Quality RO Industries (BOM:543460) ROIC %

: 13.44% (As of Sep. 2023)

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ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Quality RO Industries's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2023 was 13.44%.

As of today (2024-04-24), Quality RO Industries's WACC % is 12.65%. Quality RO Industries's ROIC % is 6.47% (calculated using TTM income statement data). Quality RO Industries earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Quality RO Industries ROIC % Historical Data

The historical data trend for Quality RO Industries'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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Quality RO Industries Annual Data

Trend

Mar22

Mar23

ROIC %

3.32

0.34

Quality RO Industries Semi-Annual Data
	Sep21	Mar22	Sep22	Mar23	Sep23
ROIC %	-	6.63	7.31	-4.88	13.44

Competitive Comparison

For the Pollution & Treatment Controls subindustry, Quality RO Industries'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.

Quality RO Industries ROIC % Distribution

For the Industrial Products industry and Industrials sector, Quality RO Industries's ROIC % distribution charts can be found below:

* The bar in red indicates where Quality RO Industries's ROIC % falls into.

Quality RO Industries ROIC % Calculation

Quality RO Industries's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2023 is calculated as:

	ROIC % (A: Mar. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2022 )	+	Invested Capital (A: Mar. 2023 ))	/ count )
=	0.441 * ( 1 - 59.61% )	/	( (43.84	+	61.025)	/ 2 )
=	0.1781199	/	52.4325
=	0.34 %

where

	Invested Capital		(A: Mar. 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	))
=	64.473	-	1.286	-	( 19.347	-	max(0, 10.614	-	34.817	+	19.347	))
=	43.84

	Invested Capital		(A: Mar. 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	))
=	111.953	-	5.111	-	( 45.817	-	max(0, 19.212	-	89.053	+	45.817	))
=	61.025

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

	ROIC % (Q: Sep. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2023 )	+	Invested Capital (Q: Sep. 2023 ))	/ count )
=	14.202 * ( 1 - 22.33% )	/	( (61.025	+	103.182)	/ 2 )
=	11.0306934	/	82.1035
=	13.44 %

where

	Invested Capital		(Q: Mar. 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	))
=	111.953	-	5.111	-	( 45.817	-	max(0, 19.212	-	89.053	+	45.817	))
=	61.025

	Invested Capital		(Q: Sep. 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	))
=	143.199	-	38.561	-	( 1.456	-	max(0, 43.92	-	102.069	+	1.456	))
=	103.182

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

Quality RO Industries (BOM:543460) 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, Quality RO Industries's WACC % is 12.65%. Quality RO Industries's ROIC % is 6.47% (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.

Quality RO Industries ROIC % Related Terms

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Quality RO Industries (BOM:543460) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Quality RO Industries Ltd (BOM:543460) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

Plot No. 09, POR Industrial Park, NH 08 Behind Sahayog Hotel, Village PO, Vadodara, GJ, IND, 391243

Website

https://www.qualityro.in

Quality RO Industries Ltd is engaged in the business of manufacturing, marketing, and supplying components for water purifiers and softener equipment. These water purifier parts have been designed to make a proper fit for RO plants and systems of different varieties, as we produce strictly according to industry standards. The company is at present engaged in the business of Trading and Manufacturing RO products and Transportation activities, which constitute two business segments. The prime revenue generator is the trading and manufacturing of the RO products segment.

Quality RO Industries (BOM:543460) Headlines

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