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Telesat ROIC %

: 5.72% (As of Dec. 2021)
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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 %. Telesat's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2021 was 5.72%.

As of today (2022-08-15), Telesat's WACC % is 4.82%. Telesat's ROIC % is 5.72% (calculated using TTM income statement data). Telesat 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.


Telesat ROIC % Historical Data

The historical data trend for Telesat'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.

* Premium members only.

Telesat Annual Data
Trend Dec19 Dec20 Dec21
ROIC %
- 8.60 5.72

Telesat Semi-Annual Data
Dec19 Dec20 Dec21
ROIC % - 8.60 5.72

Competitive Comparison

For the Communication Equipment subindustry, Telesat'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.

   

Telesat ROIC % Distribution

For the Hardware industry and Technology sector, Telesat's ROIC % distribution charts can be found below:

* The bar in red indicates where Telesat's ROIC % falls into.



Telesat ROIC % Calculation

Telesat's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2021 is calculated as:

ROIC % (A: Dec. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2020 ) + Invested Capital (A: Dec. 2021 ))/ count )
=322.428125 * ( 1 - 33.19% )/( (3746.5266609415 + 3788.3578125)/ 2 )
=215.4142303125/3767.4422367208
=5.72 %

where

Invested Capital(A: Dec. 2020 )
=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))
=4357.2433445234 - 39.642438910141 - ( 639.25833398392 - max(0, 126.57194160356 - 697.64618627528+639.25833398392))
=3746.5266609415

Invested Capital(A: Dec. 2021 )
=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))
=4973.40390625 - 63.57734375 - ( 1133.1671875 - max(0, 142.15234375 - 1263.62109375+1133.1671875))
=3788.3578125

Telesat's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2021 is calculated as:

ROIC % (Q: Dec. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2020 ) + Invested Capital (Q: Dec. 2021 ))/ count )
=322.428125 * ( 1 - 33.19% )/( (3746.5266609415 + 3788.3578125)/ 2 )
=215.4142303125/3767.4422367208
=5.72 %

where

Invested Capital(Q: Dec. 2020 )
=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))
=4357.2433445234 - 39.642438910141 - ( 639.25833398392 - max(0, 126.57194160356 - 697.64618627528+639.25833398392))
=3746.5266609415

Invested Capital(Q: Dec. 2021 )
=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))
=4973.40390625 - 63.57734375 - ( 1133.1671875 - max(0, 142.15234375 - 1263.62109375+1133.1671875))
=3788.3578125

Note: The Operating Income data used here is one times the annual (Dec. 2021) 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.


Telesat  (NAS:TSAT) 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, Telesat's WACC % is 4.82%. Telesat's ROIC % is 5.72% (calculated using TTM income statement data). Telesat 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. Telesat 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.


Telesat ROIC % Related Terms

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Telesat Business Description

Telesat logo
Traded in Other Exchanges
Address
160 Elgin Street, Ottawa, ON, CAN, K2P 2P7
Telesat Corp is a global satellite operator, providing its customers with mission-critical communications services. The company's segment includes Broadcast; Enterprise and Consulting and other. It generates maximum revenue from the Broadcast segment. The Broadcast segment includes Direct-to-home television, video distribution and contribution, and occasional use services. Geographically, it derives a majority of revenue from Canada.
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