CanAm Coal (FRA:RHE) ROC % : -5.82% (As of Sep. 2014)

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What is CanAm Coal 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 %. CanAm Coal's annualized return on capital (ROC %) for the quarter that ended in Sep. 2014 was -5.82%.

As of today (2024-05-14), CanAm Coal's WACC % is 6.20%. CanAm Coal's ROC % is -6.73% (calculated using TTM income statement data). CanAm Coal earns returns that do not match up to its cost of capital. It will destroy value as it grows.

CanAm Coal ROC % Historical Data

The historical data trend for CanAm Coal'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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CanAm Coal ROC % Chart

CanAm Coal Annual Data

Trend

Jan04

Jan05

Jan06

Jan07

Jan08

Jan09

Jan10

Jan11

Dec12

Dec13

ROC %

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-22.40

-15.18

-12.45

-6.40

-3.18

CanAm Coal Quarterly Data
	Oct09	Jan10	Apr10	Jul10	Oct10	Jan11	Apr11	Jul11	Oct11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14
ROC %	Get a 7-Day Free Trial															-0.25	-4.61	-2.44	-3.54	-5.82

CanAm Coal ROC % Calculation

CanAm Coal's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2013 is calculated as:

	ROC % (A: Dec. 2013 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2012 )	+	Invested Capital (A: Dec. 2013 ))	/ count )
=	-1.945 * ( 1 - 20.04% )	/	( (46.37	+	51.421)	/ 2 )
=	-1.555222	/	48.8955
=	-3.18 %

where

	Invested Capital		(A: Dec. 2012 )
=	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	))
=	50.907	-	8.263	-	( 1.857	-	max(0, 13.509	-	9.783	+	1.857	))
=	46.37

	Invested Capital		(A: Dec. 2013 )
=	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	))
=	44.619	-	8.847	-	( 0.302	-	max(0, 24.009	-	8.36	+	0.302	))
=	51.421

CanAm Coal's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2014 is calculated as:

	ROC % (Q: Sep. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2014 )	+	Invested Capital (Q: Sep. 2014 ))	/ count )
=	-2.68 * ( 1 - 11.15% )	/	( (40.742	+	41.12)	/ 2 )
=	-2.38118	/	40.931
=	-5.82 %

where

	Invested Capital		(Q: Jun. 2014 )
=	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	))
=	41.531	-	6.163	-	( 0.256	-	max(0, 12.89	-	7.516	+	0.256	))
=	40.742

	Invested Capital		(Q: Sep. 2014 )
=	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	))
=	44.203	-	8.119	-	( 0.28	-	max(0, 14.205	-	9.169	+	0.28	))
=	41.12

Note: The Operating Income data used here is four times the quarterly (Sep. 2014) data.

CanAm Coal (FRA:RHE) 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, CanAm Coal's WACC % is 6.20%. CanAm Coal's ROC % is -6.73% (calculated using TTM income statement data). CanAm Coal 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.

CanAm Coal ROC % Related Terms

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CanAm Coal (FRA:RHE) Business Description

Industry

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Address

1201-5th Street S W, Suite 202, Calgary, AB, CAN, T2R 0Y6

Website

http://www.canamcoal.com

CanAm Coal Corp acquires, explores and develops coal resources and resource related technologies. It owns and operates coal mines in Alabama. It also evaluates on an ongoing basis other coal and related opportunities.