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)
Trane Technologies plc, ROIC calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 2,138,919) | 1,673,718) | 1,265,645) | 1,640,972) | 1,451,904) | |
| Invested capital2 | 13,518,500) | 13,354,600) | 13,835,000) | 15,640,000) | 13,684,819) | |
| Performance Ratio | ||||||
| ROIC3 | 15.82% | 12.53% | 9.15% | 10.49% | 10.61% | |
| Benchmarks | ||||||
| ROIC, Competitors4 | ||||||
| Boeing Co. | -5.73% | -5.36% | -17.44% | -3.49% | — | |
| Caterpillar Inc. | 13.36% | 12.38% | 6.44% | 11.83% | — | |
| Eaton Corp. plc | 8.00% | 7.84% | 5.61% | 7.87% | — | |
| GE Aerospace | 2.73% | -2.53% | 5.22% | 2.37% | — | |
| Honeywell International Inc. | 11.54% | 12.33% | 10.85% | 15.49% | — | |
| Lockheed Martin Corp. | 21.60% | 22.51% | 25.67% | 26.53% | — | |
| RTX Corp. | 4.11% | 4.41% | -1.38% | 7.00% | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Invested capital. See details »
3 2022 Calculation
ROIC = 100 × NOPAT ÷ Invested capital
= 100 × 2,138,919 ÷ 13,518,500 = 15.82%
4 Click competitor name to see calculations.
| Performance ratio | Description | The company |
|---|---|---|
| ROIC | A measure of the periodic, after tax, cash-on-cash yield earned in the business. | Trane Technologies plc ROIC improved from 2020 to 2021 and from 2021 to 2022. |
Decomposition of ROIC
Trane Technologies plc, decomposition of ROIC
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Operating profit margin (OPM). See calculations »
2 Turnover of capital (TO). See calculations »
3 Effective cash tax rate (CTR). See calculations »
The primary reason for the increase in return on invested capital (ROIC) over 2022 year is the increase in efficiency measured by turnover of capital (TO) ratio.
Operating Profit Margin (OPM)
Trane Technologies plc, OPM calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 2,138,919) | 1,673,718) | 1,265,645) | 1,640,972) | 1,451,904) | |
| Add: Cash operating taxes2 | 356,060) | 409,078) | 328,760) | 391,918) | 475,262) | |
| Net operating profit before taxes (NOPBT) | 2,494,979) | 2,082,796) | 1,594,405) | 2,032,890) | 1,927,166) | |
| Net revenues | 15,991,700) | 14,136,400) | 12,454,700) | 16,598,900) | 15,668,200) | |
| Add: Increase (decrease) in deferred revenue | 6,000) | 7,300) | 1,600) | 11,900) | (800) | |
| Adjusted net revenues | 15,997,700) | 14,143,700) | 12,456,300) | 16,610,800) | 15,667,400) | |
| Profitability Ratio | ||||||
| OPM3 | 15.60% | 14.73% | 12.80% | 12.24% | 12.30% | |
| Benchmarks | ||||||
| OPM, Competitors4 | ||||||
| Boeing Co. | -3.49% | -3.17% | -20.02% | -1.80% | — | |
| Caterpillar Inc. | 17.38% | 18.88% | 11.93% | 16.28% | — | |
| Eaton Corp. plc | 14.81% | 15.90% | 11.40% | 13.19% | — | |
| GE Aerospace | 4.46% | -2.35% | 12.65% | 6.66% | — | |
| Honeywell International Inc. | 19.83% | 21.58% | 20.26% | 21.22% | — | |
| Lockheed Martin Corp. | 11.60% | 11.85% | 13.19% | 12.87% | — | |
| RTX Corp. | 10.88% | 9.65% | -1.08% | 12.79% | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
