New Oriental Education & Technology Group (New Oriental Education & Technology Group) ROIC % : 1.89% (As of Nov. 2023)

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What is New Oriental Education & Technology Group 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 %. New Oriental Education & Technology Group's annualized return on invested capital (ROIC %) for the quarter that ended in Nov. 2023 was 1.89%.

As of today (2024-04-24), New Oriental Education & Technology Group's WACC % is 6.28%. New Oriental Education & Technology Group's ROIC % is 7.84% (calculated using TTM income statement data). New Oriental Education & Technology Group 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.

New Oriental Education & Technology Group ROIC % Historical Data

The historical data trend for New Oriental Education & Technology Group'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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New Oriental Education & Technology Group ROIC % Chart

New Oriental Education & Technology Group Annual Data

Trend

May14

May15

May16

May17

May18

May19

May20

May21

May22

May23

ROIC %

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9.03

7.94

2.00

-24.50

4.61

New Oriental Education & Technology Group Quarterly Data
	Feb19	May19	Aug19	Nov19	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23
ROIC %	Get a 7-Day Free Trial															-0.31	7.90	4.36	16.74	1.89

Competitive Comparison of New Oriental Education & Technology Group's ROIC %

For the Education & Training Services subindustry, New Oriental Education & Technology Group'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.

New Oriental Education & Technology Group's ROIC % Distribution in the Education Industry

For the Education industry and Consumer Defensive sector, New Oriental Education & Technology Group's ROIC % distribution charts can be found below:

* The bar in red indicates where New Oriental Education & Technology Group's ROIC % falls into.

New Oriental Education & Technology Group ROIC % Calculation

New Oriental Education & Technology Group's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in May. 2023 is calculated as:

	ROIC % (A: May. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: May. 2022 )	+	Invested Capital (A: May. 2023 ))	/ count )
=	190.046 * ( 1 - 21.41% )	/	( (2818.251	+	3654.678)	/ 2 )
=	149.3571514	/	3236.4645
=	4.61 %

where

	Invested Capital		(A: May. 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	))
=	6034.666	-	452.57	-	( 4190.957	-	max(0, 1710.114	-	4473.959	+	4190.957	))
=	2818.251

	Invested Capital		(A: May. 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	))
=	6392.458	-	574.871	-	( 3996.609	-	max(0, 2250.978	-	4413.887	+	3996.609	))
=	3654.678

New Oriental Education & Technology Group's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Nov. 2023 is calculated as:

	ROIC % (Q: Nov. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Aug. 2023 )	+	Invested Capital (Q: Nov. 2023 ))	/ count )
=	85.368 * ( 1 - 15.35% )	/	( (3668.98	+	3965.851)	/ 2 )
=	72.264012	/	3817.4155
=	1.89 %

where

	Invested Capital		(Q: Aug. 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	))
=	6674.715	-	801.087	-	( 4117.041	-	max(0, 2366.368	-	4571.016	+	4117.041	))
=	3668.98

	Invested Capital		(Q: Nov. 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	))
=	7131.494	-	853.664	-	( 4446.482	-	max(0, 2664.907	-	4976.886	+	4446.482	))
=	3965.851

Note: The Operating Income data used here is four times the quarterly (Nov. 2023) data.

New Oriental Education & Technology Group (NYSE:EDU) 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, New Oriental Education & Technology Group's WACC % is 6.28%. New Oriental Education & Technology Group's ROIC % is 7.84% (calculated using TTM income statement data). New Oriental Education & Technology Group 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. New Oriental Education & Technology Group 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.

New Oriental Education & Technology Group ROIC % Related Terms

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New Oriental Education & Technology Group (New Oriental Education & Technology Group) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Education » New Oriental Education & Technology Group Inc (NYSE:EDU) » Definitions » ROIC %

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Traded in Other Exchanges

EDUN:Mexico 09901:Hong Kong 0K75:UK N1U0:Germany E1DU34:Brazil

Address

No. 6 Hai Dian Zhong Street, Haidian District, Beijing, CHN, 100080

Website

https://www.neworiental.org

New Oriental is a leading private education provider in China. K-9 academic after-school tutoring used to account for 50%-60% of New Oriental's revenue before the regulatory crackdown in 2021. After terminating its K-9 academic after-school tutoring business, New Oriental has identified a few new initiatives such as nonacademic tutoring and intelligent learning systems and devices. The remaining businesses include high school academic after-school tutoring and overseas-related test preparation and consulting business. It also owns 55.7% of East Buy (HKG: 01797), a market leader in livestreaming e-commerce.