Sonic Healthcare (Sonic Healthcare) ROIC % : 4.27% (As of Dec. 2023)

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What is Sonic Healthcare ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Sonic Healthcare's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 4.27%.

As of today (2024-04-26), Sonic Healthcare's WACC % is 8.65%. Sonic Healthcare's ROIC % is 4.96% (calculated using TTM income statement data). Sonic Healthcare earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sonic Healthcare ROIC % Historical Data

The historical data trend for Sonic Healthcare'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.

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Sonic Healthcare ROIC % Chart

Sonic Healthcare Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

ROIC %

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6.23

5.84

13.88

13.61

6.39

Sonic Healthcare Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial															15.64	12.05	7.28	5.70	4.27

Competitive Comparison of Sonic Healthcare's ROIC %

For the Diagnostics & Research subindustry, Sonic Healthcare'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.

Sonic Healthcare's ROIC % Distribution in the Medical Diagnostics & Research Industry

For the Medical Diagnostics & Research industry and Healthcare sector, Sonic Healthcare's ROIC % distribution charts can be found below:

* The bar in red indicates where Sonic Healthcare's ROIC % falls into.

Sonic Healthcare ROIC % Calculation

Sonic Healthcare's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROIC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	667.291 * ( 1 - 23.98% )	/	( (7949.279	+	7919.335)	/ 2 )
=	507.2746182	/	7934.307
=	6.39 %

where

	Invested Capital		(A: Jun. 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	))
=	8820.81	-	715.778	-	( 548.136	-	max(0, 1464.704	-	1620.457	+	548.136	))
=	7949.279

	Invested Capital		(A: Jun. 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	))
=	8734.65	-	644.29	-	( 535.566	-	max(0, 1260.633	-	1431.658	+	535.566	))
=	7919.335

Sonic Healthcare's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	489.234 * ( 1 - 27.3% )	/	( (7919.335	+	8733.29)	/ 2 )
=	355.673118	/	8326.3125
=	4.27 %

where

	Invested Capital		(Q: Jun. 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	))
=	8734.65	-	644.29	-	( 535.566	-	max(0, 1260.633	-	1431.658	+	535.566	))
=	7919.335

	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	))
=	9215.753	-	573.942	-	( 414.734	-	max(0, 1455.267	-	1363.788	+	414.734	))
=	8733.29

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Sonic Healthcare (OTCPK:SKHHY) 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, Sonic Healthcare's WACC % is 8.65%. Sonic Healthcare's ROIC % is 4.96% (calculated using TTM income statement data).

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.

Sonic Healthcare ROIC % Related Terms

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Sonic Healthcare (Sonic Healthcare) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Diagnostics & Research » Sonic Healthcare Ltd (OTCPK:SKHHY) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

SKHCF:USA SAB:Germany SHL:Australia

Address

225 George Street, Level 22, Grosvenor Place, Sydney, NSW, AUS, 2000

Website

https://www.sonichealthcare.com

Sonic Healthcare is a global pathology provider. It is the largest private operator in Australia, Germany, Switzerland and the U.K., the second largest in Belgium and New Zealand and the third largest in the U.S. In addition to pathology, which contributes roughly 85% of group revenue, Sonic is the second largest player in diagnostic imaging in Australia and the largest operator of medical centers in Australia. The company typically earns about 40% of group revenue in Australia and New Zealand, 25% in the U.S. and 35% in Europe.