Sigma Lithium (TSXV:SGML) ROC % : 67.52% (As of Sep. 2023)

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What is Sigma Lithium 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 %. Sigma Lithium's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was 67.52%.

As of today (2024-04-28), Sigma Lithium's WACC % is 7.36%. Sigma Lithium's ROC % is -34.67% (calculated using TTM income statement data). Sigma Lithium earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sigma Lithium ROC % Historical Data

The historical data trend for Sigma Lithium'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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Sigma Lithium ROC % Chart

Sigma Lithium Annual Data

Trend

Oct13

Oct14

Oct15

Oct16

Oct17

Dec18

Dec19

Dec20

Dec21

Dec22

ROC %

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-35.57

-19.87

-6.95

-98.06

-106.16

Sigma Lithium Quarterly Data
	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23
ROC %	Get a 7-Day Free Trial															-95.17	-161.72	-57.84	-59.67	67.52

Sigma Lithium ROC % Calculation

Sigma Lithium's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	-128.119 * ( 1 - 0% )	/	( (41.193	+	200.175)	/ 2 )
=	-128.119	/	120.684
=	-106.16 %

where

	Invested Capital		(A: Dec. 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	))
=	195.661	-	3.999	-	( 154.305	-	max(0, 4.645	-	155.114	+	154.305	))
=	41.193

	Invested Capital		(A: Dec. 2022 )
=	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	))
=	308.908	-	31.681	-	( 96.354	-	max(0, 37.442	-	114.494	+	96.354	))
=	200.175

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

	ROC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	266.792 * ( 1 - 12.76% )	/	( (339.341	+	350.063)	/ 2 )
=	232.7493408	/	344.702
=	67.52 %

where

	Invested Capital		(Q: Jun. 2023 )
=	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	))
=	381.479	-	29.566	-	( 45.617	-	max(0, 76.992	-	89.564	+	45.617	))
=	339.341

	Invested Capital		(Q: Sep. 2023 )
=	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	))
=	455.011	-	66.806	-	( 38.142	-	max(0, 99.776	-	153.363	+	38.142	))
=	350.063

Note: The Operating Income data used here is four times the quarterly (Sep. 2023) data.

Sigma Lithium (TSXV:SGML) 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, Sigma Lithium's WACC % is 7.36%. Sigma Lithium's ROC % is -34.67% (calculated using TTM income statement data). Sigma Lithium 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.

Sigma Lithium ROC % Related Terms

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Sigma Lithium (TSXV:SGML) Business Description

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GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Sigma Lithium Corp (TSXV:SGML) » Definitions » ROC %

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SGML:USA S2GM34:Brazil

Address

Avenida Nove de Julho 4939, 9th Floor, Torre Europa, Itaim, Sao Paulo, SP, BRA, 01407-200

Website

https://www.sigmalithiumresources.com

Sigma Lithium Corp is dedicated to powering the next generation of electric vehicle batteries with environmentally sustainable and high-purity lithium. The company is in construction at its wholly owned Grota do Cirilo Project in Brazil, one of the largest and highest-grade hard rock lithium spodumene deposits in the Americas. It is committed to strong ESG practices and is aiming to be net zero emissions by 2024. Its green-friendly processing plant will use 100% renewable energy, 100% recycled water and 100% dry-stack tailings.