Redx Pharma (LSE:REDX) ROC % : -111.87% (As of Sep. 2023)

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What is Redx Pharma 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 %. Redx Pharma's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was -111.87%.

As of today (2024-06-14), Redx Pharma's WACC % is 10.13%. Redx Pharma's ROC % is -123.66% (calculated using TTM income statement data). Redx Pharma earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Redx Pharma ROC % Historical Data

The historical data trend for Redx Pharma'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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Redx Pharma ROC % Chart

Redx Pharma Annual Data

Trend

Sep14

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

Sep23

ROC %

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-113.47

-91.18

-167.86

-97.37

-126.80

Redx Pharma Semi-Annual Data
	Mar14	Sep14	Mar15	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23
ROC %	Get a 7-Day Free Trial															-149.88	-125.82	-82.95	-131.67	-111.87

Redx Pharma ROC % Calculation

Redx Pharma's annualized Return on Capital (ROC %) for the fiscal year that ended in Sep. 2023 is calculated as:

	ROC % (A: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Sep. 2022 )	+	Invested Capital (A: Sep. 2023 ))	/ count )
=	-30.98 * ( 1 - -1.12% )	/	( (27.244	+	22.167)	/ 2 )
=	-31.326976	/	24.7055
=	-126.80 %

where

	Invested Capital		(A: Sep. 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	))
=	62.477	-	3.06	-	( 53.854	-	max(0, 27.205	-	59.378	+	53.854	))
=	27.244

	Invested Capital		(A: Sep. 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	))
=	25.636	-	1.174	-	( 18.092	-	max(0, 21.007	-	23.302	+	18.092	))
=	22.167

Redx Pharma's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2023 is calculated as:

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	-26.724 * ( 1 - -2.05% )	/	( (26.59	+	22.167)	/ 2 )
=	-27.271842	/	24.3785
=	-111.87 %

where

	Invested Capital		(Q: 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	))
=	42.848	-	2.48	-	( 34.61	-	max(0, 26.303	-	40.081	+	34.61	))
=	26.59

	Invested Capital		(Q: Sep. 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	))
=	25.636	-	1.174	-	( 18.092	-	max(0, 21.007	-	23.302	+	18.092	))
=	22.167

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

Redx Pharma (LSE:REDX) 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, Redx Pharma's WACC % is 10.13%. Redx Pharma's ROC % is -123.66% (calculated using TTM income statement data). Redx Pharma 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.

Redx Pharma ROC % Related Terms

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Redx Pharma (LSE:REDX) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Biotechnology » Redx Pharma PLC (LSE:REDX) » Definitions » ROC %

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Address

Block 33, Mereside, Alderley Park, Macclesfield, GBR, SK10 4TG

Website

https://www.redxpharma.com

Redx Pharma PLC is a United Kingdom-based biotechnology company focused on the development of novel precision medicines that have the potential to transform treatment in oncology and fibrotic diseases. Its product pipeline under development includes Porcupine Inhibitor, ROCK2 Selective Inhibitor, GI-targeted ROCK inhibitor, Pan-RAF Inhibitor, and others. The firm operates geographically in UK and Ireland. Revenue is generated from; Scientific programmes and research collaboration, Research collaboration and Research and preclinical development services. Redx is a clinical-stage biotechnology company focused on the discovery & development of novel, small-molecule, targeted medicines for the treatment of cancer and fibrotic disease and the emerging area of cancer-associated fibrosis.

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