Heron Lake BioEnergy LLC (Heron Lake BioEnergy LLC) ROC % : 36.72% (As of Jul. 2021)

Heron Lake BioEnergy LLC ROC % Chart

Heron Lake BioEnergy LLC Annual Data
	Trend	Oct11	Oct12	Oct13	Oct14	Oct15	Oct16	Oct17	Oct18	Oct19	Oct20
ROC %		Get a 7-Day Free Trial					9.26	13.18	1.73	-11.21	-26.18

Heron Lake BioEnergy LLC Quarterly Data
	Oct16	Jan17	Apr17	Jul17	Oct17	Jan18	Apr18	Jul18	Oct18	Jan19	Apr19	Jul19	Oct19	Jan20	Apr20	Jul20	Oct20	Jan21	Apr21	Jul21
ROC %	Get a 7-Day Free Trial															-29.54	-11.73	-24.19	15.06	36.72

Heron Lake BioEnergy LLC ROC % Calculation

Heron Lake BioEnergy LLC's annualized Return on Capital (ROC %) for the fiscal year that ended in Oct. 2020 is calculated as:

where

Heron Lake BioEnergy LLC's annualized Return on Capital (ROC %) for the quarter that ended in Jul. 2021 is calculated as:

where

Note: The Operating Income data used here is four times the quarterly (Jul. 2021) 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.

Heron Lake BioEnergy LLC  (GREY:HLBYL) 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, Heron Lake BioEnergy LLC's WACC % is 1.62%. Heron Lake BioEnergy LLC's ROC % is 1.69% (calculated using TTM income statement data). Heron Lake BioEnergy LLC generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

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Heron Lake BioEnergy LLC (Heron Lake BioEnergy LLC) Business Description