DGL Group (ASX:DGL) ROIC % : 3.52% (As of Dec. 2023)

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What is DGL Group 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 %. DGL Group's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 3.52%.

As of today (2024-04-26), DGL Group's WACC % is 6.49%. DGL Group's ROIC % is 3.40% (calculated using TTM income statement data). DGL Group earns returns that do not match up to its cost of capital. It will destroy value as it grows.

DGL Group ROIC % Historical Data

The historical data trend for DGL Group'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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DGL Group ROIC % Chart

DGL Group Annual Data

Trend

Jun21

Jun22

Jun23

ROIC %

4.07

8.53

4.51

DGL Group Semi-Annual Data
	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial			7.33	9.07	5.77	3.43	3.52

Competitive Comparison of DGL Group's ROIC %

For the Conglomerates subindustry, DGL Group'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.

DGL Group's ROIC % Distribution in the Conglomerates Industry

For the Conglomerates industry and Industrials sector, DGL Group's ROIC % distribution charts can be found below:

* The bar in red indicates where DGL Group's ROIC % falls into.

DGL Group ROIC % Calculation

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

	ROIC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	32.779 * ( 1 - 36.87% )	/	( (420.669	+	496.843)	/ 2 )
=	20.6933827	/	458.756
=	4.51 %

where

	Invested Capital		(A: Jun. 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	))
=	508.602	-	62.424	-	( 25.509	-	max(0, 89.125	-	144.934	+	25.509	))
=	420.669

	Invested Capital		(A: Jun. 2023 )
=	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	))
=	566.875	-	33.306	-	( 36.726	-	max(0, 67.237	-	134.748	+	36.726	))
=	496.843

DGL Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	28.464 * ( 1 - 35.94% )	/	( (496.843	+	537.897)	/ 2 )
=	18.2340384	/	517.37
=	3.52 %

where

	Invested Capital		(Q: Jun. 2023 )
=	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	))
=	566.875	-	33.306	-	( 36.726	-	max(0, 67.237	-	134.748	+	36.726	))
=	496.843

	Invested Capital		(Q: Dec. 2023 )
=	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	))
=	595.187	-	36.037	-	( 21.253	-	max(0, 75.33	-	132.544	+	21.253	))
=	537.897

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

DGL Group (ASX:DGL) 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, DGL Group's WACC % is 6.49%. DGL Group's ROIC % is 3.40% (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.

DGL Group ROIC % Related Terms

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DGL Group (ASX:DGL) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Conglomerates » DGL Group Ltd (ASX:DGL) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

C/- DW Accounting and Advisory Pty Ltd, Level 4, 91-97 William Street, Melbourne, VIC, AUS, 3000

Website

https://www.dglgroup.com

DGL Group Ltd is an investment holding company. The company's segment includes Environmental Solutions; Chemical Manufacturing; Warehousing and Distribution and Corporate Costs. It generates maximum revenue from the Chemical Manufacturing segment. The Chemical Manufacturing segment produces its own range of speciality chemicals and undertaken advanced formulation and contract manufacturing on behalf of third parties.