Smartspace Software (LSE:SMRT) ROIC % : -8.77% (As of Jul. 2023)

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What is Smartspace Software 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 %. Smartspace Software's annualized return on invested capital (ROIC %) for the quarter that ended in Jul. 2023 was -8.77%.

As of today (2024-05-15), Smartspace Software's WACC % is 9.93%. Smartspace Software's ROIC % is -9.85% (calculated using TTM income statement data). Smartspace Software earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Smartspace Software ROIC % Historical Data

The historical data trend for Smartspace Software'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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Smartspace Software ROIC % Chart

Smartspace Software Annual Data

Trend

Jan14

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

ROIC %

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-4.18

-8.88

-12.20

-14.04

-11.81

Smartspace Software Semi-Annual Data
	Jan14	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23
ROIC %	Get a 7-Day Free Trial															-20.97	-9.02	-12.99	-10.63	-8.77

Competitive Comparison of Smartspace Software's ROIC %

For the Software - Application subindustry, Smartspace Software'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.

Smartspace Software's ROIC % Distribution in the Software Industry

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

* The bar in red indicates where Smartspace Software's ROIC % falls into.

Smartspace Software ROIC % Calculation

Smartspace Software's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2023 is calculated as:

	ROIC % (A: Jan. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2022 )	+	Invested Capital (A: Jan. 2023 ))	/ count )
=	-1.781 * ( 1 - -11.53% )	/	( (16.892	+	16.759)	/ 2 )
=	-1.9863493	/	16.8255
=	-11.81 %

where

	Invested Capital		(A: Jan. 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	))
=	17.527	-	0.767	-	( 2.758	-	max(0, 3.73	-	3.598	+	2.758	))
=	16.892

	Invested Capital		(A: Jan. 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	))
=	16.586	-	0.329	-	( 1.962	-	max(0, 4.712	-	4.21	+	1.962	))
=	16.759

Smartspace Software's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jul. 2023 is calculated as:

	ROIC % (Q: Jul. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jan. 2023 )	+	Invested Capital (Q: Jul. 2023 ))	/ count )
=	-1.152 * ( 1 - -19.69% )	/	( (16.759	+	14.675)	/ 2 )
=	-1.3788288	/	15.717
=	-8.77 %

where

	Invested Capital		(Q: Jan. 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	))
=	16.586	-	0.329	-	( 1.962	-	max(0, 4.712	-	4.21	+	1.962	))
=	16.759

	Invested Capital		(Q: Jul. 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	))
=	14.583	-	1.121	-	( 2.213	-	max(0, 3.907	-	2.694	+	2.213	))
=	14.675

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

Smartspace Software (LSE:SMRT) 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, Smartspace Software's WACC % is 9.93%. Smartspace Software's ROIC % is -9.85% (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.

Smartspace Software ROIC % Related Terms

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Smartspace Software (LSE:SMRT) Business Description

Industry

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Address

4 Fordham House Court, Fordham House Estate, Fordham, Cambridgeshire, GBR, CB7 5LL

Website

https://www.smartspaceplc.com

Smartspace Software PLC is engaged in the development and sale of software products. It is also engaged in the sale and installation of audio-visual hardware products. It operates through the following segments SwipedOn, and Space Connect. The firm generates the majority of revenue from the SwipedOn segment which is engaged in the sale and support of self-service visitor management software to customers throughout the world.