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Apple Inc  (NAS:AAPL) ROC (Joel Greenblatt) %: 174.15% (As of Sep. 2018)

Joel Greenblatt defined Return on Capital differently in his book The Little Book That Still Beats the Market (Little Books. Big Profits). He defines Return on Capital as EBIT divided by the total of Property, Plant and Equipment and net working capital. Apple Inc's annualized return on capital (Joel Greenblatt) for the quarter that ended in Sep. 2018 was 174.15%.

NAS:AAPL' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: 202.81   Max: 545.32
Current: 209.23

202.81
545.32

During the past 13 years, Apple Inc's highest Return on Capital (Joel Greenblatt) was 545.32%. The lowest was 202.81%. And the median was 326.89%.

NAS:AAPL's ROC (Joel Greenblatt) % is ranked higher than
99% of the 2226 Companies
in the Global industry.

( Industry Median: 12.27 vs. NAS:AAPL: 209.23 )

Apple Inc's 5-Year average Growth Rate of Return on Capital (Joel Greenblatt) was -9.10% per year.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Apple Inc Annual Data

Sep09 Sep10 Sep11 Sep12 Sep13 Sep14 Sep15 Sep16 Sep17 Sep18
ROC (Joel Greenblatt) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 289.44 339.94 253.95 218.49 202.81

Apple Inc Quarterly Data

Dec13 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18
ROC (Joel Greenblatt) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 184.98 329.24 197.34 154.44 174.15

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Apple Inc Distribution

* The bar in red indicates where Apple Inc's ROC (Joel Greenblatt) % falls into.



Calculation

Joel Greenblatt defined Return on Capital differently in his book The Little Book That Still Beats the Market (Little Books. Big Profits) . He defines Return on Capital as follows:

ROC (Joel Greenblatt) %=EBIT/Average of (Net fixed Assets + Net Working Capital)

EBIT stands for Earnings Before Interest and Taxes.

Fixed Assets are also known as non-current assets. They include the Property, Plant and Equipment that the firm needs in its operation.

GuruFocus calculates net working capital as: (Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Deferred Revenue + Other Current Liabilities). We're trying to account for OPERATING assets and liabilities (part of daily business) when calculating working capital. Cash and marketable securities are considered NON-OPERATING assets and are not included in calculation. We will also back out all interest bearing debt, short term debt and the portion of long term debt that is due in the current period from the current liabilities. This debt will be considered when computing cost of capital and it would be inappropriate to count it twice.

Working Capital(Q: Jun. 2018 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(14104 + 5936 + 12488) - (63673 + 7403 + 0)
=-38548

Working Capital(Q: Sep. 2018 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(23186 + 3956 + 12087) - (55888 + 7543 + 32687)
=-56889

When net working capital is negative, 0 is used.

So Joel Greenblatt's Return on Capital of Apple Inc for the quarter that ended in Sep. 2018 can be restated as:

ROC (Joel Greenblatt's)(Q: Sep. 2018 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=EBIT/Average of (Property, Plant and Equipment+Net Working Capital)
     Q: Jun. 2018  Q: Sep. 2018
=EBIT/( ( (Property, Plant and Equipment + Net Working Capital) + (Property, Plant and Equipment + Net Working Capital) )/2 )
=69156/( ( (38117 + max(-38548, 0)) + (41304 + max(-56889, 0)) )/2 )
=69156/( ( 38117 + 41304 )/2 )
=69156/39710.5
=174.15 %

Note: The EBIT data used here is four times the quarterly (Sep. 2018) EBIT data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

The way Joel Greenblatt defines Return on Capital is a more accurate measure of how efficiently the company generates returns onthe capital actually invested in the business. EBIT is used instead of net income because the tax and interest payment may be affected by factors other than the core business operation. Intangible assets are not included in the calculation because they don't need to be replaced.

Joel Greenblatt uses his definition of Return on Capital and Earnings Yield (Joel Greenblatt) to rank companies.


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