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# CarMax ROC %

: 1.98% (As of Aug. 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 %. CarMax's annualized return on capital (ROC %) for the quarter that ended in Aug. 2021 was 1.98%.

As of today (2021-12-07), CarMax's WACC % is 7.00%. CarMax's ROC % is 1.84% (calculated using TTM income statement data). CarMax earns returns that do not match up to its cost of capital. It will destroy value as it grows.

## CarMax ROC % Historical Data

The historical data trend for CarMax'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.

CarMax Annual Data
Trend Feb12 Feb13 Feb14 Feb15 Feb16 Feb17 Feb18 Feb19 Feb20 Feb21
ROC %
2.96 2.77 2.46 2.25 1.05

 CarMax Quarterly Data Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19 Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 ROC % 3.60 2.36 -1.95 4.80 1.98

## CarMax ROC % Calculation

CarMax's annualized Return on Capital (ROC %) for the fiscal year that ended in Feb. 2021 is calculated as:

 ROC % (A: Feb. 2021 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (A: Feb. 2020 ) + Invested Capital (A: Feb. 2021 )) / count ) = 273.625 * ( 1 - 22.62% ) / ( (19953.7 + 20194.206) / 2 ) = 211.731025 / 20073.953 = 1.05 %

where

 Invested Capital (A: Feb. 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 )) = 21082.182 - 1070.271 - ( 58.211 - max(0, 1534.707 - 3663.687 + 58.211 )) = 19953.7

 Invested Capital (A: Feb. 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 )) = 21541.541 - 1215.016 - ( 132.319 - max(0, 1698.548 - 4116.796 + 132.319 )) = 20194.206

CarMax's annualized Return on Capital (ROC %) for the quarter that ended in Aug. 2021 is calculated as:

 ROC % (Q: Aug. 2021 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (Q: May. 2021 ) + Invested Capital (Q: Aug. 2021 )) / count ) = 561.236 * ( 1 - 22.44% ) / ( (20899.263 + 23003.187) / 2 ) = 435.2946416 / 21951.225 = 1.98 %

where

 Invested Capital (Q: May. 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 )) = 22832.889 - 1555.672 - ( 377.954 - max(0, 2093.387 - 4690.605 + 377.954 )) = 20899.263

 Invested Capital (Q: Aug. 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 )) = 24453.322 - 1392.04 - ( 58.095 - max(0, 1958.96 - 5371.296 + 58.095 )) = 23003.187

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

CarMax  (NYSE:KMX) 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, CarMax's WACC % is 7.00%. CarMax's ROC % is 1.84% (calculated using TTM income statement data). CarMax 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.

## CarMax ROC % Related Terms

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

Industry
Consumer Cyclical NAICS : 423110 SIC : 5521
12800 Tuckahoe Creek Parkway, Richmond, VA, USA, 23238
Website
CarMax sells, finances, and services used and new cars through a chain of 220 used retail stores at the end of fiscal 2021 plus one new vehicle store. It was formed in 1993 as a unit of Circuit City and spun off into an independent company in late 2002. Used-vehicle sales account for about 83% of revenue, wholesale about 14%, and the remaining portion is composed of extended service plans and repair. In fiscal 2021, the company retailed and wholesaled 751,862 and 426,268 used vehicles, respectively. CarMax is the largest used vehicle retailer in the U.S., but still estimates that it has only about 3.5% U.S. market share of vehicles 0 to 10 years old but seeks over 5% by the end of calendar 2025. CarMax is based in Richmond, Virginia.
Executives
 Oneil Mark F director C/O CARMAX, INC. 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Reedy Thomas W Jr officer: EVP of Finance 12800 TUCKHOE CREEK PARKWAY RICHMOND VA 23238 Margolin Eric M officer: EVP, Gen. Counsel & Secretary C/O ADVANCE AUTO PARTS 5673 AIRPORT RD ROANOKE VA 24012 Lyski James officer: EVP & Chief Marketing Officer ONE NATIONWIDE PLAZA 1-38-06 COLUMBUS OH 43215 Nash William D officer: President & CEO 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Daniels Jon G officer: SVP, CAF 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Folliard Thomas J director 4900 COX RD GELN ALLEN VA 23060 Livesay Jill A officer: VP, Controller & PAO CARMAX, INC. 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Cafritz Diane L officer: SVP & CHRO 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Hill Edwin J officer: EVP & COO 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Blaylock Ronald E director PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN"> Ownership Information: BLAYLOCK RONALD E 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;} Satriano Pietro director C/O US FOODS HOLDING CORP. 9399 W. HIGGINS RD., STE 100 ROSEMONT IL 60018 Shinder Marcella director 12800 TUCKAHOE CREEK PARKWAY RICHMOND VA 23238 Steenrod Mitchell D director 12800 TUCKAHOE CREEK PKWY RICHMOND VA 23238 Mccreight David W. director C/O URBAN OUTFITTERS, INC. 5000 SOUTH BROAD STREET PHILADELPHIA PA 19112

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