Dharani Finance (BOM:511451) ROC % : -10.43% (As of Mar. 2024)

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What is Dharani Finance ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Dharani Finance's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -10.43%.

As of today (2024-06-02), Dharani Finance's WACC % is 6.23%. Dharani Finance's ROC % is -1.40% (calculated using TTM income statement data). Dharani Finance earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Dharani Finance ROC % Historical Data

The historical data trend for Dharani Finance'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.

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Dharani Finance ROC % Chart

Dharani Finance Annual Data

Trend

Mar15

Mar16

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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-4.93

-0.16

-0.52

0.56

-1.38

Dharani Finance Quarterly Data
	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial															-0.07	-1.92	1.58	5.79	-10.43

Dharani Finance ROC % Calculation

Dharani Finance's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	-1.219 * ( 1 - 0% )	/	( (85.857	+	90.341)	/ 2 )
=	-1.219	/	88.099
=	-1.38 %

where

	Invested Capital		(A: Mar. 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	))
=	95.971	-	9.75	-	( 0.364	-	max(0, 10.309	-	89.856	+	0.364	))
=	85.857

	Invested Capital		(A: Mar. 2024 )
=	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	))
=	91.863	-	1.364	-	( 0.158	-	max(0, 1.364	-	73.995	+	0.158	))
=	90.341

Dharani Finance's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-9.42 * ( 1 - 0% )	/	( (0	+	90.341)	/ 1 )
=	-9.42	/	90.341
=	-10.43 %

where

	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	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	91.863	-	1.364	-	( 0.158	-	max(0, 1.364	-	73.995	+	0.158	))
=	90.341

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

Dharani Finance (BOM:511451) 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, Dharani Finance's WACC % is 6.23%. Dharani Finance's ROC % is -1.40% (calculated using TTM income statement data). Dharani Finance 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.

Dharani Finance ROC % Related Terms

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Dharani Finance (BOM:511451) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Credit Services » Dharani Finance Ltd (BOM:511451) » Definitions » ROC %

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Address

New No.59 (Old No. 57) Sterling Road, PGP House, Nungambakkam, Chennai, TN, IND, 600034

Website

https://www.dharanifinance.com

Dharani Finance Ltd operates as a non-banking finance company in India. The main activities of the company are to carry on the business of hire purchase, leasing of machinery and other equipment, financing industrial enterprises, undertaking the business of financial operations of all kinds, dealing in foreign exchange, providing financial services like investment planning, tax planning, consultancy and much more. In addition, it also acts as a tour agent, carries on the import and export of merchandise, functions as a forwarding agent, freight contractor, warehousing, and many more. The company's operating segments include Financial Services and Travel Services. The majority of its revenue is generated from the Financial Services segment.

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