Made Tech Group (LSE:MTEC) ROIC % : 2.57% (As of Nov. 2023)

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What is Made Tech Group 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 %. Made Tech Group's annualized return on invested capital (ROIC %) for the quarter that ended in Nov. 2023 was 2.57%.

As of today (2024-05-25), Made Tech Group's WACC % is 10.19%. Made Tech Group's ROIC % is 8.57% (calculated using TTM income statement data). Made Tech Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Made Tech Group ROIC % Historical Data

The historical data trend for Made Tech Group'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.

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Made Tech Group ROIC % Chart

Made Tech Group Annual Data

Trend

May19

May20

May21

May22

May23

ROIC %

49.98

37.05

-69.56

-1.38

-17.57

Made Tech Group Semi-Annual Data
	May19	May20	Nov20	May21	Nov21	May22	Nov22	May23	Nov23
ROIC %	Get a 7-Day Free Trial				36.08	-23.36	-28.96	-17.87	2.57

Competitive Comparison of Made Tech Group's ROIC %

For the Information Technology Services subindustry, Made Tech Group'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.

Made Tech Group's ROIC % Distribution in the Software Industry

For the Software industry and Technology sector, Made Tech Group's ROIC % distribution charts can be found below:

* The bar in red indicates where Made Tech Group's ROIC % falls into.

Made Tech Group ROIC % Calculation

Made Tech Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in May. 2023 is calculated as:

	ROIC % (A: May. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: May. 2022 )	+	Invested Capital (A: May. 2023 ))	/ count )
=	-1.023 * ( 1 - -4.72% )	/	( (4.218	+	7.974)	/ 2 )
=	-1.0712856	/	6.096
=	-17.57 %

where

	Invested Capital		(A: May. 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	))
=	21.181	-	4.799	-	( 12.333	-	max(0, 6.234	-	18.398	+	12.333	))
=	4.218

	Invested Capital		(A: May. 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	))
=	20.179	-	3.731	-	( 8.474	-	max(0, 4.876	-	14.667	+	8.474	))
=	7.974

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

	ROIC % (Q: Nov. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: May. 2023 )	+	Invested Capital (Q: Nov. 2023 ))	/ count )
=	0.192 * ( 1 - 0% )	/	( (7.974	+	6.978)	/ 2 )
=	0.192	/	7.476
=	2.57 %

where

	Invested Capital		(Q: May. 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	))
=	20.179	-	3.731	-	( 8.474	-	max(0, 4.876	-	14.667	+	8.474	))
=	7.974

	Invested Capital		(Q: Nov. 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	))
=	19.982	-	5.126	-	( 7.878	-	max(0, 5.173	-	15.166	+	7.878	))
=	6.978

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

Made Tech Group (LSE:MTEC) 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, Made Tech Group's WACC % is 10.19%. Made Tech Group's ROIC % is 8.57% (calculated using TTM income statement data).

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.

Made Tech Group ROIC % Related Terms

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Made Tech Group (LSE:MTEC) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Software » Made Tech Group PLC (LSE:MTEC) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

5UH:Germany

Address

4 O’Meara Street, London, GBR, SE1 1TE

Website

https://www.madetech.com

Made Tech Group PLC provides digital, data and technology services to the UK public sector, that enables central government, healthcare, and local government organisations to digitally transform. Its projects include delivering and operating the Multichannel Digital Tax Platform (MDTP), which runs HMRC's Making Tax Digital services; supporting the Ministry of Justice to modernise the technology within the prison estate; and working with DVLA to digitally transform key services such as the UK provisional driving licence system.

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