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China Life Insurance Co ROIC %

: 1.38% (As of Dec. 2019)
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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 %. China Life Insurance Co's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2019 was 1.38%.

As of today (2020-08-03), China Life Insurance Co's WACC % is 9.28%. China Life Insurance Co's ROIC % is 1.94% (calculated using TTM income statement data). China Life Insurance Co earns returns that do not match up to its cost of capital. It will destroy value as it grows.


China Life Insurance Co 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.

China Life Insurance Co Annual Data
Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.74 0.96 1.43 0.53 1.92

China Life Insurance Co Semi-Annual Data
Jun10 Dec10 Jun11 Dec11 Jun12 Dec12 Jun13 Dec13 Jun14 Dec14 Jun15 Dec15 Jun16 Dec16 Jun17 Dec17 Jun18 Dec18 Jun19 Dec19
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 1.65 1.33 -0.23 2.51 1.38

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.


China Life Insurance Co ROIC % Distribution

* The bar in red indicates where China Life Insurance Co's ROIC % falls into.



China Life Insurance Co ROIC % Calculation

China Life Insurance Co's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2019 is calculated as:

ROIC % (A: Dec. 2019 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (A: Dec. 2018 ) + Invested Capital (A: Dec. 2019 ))/ count )
=9132.1271226314 * ( 1 - 1.31% )/( (443916.63640193 + 497074.39725109)/ 2 )
=9012.496257325/470495.51682651
=1.92 %

where

Invested Capital(A: Dec. 2018 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=472769.44085303 - 26029.025088252 - ( 7381.0596045731 - 5% * 91145.604834609 )
=443916.63640193

Invested Capital(A: Dec. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=531350.64231433 - 31876.32775853 - ( 7600.2680468226 - 5% * 104007.01484238 )
=497074.39725109

China Life Insurance Co's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2019 is calculated as:

ROIC % (Q: Dec. 2019 )
=NOPAT/Average Invested Capital
=EBIT * ( 1 - Tax Rate % )/( (Invested Capital (Q: Jun. 2019 ) + Invested Capital (Q: Dec. 2019 ))/ count )
=6623.3229251322 * ( 1 - -0.88% )/( (477688.80206446 + 493879.0723869)/ 2 )
=6681.6081668734/485783.93722568
=1.38 %

where

Invested Capital(Q: Jun. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=504495.70146571 - 21754.787827827 - ( 8301.1728547197 - 5% * 64981.225625933 )
=477688.80206446

Invested Capital(Q: Dec. 2019 )
=Total Assets - Accounts Payable & Accrued Expense - Excess Cash
=Total Assets - Accounts Payable & Accrued Expense - ( Cash and cash equivalents - 5% * Revenue )
=531350.64231433 - 31876.32775853 - ( 7600.2680468226 - 5% * 40100.517558493 )
=493879.0723869

Note: The EBIT data used here is two times the semi-annual (Dec. 2019) data.

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


China Life Insurance Co  (NYSE:LFC) 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, China Life Insurance Co's WACC % is 9.28%. China Life Insurance Co's ROIC % is 1.94% (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.


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