JD Sports Fashion (LSE:JD.) ROIC % : 10.94% (As of Jul. 2023)

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What is JD Sports Fashion 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 %. JD Sports Fashion's annualized return on invested capital (ROIC %) for the quarter that ended in Jul. 2023 was 10.94%.

As of today (2024-04-28), JD Sports Fashion's WACC % is 13.76%. JD Sports Fashion's ROIC % is 10.78% (calculated using TTM income statement data). JD Sports Fashion earns returns that do not match up to its cost of capital. It will destroy value as it grows.

JD Sports Fashion ROIC % Historical Data

The historical data trend for JD Sports Fashion'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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JD Sports Fashion ROIC % Chart

JD Sports Fashion Annual Data

Trend

Jan14

Jan15

Jan16

Jan17

Jan18

Jan19

Jan20

Jan21

Jan22

Jan23

ROIC %

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31.18

17.26

9.95

16.37

10.58

JD Sports Fashion Semi-Annual Data
	Jan14	Jul14	Jan15	Jul15	Jan16	Jul16	Jan17	Jul17	Jan18	Jul18	Jan19	Jul19	Jan20	Jul20	Jan21	Jul21	Jan22	Jul22	Jan23	Jul23
ROIC %	Get a 7-Day Free Trial															17.53	14.29	11.80	1.76	10.94

Competitive Comparison of JD Sports Fashion's ROIC %

For the Apparel Retail subindustry, JD Sports Fashion'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.

JD Sports Fashion's ROIC % Distribution in the Retail - Cyclical Industry

For the Retail - Cyclical industry and Consumer Cyclical sector, JD Sports Fashion's ROIC % distribution charts can be found below:

* The bar in red indicates where JD Sports Fashion's ROIC % falls into.

JD Sports Fashion ROIC % Calculation

JD Sports Fashion's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Jan. 2023 is calculated as:

	ROIC % (A: Jan. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jan. 2022 )	+	Invested Capital (A: Jan. 2023 ))	/ count )
=	1055.4 * ( 1 - 48.58% )	/	( (4999.5	+	5263.3)	/ 2 )
=	542.68668	/	5131.4
=	10.58 %

where

	Invested Capital		(A: Jan. 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	))
=	7068.6	-	1279.5	-	( 1314	-	max(0, 1886.9	-	2676.5	+	1314	))
=	4999.5

	Invested Capital		(A: Jan. 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	))
=	8024.7	-	1488.7	-	( 1582.5	-	max(0, 2163	-	3435.7	+	1582.5	))
=	5263.3

JD Sports Fashion's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jul. 2023 is calculated as:

	ROIC % (Q: Jul. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jan. 2023 )	+	Invested Capital (Q: Jul. 2023 ))	/ count )
=	796.8 * ( 1 - 25.64% )	/	( (5263.3	+	5572.8)	/ 2 )
=	592.50048	/	5418.05
=	10.94 %

where

	Invested Capital		(Q: Jan. 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	))
=	8024.7	-	1488.7	-	( 1582.5	-	max(0, 2163	-	3435.7	+	1582.5	))
=	5263.3

	Invested Capital		(Q: Jul. 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	))
=	7917.3	-	1441.7	-	( 1391.1	-	max(0, 2498.4	-	3401.2	+	1391.1	))
=	5572.8

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

JD Sports Fashion (LSE:JD.) 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, JD Sports Fashion's WACC % is 13.76%. JD Sports Fashion's ROIC % is 10.78% (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.

JD Sports Fashion ROIC % Related Terms

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JD Sports Fashion (LSE:JD.) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » JD Sports Fashion PLC (LSE:JD.) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

JDDSF:USA JDSPY:USA JDl:UK 9JD:Germany

Address

Hollinsbrook Way, Pilsworth, Bury, Lancashire, GBR, BL9 8RR

Website

https://www.jdplc.com

JD Sports Fashion PLC is a U.K. retailer of branded sportswear and fashionwear. The company has stores in the United Kingdom, mainland Europe, and outside Europe. The offering includes international brands, such as Adidas, Nike and The North Face, and own-brand labels, such as McKenzie, Carbrini, Supply & Demand and The Duffer of St George. The store network consists of various shops: Size?, Footpatrol, Chausport, Sprinter, Scotts, Tessuti, Cloggs, Mainline, and Ultimate Outdoors, among others. Stores are specialized: Footpatrol is a sneaker provider; Size? offers footwear, apparel, and accessories; and Chausport operates throughout France selling international footwear brands, such as Nike.

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