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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. WellCare Health Plans's annualized return on capital (ROC %) for the quarter that ended in Sep. 2019 was 15.89%.
As of today (2024-05-05), WellCare Health Plans's WACC % is 0.00%. WellCare Health Plans's ROC % is 0.00% (calculated using TTM income statement data). WellCare Health Plans earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for WellCare Health Plans'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.
WellCare Health Plans Annual Data | |||||||||||||||||||||
Trend | Dec09 | Dec10 | Dec11 | Dec12 | Dec13 | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | |||||||||||
ROC % | Get a 7-Day Free Trial | 7.91 | 11.28 | 23.61 | 23.86 | 13.22 |
WellCare Health Plans Quarterly Data | ||||||||||||||||||||
Dec14 | Mar15 | Jun15 | Sep15 | Dec15 | Mar16 | Jun16 | Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | Sep19 | |
ROC % | Get a 7-Day Free Trial | 13.70 | 6.40 | 13.48 | 14.36 | 15.89 |
WellCare Health Plans's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2018 is calculated as:
ROC % (A: Dec. 2018 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2017 ) | + | Invested Capital (A: Dec. 2018 )) | / count ) |
= | 785.8 * ( 1 - 36.52% ) | / | ( (2611.3 | + | 4933.7) | / 2 ) |
= | 498.82584 | / | 3772.5 | |||
= | 13.22 % |
where
Invested Capital | (A: Dec. 2017 ) | |||||||||||
= | 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 | )) |
= | 8364.6 | - | 4377.3 | - | ( 4668.1 | - | max(0, 4443.2 | - | 5819.2 | + | 4668.1 | )) |
= | 2611.3 |
Invested Capital | (A: Dec. 2018 ) | |||||||||||
= | 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 | )) |
= | 11764.7 | - | 5014.2 | - | ( 4484 | - | max(0, 5015.6 | - | 6832.4 | + | 4484 | )) |
= | 4933.7 |
WellCare Health Plans's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2019 is calculated as:
ROC % (Q: Sep. 2019 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Jun. 2019 ) | + | Invested Capital (Q: Sep. 2019 )) | / count ) |
= | 1290.8 * ( 1 - 23.18% ) | / | ( (5971.5 | + | 6509.9) | / 2 ) |
= | 991.59256 | / | 6240.7 | |||
= | 15.89 % |
where
Invested Capital | (Q: Jun. 2019 ) | |||||||||||
= | 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 | )) |
= | 13205.5 | - | 5897.6 | - | ( 3919.5 | - | max(0, 5930.3 | - | 7266.7 | + | 3919.5 | )) |
= | 5971.5 |
Invested Capital | (Q: Sep. 2019 ) | |||||||||||
= | 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 | )) |
= | 13861.7 | - | 6355.3 | - | ( 3649.1 | - | max(0, 6404 | - | 7400.5 | + | 3649.1 | )) |
= | 6509.9 |
Note: The Operating Income data used here is four times the quarterly (Sep. 2019) 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.
WellCare Health Plans (NYSE:WCG) 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, WellCare Health Plans's WACC % is 0.00%. WellCare Health Plans's ROC % is 0.00% (calculated using TTM income statement data). WellCare Health Plans 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.
Thank you for viewing the detailed overview of WellCare Health Plans's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
William L Trubeck | director | ONE H&R BLOCK WAY, KANSAS CITY MO 64105 |
H James Dallas | director | 127 PUBLIC SQUARE, CLEVELAND OH 44114 |
Kenneth A Burdick | director, officer: Chief Executive Officer | 6705 ROCKLEDGE DR, SUITE 900, BETHESDA MD 20817 |
Anat Hakim | officer: EVP, General Counsel/Secretary | LILLY CORPORATE CENTER, INDIANAPOLIS IN 46285 |
Paul E Weaver | director | C/O GATEWAY, INC., 7565 IRVINE CENTER DRIVE, IRVINE CA 92618 |
Steele Glenn Jr Md Phd | director | 250 TECHNOLOGY PARK, LAKE MARY FL 32746-6232 |
Carol Burt | director | C/O WELLCARE HEALTH PLANS, INC., 8725 HENDERSON ROAD, TAMPA FL 33634 |
Roel C Campos | director | 509 WEST BUTLER ROAD, GREENVILLE SC 29607 |
Maurice Hebert | officer: Chief Accounting Officer | C/O WELLCARE HEALTH PLANS, INC., 8735 HENDERSON ROAD, TAMPA FL 33634 |
David J Gallitano | director | 3552 CHURCH ROAD, ELLICOTT CITY MD 21043 |
Thomas L Tran | officer: Chief Financial Officer | 8735 HENDERSON ROAD, TAMPA FL 33625 |
Lisa G Iglesias | officer: SVP, General Counsel | 1 FOUNTAIN SQUARE, LAW DEPT. 7S730, CHATTANOOGA TN 37402 |
Lucinda M. Baily | officer: Chief Compliance Officer | 10910 DOMAIN DRIVE, SUITE 300, AUSTIN TX 78758 |
Walter W. Cooper | officer: Chief Administrative Officer | 8725 HENDERSON ROAD, REN. 1, TAMPA FL 33634 |
Charles Berg | other: Former Director | 48 MONROE TURNPIKE, TRUMBULL CT 06611 |
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