Acreage Holdings (XCNQ:ACRG.A.U) ROC % : -19.06% (As of Sep. 2023)

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What is Acreage Holdings 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 %. Acreage Holdings's annualized return on capital (ROC %) for the quarter that ended in Sep. 2023 was -19.06%.

As of today (2024-04-28), Acreage Holdings's WACC % is 14.71%. Acreage Holdings's ROC % is -3.82% (calculated using TTM income statement data). Acreage Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Acreage Holdings ROC % Historical Data

The historical data trend for Acreage Holdings'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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Acreage Holdings ROC % Chart

Acreage Holdings Annual Data

Trend

Aug17

Aug18

Dec19

Dec20

Dec21

Dec22

ROC %

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-19.47

-27.84

-23.78

-4.34

-4.27

Acreage Holdings 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															-12.55	-8.83	3.00	-3.12	-19.06

Acreage Holdings ROC % Calculation

Acreage Holdings'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 )
=	-13.629 * ( 1 - -6.32% )	/	( (398.506	+	280.139)	/ 2 )
=	-14.4903528	/	339.3225
=	-4.27 %

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	))
=	491.551	-	49.865	-	( 43.18	-	max(0, 66.793	-	112.979	+	43.18	))
=	398.506

	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	))
=	360.573	-	56.367	-	( 24.067	-	max(0, 72.333	-	118.193	+	24.067	))
=	280.139

Acreage Holdings'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 )
=	-10.004 * ( 1 - -446.14% )	/	( (292.22	+	281.22)	/ 2 )
=	-54.6358456	/	286.72
=	-19.06 %

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	))
=	359.914	-	67.861	-	( 16.401	-	max(0, 94.293	-	94.126	+	16.401	))
=	292.22

	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	))
=	355.784	-	81.552	-	( 15.142	-	max(0, 96.667	-	89.679	+	15.142	))
=	281.22

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

Acreage Holdings (XCNQ:ACRG.A.U) 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, Acreage Holdings's WACC % is 14.71%. Acreage Holdings's ROC % is -3.82% (calculated using TTM income statement data). Acreage Holdings 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.

Acreage Holdings ROC % Related Terms

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Acreage Holdings (XCNQ:ACRG.A.U) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Acreage Holdings Inc (XCNQ:ACRG.A.U) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

ACRHF:USA ACRDF:USA 0VZ1:Germany ACRG.B.U:Canada

Address

450 Lexington Avenue, Suite 3308, New York, NY, USA, 10163

Website

https://www.acreageholdings.com

Acreage Holdings Inc is a vertically integrated, multi-state operator in the cannabis industry. Its business operations include cultivating, processing, distributing, and retailing cannabis. The Company derives its revenues from its retail dispensary business, where cannabis and cannabis-infused products are sold to consumers. Its geographic segments include New England, Mid-Atlantic, Midwest, West, and South. The Company operates under one operating segment, which is: the production and sale of cannabis products.

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