Poseidon Concepts (TSX:PSN) ROC % : 28.31% (As of Sep. 2012)

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What is Poseidon Concepts 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 %. Poseidon Concepts's annualized return on capital (ROC %) for the quarter that ended in Sep. 2012 was 28.31%.

As of today (2024-04-25), Poseidon Concepts's WACC % is 0.00%. Poseidon Concepts's ROC % is 0.00% (calculated using TTM income statement data). Poseidon Concepts earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Poseidon Concepts ROC % Historical Data

The historical data trend for Poseidon Concepts'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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Poseidon Concepts ROC % Chart

Poseidon Concepts Annual Data

Trend

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

ROC %

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-0.07

3.36

-3.35

1.11

26.45

Poseidon Concepts Quarterly Data
	Dec06	Dec07	Dec08	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12
ROC %	Get a 7-Day Free Trial										17.78	39.17	127.75	97.31	28.31

Poseidon Concepts ROC % Calculation

Poseidon Concepts's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2011 is calculated as:

	ROC % (A: Dec. 2011 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2010 )	+	Invested Capital (A: Dec. 2011 ))	/ count )
=	61.338 * ( 1 - 25.72% )	/	( (270.875	+	73.699)	/ 2 )
=	45.5618664	/	172.287
=	26.45 %

where

	Invested Capital		(A: Dec. 2010 )
=	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	))
=	231.994	-	10.726	-	( 0	-	max(0, 61.779	-	12.172	+	0	))
=	270.875

	Invested Capital		(A: Dec. 2011 )
=	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	))
=	102.884	-	55.785	-	( 0	-	max(0, 84.156	-	57.556	+	0	))
=	73.699

Poseidon Concepts's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2012 is calculated as:

	ROC % (Q: Sep. 2012 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2012 )	+	Invested Capital (Q: Sep. 2012 ))	/ count )
=	56.496 * ( 1 - 23.87% )	/	( (142.684	+	161.213)	/ 2 )
=	43.0104048	/	151.9485
=	28.31 %

where

	Invested Capital		(Q: Jun. 2012 )
=	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	))
=	192.759	-	37.951	-	( 12.124	-	max(0, 37.951	-	139.702	+	12.124	))
=	142.684

	Invested Capital		(Q: Sep. 2012 )
=	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	))
=	201.781	-	37.107	-	( 3.461	-	max(0, 37.107	-	139.846	+	3.461	))
=	161.213

Note: The Operating Income data used here is four times the quarterly (Sep. 2012) data.

Poseidon Concepts (TSX:PSN) 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, Poseidon Concepts's WACC % is 0.00%. Poseidon Concepts's ROC % is 0.00% (calculated using TTM income statement data). Poseidon Concepts 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.

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