Virtual Mind Holding Co (HKSE:01520) ROC % : -61.93% (As of Dec. 2023)

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What is Virtual Mind Holding Co 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 %. Virtual Mind Holding Co's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was -61.93%.

As of today (2024-06-05), Virtual Mind Holding Co's WACC % is 8.87%. Virtual Mind Holding Co's ROC % is -35.15% (calculated using TTM income statement data). Virtual Mind Holding Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Virtual Mind Holding Co ROC % Historical Data

The historical data trend for Virtual Mind Holding Co'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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Virtual Mind Holding Co ROC % Chart

Virtual Mind Holding Co Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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-23.35

-26.46

-24.98

-43.60

-35.74

Virtual Mind Holding Co Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial															-21.94	-44.33	-58.47	-12.24	-61.93

Virtual Mind Holding Co ROC % Calculation

Virtual Mind Holding Co's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	-74.764 * ( 1 - 0.66% )	/	( (246.198	+	169.402)	/ 2 )
=	-74.2705576	/	207.8
=	-35.74 %

where

	Invested Capital		(A: Dec. 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	))
=	288.373	-	30.967	-	( 11.208	-	max(0, 53.857	-	238.051	+	11.208	))
=	246.198

	Invested Capital		(A: 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	))
=	214.185	-	20.221	-	( 24.562	-	max(0, 39.048	-	162.923	+	24.562	))
=	169.402

Virtual Mind Holding Co's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	-121.096 * ( 1 - 0.85% )	/	( (218.329	+	169.402)	/ 2 )
=	-120.066684	/	193.8655
=	-61.93 %

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	))
=	259.679	-	9.263	-	( 32.087	-	max(0, 33.281	-	210.184	+	32.087	))
=	218.329

	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	))
=	214.185	-	20.221	-	( 24.562	-	max(0, 39.048	-	162.923	+	24.562	))
=	169.402

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

Virtual Mind Holding Co (HKSE:01520) 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, Virtual Mind Holding Co's WACC % is 8.87%. Virtual Mind Holding Co's ROC % is -35.15% (calculated using TTM income statement data). Virtual Mind Holding 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 %, 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.

Virtual Mind Holding Co ROC % Related Terms

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Virtual Mind Holding Co (HKSE:01520) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Manufacturing - Apparel & Accessories » Virtual Mind Holding Co Ltd (HKSE:01520) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

538 Castle Peak Road, Room 2511-15, 25 Floor, Peninsula Tower, Cheung Sha Wan, Kowloon, Hong Kong, HKG

Website

https://www.vmh.com.hk

Virtual Mind Holding Co Ltd is engaged in designing, manufacturing, and trading apparel; provision of money lending business, namely money lending operation; selling of gaming and animated characters related products, namely IP application and products operation. It offers women's fashion outerwear such as coats and jackets, dresses, activewear, and pants. Majority of the revenue is generated from the Design, manufacture, and trading of the apparel segment. Geographically, it derives the majority of revenue from The PRC and also has a presence in Hong Kong and The USA.

Executives

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Li Shao Yu
Blb International Company Limited	2101 Beneficial owner

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