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Vodafone Group ROC %

: 3.82% (As of Sep. 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 %. Vodafone Group's annualized return on capital (ROC %) for the quarter that ended in Sep. 2020 was 3.82%.

As of today (2021-01-20), Vodafone Group's WACC % is 4.16%. Vodafone Group's ROC % is 5.51% (calculated using TTM income statement data). Vodafone 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.


Vodafone 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.

Vodafone Group Annual Data
Mar11 Mar12 Mar13 Mar14 Mar15 Mar16 Mar17 Mar18 Mar19 Mar20
ROC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 30.68 -1.90 4.56 4.74 -3.68

Vodafone Group Semi-Annual Data
Mar11 Sep11 Mar12 Sep12 Mar13 Sep13 Mar14 Sep14 Mar15 Sep15 Mar16 Sep16 Mar17 Sep17 Mar18 Sep18 Mar19 Sep19 Mar20 Sep20
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 5.30 2.10 19.31 7.99 3.82

Vodafone Group ROC % Calculation

Vodafone Group's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2020 is calculated as:

ROC % (A: Mar. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Mar. 2019 ) + Invested Capital (A: Mar. 2020 ))/ count )
=9888.3977900552 * ( 1 - 157.23% )/( (134472.31638418 + 173438.67403315)/ 2 )
=-5659.1300552486/153955.49520866
=-3.68 %

where

Invested Capital(A: Mar. 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))
=161425.98870056 - 11063.276836158 - ( 28550.282485876 - max(0, 28839.548022599 - 44729.943502825+28550.282485876))
=134472.31638418

Invested Capital(A: Mar. 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))
=185820.99447514 - 11560.220994475 - ( 20898.342541436 - max(0, 37024.309392265 - 37846.408839779+20898.342541436))
=173438.67403315

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

ROC % (Q: Sep. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Mar. 2020 ) + Invested Capital (Q: Sep. 2020 ))/ count )
=8457.0082449941 * ( 1 - 23.96% )/( (173438.67403315 + 163404.00471143)/ 2 )
=6430.7090694935/168421.33937229
=3.82 %

where

Invested Capital(Q: Mar. 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))
=185820.99447514 - 11560.220994475 - ( 20898.342541436 - max(0, 37024.309392265 - 37846.408839779+20898.342541436))
=173438.67403315

Invested Capital(Q: Sep. 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))
=184760.89517079 - 17618.374558304 - ( 18600.706713781 - max(0, 30969.37573616 - 34707.89163722+18600.706713781))
=163404.00471143

Note: The Operating Income data used here is two times the semi-annual (Sep. 2020) data.

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


Vodafone Group  (NAS:VOD) 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, Vodafone Group's WACC % is 4.16%. Vodafone Group's ROC % is 5.51% (calculated using TTM income statement data). Vodafone 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.


Vodafone Group ROC % Related Terms


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