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Prudential (Prudential) ROC %

: 1.02% (As of Dec. 2023)
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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 %. Prudential's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 1.02%.

As of today (2024-04-19), Prudential's WACC % is 11.60%. Prudential's ROC % is 1.14% (calculated using TTM income statement data). Prudential earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Prudential ROC % Historical Data

The historical data trend for Prudential'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.

Prudential Annual Data
Trend Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21 Dec22 Dec23
ROC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 0.51 0.58 0.73 -0.41 1.15

Prudential Semi-Annual Data
Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21 Dec21 Jun22 Dec22 Jun23 Dec23
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 0.73 -1.63 0.74 1.29 1.02

Prudential ROC % Calculation

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

ROC % (A: Dec. 2023 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2022 ) + Invested Capital (A: Dec. 2023 ))/ count )
=2269 * ( 1 - 18.36% )/( (154186.6 + 169008.5)/ 2 )
=1852.4116/161597.55
=1.15 %

where

Invested Capital(A: Dec. 2022 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=160249 - 2874 - ( 1809 - 5% * -27588 )
=154186.6

Invested Capital(A: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=174066 - 4066 - ( 1590 - 5% * 11970 )
=169008.5

Prudential's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

ROC % (Q: Dec. 2023 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2023 ) + Invested Capital (Q: Dec. 2023 ))/ count )
=2018 * ( 1 - 17.03% )/( (159883.75 + 168415.75)/ 2 )
=1674.3346/164149.75
=1.02 %

where

Invested Capital(Q: Jun. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=165458 - 247 - ( 5920 - 5% * 11855 )
=159883.75

Invested Capital(Q: Dec. 2023 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Balance Sheet Cash And Cash Equivalents - 5% * Revenue )
=174066 - 4066 - ( 1590 - 5% * 115 )
=168415.75

Note: The EBIT data used here is two times the semi-annual (Dec. 2023) 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.


Prudential  (OTCPK:PUKPF) 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, Prudential's WACC % is 11.60%. Prudential's ROC % is 1.14% (calculated using TTM income statement data). Prudential 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.


Prudential ROC % Related Terms

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Prudential (Prudential) Business Description

Address
1 Angel Court, London, GBR, EC2R 7AG
Originally established as Prudential Mutual Assurance, Investment, and Loan Association in 1848, Prudential plc has moved on a lot since then. Set up to sell life insurance and loans to the middle and then the industrializing and urbanizing working classes, the company subsequently diversified into Europe and then North America with the purchase of Jackson National Life in around 1985. During its time as owner of Jackson, Prudential focused on building out a simple chassis-style product portfolio where customers could choose a variety of add-ons. The company also became renowned for its focus on building requisite internal capabilities to support its strong product offerings, including compelling technology and a large and well-trained distribution force.