ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Columbia Sportswear Co's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 22.13%.
As of today (2024-04-25), Columbia Sportswear Co's WACC % is 9.24%. Columbia Sportswear Co's ROIC % is 13.08% (calculated using TTM income statement data).
Columbia Sportswear Co 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.
* 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.
Competitive Comparison of Columbia Sportswear Co's ROIC %
For the Apparel Manufacturing subindustry, Columbia Sportswear Co'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.
Columbia Sportswear Co's ROIC % Distribution in the Manufacturing - Apparel & Accessories Industry
For the Manufacturing - Apparel & Accessories industry and Consumer Cyclical sector, Columbia Sportswear Co's ROIC % distribution charts can be found below:
* The bar in red indicates where Columbia Sportswear Co's ROIC % falls into.
Columbia Sportswear Co ROIC % Calculation
Columbia Sportswear Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
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.
Columbia Sportswear Co (NAS:COLM) 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, Columbia Sportswear Co's WACC % is 9.24%. Columbia Sportswear Co's ROIC % is 13.08% (calculated using TTM income statement data).
Columbia Sportswear Co 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.
Columbia Sportswear Co 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.
Columbia Sportswear Co ROIC % Related Terms
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Columbia Sportswear Co (Columbia Sportswear Co) Business Description
Columbia Sportswear Co makes outdoor and active-lifestyle apparel, footwear, equipment, and accessories that it sells under four primary brands: Columbia, Sorel, Mountain Hardwear, and prAna. The majority of sales are in the United States, but the company also has remarkable sales in its three other geographic segments: Latin American and Asia-Pacific; Europe, Middle East, and Africa; and Canada. The majority of sales are through wholesale channels, including sporting goods and department stores, but the company also operates its own branded stores in each of its geographic segments. Columbia sources products from around the world and uses contract manufacturers outside the United States, predominantly in Asia, to manufacture its products.
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