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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 %. Mohawk Industries's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 5.43%.
As of today (2024-03-19), Mohawk Industries's WACC % is 8.74%. Mohawk Industries's ROC % is 6.18% (calculated using TTM income statement data). Mohawk Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Mohawk Industries'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.
Mohawk Industries'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 ) |
= | 589.936 * ( 1 - -23.94% ) | / | ( (12308.807 | + | 11819.446) | / 2 ) |
= | 731.1666784 | / | 12064.1265 | |||
= | 6.06 % |
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 | )) |
= | 14120.432 | - | 1144.002 | - | ( 667.623 | - | max(0, 3070.285 | - | 5895.099 | + | 667.623 | )) |
= | 12308.807 |
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 | )) |
= | 13559.869 | - | 1097.873 | - | ( 642.55 | - | max(0, 3145.914 | - | 5604.217 | + | 642.55 | )) |
= | 11819.446 |
Mohawk Industries'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 ) |
= | 674.936 * ( 1 - 9.25% ) | / | ( (10744.082 | + | 11819.446) | / 2 ) |
= | 612.50442 | / | 11281.764 | |||
= | 5.43 % |
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 | )) |
= | 13138.495 | - | 1875.961 | - | ( 518.452 | - | max(0, 3188.574 | - | 5504.325 | + | 518.452 | )) |
= | 10744.082 |
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 | )) |
= | 13559.869 | - | 1097.873 | - | ( 642.55 | - | max(0, 3145.914 | - | 5604.217 | + | 642.55 | )) |
= | 11819.446 |
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.
Mohawk Industries (NYSE:MHK) 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, Mohawk Industries's WACC % is 8.74%. Mohawk Industries's ROC % is 6.18% (calculated using TTM income statement data). Mohawk Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.
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 Mohawk Industries's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Suzanne L Helen | other: Possible Group Member | C/O MOHAWK INDUSTRIES INC, 2001 ANTIOCH ROAD, DALTON GA 30721 |
Rodney David Patton | officer: General Counsel - VP | 5855 RIVERMOND DRIVE, ATLANTA GA 30328 |
Jeffrey S Lorberbaum | director, officer: President and CEO | MOHAWK INDUSTRIES INC, P O BOX 12069, CALHOUN GA 30703 |
Bernard Thiers | director | NESTOR DE TIERESTRAAT 128, EINE C9 9700 |
Harkins William Wayne Ii | officer: CAO and Corporate Controller | 160 SOUTH INDUSTRIAL BLVD, CALHOUN GA 30701 |
Clifford Charles Suing | officer: CAO and Corporate Controller | 160 SOUTH INDUSTRIAL BLVD, CALHOUN GA 30701 |
Chistopher Wellborn | director, officer: President-Dal-Tile | MOHAWK INDUSTRIES INC, P O BOX 12069, CALHOUN GA 30703 |
Jerry W Burris | director | 5500 WAYZATA BLVD., SUITE 600, GOLDEN VALLEY MN 55416 |
James Brunk | director, officer: Corporate Controller and CAO | 251 MISTY HILL TRAIL, DALLAS GA 30132 |
Steven Hyosig Lee | officer: CAO and Corporate Controller | 160 SOUTH INDUSTRIAL BLVD, CALHOUN GA 30701 |
Frank H Boykin | director, officer: Vice President-Finance & CFO | 2042 OLD FORGE WAY, MARIETTA GA 30068 |
De Cock Paul F | officer: President-Flooring NA | ALPHONSE RENARDSTRAAT 41, ELSENE C9 1050 |
Filip Balcaen | director | PAULINE VAN POTTELSBERGHELAAN 10, 9051 SINT-DENIJS-WESTREM, GENT C9 9051 |
John Engquist | director | H&E EQUIPMENT SERVICES, 11100 MEAD ROAD, SUITE 200, BATON ROUGE LA 70816 |
Bruce Bruckmann | director | C/O MOHAWK INDUSTRIES INC, P O BOX 12069, CALHOUN GA 30703 |
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