Spirit Technology Solutions (ASX:ST1) ROIC % : -4.63% (As of Dec. 2023)

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What is Spirit Technology Solutions 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 %. Spirit Technology Solutions's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was -4.63%.

As of today (2024-04-26), Spirit Technology Solutions's WACC % is 7.60%. Spirit Technology Solutions's ROIC % is -5.47% (calculated using TTM income statement data). Spirit Technology Solutions earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Spirit Technology Solutions ROIC % Historical Data

The historical data trend for Spirit Technology Solutions'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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Spirit Technology Solutions ROIC % Chart

Spirit Technology Solutions Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

ROIC %

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-2.19

-3.06

2.02

-1.81

-2.66

Spirit Technology Solutions Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROIC %	Get a 7-Day Free Trial															-0.02	-0.94	2.30	-6.02	-4.63

Competitive Comparison of Spirit Technology Solutions's ROIC %

For the Telecom Services subindustry, Spirit Technology Solutions'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.

Spirit Technology Solutions's ROIC % Distribution in the Telecommunication Services Industry

For the Telecommunication Services industry and Communication Services sector, Spirit Technology Solutions's ROIC % distribution charts can be found below:

* The bar in red indicates where Spirit Technology Solutions's ROIC % falls into.

Spirit Technology Solutions ROIC % Calculation

Spirit Technology Solutions'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 )
=	-3.713 * ( 1 - 18.18% )	/	( (116.828	+	111.527)	/ 2 )
=	-3.0379766	/	114.1775
=	-2.66 %

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	))
=	123.511	-	16.705	-	( 11.733	-	max(0, 43.175	-	33.153	+	11.733	))
=	116.828

	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	))
=	119.18	-	15.329	-	( 7.024	-	max(0, 33.265	-	25.589	+	7.024	))
=	111.527

Spirit Technology Solutions'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 )
=	-6.712 * ( 1 - 25.13% )	/	( (111.527	+	105.748)	/ 2 )
=	-5.0252744	/	108.6375
=	-4.63 %

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	))
=	119.18	-	15.329	-	( 7.024	-	max(0, 33.265	-	25.589	+	7.024	))
=	111.527

	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	))
=	119.831	-	16.071	-	( 6.678	-	max(0, 28.664	-	26.676	+	6.678	))
=	105.748

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

Spirit Technology Solutions (ASX:ST1) 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, Spirit Technology Solutions's WACC % is 7.60%. Spirit Technology Solutions's ROIC % is -5.47% (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.

Spirit Technology Solutions ROIC % Related Terms

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Spirit Technology Solutions (ASX:ST1) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Spirit Technology Solutions Ltd (ASX:ST1) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

19-25 Raglan Street, Level 2, South Melbourne, Melbourne, VIC, AUS, 3205

Website

https://www.spirit.com.au

Spirit Technology Solutions Ltd provides telecommunication services, cloud services, managed IT services, and cyber security services to small and medium-sized businesses. It derives key revenue from Managed services followed by internet and data services. Geographically the group operates and generates revenue in Australia.

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