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# Value Line (NAS:VALU) ROC %

: 10.85% (As of Jan. 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 %. Value Line's annualized return on capital (ROC %) for the quarter that ended in Jan. 2023 was 10.85%.

As of today (2023-03-20), Value Line's WACC % is 1.30%. Value Line's ROC % is 10.27% (calculated using TTM income statement data). Value Line generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

## Value Line ROC % Historical Data

The historical data trend for Value Line'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.

 Value Line Quarterly Data Apr18 Jul18 Oct18 Jan19 Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 ROC %               9.79 9.64 9.13 11.46 10.85

## Value Line ROC % Calculation

Value Line's annualized Return on Capital (ROC %) for the fiscal year that ended in Apr. 2022 is calculated as:

 ROC % (A: Apr. 2022 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (A: Apr. 2021 ) + Invested Capital (A: Apr. 2022 )) / count ) = 10.8 * ( 1 - 22.25% ) / ( (92.48 + 86.332) / 2 ) = 8.397 / 89.406 = 9.39 %

where

 Invested Capital (A: Apr. 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 )) = 121.136 - 5.344 - ( 45.353 - max(0, 27.924 - 51.236 + 45.353 )) = 92.48

 Invested Capital (A: Apr. 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 )) = 128.743 - 4.831 - ( 57.825 - max(0, 23.758 - 61.338 + 57.825 )) = 86.332

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

 ROC % (Q: Jan. 2023 ) = NOPAT / Average Invested Capital = Operating Income * ( 1 - Tax Rate % ) / ( (Invested Capital (Q: Oct. 2022 ) + Invested Capital (Q: Jan. 2023 )) / count ) = 11.936 * ( 1 - 24.15% ) / ( (83.69 + 83.126) / 2 ) = 9.053456 / 83.408 = 10.85 %

where

 Invested Capital (Q: Oct. 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 )) = 127.874 - 4.935 - ( 57.744 - max(0, 22.9 - 62.149 + 57.744 )) = 83.69

 Invested Capital (Q: Jan. 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 )) = 129.33 - 4.596 - ( 60.777 - max(0, 22.444 - 64.052 + 60.777 )) = 83.126

Note: The Operating Income data used here is four times the quarterly (Jan. 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.

Value Line  (NAS:VALU) 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, Value Line's WACC % is 1.30%. Value Line's ROC % is 10.27% (calculated using TTM income statement data). Value Line generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

## Value Line ROC % Related Terms

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## Value Line (NAS:VALU) Business Description Industry
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