Aristocrat Leisure (ASX:ALL) ROIC % : 19.50% (As of Sep. 2023)

Aristocrat Leisure ROIC % Chart

Aristocrat Leisure Annual Data
	Trend	Sep14	Sep15	Sep16	Sep17	Sep18	Sep19	Sep20	Sep21	Sep22	Sep23
ROIC %		Get a 7-Day Free Trial					10.86	11.82	11.79	13.93	17.25

Aristocrat Leisure Semi-Annual Data
	Mar14	Sep14	Mar15	Sep15	Mar16	Sep16	Mar17	Sep17	Mar18	Sep18	Mar19	Sep19	Mar20	Sep20	Mar21	Sep21	Mar22	Sep22	Mar23	Sep23
ROIC %	Get a 7-Day Free Trial															15.63	17.78	11.75	15.51	19.50

Competitive Comparison of Aristocrat Leisure's ROIC %

For the Gambling subindustry, Aristocrat Leisure'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.

Aristocrat Leisure's ROIC % Distribution in the Travel & Leisure Industry

For the Travel & Leisure industry and Consumer Cyclical sector, Aristocrat Leisure's ROIC % distribution charts can be found below:

* The bar in red indicates where Aristocrat Leisure's ROIC % falls into.

Aristocrat Leisure ROIC % Calculation

Aristocrat Leisure's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Sep. 2023 is calculated as:

where

Aristocrat Leisure's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2023 is calculated as:

where

Note: The Operating Income data used here is two times the semi-annual (Sep. 2023) 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.

Aristocrat Leisure  (ASX:ALL) 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, Aristocrat Leisure's WACC % is 7.56%. Aristocrat Leisure's ROIC % is 17.40% (calculated using TTM income statement data). Aristocrat Leisure generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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. Aristocrat Leisure 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 %, 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.

Aristocrat Leisure ROIC % Related Terms

Thank you for viewing the detailed overview of Aristocrat Leisure's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.

Aristocrat Leisure (ASX:ALL) Business Description