ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Washington H Soul Pattinson's annualized return on invested capital (ROIC %) for the quarter that ended in Jan. 2024 was -1.00%.
As of today (2024-05-11), Washington H Soul Pattinson's WACC % is 7.62%. Washington H Soul Pattinson's ROIC % is -1.01% (calculated using TTM income statement data).
Washington H Soul Pattinson earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Washington H Soul Pattinson ROIC % Historical 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.
Competitive Comparison of Washington H Soul Pattinson's ROIC %
For the Capital Markets subindustry, Washington H Soul Pattinson'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.
Washington H Soul Pattinson's ROIC % Distribution in the Capital Markets Industry
For the Capital Markets industry and Financial Services sector, Washington H Soul Pattinson's ROIC % distribution charts can be found below:
* The bar in red indicates where Washington H Soul Pattinson's ROIC % falls into.
Washington H Soul Pattinson ROIC % Calculation
Washington H Soul Pattinson's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jul. 2023 is calculated as:
Note:
The Operating Income data used here is two times the semi-annual (Jan. 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.
Washington H Soul Pattinson (ASX:SOL) 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, Washington H Soul Pattinson's WACC % is 7.62%. Washington H Soul Pattinson's ROIC % is -1.01% (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.
Washington H Soul Pattinson ROIC % Related Terms
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Washington H Soul Pattinson (ASX:SOL) Business Description
Washington H. Soul Pattinson, or Soul Patts, is a value-oriented investment house which invests in both public and private markets. As an investor, Soul Patts allocates capital with a view to taking a long-term position in its investments and on a passive basis. Long-term holdings in the group's three largest investments—TPG Telecom, Brickworks and New Hope Corporation—contribute more than half of the group's circa AUD 11 billion investment net asset value. A cross-shareholding between Soul Patts and Brickworks was established in the 1960s.
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