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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Exelixis's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 14.76%.
As of today (2024-04-19), Exelixis's WACC % is 7.18%. Exelixis's ROC % is 7.80% (calculated using TTM income statement data). Exelixis generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
The historical data trend for Exelixis's ROC % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Exelixis's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:
ROC % (A: Dec. 2023 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2022 ) | + | Invested Capital (A: Dec. 2023 )) | / count ) |
= | 170.885 * ( 1 - 19.32% ) | / | ( (1659.159 | + | 1885.76) | / 2 ) |
= | 137.870018 | / | 1772.4595 | |||
= | 7.78 % |
where
Invested Capital | (A: Dec. 2022 ) | |||||||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | |||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Cash, Cash Equivalents, Marketable Securities | - | max(0, Total Current Liabilities | - | Total Current Assets | + | Cash, Cash Equivalents, Marketable Securities | )) |
= | 3071.489 | - | 117.927 | - | ( 1308.468 | - | max(0, 324.359 | - | 1618.762 | + | 1308.468 | )) |
= | 1659.159 |
Invested Capital | (A: Dec. 2023 ) | |||||||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | |||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Cash, Cash Equivalents, Marketable Securities | - | max(0, Total Current Liabilities | - | Total Current Assets | + | Cash, Cash Equivalents, Marketable Securities | )) |
= | 2942.357 | - | 132.916 | - | ( 995.302 | - | max(0, 394.277 | - | 1317.958 | + | 995.302 | )) |
= | 1885.76 |
Exelixis's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:
ROC % (Q: Dec. 2023 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Sep. 2023 ) | + | Invested Capital (Q: Dec. 2023 )) | / count ) |
= | 327.152 * ( 1 - 17% ) | / | ( (1793.796 | + | 1885.76) | / 2 ) |
= | 271.53616 | / | 1839.778 | |||
= | 14.76 % |
where
Invested Capital | (Q: Sep. 2023 ) | |||||||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | |||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Cash, Cash Equivalents, Marketable Securities | - | max(0, Total Current Liabilities | - | Total Current Assets | + | Cash, Cash Equivalents, Marketable Securities | )) |
= | 2976.91 | - | 116.561 | - | ( 1103.387 | - | max(0, 376.816 | - | 1443.369 | + | 1103.387 | )) |
= | 1793.796 |
Invested Capital | (Q: Dec. 2023 ) | |||||||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | Excess Cash | |||||||
= | Total Assets | - | Accounts Payable & Accrued Expense | - | ( Cash, Cash Equivalents, Marketable Securities | - | max(0, Total Current Liabilities | - | Total Current Assets | + | Cash, Cash Equivalents, Marketable Securities | )) |
= | 2942.357 | - | 132.916 | - | ( 995.302 | - | max(0, 394.277 | - | 1317.958 | + | 995.302 | )) |
= | 1885.76 |
Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Exelixis (NAS:EXEL) ROC % Explanation
ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Exelixis's WACC % is 7.18%. Exelixis's ROC % is 7.80% (calculated using TTM income statement data). Exelixis generates higher returns on investment than it costs the company to raise the capital needed for that investment. It is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases.
Be Aware
Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Thank you for viewing the detailed overview of Exelixis's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Patrick J. Haley | officer: Sr. Vice President, Commercial | 210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
Jeffrey Hessekiel | officer: EVP and General Counsel | 210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
David Edward Johnson | director | 590 MADISON AVENUE, NEW YORK NY 10022 |
Dana Aftab | officer: CSO/EVP Disc & Trans Research | EXELIXIS, INC., 1851 HARBOR BAY PARKWAY, ALAMEDA CA 94502 |
Amy C. Peterson | officer: EVP Prod Dev & Med Aff & CMO | C/O MOURANT OZANNES CORPORATE SERVICES, 94 SOLARIS AVENUE, CAMANA BAY, GRAND CAYMAN E9 KY1-1108 |
Christopher J. Senner | officer: EVP and CFO | 210 EAST GRAND AVE., SOUTH SAN FRANCISCO CA 94080 |
Tomas J. Heyman | director | C/O AKERO THERAPEUTICS, INC., 170 HARBOR WAY 3RD FLOOR, SOUTH SAN FRANCISCO CA 94080 |
Bob Oliver | director | C/O IMMUNOMEDICS, INC., 300 THE AMERICAN ROAD, MORRIS PLAINS NJ 07950 |
Caligan Partners Lp | director, other: See Remarks | 515 MADISON AVENUE, 8TH FLOOR, NEW YORK NY 10022 |
Jack L Wyszomierski | director | SCHERING PLOUGH CORP, ONE GIRALDA FARMS, MADISON NJ 07940-1000 |
Alan M Garber | director | 3355 MILTON COURT, MOUNTAIN VIEW CA 94040 |
Carl B Feldbaum | director | C/O EXELIXIS INC, 170 HARBOR WAY, PO BOX 511, SOUTH SAN FRISCISCO CA 94083-0511 |
Peter Lamb | officer: EVP, Discovery Research & CSO | PO BOX 511, 170 HARBOR WAY, SOUTH SAN FRANCISCO CA 94083-0511 |
George Poste | director | 515 GALVESTON DR, REDWOOD CITY CA 94063 |
Lance Willsey | director | C/O EXELIXIS INC, 170 HARBOR WAY, SAN FRANCISCO CA 94083 |
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