Bytes Technology Group (LSE:BYIT) ROC % : 28.97% (As of Feb. 2024)

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What is Bytes Technology Group 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 %. Bytes Technology Group's annualized return on capital (ROC %) for the quarter that ended in Feb. 2024 was 28.97%.

As of today (2024-05-25), Bytes Technology Group's WACC % is 6.81%. Bytes Technology Group's ROC % is 29.97% (calculated using TTM income statement data). Bytes Technology Group 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.

Bytes Technology Group ROC % Historical Data

The historical data trend for Bytes Technology Group'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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Bytes Technology Group ROC % Chart

Bytes Technology Group Annual Data

Trend

Feb18

Feb19

Feb20

Feb21

Feb22

Feb23

Feb24

ROC %

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27.54

19.64

25.59

27.76

27.44

Bytes Technology Group Semi-Annual Data
	Feb18	Feb19	Aug19	Feb20	Aug20	Feb21	Aug21	Feb22	Aug22	Feb23	Aug23	Feb24
ROC %	Get a 7-Day Free Trial							25.10	32.29	28.07	33.99	28.97

Bytes Technology Group ROC % Calculation

Bytes Technology Group's annualized Return on Capital (ROC %) for the fiscal year that ended in Feb. 2024 is calculated as:

	ROC % (A: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Feb. 2023 )	+	Invested Capital (A: Feb. 2024 ))	/ count )
=	58.076 * ( 1 - 23.94% )	/	( (154.021	+	167.906)	/ 2 )
=	44.1726056	/	160.9635
=	27.44 %

where

	Invested Capital		(A: Feb. 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	))
=	320.767	-	152.807	-	( 73.019	-	max(0, 255.742	-	269.681	+	73.019	))
=	154.021

	Invested Capital		(A: Feb. 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	))
=	379.718	-	187.276	-	( 88.836	-	max(0, 297.931	-	322.467	+	88.836	))
=	167.906

Bytes Technology Group's annualized Return on Capital (ROC %) for the quarter that ended in Feb. 2024 is calculated as:

	ROC % (Q: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Aug. 2023 )	+	Invested Capital (Q: Feb. 2024 ))	/ count )
=	54.934 * ( 1 - 24.03% )	/	( (120.234	+	167.906)	/ 2 )
=	41.7333598	/	144.07
=	28.97 %

where

	Invested Capital		(Q: Aug. 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	))
=	303.331	-	177.846	-	( 51.663	-	max(0, 240.603	-	245.854	+	51.663	))
=	120.234

	Invested Capital		(Q: Feb. 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	))
=	379.718	-	187.276	-	( 88.836	-	max(0, 297.931	-	322.467	+	88.836	))
=	167.906

Note: The Operating Income data used here is two times the semi-annual (Feb. 2024) data.

Bytes Technology Group (LSE:BYIT) 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, Bytes Technology Group's WACC % is 6.81%. Bytes Technology Group's ROC % is 29.97% (calculated using TTM income statement data). Bytes Technology Group 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.

Bytes Technology Group ROC % Related Terms

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Bytes Technology Group (LSE:BYIT) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Bytes Technology Group PLC (LSE:BYIT) » Definitions » ROC %

Comparable Companies

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BYI:South Africa BYITl:UK 9NY:Germany

Address

Randalls Way, Bytes House, Leatherhead, Surrey, GBR, KT22 7TW

Website

https://www.bytesplc.com

Bytes Technology Group PLC provides IT solutions and services, offering software, hardware and cloud services. It enables effective and cost-efficient technology sourcing, adoption and management across software, security and cloud services. The company's brands include Bytes Software Services (BSS) and Phoenix Software. It generates a majority of its revenue from Software.

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