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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 %. Motorcar Parts of America's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 14.90%.
As of today (2024-04-19), Motorcar Parts of America's WACC % is 18.06%. Motorcar Parts of America's ROIC % is 189.75% (calculated using TTM income statement data). Motorcar Parts of America generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.
The historical data trend for Motorcar Parts of America'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 Auto Parts subindustry, Motorcar Parts of America'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.
For the Vehicles & Parts industry and Consumer Cyclical sector, Motorcar Parts of America's ROIC % distribution charts can be found below:
* The bar in red indicates where Motorcar Parts of America's ROIC % falls into.
Motorcar Parts of America'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 ) |
= | 27.155 * ( 1 - -35.32% ) | / | ( (783.959 | + | 835.208) | / 2 ) |
= | 36.746146 | / | 809.5835 | |||
= | 4.54 % |
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 | )) |
= | 1015.698 | - | 206.521 | - | ( 25.218 | - | max(0, 426.405 | - | 536.985 | + | 25.218 | )) |
= | 783.959 |
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 | )) |
= | 1028.565 | - | 179.75 | - | ( 13.607 | - | max(0, 382.592 | - | 537.478 | + | 13.607 | )) |
= | 835.208 |
Motorcar Parts of America'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: Sep. 2023 ) | + | Invested Capital (Q: Dec. 2023 )) | / count ) |
= | 25.5 * ( 1 - -375.32% ) | / | ( (861.608 | + | 764.808) | / 2 ) |
= | 121.2066 | / | 813.208 | |||
= | 14.90 % |
where
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 | )) |
= | 1066.772 | - | 192.835 | - | ( 12.329 | - | max(0, 424.972 | - | 588.215 | + | 12.329 | )) |
= | 861.608 |
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 | )) |
= | 995.933 | - | 216.764 | - | ( 14.361 | - | max(0, 389.545 | - | 544.36 | + | 14.361 | )) |
= | 764.808 |
Note: The Operating Income data used here is four times the quarterly (Dec. 2023) 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.
Motorcar Parts of America (NAS:MPAA) 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, Motorcar Parts of America's WACC % is 18.06%. Motorcar Parts of America's ROIC % is 189.75% (calculated using TTM income statement data). Motorcar Parts of America generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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. Motorcar Parts of America earns returns that do not match up to its cost of capital. It will destroy value as it grows.
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.
Thank you for viewing the detailed overview of Motorcar Parts of America's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Rudolph J Borneo | director | 50 O'FARRELL STREET, SAN FRANCISCO CA 94108 |
David Bryan | director | 605 STAPP ROAD, BOULDER CREEK CA 95006 |
Bison Capital Partners Vi, L.p. | director | 233 WILSHIRE BOULEVARD, SUITE 425, SANTA MONICA CA 90401 |
Bison Capital Partners Vi-a, L.p. | director | 233 WILSHIRE BOULEVARD, SUITE 425, SANTA MONICA CA 90401 |
Douglas B Trussler | director | 39 EAST UNION STREET, PASADENA CA 91103 |
Richard K Mochulsky | officer: Vice President, Sales | 2929 CALIFORNIA STREET, TORRANCE CA 90505 |
Joseph Edwin Ferguson | director | 5103 SOUTH GARTH AVENUE, LOS ANGELES CA 90056 |
Joffe Selwyn | director, officer: President, CEO & Chairman | |
Kamlesh Shah | officer: Chief Accounting Officer | C/O MOTORCAR PARTS OF AMERICA, INC., 2929 CALIFORNIA STREET, TORRANCE CA 90503 |
David Sung Lee | officer: CFO | 2929 CALIFORNIA STREET, TORRANCE CA 90503 |
Patricia W Warfield | director | 2929 CALIFORNIA STREET, TORRANCE CA 90503 |
Duane Franklin Miller | director | 7811 FIELDSTONE RIDGE, CLARKSTON MI 48348 |
Jamy P. Rankin | director | C/O MOTOR CAR PARTS OF AMERICA, INC., 2929 CALIFORNIA STREET, TORRANCE CA 90503 |
Philip Gay | director | 6300 CANOGA AVENUE, SUITE 1700, WOODLAND HILLS CA 91367 |
Juliet Lynn Stone | officer: VP, Gen Counsel and Secretary | C/O MOTORCAR PARTS OF AMERICA, INC., 2020 CALIFORNIA STREET, TORRANCE CA 90503 |
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