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Lords Group Trading (LSE:LORD) ROIC % : 7.66% (As of Jun. 2023)


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What is Lords Group Trading ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Lords Group Trading's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2023 was 7.66%.

As of today (2024-05-11), Lords Group Trading's WACC % is 7.08%. Lords Group Trading's ROIC % is 8.85% (calculated using TTM income statement data). Lords Group Trading 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.


Lords Group Trading ROIC % Historical Data

The historical data trend for Lords Group Trading's ROIC % 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.

* Premium members only.

Lords Group Trading ROIC % Chart

Lords Group Trading Annual Data
Trend Dec18 Dec19 Dec20 Dec21 Dec22
ROIC %
5.38 -0.44 6.41 10.17 11.07

Lords Group Trading Semi-Annual Data
Dec18 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23
ROIC % Get a 7-Day Free Trial Premium Member Only 12.66 7.87 10.79 10.25 7.66

Competitive Comparison of Lords Group Trading's ROIC %

For the Industrial Distribution subindustry, Lords Group Trading's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Lords Group Trading's ROIC % Distribution in the Industrial Distribution Industry

For the Industrial Distribution industry and Industrials sector, Lords Group Trading's ROIC % distribution charts can be found below:

* The bar in red indicates where Lords Group Trading's ROIC % falls into.



Lords Group Trading ROIC % Calculation

Lords Group Trading's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

ROIC % (A: Dec. 2022 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2021 ) + Invested Capital (A: Dec. 2022 ))/ count )
=17.257 * ( 1 - 25.45% )/( (92.416 + 139.986)/ 2 )
=12.8650935/116.201
=11.07 %

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))
=239.881 - 83.857 - ( 16.038 - max(0, 112.562 - 141.571+16.038))
=139.986

Lords Group Trading's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2023 is calculated as:

ROIC % (Q: Jun. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2022 ) + Invested Capital (Q: Jun. 2023 ))/ count )
=16.556 * ( 1 - 30.4% )/( (139.986 + 161.012)/ 2 )
=11.522976/150.499
=7.66 %

where

Invested Capital(Q: 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))
=239.881 - 83.857 - ( 16.038 - max(0, 112.562 - 141.571+16.038))
=139.986

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


Lords Group Trading  (LSE:LORD) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Lords Group Trading's WACC % is 7.08%. Lords Group Trading's ROIC % is 8.85% (calculated using TTM income statement data). Lords Group Trading 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. Lords Group Trading 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 %, ROIC % 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.


Lords Group Trading ROIC % Related Terms

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Lords Group Trading (LSE:LORD) Business Description

Traded in Other Exchanges
Address
12-15 Hanger Green, 2nd Floor, London, GBR, W5 3EL
Lords Group Trading PLC is a distributor of building, plumbing, heating, and DIY goods. The group principally sells to local tradesmen, small to medium-sized plumbing and heating merchants, construction companies and retails directly to the public. Its operating two divisions include Merchanting: supplies building materials and DIY goods through its network of merchant businesses and online platform capabilities; Heating and Plumbing: a distributor in the UK of heating and plumbing products to a UK network of independent merchants, installers and the general public. It focused on the growing Repairs, Maintenance, and Improvement (RMI) market, and construction market. Its main clients are local tradesmen, hardware stores, plumbing and heating merchants and construction companies.

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