VNET Group (VNET Group) ROC % : -4.85% (As of Dec. 2023)

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What is VNET 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 %. VNET Group's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was -4.85%.

As of today (2024-04-30), VNET Group's WACC % is 1.89%. VNET Group's ROC % is -0.36% (calculated using TTM income statement data). VNET Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

VNET Group ROC % Historical Data

The historical data trend for VNET 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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VNET Group ROC % Chart

VNET Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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2.48

1.44

0.59

0.64

-0.40

VNET Group Quarterly Data
	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %	Get a 7-Day Free Trial															-0.30	1.25	1.36	0.52	-4.85

VNET Group ROC % Calculation

VNET Group'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 )
=	-14.009 * ( 1 - -4.6% )	/	( (3358.664	+	3992.596)	/ 2 )
=	-14.653414	/	3675.63
=	-0.40 %

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	))
=	3865.399	-	403.433	-	( 381.732	-	max(0, 908.256	-	1011.558	+	381.732	))
=	3358.664

	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	))
=	4255.61	-	489.009	-	( 364.185	-	max(0, 1601.794	-	1375.799	+	364.185	))
=	3992.596

VNET Group'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: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	-190.868 * ( 1 - -2.13% )	/	( (4038.856	+	3992.596)	/ 2 )
=	-194.9334884	/	4015.726
=	-4.85 %

where

	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	))
=	4099.935	-	512.174	-	( 370.315	-	max(0, 1537.146	-	1086.051	+	370.315	))
=	4038.856

	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	))
=	4255.61	-	489.009	-	( 364.185	-	max(0, 1601.794	-	1375.799	+	364.185	))
=	3992.596

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

VNET Group (NAS:VNET) 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, VNET Group's WACC % is 1.89%. VNET Group's ROC % is -0.36% (calculated using TTM income statement data). VNET Group 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.

VNET Group ROC % Related Terms

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VNET Group (VNET Group) Business Description

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217A:Germany

Address

No. 10 Jiuxianqiao East Road, Guanjie Building Southeast 1st Floor, Chaoyang District, Beijing, CHN, 100016

Website

https://www.vnet.com

VNET started as AsiaCloud in 1999 and moved to the data center business with its first self-developed data center opening in 2010. The firm listed (as 21Vianet) on the Nasdaq in April 2011, subsequently changing its name to VNET Group in 2021. It originally focused on providing data center services such as colocation and cloud services to retail clients in China, but added hyperscale customers in 2019 and now counts large Chinese hyperscalers such as Alibaba Cloud, Tencent Cloud, and Huawei Cloud as customers. At end-September 2023 it had 84,608 self-built cabinets with the majority in Beijing, Shanghai, and the Greater Bay area. It also operated partnered data centers with around 4,314 cabinets and had 476 MW of wholesale capacity contracted or under a memorandum of understanding.