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Cal-Maine Foods Inc  (NAS:CALM) ROC (Joel Greenblatt) %: -14.27% (As of Aug. 2017)

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. Cal-Maine Foods Inc's annualized return on capital (Joel Greenblatt) for the quarter that ended in Aug. 2017 was -14.27%.

NAS:CALM' s ROC (Joel Greenblatt) % Range Over the Past 10 Years
Min: -18.38   Max: 100.1
Current: -13.3

-18.38
100.1

During the past 13 years, Cal-Maine Foods Inc's highest Return on Capital (Joel Greenblatt) was 100.10%. The lowest was -18.38%. And the median was 42.66%.

NAS:CALM's ROC (Joel Greenblatt) % is ranked lower than
93% of the 1635 Companies
in the Global industry.

( Industry Median: 13.31 vs. NAS:CALM: -13.30 )

Cal-Maine Foods Inc's 5-Year average Growth Rate of Return on Capital (Joel Greenblatt) was 0.00% 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.

Cal-Maine Foods Inc Annual Data

May08 May09 May10 May11 May12 May13 May14 May15 May16 May17
ROC (Joel Greenblatt) % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 24.52 40.47 51.96 90.49 -18.38

Cal-Maine Foods Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
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 -34.29 -23.76 -2.71 -12.69 -14.27

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.


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: May. 2017 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(61.261 + 160.692 + 58.227) - (59.853 + 0 + 0)
=220.327

Working Capital(Q: Aug. 2017 )
=(Accounts Receivable + Total Inventories + Other Current Assets) - (Accounts Payable & Accrued Expense + Defer. Rev. + Other Current Liabilities)
=(131.596 + 159.226 + 3.753) - (58.386 + 0 + 0)
=236.189

When net working capital is negative, 0 is used.

So Joel Greenblatt's Return on Capital of Cal-Maine Foods Inc for the quarter that ended in Aug. 2017 can be restated as:

ROC (Joel Greenblatt's)(Q: Aug. 2017 )
=EBIT/Average of (Net fixed Assets + Net Working Capital)
=EBIT/Average of (Property, Plant and Equipment+Net Working Capital)
     Q: May. 2017  Q: Aug. 2017
=EBIT/( ( (Property, Plant and Equipment + Net Working Capital) + (Property, Plant and Equipment + Net Working Capital) )/2 )
=-97.512/( ( (458.184 + max(220.327, 0)) + (452.099 + max(236.189, 0)) )/2 )
=-97.512/( ( 678.511 + 688.288 )/2 )
=-97.512/683.3995
=-14.27 %

Note: The EBIT data used here is four times the quarterly (Aug. 2017) 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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