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# Computer Programs and Systems ROC %

: 3.74% (As of Sep. 2021)
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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 %. Computer Programs and Systems's annualized return on capital (ROC %) for the quarter that ended in Sep. 2021 was 3.74%.

As of today (2022-01-21), Computer Programs and Systems's WACC % is 5.78%. Computer Programs and Systems's ROC % is 5.51% (calculated using TTM income statement data). Computer Programs and Systems earns returns that do not match up to its cost of capital. It will destroy value as it grows.

## Computer Programs and Systems ROC % Historical Data

The historical data trend for Computer Programs and Systems'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.

Computer Programs and Systems Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
ROC %
3.89 9.78 8.15 6.94 5.31

 Computer Programs and Systems Quarterly Data Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 ROC % 6.97 4.60 5.51 8.38 3.74

## Computer Programs and Systems ROC % Calculation

Computer Programs and Systems's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2020 is calculated as:

 ROC % (A: Dec. 2020 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (A: Dec. 2019 ) + Invested Capital (A: Dec. 2020 )) / count ) = 21.054 * ( 1 - 24.16% ) / ( (310.286 + 291.04) / 2 ) = 15.9673536 / 300.663 = 5.31 %

where

 Invested Capital (A: Dec. 2019 ) = 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 )) = 339.589 - 21.946 - ( 7.357 - max(0, 41.93 - 66.832 + 7.357 )) = 310.286

 Invested Capital (A: Dec. 2020 ) = 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 )) = 326.272 - 22.561 - ( 12.671 - max(0, 37.442 - 67.144 + 12.671 )) = 291.04

Computer Programs and Systems's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2021 is calculated as:

 ROC % (Q: Sep. 2021 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (Q: Jun. 2021 ) + Invested Capital (Q: Sep. 2021 )) / count ) = 18.124 * ( 1 - 28.34% ) / ( (344.649 + 349.278) / 2 ) = 12.9876584 / 346.9635 = 3.74 %

where

 Invested Capital (Q: Jun. 2021 ) = 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 )) = 393.159 - 29.379 - ( 19.131 - max(0, 50.242 - 72.326 + 19.131 )) = 344.649

 Invested Capital (Q: Sep. 2021 ) = 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 )) = 387.382 - 20.99 - ( 17.114 - max(0, 41.614 - 70.977 + 17.114 )) = 349.278

Note: The Operating Income data used here is four times the quarterly (Sep. 2021) 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.

Computer Programs and Systems  (NAS:CPSI) 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, Computer Programs and Systems's WACC % is 5.78%. Computer Programs and Systems's ROC % is 5.51% (calculated using TTM income statement data). Computer Programs and Systems 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 %, 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.

## Computer Programs and Systems ROC % Related Terms

Thank you for viewing the detailed overview of Computer Programs and Systems's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.

## Computer Programs and Systems Business Description

Industry
Healthcare NAICS : 541511 SIC : 7371
6600 Wall Street, Mobile, AL, USA, 36695
Website
Computer Programs and Systems Inc is a provider of healthcare solutions and services for community hospitals and post-acute care facilities. The company's segment includes Acute Care EHR, Post-acute Care EHR, and TruBridge. Acute Care EHR segment consists of acute care software solutions and support sales generated by Evident and Health and. Post-acute Care EHR segment consists of post-acute care software solutions and support sales generated by AHT, and TruBridge segment primarily consists of business management, consulting and managed IT services sales generated by TruBridge and the sale of Rycan's revenue cycle management workflow and automation software. It generates a majority of its revenue from the Acute Care EHR segment.
Executives
 Strong Jeffrey A. director 157 COLUMBUS AVE SUITE 403 NEW YORK CITY NY 10023 Douglas John B Jr director, officer: President and CEO 333 DALEWOOD DR. MOBILE AL 36608 Schneider Victor S officer: Executive Vice President 5 DEMOUY AVE. MOBILE AL 36606 Fowler Christopher L officer: COO and President (TruBridge) 6600 WALL STREET MOBILE AL 36695 Britain James B officer: VP - Finance and Controller 6600 WALL STREET MOBILE AL 36695 Hinckle Robert D officer: Senior VP - Client Services COMPUTER PROGRAMS AND SYSTEMS, INC. 6600 WALL STREET MOBILE AL 36695 Rosser Troy D officer: Senior Vice President - Sales COMPUTER PROGRAMS & SYSTEMS, INC. 6600 WALL STREET MOBILE AL 36695 Chambless Matt J officer: CFO, Secretary & Treasurer 6600 WALL STREET MOBILE AL 36695 Mulherin William A Iii director 228 S. MCGREGOR AVE MOBILE AL 36608 Tobin Glenn director CERNER CORP 2800 ROCKCREEK PARKWAY KANSAS CITY MO 64117 Warren Denise Wilder director 6600 WALL STREET MOBILE AL 36695 Benjamin Regina M. director 51 SAWYER ROAD, SUITE 200 WALTHAM MA 02453 Huffman Charles P director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: HUFFMAN CHARLES P a.header:link {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:visited {color: #3b4fae; font-weight: bold; text-decoration: underline;} a.header:hover {color: #191970;} Hjelm Christopher T director C/O THE KROGER CO. 1014 VINE ST. CINCINNATI OH 45202 Outlaw Arthur Robert Jr director 6600 WALL STREET MOBILE AL 36695

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