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 Lovesac Co's annualized return on invested capital (ROIC %) for the quarter that ended in Jan. 2024 was 38.31%.
As of today (2024-05-04), The Lovesac Co's WACC % is 13.37%. The Lovesac Co's ROIC % is 7.18% (calculated using TTM income statement data).
The Lovesac Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The Lovesac Co ROIC % Historical Data
The historical data trend for The Lovesac Co'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.
For the Furnishings, Fixtures & Appliances subindustry, The Lovesac Co'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.
The Lovesac Co's ROIC % Distribution in the Furnishings, Fixtures & Appliances Industry
For the Furnishings, Fixtures & Appliances industry and Consumer Cyclical sector, The Lovesac Co's ROIC % distribution charts can be found below:
* The bar in red indicates where The Lovesac Co's ROIC % falls into.
The Lovesac Co ROIC % Calculation
The Lovesac Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2024 is calculated as:
Note:
The Operating Income data used here is four times the quarterly (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.
The Lovesac Co (NAS:LOVE) 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, The Lovesac Co's WACC % is 13.37%. The Lovesac Co's ROIC % is 7.18% (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.
The Lovesac Co ROIC % Related Terms
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The Lovesac Co (The Lovesac Co) Business Description
The Lovesac Co designs, manufactures and sells alternative furniture which is comprised of modular couches called sactionals and premium foam beanbag chairs called sacs. It also offers other accessories such as sactional-specific drink holders, Footsac blankets, decorative pillows, fitted seat tables and ottoman. Its products are sold across the United States through its website or company-owned retail stores which are used in homes and offices. Majority of the firm's revenue gets derives from the sale of Sactionals.
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