Salon City (Salon City) ROC % : -44.96% (As of Sep. 2008)

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What is Salon City ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Salon City's annualized return on capital (ROC %) for the quarter that ended in Sep. 2008 was -44.96%.

As of today (2024-04-28), Salon City's WACC % is 0.00%. Salon City's ROC % is 0.00% (calculated using TTM income statement data). Salon City earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Salon City ROC % Historical Data

The historical data trend for Salon City'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.

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Salon City ROC % Chart

Salon City Annual Data

Trend

Dec06

Dec07

ROC %

-3,458.90

-406.02

Salon City Quarterly Data
	Mar07	Jun07	Sep07	Dec07	Mar08	Jun08	Sep08
ROC %	Get a 7-Day Free Trial			-1,214.07	-512.47	-72.73	-49.19	-44.96

Salon City ROC % Calculation

Salon City's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2007 is calculated as:

	ROC % (A: Dec. 2007 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2006 )	+	Invested Capital (A: Dec. 2007 ))	/ count )
=	-0.81 * ( 1 - 0% )	/	( (0.073	+	0.326)	/ 2 )
=	-0.81	/	0.1995
=	-406.02 %

where

	Invested Capital		(A: Dec. 2006 )
=	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	))
=	0.213	-	0.205	-	( 0.089	-	max(0, 0.278	-	0.213	+	0.089	))
=	0.073

	Invested Capital		(A: Dec. 2007 )
=	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	))
=	0.129	-	0.41	-	( 0.112	-	max(0, 0.727	-	0.12	+	0.112	))
=	0.326

Salon City's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2008 is calculated as:

	ROC % (Q: Sep. 2008 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2008 )	+	Invested Capital (Q: Sep. 2008 ))	/ count )
=	-0.156 * ( 1 - % )	/	( (0.296	+	0.398)	/ 2 )
=	-0.156	/	0.347
=	-44.96 %

where

	Invested Capital		(Q: Jun. 2008 )
=	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	))
=	0.196	-	0.496	-	( 0.074	-	max(0, 0.79	-	0.194	+	0.074	))
=	0.296

	Invested Capital		(Q: Sep. 2008 )
=	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	))
=	0.214	-	0.456	-	( 0.024	-	max(0, 0.853	-	0.213	+	0.024	))
=	0.398

Note: The Operating Income data used here is four times the quarterly (Sep. 2008) data.

Salon City (OTCPK:SALN) 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, Salon City's WACC % is 0.00%. Salon City's ROC % is 0.00% (calculated using TTM income statement data). Salon City 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.

Salon City ROC % Related Terms

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Salon City (Salon City) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Salon City Inc (OTCPK:SALN) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

909 North Palm Avenue, Suite 311, West Hollywood, CA, USA, 90069

Website

http://www.saloncity.com

Salon City Inc is engaged in the beauty industry through its media and network. Geographically the business presence of the group are seen in United States and internationally.

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