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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Maxim Integrated Products's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2021 was 56.51%.
As of today (2024-04-26), Maxim Integrated Products's WACC % is 7.21%. Maxim Integrated Products's ROIC % is 47.71% (calculated using TTM income statement data). Maxim Integrated Products 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 Maxim Integrated Products's ROIC % 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.
Maxim Integrated Products Annual Data | |||||||||||||||||||||
Trend | Jun12 | Jun13 | Jun14 | Jun15 | Jun16 | Jun17 | Jun18 | Jun19 | Jun20 | Jun21 | |||||||||||
ROIC % | Get a 7-Day Free Trial | 36.69 | 29.15 | 49.78 | 40.55 | 47.77 |
Maxim Integrated Products Quarterly Data | ||||||||||||||||||||
Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | Sep20 | Dec20 | Mar21 | Jun21 | |
ROIC % | Get a 7-Day Free Trial | 52.87 | 42.41 | 42.75 | 48.55 | 56.51 |
For the Semiconductors subindustry, Maxim Integrated Products's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
For the Semiconductors industry and Technology sector, Maxim Integrated Products's ROIC % distribution charts can be found below:
* The bar in red indicates where Maxim Integrated Products's ROIC % falls into.
Maxim Integrated Products's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jun. 2021 is calculated as:
ROIC % (A: Jun. 2021 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Jun. 2020 ) | + | Invested Capital (A: Jun. 2021 )) | / count ) |
= | 959.134 * ( 1 - 11.02% ) | / | ( (1714.756 | + | 1857.981) | / 2 ) |
= | 853.4374332 | / | 1786.3685 | |||
= | 47.77 % |
where
Invested Capital | (A: Jun. 2020 ) | |||||||||||
= | 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 | )) |
= | 3629.303 | - | 300.341 | - | ( 1614.206 | - | max(0, 453.334 | - | 2317.829 | + | 1614.206 | )) |
= | 1714.756 |
Invested Capital | (A: Jun. 2021 ) | |||||||||||
= | 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 | )) |
= | 4523.099 | - | 373.719 | - | ( 2291.399 | - | max(0, 637.312 | - | 3218.285 | + | 2291.399 | )) |
= | 1857.981 |
Maxim Integrated Products's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2021 is calculated as:
ROIC % (Q: Jun. 2021 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Mar. 2021 ) | + | Invested Capital (Q: Jun. 2021 )) | / count ) |
= | 1137.904 * ( 1 - 8.6% ) | / | ( (1822.775 | + | 1857.981) | / 2 ) |
= | 1040.044256 | / | 1840.378 | |||
= | 56.51 % |
where
Invested Capital | (Q: Mar. 2021 ) | |||||||||||
= | 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 | )) |
= | 4172.227 | - | 315.479 | - | ( 2033.973 | - | max(0, 534.503 | - | 2874.798 | + | 2033.973 | )) |
= | 1822.775 |
Invested Capital | (Q: Jun. 2021 ) | |||||||||||
= | 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 | )) |
= | 4523.099 | - | 373.719 | - | ( 2291.399 | - | max(0, 637.312 | - | 3218.285 | + | 2291.399 | )) |
= | 1857.981 |
Note: The Operating Income data used here is four times the quarterly (Jun. 2021) 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.
Maxim Integrated Products (NAS:MXIM) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Maxim Integrated Products's WACC % is 7.21%. Maxim Integrated Products's ROIC % is 47.71% (calculated using TTM income statement data). Maxim Integrated Products 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. Maxim Integrated Products 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 %, ROIC % 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 Maxim Integrated Products's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Jon Imperato | officer: SVP of Sales and Marketing | 160 RIO ROBLES SAN JOSE CA 95134 |
Tunc Doluca | director, officer: PRESIDENT, CEO & DIRECTOR | |
James R Bergman | director | 28202 CABOT RD. STE 200 LAGUNA NIGEL CA 92677 |
Bryan Preeshl | officer: SENIOR VICE PRESIDENT | 160 RIO ROBLES SAN JOSE CA 95134 |
Mary Ann Wright | director | 486 S. PIERCE AVE., SUITE E, LOUISVILLE CO 80027 |
Robert Edward Grady | director | 555 CALIFORNIA STREET, SUITE 3450, SAN FRANCISCO CA 94104 |
Edwin Medlin | officer: SVP, Chief Legal, Admin, Compl | MAXIM INTEGRATED PRODUCTS INC 120 SAN GABRIEL DRIVE SUNNYVALE CA 94086 |
Brian C White | officer: SENIOR VP and CFO | C/O INTEGRATED DEVICE TECHNOLOGY, INC., 6024 SILVER CREEK VALLEY ROAD, SAN JOSE CA 95138 |
Vivek Jain | officer: SENIOR VP | 120 SAN GABRIEL DRIVE, SUNNYVALE CA 94086 |
Joseph R Bronson | director | 7005 SOUTHFRONT ROAD, LIVERMORE CA 94551 |
David Loftus | officer: Vice President | C/O INTERSIL CORPORATION 1001 MURPHY RANCH ROAD MILPITAS CA 95035 |
Mercedes Johnson | director | MICRON TECHNOLOGY, INC, 8000 S FEDERAL WAY, MS 1-557, BOISE ID 83716 |
William P Sullivan | director | 5301 STEVENS CREEK BLVD, MS 1A-LC, SANTA CLARA CA 95051 |
William D Watkins | director | P O BOX 8, SAINT PETERS MO 63376 |
Tracy Accardi | director | 160 RIO ROBLES SAN JOSE CA 95134 |
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