Telefonica Brasil (Telefonica Brasil) ROIC % : 8.81% (As of Dec. 2023)

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What is Telefonica Brasil 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 %. Telefonica Brasil's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2023 was 8.81%.

As of today (2024-04-25), Telefonica Brasil's WACC % is 6.41%. Telefonica Brasil's ROIC % is 5.79% (calculated using TTM income statement data). Telefonica Brasil earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Telefonica Brasil ROIC % Historical Data

The historical data trend for Telefonica Brasil'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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Telefonica Brasil ROIC % Chart

Telefonica Brasil Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROIC %

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5.51

4.32

7.10

5.66

7.17

Telefonica Brasil Quarterly Data
	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Jun23	Sep23	Dec23
ROIC %	Get a 7-Day Free Trial															5.22	6.30	6.83	7.72	8.81

Competitive Comparison of Telefonica Brasil's ROIC %

For the Telecom Services subindustry, Telefonica Brasil'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.

Telefonica Brasil's ROIC % Distribution in the Telecommunication Services Industry

For the Telecommunication Services industry and Communication Services sector, Telefonica Brasil's ROIC % distribution charts can be found below:

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

Telefonica Brasil ROIC % Calculation

Telefonica Brasil's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROIC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	1736.15 * ( 1 - 9.58% )	/	( (21410.093	+	22358.127)	/ 2 )
=	1569.82683	/	21884.11
=	7.17 %

where

	Invested Capital		(A: Dec. 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	))
=	22709.704	-	2231.249	-	( 433.685	-	max(0, 4226.698	-	3295.06	+	433.685	))
=	21410.093

	Invested Capital		(A: Dec. 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	))
=	24641.41	-	2454.559	-	( 889.715	-	max(0, 4098.98	-	3927.704	+	889.715	))
=	22358.127

Telefonica Brasil's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROIC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	1973.06 * ( 1 - 0.79% )	/	( (22071.122	+	22358.127)	/ 2 )
=	1957.472826	/	22214.6245
=	8.81 %

where

	Invested Capital		(Q: Sep. 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	))
=	24296.105	-	2557.554	-	( 922.638	-	max(0, 4260.99	-	3928.419	+	922.638	))
=	22071.122

	Invested Capital		(Q: Dec. 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	))
=	24641.41	-	2454.559	-	( 889.715	-	max(0, 4098.98	-	3927.704	+	889.715	))
=	22358.127

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

Telefonica Brasil (NYSE:VIV) 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, Telefonica Brasil's WACC % is 6.41%. Telefonica Brasil's ROIC % is 5.79% (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.

Telefonica Brasil ROIC % Related Terms

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Telefonica Brasil (Telefonica Brasil) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Telecommunication Services » Telefonica Brasil SA (NYSE:VIV) » Definitions » ROIC %

Comparable Companies

Traded in Other Exchanges

TSPA:Germany VIVT3:Brazil VIV:Argentina

Address

Avenida Engenheiro Luis Carlos Berrini, 1376, 32nd Floor, Sao Paulo, SP, BRA, 04571-936

Website

https://www.telefonica.com.br

Telefonica Brasil, known as Vivo, is the largest wireless carrier in Brazil with 98 million customers, equal to about 40% market share. The firm is strongest in the postpaid business, where it has 60 million customers, about 42% share of this market. It is the incumbent fixed-line telephone operator in Sao Paulo state and, following the acquisition of GVT, the owner of an extensive fiber network across the country. The firm provides internet access to 6 million households on this network. Following its parent Telefonica's footsteps, Vivo is cross-selling fixed-line and wireless services as a converged offering. The firm also sells pay-tv services to its fixed-line customers.