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Youdao ROIC %

: -21.04% (As of Sep. 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 %. Youdao's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2021 was -21.04%.

As of today (2021-12-07), Youdao's WACC % is 7.07%. Youdao's ROIC % is -60.88% (calculated using TTM income statement data). Youdao earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Youdao ROIC % Historical Data

The historical data trend for Youdao'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.

Youdao Annual Data
Trend Dec17 Dec18 Dec19 Dec20
ROIC %
-13.57 -20.89 -46.89 -88.86

Youdao Quarterly Data
Dec17 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21
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 -190.09 -78.16 -52.57 -90.18 -21.04

Competitive Comparison

For the Internet Content & Information subindustry, Youdao'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.

   

Youdao ROIC % Distribution

For the Interactive Media industry and Communication Services sector, Youdao's ROIC % distribution charts can be found below:

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



Youdao ROIC % Calculation

Youdao'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 )
=-263.82808557491 * ( 1 - -0.17% )/( (198.97101387285 + 395.84190968452)/ 2 )
=-264.27659332039/297.40646177869
=-88.86 %

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))
=297.48406689764 - 59.846158233172 - ( 231.00374980396 - max(0, 250.75409555584 - 289.42099034746+231.00374980396))
=198.97101387285

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))
=316.58556726255 - 156.54856024345 - ( 182.65884727723 - max(0, 518.94927591638 - 283.14437325096+182.65884727723))
=395.84190968452

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

ROIC % (Q: Sep. 2021 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2021 ) + Invested Capital (Q: Sep. 2021 ))/ count )
=-80.107801682078 * ( 1 - -1.98% )/( (398.15050583658 + 378.33945138857)/ 2 )
=-81.693936155383/388.24497861257
=-21.04 %

where

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))
=463.80513618677 - 208.81929961089 - ( 289.4846692607 - max(0, 559.64155642023 - 416.47688715953+289.4846692607))
=398.15050583658

Invested Capital(Q: Sep. 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))
=379.80979818162 - 162.55719219987 - ( 139.93974877252 - max(0, 473.99625172312 - 312.90940631631+139.93974877252))
=378.33945138857

Note: The Operating Income data used here is four times the quarterly (Sep. 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.


Youdao  (NYSE:DAO) 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, Youdao's WACC % is 7.07%. Youdao's ROIC % is -60.88% (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.


Youdao ROIC % Related Terms

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Youdao Business Description

Youdao logo
Industry
Traded in Other Exchanges
Address
No. 399, Wangshang Road, Binjiang District, Hangzhou, CHN, 310051
Youdao Inc develops and markets software applications. It engages in developing technologies to provide learning content, applications, and solutions. The firm operates in three segments: Learning services, Learning products, and Online marketing services. Nearly half of its revenues come from the Learning services segment, which generates revenues from online courses, mainly including Youdao Premium Courses, NetEase Cloud Classroom, and China University MOOC. The learning products segment includes sales of smart devices such as Youdao Dictionary Pen and Youdao Pocket Translator. It generates revenues from the online marketing services through the provision of different formats of advertisement, including but not limited to banners, text links, videos, logos, buttons, and rich media.

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