ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Art's-Way Manufacturing Co's annualized return on invested capital (ROIC %) for the quarter that ended in Feb. 2024 was -5.61%.
As of today (2024-04-24), Art's-Way Manufacturing Co's WACC % is 5.40%. Art's-Way Manufacturing Co's ROIC % is -1.22% (calculated using TTM income statement data).
Art's-Way Manufacturing Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Art's-Way Manufacturing Co ROIC % Historical Data
The historical data trend for Art's-Way Manufacturing Co'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.
Competitive Comparison of Art's-Way Manufacturing Co's ROIC %
For the Farm & Heavy Construction Machinery subindustry, Art's-Way Manufacturing Co'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.
Art's-Way Manufacturing Co's ROIC % Distribution in the Farm & Heavy Construction Machinery Industry
For the Farm & Heavy Construction Machinery industry and Industrials sector, Art's-Way Manufacturing Co's ROIC % distribution charts can be found below:
* The bar in red indicates where Art's-Way Manufacturing Co's ROIC % falls into.
Art's-Way Manufacturing Co ROIC % Calculation
Art's-Way Manufacturing Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Nov. 2023 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (Feb. 2024) 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.
Art's-Way Manufacturing Co (NAS:ARTW) 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, Art's-Way Manufacturing Co's WACC % is 5.40%. Art's-Way Manufacturing Co's ROIC % is -1.22% (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.
Art's-Way Manufacturing Co ROIC % Related Terms
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Art's-Way Manufacturing Co (Art's-Way Manufacturing Co) Business Description
Art's-Way Manufacturing Co Inc is a manufacturer of agricultural equipment. It has three reportable segments: Agricultural Products, Modular Buildings, and Tools. The Agricultural Products segment fabricates and sells farming products as well as related equipment and replacement parts for these products in the United States and worldwide. Its Modular Buildings segment manufactures and installs modular buildings for animal containment and various laboratory uses. The Tools segment manufactures steel cutting tools and inserts. It derives revenues from the Agricultural Products segment.
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