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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 %. Precision Castparts's annualized return on invested capital (ROIC %) for the quarter that ended in Sep. 2015 was 8.24%.
As of today (2024-05-26), Precision Castparts's WACC % is 0.00%. Precision Castparts's ROIC % is 0.00% (calculated using TTM income statement data). Precision Castparts earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Precision Castparts'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.
Precision Castparts Annual Data | |||||||||||||||||||||
Trend | Mar06 | Mar07 | Mar08 | Mar09 | Mar10 | Mar11 | Mar12 | Mar13 | Mar14 | Mar15 | |||||||||||
ROIC % | Get a 7-Day Free Trial | 14.64 | 15.46 | 12.12 | 11.38 | 10.47 |
Precision Castparts Quarterly Data | ||||||||||||||||||||
Dec10 | Mar11 | Jun11 | Sep11 | Dec11 | Mar12 | Jun12 | Sep12 | Dec12 | Mar13 | Jun13 | Sep13 | Dec13 | Mar14 | Jun14 | Sep14 | Dec14 | Mar15 | Jun15 | Sep15 | |
ROIC % | Get a 7-Day Free Trial | 11.01 | 10.38 | 7.90 | 9.53 | 8.24 |
For the Metal Fabrication subindustry, Precision Castparts'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.
For the Industrial Products industry and Industrials sector, Precision Castparts's ROIC % distribution charts can be found below:
* The bar in red indicates where Precision Castparts's ROIC % falls into.
Precision Castparts's annualized Return on Invested Capital (ROIC %) for the fiscal year that ended in Mar. 2015 is calculated as:
ROIC % (A: Mar. 2015 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Mar. 2014 ) | + | Invested Capital (A: Mar. 2015 )) | / count ) |
= | 2612 * ( 1 - 32.14% ) | / | ( (16632 | + | 17233) | / 2 ) |
= | 1772.5032 | / | 16932.5 | |||
= | 10.47 % |
where
Invested Capital | (A: Mar. 2014 ) | |||||||||||
= | 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 | )) |
= | 18586 | - | 1593 | - | ( 361 | - | max(0, 1608 | - | 5507 | + | 361 | )) |
= | 16632 |
Invested Capital | (A: Mar. 2015 ) | |||||||||||
= | 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 | )) |
= | 19428 | - | 1721 | - | ( 474 | - | max(0, 2827 | - | 5972 | + | 474 | )) |
= | 17233 |
Precision Castparts's annualized Return on Invested Capital (ROIC %) for the quarter that ended in Sep. 2015 is calculated as:
ROIC % (Q: Sep. 2015 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Jun. 2015 ) | + | Invested Capital (Q: Sep. 2015 )) | / count ) |
= | 2192 * ( 1 - 32.75% ) | / | ( (17669 | + | 18106) | / 2 ) |
= | 1474.12 | / | 17887.5 | |||
= | 8.24 % |
where
Invested Capital | (Q: Jun. 2015 ) | |||||||||||
= | 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 | )) |
= | 20382 | - | 1657 | - | ( 1056 | - | max(0, 2196 | - | 6569 | + | 1056 | )) |
= | 17669 |
Invested Capital | (Q: Sep. 2015 ) | |||||||||||
= | 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 | )) |
= | 20189 | - | 1451 | - | ( 632 | - | max(0, 2013 | - | 6152 | + | 632 | )) |
= | 18106 |
Note: The Operating Income data used here is four times the quarterly (Sep. 2015) data.
* 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.
Precision Castparts (NYSE:PCP) 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, Precision Castparts's WACC % is 0.00%. Precision Castparts's ROIC % is 0.00% (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.
Thank you for viewing the detailed overview of Precision Castparts's ROIC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Ulrich Schmidt | director | PRECISION CASTPARTS CORP., 4650 SW MACADAM AVENUE, SUITE 400, PORTLAND OR 97239 |
Richard L Wambold | director | C/O PACTIV CORP, 1900 W FIELD COURT, LAKE FOREST IL 60045 |
Lester L Lyles | director | C/O MTC TECHNOLOGIES INC, 4032 LINDEN AVENUE, DAYTON OH 45432 |
Timothy A Wicks | director | C/O PRECISION CASTPARTS CORP., 4650 SW MACADAM AVENUE, SUITE 400, PORTLAND OR 97239 |
Andrew Masterman | officer: EVP, Pres. Wyman-Gordon | 401 PLYMOUTH ROAD, SUITE 500, PLYMOUTH MEETING PA 19462-1646 |
Kevin M Stein | officer: Exec VP | TRANSDIGM GROUP INCORPORATED, 1301 EAST 9TH STREET, SUITE 3000, CLEVELAND OH 44114 |
Steven G Rothmeier | director | C/O E.W BLANCH HOLDINGS INC, 500 N. AKARD #4500, DALLAS TX 75201 |
Russell S Pattee | officer: VP and Corporate Controller | PRECISION CASTPARTS CORP., 4650 SW MACADAM AVENUE, SUITE 400, PORTLAND OR 97239 |
Chris Ayers | officer: Exec. VP, Pres. PCC Forgings | 4650 S.W. MACADAM, SUITE #440, PORTLAND OR 97239 |
William D Larsson | officer: Sr. VP and CFO | 35 SHARPS CIRCLE, RENO NV 89519 |
Byron O Pond | director | C/O GSI GROUP INC., 125 MIDDLESEX TURNPIKE, BEDFORD MA 01730-1409 |
Wayne F Robbins | officer: President; PCC Flow Technologi | 4650 SW MACADAM, STE 440, PORTLAND OR 97239 |
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