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Amgen (NAS:AMGN) ROC %

: 8.02% (As of Dec. 2023)
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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 %. Amgen's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 8.02%.

As of today (2024-02-24), Amgen's WACC % is 6.97%. Amgen's ROC % is 13.52% (calculated using TTM income statement data). Amgen 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.


Amgen ROC % Historical Data

The historical data trend for Amgen'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.

* Premium members only.

Amgen Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 20.62 18.30 18.49 19.15 11.62

Amgen Quarterly Data
Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22 Sep22 Dec22 Mar23 Jun23 Sep23 Dec23
ROC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 19.00 14.02 20.41 16.22 8.02

Amgen ROC % Calculation

Amgen's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

ROC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=7897 * ( 1 - 14.49% )/( (45625 + 70642)/ 2 )
=6752.7247/58133.5
=11.62 %

where

Amgen's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

ROC % (Q: Dec. 2023 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Sep. 2023 ) + Invested Capital (Q: Dec. 2023 ))/ count )
=5084 * ( 1 - 9.98% )/( (43485 + 70642)/ 2 )
=4576.6168/57063.5
=8.02 %

where

Note: The Operating Income data used here is four times the quarterly (Dec. 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.


Amgen  (NAS:AMGN) 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, Amgen's WACC % is 6.97%. Amgen's ROC % is 13.52% (calculated using TTM income statement data). Amgen 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.


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.


Amgen ROC % Related Terms

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Amgen (NAS:AMGN) Business Description

Address
One Amgen Center Drive, Thousand Oaks, CA, USA, 91320-1799
Amgen is a leader in biotechnology-based human therapeutics. Flagship drugs include red blood cell boosters Epogen and Aranesp, immune system boosters Neupogen and Neulasta, and Enbrel and Otezla for inflammatory diseases. Amgen introduced its first cancer therapeutic, Vectibix, in 2006 and markets bone-strengthening drug Prolia/Xgeva (approved 2010) and Evenity (2019). The acquisition of Onyx bolstered the firm's therapeutic oncology portfolio with Kyprolis. Recent launches include Repatha (cholesterol-lowering), Aimovig (migraine), Lumakras (lung cancer), and Tezspire (asthma). The 2023 Horizon acquisition brings several rare disease drugs, including thyroid eye disease drug Tepezza. Amgen also has a growing biosimilar portfolio.
Executives
Nancy A. Grygiel officer: SVP & CCO ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
Jonathan P Graham officer: SVP, Gen. Counsel & Secy. 2099 PENNSYLVANIA AVENUE, NW, 12TH FLOOR, WASHINGTON DC 20006
Matthew C. Busch officer: VP, Finance & CAO ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
Murdo Gordon officer: EVP Global Commercial Ops C/O BRISTOL-MYERS SQUIBB COMPANY, 345 PARK AVE, NEW YORK NY 10154
Rachna Khosla officer: SVP, Business Development ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
R Sanders Williams director DUKE UNIVERSITY SCHOOL OF MEDICINE, TRENT DRIVE, DURHAM NC 27706
Robert Eckert director MATTEL, INC., 333 CONTINENTAL BLVD, M1-1518, EL SEGUNDO CA 90245
Michael V Drake director ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
Derek Miller officer: SVP, Human Resources ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
Omar Ishrak director 710 MEDTRONIC PKWY, MS LC300, MINNEAPOLIS MN 55432
Ronald D Sugar director 10877 WILSHIRE BLVD., SUITE 1650, LOS ANGELES CA 900274
Linda H. Louie officer: VP, Finance & CAO ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320
Amy E Miles director
David Piacquad officer: SVP, Business Development ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320-1799
Peter H. Griffith officer: EVP & CFO ONE AMGEN CENTER DRIVE, THOUSAND OAKS CA 91320