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Great-West Lifeco ROC %

: 0.71% (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 %. Great-West Lifeco's annualized return on capital (ROC %) for the quarter that ended in Sep. 2021 was 0.71%.

As of today (2021-12-03), Great-West Lifeco's WACC % is 5.83%. Great-West Lifeco's ROC % is 0.71% (calculated using TTM income statement data). Great-West Lifeco earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Great-West Lifeco ROC % Historical Data

The historical data trend for Great-West Lifeco'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.

* Premium members only.

Great-West Lifeco Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
ROC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.82 0.64 0.76 0.64 0.67

Great-West Lifeco Quarterly Data
Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21
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 0.85 0.80 0.58 0.74 0.71

Great-West Lifeco ROC % Calculation

Great-West Lifeco'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
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2019 ) + Invested Capital (A: Dec. 2020 ))/ count )
=2623.9362947927 * ( 1 - -2.67% )/( (337887.00736578 + 462591.10781482)/ 2 )
=2693.9953938637/400239.0575903
=0.67 %

where

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 )
=342597.76748424 - 2895.4362518035 - ( 3514.3139190523 - 5% * 33979.801047916 )
=337887.00736578

Invested Capital(A: Dec. 2020 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=468803.18526036 - 2374.1119525334 - ( 6203.4506987275 - 5% * 47309.704114295 )
=462591.10781482

Great-West Lifeco'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
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2021 ) + Invested Capital (Q: Sep. 2021 ))/ count )
=3826.0595059585 * ( 1 - 9.83% )/( (487272.54500818 + 477897.87704206)/ 2 )
=3449.9578565228/482585.21102512
=0.71 %

where

Invested Capital(Q: Jun. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=494415.71194763 - 2389.5253682488 - ( 5489.3617021277 - 5% * 14714.402618658 )
=487272.54500818

Invested Capital(Q: Sep. 2021 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=485330.28174572 - 2682.5033541157 - ( 5437.6134480309 - 5% * 13754.241969852 )
=477897.87704206

Note: The EBIT 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.


Great-West Lifeco  (OTCPK:GWLIF) 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, Great-West Lifeco's WACC % is 5.83%. Great-West Lifeco's ROC % is 0.71% (calculated using TTM income statement data). Great-West Lifeco 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.


Great-West Lifeco ROC % Related Terms

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Great-West Lifeco Business Description

Great-West Lifeco logo
Industry
Financial Services » Insurance NAICS : 524113 SIC : 7311
Address
100 Osborne Street North, Winnipeg, MB, CAN, R3C 1V3
Great-West Lifeco is one of the three big Canadian life insurance firms. With just under half of the firm's profit and revenue in Canada, Great-West also operates in the U.S. and Europe. In Canada, Great-West provides both individual and group insurance. In the United States, Great-West operates Putnam Investments and defined-contribution recordkeeping firm Empower Retirement. In 2020, Great-West announced it would acquire Personal Capital and MassMutual's recordkeeping business. In Europe, Great-West offers life insurance, annuities, and reinsurance primarily in the U.K., Ireland, and Germany.

Great-West Lifeco Headlines

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