Abu Dhabi Ship Building PJSC (ADX:ADSB) ROIC % : 2.22% (As of Dec. 2022)

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What is Abu Dhabi Ship Building PJSC ROIC %?

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Abu Dhabi Ship Building PJSC's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2022 was 2.22%.

As of today (2024-04-25), Abu Dhabi Ship Building PJSC's WACC % is 9.92%. Abu Dhabi Ship Building PJSC's ROIC % is 2.22% (calculated using TTM income statement data). Abu Dhabi Ship Building PJSC earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Abu Dhabi Ship Building PJSC ROIC % Historical Data

The historical data trend for Abu Dhabi Ship Building PJSC's ROIC % 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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Abu Dhabi Ship Building PJSC ROIC % Chart

Abu Dhabi Ship Building PJSC Annual Data

Trend

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

ROIC %

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0.33

-0.22

-1.92

-3.26

2.22

Abu Dhabi Ship Building PJSC Semi-Annual Data
	Dec06	Dec07	Dec08	Dec09	Dec10	Dec11	Dec12	Dec13	Dec14	Dec15	Dec16	Dec17	Dec18	Dec19	Dec20	Dec21	Dec22
ROIC %	Get a 7-Day Free Trial												0.33	-0.22	-1.92	-3.26	2.22

Competitive Comparison of Abu Dhabi Ship Building PJSC's ROIC %

For the Aerospace & Defense subindustry, Abu Dhabi Ship Building PJSC's ROIC %, along with its competitors' market caps and ROIC % data, can be viewed below:

* 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. Note that "N/A" values will not show up in the chart.

Abu Dhabi Ship Building PJSC's ROIC % Distribution in the Aerospace & Defense Industry

For the Aerospace & Defense industry and Industrials sector, Abu Dhabi Ship Building PJSC's ROIC % distribution charts can be found below:

* The bar in red indicates where Abu Dhabi Ship Building PJSC's ROIC % falls into.

Abu Dhabi Ship Building PJSC ROIC % Calculation

Abu Dhabi Ship Building PJSC's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2022 is calculated as:

	ROIC % (A: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2021 )	+	Invested Capital (A: Dec. 2022 ))	/ count )
=	19.254 * ( 1 - 0% )	/	( (599.433	+	1131.847)	/ 2 )
=	19.254	/	865.64
=	2.22 %

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	))
=	1530.262	-	34.906	-	( 895.923	-	max(0, 339.976	-	1327.736	+	895.923	))
=	599.433

	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	))
=	1493.419	-	51.732	-	( 309.84	-	max(0, 511.045	-	1119.678	+	309.84	))
=	1131.847

Abu Dhabi Ship Building PJSC's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2022 is calculated as:

	ROIC % (Q: Dec. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2021 )	+	Invested Capital (Q: Dec. 2022 ))	/ count )
=	19.254 * ( 1 - 0% )	/	( (599.433	+	1131.847)	/ 2 )
=	19.254	/	865.64
=	2.22 %

where

	Invested Capital		(Q: 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	))
=	1530.262	-	34.906	-	( 895.923	-	max(0, 339.976	-	1327.736	+	895.923	))
=	599.433

	Invested Capital		(Q: 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	))
=	1493.419	-	51.732	-	( 309.84	-	max(0, 511.045	-	1119.678	+	309.84	))
=	1131.847

Note: The Operating Income data used here is one times the annual (Dec. 2022) data.

Abu Dhabi Ship Building PJSC (ADX:ADSB) ROIC % Explanation

ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. 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 ROIC % 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, Abu Dhabi Ship Building PJSC's WACC % is 9.92%. Abu Dhabi Ship Building PJSC's ROIC % is 2.22% (calculated using TTM income statement data).

Be Aware

Like ROE % and ROA %, ROIC % 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.

Abu Dhabi Ship Building PJSC ROIC % Related Terms

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Abu Dhabi Ship Building PJSC (ADX:ADSB) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Aerospace & Defense » Abu Dhabi Ship Building PJSC (ADX:ADSB) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

Musafah Industrial Area, P.O. Box 8922, Abu Dhabi, ARE

Website

https://www.adsb.ae

Abu Dhabi Ship Building PJSC is a shipbuilder and support services contractor locally and internationally. Its operating segments include New Build and Engineering; Small Boats; Military Repairs and Maintenance; Commercial Repairs and Maintenance and Combat System Integration. It generates maximum revenue from the New Build and Engineering services segment. It provides the design, engineering, research and development, construction, commissioning, test and trials, ILS, upgrades, conversions, and consultancy services for military, commercial, and leisure vessels in any construction material.

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