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Vivint Smart Home ROIC %

: -14.44% (As of Dec. 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 %. Vivint Smart Home's annualized return on invested capital (ROIC %) for the quarter that ended in Dec. 2020 was -14.44%.

As of today (2021-04-12), Vivint Smart Home's WACC % is 7.35%. Vivint Smart Home's ROIC % is -8.25% (calculated using TTM income statement data). Vivint Smart Home earns returns that do not match up to its cost of capital. It will destroy value as it grows.


Vivint Smart Home ROIC % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.

* Premium members only.

Vivint Smart Home Annual Data
Dec18 Dec19 Dec20
ROIC % 0.00 -4.51 -7.83

Vivint Smart Home Quarterly Data
Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.69 -3.64 -6.09 -9.44 -14.44

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.


Vivint Smart Home ROIC % Distribution

* The bar in red indicates where Vivint Smart Home's ROIC % falls into.



Vivint Smart Home ROIC % Calculation

Vivint Smart Home'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 )
=-232.363 * ( 1 - -0.28% )/( (3168.338 + 2784.97)/ 2 )
=-233.0136164/2976.654
=-7.83 %

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))
=2604.408 - 298.585 - ( 4.549 - max(0, 1013.965 - 151.45+4.549))
=3168.338

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))
=2877.493 - 409.062 - ( 313.799 - max(0, 757.547 - 441.008+313.799))
=2784.97

Vivint Smart Home's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Dec. 2020 is calculated as:

ROIC % (Q: Dec. 2020 )
=NOPAT/Average Invested Capital
=Operating Income * ( 1 - Tax Rate % )/( (Invested Capital (Q: Sep. 2020 ) + Invested Capital (Q: Dec. 2020 ))/ count )
=-401.708 * ( 1 - -0.69% )/( (2818.634 + 2784.97)/ 2 )
=-404.4797852/2801.802
=-14.44 %

where

Invested Capital(Q: Sep. 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))
=2924.679 - 406.316 - ( 295.682 - max(0, 742.482 - 442.211+295.682))
=2818.634

Invested Capital(Q: 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))
=2877.493 - 409.062 - ( 313.799 - max(0, 757.547 - 441.008+313.799))
=2784.97

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

* All numbers are in millions except for per share data and ratio. All numbers are indicated in the company's associated stock exchange currency.


Vivint Smart Home  (NYSE:VVNT) 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, Vivint Smart Home's WACC % is 7.35%. Vivint Smart Home's ROIC % is -8.25% (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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