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Safety Insurance Group ROC %

: -0.42% (As of Mar. 2020)
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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 %. Safety Insurance Group's annualized return on capital (ROC %) for the quarter that ended in Mar. 2020 was -0.42%.

As of today (2020-05-31), Safety Insurance Group's WACC % is 2.66%. Safety Insurance Group's ROC % is 3.64% (calculated using TTM income statement data). Safety Insurance Group 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.


Safety Insurance Group ROC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Safety Insurance Group Annual Data
Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
ROC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -0.86 3.90 3.65 4.77 5.40

Safety Insurance Group Quarterly Data
Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20
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 6.75 5.64 3.33 5.93 -0.42

Safety Insurance Group ROC % Calculation

Safety Insurance Group's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2019 is calculated as:

ROC % (A: Dec. 2019 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2018 ) + Invested Capital (A: Dec. 2019 ))/ count )
=123.771 * ( 1 - 19.47% )/( (1764.7751 + 1927.7488)/ 2 )
=99.6727863/1846.26195
=5.40 %

where

Invested Capital(A: Dec. 2018 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=1856.24 - 95.362 - ( 37.582 - 5% * 829.582 )
=1764.7751

Invested Capital(A: Dec. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=2022.669 - 94.304 - ( 44.407 - 5% * 875.816 )
=1927.7488

Safety Insurance Group's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2020 is calculated as:

ROC % (Q: Mar. 2020 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2019 ) + Invested Capital (Q: Mar. 2020 ))/ count )
=-11.136 * ( 1 - 29.71% )/( (1895.12765 + 1835.01975)/ 2 )
=-7.8274944/1865.0737
=-0.42 %

where

Invested Capital(Q: Dec. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=2022.669 - 94.304 - ( 44.407 - 5% * 223.393 )
=1895.12765

Invested Capital(Q: Mar. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=1930.719 - 63.243 - ( 41.567 - 5% * 182.215 )
=1835.01975

Note: The EBIT data used here is four times the quarterly (Mar. 2020) data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Safety Insurance Group  (NAS:SAFT) 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, Safety Insurance Group's WACC % is 2.66%. Safety Insurance Group's ROC % is 3.64% (calculated using TTM income statement data). Safety Insurance Group 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.


Safety Insurance Group ROC % Related Terms


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