WH Smith (LSE:SMWH) ROC % : 5.89% (As of Feb. 2024)

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What is WH Smith ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. WH Smith's annualized return on capital (ROC %) for the quarter that ended in Feb. 2024 was 5.89%.

As of today (2024-04-28), WH Smith's WACC % is 9.66%. WH Smith's ROC % is 8.30% (calculated using TTM income statement data). WH Smith earns returns that do not match up to its cost of capital. It will destroy value as it grows.

WH Smith ROC % Historical Data

The historical data trend for WH Smith'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.

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WH Smith ROC % Chart

WH Smith Annual Data

Trend

Aug14

Aug15

Aug16

Aug17

Aug18

Aug19

Aug20

Aug21

Aug22

Aug23

ROC %

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27.49

-4.81

-1.80

6.65

8.53

WH Smith Semi-Annual Data
	Aug14	Feb15	Aug15	Feb16	Aug16	Feb17	Aug17	Feb18	Aug18	Feb19	Aug19	Feb20	Aug20	Feb21	Aug21	Feb22	Aug22	Feb23	Aug23	Feb24
ROC %	Get a 7-Day Free Trial															4.88	9.22	6.81	10.62	5.89

WH Smith ROC % Calculation

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

	ROC % (A: Aug. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Aug. 2022 )	+	Invested Capital (A: Aug. 2023 ))	/ count )
=	165 * ( 1 - 20% )	/	( (1534	+	1560)	/ 2 )
=	132	/	1547
=	8.53 %

where

	Invested Capital		(A: Aug. 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	))
=	1692	-	257	-	( 132	-	max(0, 517	-	418	+	132	))
=	1534

	Invested Capital		(A: Aug. 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	))
=	1650	-	256	-	( 56	-	max(0, 543	-	377	+	56	))
=	1560

WH Smith's annualized Return on Capital (ROC %) for the quarter that ended in Feb. 2024 is calculated as:

	ROC % (Q: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Aug. 2023 )	+	Invested Capital (Q: Feb. 2024 ))	/ count )
=	132 * ( 1 - 28.57% )	/	( (1560	+	1639)	/ 2 )
=	94.2876	/	1599.5
=	5.89 %

where

	Invested Capital		(Q: Aug. 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	))
=	1650	-	256	-	( 56	-	max(0, 543	-	377	+	56	))
=	1560

	Invested Capital		(Q: Feb. 2024 )
=	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	))
=	1701	-	268	-	( 44	-	max(0, 571	-	365	+	44	))
=	1639

Note: The Operating Income data used here is two times the semi-annual (Feb. 2024) data.

WH Smith (LSE:SMWH) 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, WH Smith's WACC % is 9.66%. WH Smith's ROC % is 8.30% (calculated using TTM income statement data). WH Smith 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.

WH Smith ROC % Related Terms

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WH Smith (LSE:SMWH) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » WH Smith PLC (LSE:SMWH) » Definitions » ROC %

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Address

Greenbridge Road, Swindon, Wiltshire, GBR, SN3 3RX

Website

https://www.whsmithplc.co.uk

WH Smith PLC is a U.K. retailer selling a wide range of products. Its two core business segments are travel and high street. WHSmith's travel stores offer products such as food, drink, publications, books, and tech accessories and other products to travelers. This segment operates predominantly in airports, railway stations, hospitals, and workplaces across Europe, Australia, the Middle East, Southeast Asia, and India. The high street segment operates stores in the United Kingdom, predominantly on the U.K. high street. The high street segment sells products into the following categories: stationery, books, newspapers, magazines, and confectionery. WH Smith also has an online retail business that sells a range of books, stationery, magazines, and gifts through its websites.

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