ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. LPI Capital Bhd's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2024 was 9.37%.
As of today (2024-05-13), LPI Capital Bhd's WACC % is 6.44%. LPI Capital Bhd's ROIC % is 8.08% (calculated using TTM income statement data).
LPI Capital Bhd 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.
LPI Capital Bhd ROIC % Historical Data
The historical data trend for LPI Capital Bhd'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.
Competitive Comparison of LPI Capital Bhd's ROIC %
For the Insurance - Property & Casualty subindustry, LPI Capital Bhd'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.
LPI Capital Bhd's ROIC % Distribution in the Insurance Industry
For the Insurance industry and Financial Services sector, LPI Capital Bhd's ROIC % distribution charts can be found below:
* The bar in red indicates where LPI Capital Bhd's ROIC % falls into.
LPI Capital Bhd ROIC % Calculation
LPI Capital Bhd's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:
Note:
The EBIT data used here is four times the quarterly (Mar. 2024) 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.
LPI Capital Bhd (XKLS:8621) 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, LPI Capital Bhd's WACC % is 6.44%. LPI Capital Bhd's ROIC % is 8.08% (calculated using TTM income statement data).
LPI Capital Bhd 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.
LPI Capital Bhd 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.
LPI Capital Bhd ROIC % Related Terms
Thank you for viewing the detailed overview of LPI Capital Bhd's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
LPI Capital Bhd is a diversified insurance company that provides comprehensive insurance solutions to customers ranging from individual policies to the underwriting of large-scale industrial projects. The company's insurance solutions offering includes; Employee Benefits, Health, Liability, Motor, Marine, Pecuniary, Personal Accident, Project, Property, and Trade Credit. It has two operating business segments: The general insurance segment includes Underwriting of all classes of general insurance business, and The investment holding segment includes Investment holding operations. The company derives a majority of its revenue from the General insurance segment.
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