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General Mills ROIC %

: 9.32% (As of May. 2020)
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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 %. General Mills's annualized return on invested capital (ROIC %) for the quarter that ended in May. 2020 was 9.32%.

As of today (2020-08-06), General Mills's WACC % is 3.95%. General Mills's ROIC % is 8.20% (calculated using TTM income statement data). General Mills 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.

General Mills ROIC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

General Mills Annual Data
May11 May12 May13 May14 May15 May16 May17 May18 May19 May20
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 9.37 9.65 10.07 7.85 8.39

General Mills Quarterly Data
Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19 Nov19 Feb20 May20
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 8.72 7.98 8.41 6.95 9.32
Competitive Comparison
* 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.

General Mills ROIC % Distribution

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


General Mills ROIC % Calculation

General Mills's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in May. 2020 is calculated as:

ROIC % (A: May. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (A: May. 2019 ) + Invested Capital (A: May. 2020 ))/ count )
=2978.3 * ( 1 - 18.48% )/( (29165.3 + 28715.4)/ 2 )
=2427.91016/28940.35
=8.39 %

where

Invested Capital(A: May. 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))
=30111.2 - 3846.5 - ( 450 - max(0, 7087.1 - 4186.5+450))
=29165.3

Invested Capital(A: May. 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))
=30806.7 - 4461.5 - ( 1677.8 - max(0, 7491.5 - 5121.3+1677.8))
=28715.4

General Mills's annualized Return on Invested Capital (ROIC %) for the quarter that ended in May. 2020 is calculated as:

ROIC % (Q: May. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Feb. 2020 ) + Invested Capital (Q: May. 2020 ))/ count )
=3364 * ( 1 - 19.05% )/( (29705.3 + 28715.4)/ 2 )
=2723.158/29210.35
=9.32 %

where

Invested Capital(Q: Feb. 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))
=30248.7 - 2931.5 - ( 606.9 - max(0, 6696.6 - 4308.5+606.9))
=29705.3

Invested Capital(Q: May. 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))
=30806.7 - 4461.5 - ( 1677.8 - max(0, 7491.5 - 5121.3+1677.8))
=28715.4

Note: The Operating Income data used here is four times the quarterly (May. 2020) data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

General Mills  (NYSE:GIS) 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, General Mills's WACC % is 3.95%. General Mills's ROIC % is 8.20% (calculated using TTM income statement data). General Mills 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. General Mills 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.

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