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British American Tobacco ROIC %

: 5.84% (As of Jun. 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 %. British American Tobacco's annualized return on invested capital (ROIC %) for the quarter that ended in Jun. 2021 was 5.84%.

As of today (2021-10-16), British American Tobacco's WACC % is 5.67%. British American Tobacco's ROIC % is 5.44% (calculated using TTM income statement data). British American Tobacco earns returns that do not match up to its cost of capital. It will destroy value as it grows.


British American Tobacco ROIC % Historical Data

The historical data trend for British American Tobacco'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.

British American Tobacco Annual Data
Trend Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20
ROIC %
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 12.73 10.59 5.02 5.06 5.76

British American Tobacco Semi-Annual Data
Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19 Jun20 Dec20 Jun21
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.66 5.16 5.49 5.49 5.84

Competitive Comparison

For the Tobacco subindustry, British American Tobacco'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.

   

British American Tobacco ROIC % Distribution

For the Tobacco Products industry and Consumer Defensive sector, British American Tobacco's ROIC % distribution charts can be found below:

* The bar in red indicates where British American Tobacco's ROIC % falls into.



British American Tobacco ROIC % Calculation

British American Tobacco's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2020 is calculated as:

ROIC % (A: Dec. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2019 ) + Invested Capital (A: Dec. 2020 ))/ count )
=13393.817204301 * ( 1 - 24.31% )/( (178432.50327654 + 173380.37634409)/ 2 )
=10137.780241935/175906.43981031
=5.76 %

where

Invested Capital(A: Dec. 2019 )
=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))
=184803.40760157 - 13643.512450852 - ( 2650.0655307995 - max(0, 24669.724770642 - 17397.116644823+2650.0655307995))
=178432.50327654

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))
=185067.20430108 - 14194.892473118 - ( 2752.688172043 - max(0, 20803.76344086 - 18295.698924731+2752.688172043))
=173380.37634409

British American Tobacco's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Jun. 2021 is calculated as:

ROIC % (Q: Jun. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Dec. 2020 ) + Invested Capital (Q: Jun. 2021 ))/ count )
=13767.180925666 * ( 1 - 24.06% )/( (173380.37634409 + 184827.48948107)/ 2 )
=10454.797194951/179103.93291258
=5.84 %

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))
=185067.20430108 - 14194.892473118 - ( 2752.688172043 - max(0, 20803.76344086 - 18295.698924731+2752.688172043))
=173380.37634409

Invested Capital(Q: Jun. 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))
=192138.84992987 - 13015.427769986 - ( 4698.4572230014 - max(0, 25831.697054698 - 20127.62973352+4698.4572230014))
=184827.48948107

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


British American Tobacco  (NYSE:BTI) 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, British American Tobacco's WACC % is 5.67%. British American Tobacco's ROIC % is 5.44% (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.


British American Tobacco ROIC % Related Terms

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British American Tobacco Business Description

British American Tobacco logo
Industry
Address
Globe House, 4 Temple Place, London, GBR, WC2R 2PG
Following the acquisition of Reynolds American, British American Tobacco is neck-and-neck with Philip Morris International to be the largest listed global tobacco company--slightly larger than PMI on net revenue, but slightly smaller on volumes. British American's Global Drive Brands are Dunhill, Kent, Pall Mall, Lucky Strike, and Rothmans, and it also owns Newport and Camel in the U.S. The firm also sells vapor e-cigarettes, including its Vype brand, heated tobacco, with Glo, as well as roll- your-own and smokeless tobacco products. The company holds 31% of ITC Limited, the leading Indian cigarette-maker.

British American Tobacco Headlines

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