | 3.68% | 3.42% | 2.47% | 1.93% | 3.97% | |
| Benchmarks | |||||||
| OPM, Competitors4 | |||||||
| Costco Wholesale Corp. | 3.78% | 3.28% | 3.79% | 3.58% | — | — | |
| Target Corp. | 5.54% | 3.67% | 8.88% | 7.06% | — | — | |
| Walmart Inc. | 3.88% | 3.26% | 3.77% | 4.26% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
OPM = 100 × NOPBT ÷ Sales
= 100 × 3,220 ÷ 78,844 = 4.08%
4 Click competitor name to see calculations.
The operational performance of the company between 2019 and 2024 is characterized by a significant V-shaped recovery in both top-line revenue and profitability. Following a period of contraction from 2019 to 2021, there has been a consistent upward trajectory in efficiency and scale, culminating in peak performance levels by the end of the analyzed period.
- Sales Trends
- Revenue experienced a notable decline from 60,114 million US dollars in 2019 to a low of 51,298 million US dollars in 2021. This was followed by a period of rapid expansion, with sales increasing to 68,636 million US dollars in 2022 and reaching a peak of 78,844 million US dollars by June 29, 2024.
- Net Operating Profit Before Taxes (NOPBT)
- Operating profits mirrored the volatility of sales, dropping sharply from 2,388 million US dollars in 2019 to 1,023 million US dollars in 2020. Since that trough, NOPBT has grown consistently for four consecutive years, ending the period at 3,220 million US dollars in 2024, which represents a substantial increase over the 2019 baseline.
- Operating Profit Margin (OPM) Analysis
- The operating profit margin exhibited a significant compression between 2019 and 2020, falling from 3.97% to 1.93%. A steady recovery phase followed, with margins expanding to 2.47% in 2021, 3.42% in 2022, and 3.68% in 2023. By June 29, 2024, the OPM reached 4.08%, indicating that the company not only recovered its previous profitability levels but improved its operational efficiency relative to sales.
The correlation between the growth in sales and the expansion of the operating profit margin suggests that the company has successfully leveraged its increased scale to enhance profitability. The transition from a 1.93% margin in 2020 to 4.08% in 2024 demonstrates a strengthened ability to convert revenue into operating profit.
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Turnover of Capital (TO)
Sysco Corp., TO calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Sales | 78,844) | 76,325) | 68,636) | 51,298) | 52,893) | 60,114) | |
| Invested capital1 | 16,003) | 14,268) | 14,109) | 14,339) | 18,092) | 12,842) | |
| Efficiency Ratio | |||||||
| TO2 | 4.93 | 5.35 | 4.86 | 3.58 | 2.92 | 4.68 | |
| Benchmarks | |||||||
| TO, Competitors3 | |||||||
| Costco Wholesale Corp. | 7.57 | 6.81 | 7.03 | 6.74 | — | — | |
| Target Corp. | 3.13 | 3.61 | 3.52 | 3.07 | — | — | |
| Walmart Inc. | 4.14 | 4.05 | 3.63 | 3.38 | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 Invested capital. See details »
2 2024 Calculation
TO = Sales ÷ Invested capital
= 78,844 ÷ 16,003 = 4.93
3 Click competitor name to see calculations.
The analysis of the turnover of capital reveals a period of significant volatility between 2019 and 2021, followed by a strong recovery phase and a subsequent stabilization. The efficiency with which capital is utilized to generate revenue has fluctuated in direct correlation with shifts in sales volume and the level of invested capital.
- Sales Performance
- Annual sales experienced a contraction from June 2019 through July 2021, reaching a minimum of US$ 51,298 million. This was followed by a robust recovery and growth phase, with sales increasing to US$ 68,636 million in 2022 and continuing an upward trajectory to reach US$ 78,844 million by June 2024.
- Invested Capital Trends
- Invested capital showed a sharp increase in June 2020, peaking at US$ 18,092 million. This was followed by a period of reduction and stabilization between 2021 and 2023, where capital remained consistently around US$ 14 billion. A renewed increase in invested capital is observed in June 2024, rising to US$ 16,003 million.
- Turnover of Capital (TO) Analysis
- The turnover ratio declined sharply from 4.68 in 2019 to a low of 2.92 in 2020, driven by the dual impact of falling sales and rising invested capital. A sustained recovery followed, with the ratio peaking at 5.35 in July 2023, indicating a period of high capital efficiency where sales growth significantly outpaced capital investment. The ratio moderated to 4.93 in June 2024, reflecting the impact of the increase in invested capital relative to the growth in sales.
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Effective Cash Tax Rate (CTR)
Sysco Corp., CTR calculation, comparison to benchmarks
| Jun 29, 2024 | Jul 1, 2023 | Jul 2, 2022 | Jul 3, 2021 | Jun 27, 2020 | Jun 29, 2019 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Net operating profit after taxes (NOPAT)1 | 2,500) | 2,164) | 1,757) | 861) | 665) | 1,850) | |
| Add: Cash operating taxes2 | 720) | 648) | 588) | 408) | 358) | 538) | |
| Net operating profit before taxes (NOPBT) | 3,220) | 2,812) | 2,345) | 1,269) | 1,023) | 2,388) | |
| Tax Rate | |||||||
| CTR3 | 22.36% | 23.03% | 25.07% | 32.13% | 35.00% | 22.53% | |
| Benchmarks | |||||||
| CTR, Competitors4 | |||||||
| Costco Wholesale Corp. | 25.54% | 27.04% | 23.89% | 23.00% | — | — | |
| Target Corp. | 16.78% | 4.45% | 16.42% | 23.99% | — | — | |
| Walmart Inc. | 25.66% | 29.71% | 28.43% | 23.29% | — | — | |
Based on: 10-K (reporting date: 2024-06-29), 10-K (reporting date: 2023-07-01), 10-K (reporting date: 2022-07-02), 10-K (reporting date: 2021-07-03), 10-K (reporting date: 2020-06-27), 10-K (reporting date: 2019-06-29).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2024 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 720 ÷ 3,220 = 22.36%
4 Click competitor name to see calculations.
The financial trajectory from 2019 to 2024 is characterized by a sharp contraction in operating profitability followed by a sustained recovery and a normalization of the cash tax burden.
- Net Operating Profit Before Taxes (NOPBT)
- A significant decline in profitability is observed between 2019 and 2020, where NOPBT fell from 2,388 million USD to 1,023 million USD. Following this trough, the company entered a period of consistent growth, with profits increasing annually to reach 3,220 million USD by June 29, 2024. This indicates a strong recovery that exceeded pre-2020 performance levels.
- Cash Operating Taxes
- Cash tax expenditures mirrored the direction of operating profits but with less volatility. Payments decreased to 358 million USD in 2020 before initiating a steady climb over the subsequent four years, ending at 720 million USD in 2024. The growth in absolute tax payments was consistent with the recovery of the profit base.
- Effective Cash Tax Rate (CTR)
- The effective cash tax rate exhibited an inverse relationship with NOPBT during the period of volatility, peaking at 35.00% in 2020 and 32.13% in 2021. This spike indicates that cash tax payments did not decrease proportionally with the drop in operating profit. However, from 2022 through 2024, a steady downward trend is observed, with the rate compressing to 22.36%. This suggests an improved tax efficiency or the utilization of deferred tax assets as profitability expanded, eventually returning the rate to levels slightly below the 22.53% recorded in 2019.
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