AirTrona International (AirTrona International) ROC % : -1,031.11% (As of Aug. 2011)

AirTrona International ROC % Chart

AirTrona International Quarterly Data
	Nov06	Feb07	May07	Aug07	Nov07	Feb08	May08	Aug08	Nov08	Feb09	May09	Aug09	Nov09	Feb10	May10	Aug10	Nov10	May11	Aug11
ROC %	Get a 7-Day Free Trial														-90.91	-135.59	-62.22	-	-1,031.11

AirTrona International ROC % Calculation

AirTrona International's annualized Return on Capital (ROC %) for the fiscal year that ended in Nov. 2010 is calculated as:

where

AirTrona International's annualized Return on Capital (ROC %) for the quarter that ended in Aug. 2011 is calculated as:

where

Note: The Operating Income data used here is four times the quarterly (Aug. 2011) 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.

AirTrona International  (OTCPK:ARTR) 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, AirTrona International's WACC % is 0.00%. AirTrona International's ROC % is 0.00% (calculated using TTM income statement data). AirTrona International 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.

AirTrona International ROC % Related Terms

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AirTrona International (AirTrona International) Business Description