OPM = 100 × NOPBT ÷ Adjusted net revenues
= 100 × 2,494,979 ÷ 15,997,700 = 15.60%
4 Click competitor name to see calculations.
| Profitability ratio | Description | The company |
|---|---|---|
| OPM | The operating profit margin (OPM) is the ratio of pretax economic earnings, or NOPBT, to sales. | Trane Technologies plc OPM improved from 2020 to 2021 and from 2021 to 2022. |
Turnover of Capital (TO)
Trane Technologies plc, TO calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net revenues | 15,991,700) | 14,136,400) | 12,454,700) | 16,598,900) | 15,668,200) | |
| Add: Increase (decrease) in deferred revenue | 6,000) | 7,300) | 1,600) | 11,900) | (800) | |
| Adjusted net revenues | 15,997,700) | 14,143,700) | 12,456,300) | 16,610,800) | 15,667,400) | |
| Invested capital1 | 13,518,500) | 13,354,600) | 13,835,000) | 15,640,000) | 13,684,819) | |
| Efficiency Ratio | ||||||
| TO2 | 1.18 | 1.06 | 0.90 | 1.06 | 1.14 | |
| Benchmarks | ||||||
| TO, Competitors3 | ||||||
| Boeing Co. | 1.31 | 1.26 | 1.22 | 2.15 | — | |
| Caterpillar Inc. | 1.03 | 0.87 | 0.72 | 0.92 | — | |
| Eaton Corp. plc | 0.67 | 0.67 | 0.65 | 0.73 | — | |
| GE Aerospace | 1.10 | 0.99 | 0.63 | 0.67 | — | |
| Honeywell International Inc. | 0.76 | 0.72 | 0.67 | 0.86 | — | |
| Lockheed Martin Corp. | 2.48 | 2.34 | 2.33 | 2.33 | — | |
| RTX Corp. | 0.59 | 0.56 | 0.49 | 0.75 | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 Invested capital. See details »
2 2022 Calculation
TO = Adjusted net revenues ÷ Invested capital
= 15,997,700 ÷ 13,518,500 = 1.18
3 Click competitor name to see calculations.
| Efficiency ratio | Description | The company |
|---|---|---|
| TO | The turnover of capital (TO) is the ratio of sales to invested capital. Capital turnover is a function of the efficiency of working capital management and of net fixed assets. | Trane Technologies plc TO improved from 2020 to 2021 and from 2021 to 2022. |
Effective Cash Tax Rate (CTR)
Trane Technologies plc, CTR calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Net operating profit after taxes (NOPAT)1 | 2,138,919) | 1,673,718) | 1,265,645) | 1,640,972) | 1,451,904) | |
| Add: Cash operating taxes2 | 356,060) | 409,078) | 328,760) | 391,918) | 475,262) | |
| Net operating profit before taxes (NOPBT) | 2,494,979) | 2,082,796) | 1,594,405) | 2,032,890) | 1,927,166) | |
| Tax Rate | ||||||
| CTR3 | 14.27% | 19.64% | 20.62% | 19.28% | 24.66% | |
| Benchmarks | ||||||
| CTR, Competitors4 | ||||||
| Boeing Co. | — | — | — | — | — | |
| Caterpillar Inc. | 25.48% | 24.33% | 25.06% | 21.38% | — | |
| Eaton Corp. plc | 19.89% | 26.02% | 24.39% | 17.70% | — | |
| GE Aerospace | 44.47% | — | 34.06% | 47.14% | — | |
| Honeywell International Inc. | 23.25% | 20.13% | 20.56% | 15.05% | — | |
| Lockheed Martin Corp. | 24.95% | 18.89% | 16.51% | 11.49% | — | |
| RTX Corp. | 36.10% | 18.64% | — | 26.56% | — | |
Based on: 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), 10-K (reporting date: 2018-12-31).
1 NOPAT. See details »
2 Cash operating taxes. See details »
3 2022 Calculation
CTR = 100 × Cash operating taxes ÷ NOPBT
= 100 × 356,060 ÷ 2,494,979 = 14.27%
4 Click competitor name to see calculations.
| Tax rate | Description | The company |
|---|---|---|
| CTR | Effective cash tax rate on operating income. | Trane Technologies plc CTR decreased from 2020 to 2021 and from 2021 to 2022. |