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UniFirst ROIC %

: 14.15% (As of Aug. 2019)
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Return on invested capital measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. UniFirst's annualized return on invested capital (ROIC) for the quarter that ended in Aug. 2019 was 14.15%.

As of today (2019-11-19), UniFirst's WACC % is 7.42%. UniFirst's return on invested capital is 14.04% (calculated using TTM income statement data). UniFirst 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.


UniFirst 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.

UniFirst Annual Data
Aug10 Aug11 Aug12 Aug13 Aug14 Aug15 Aug16 Aug17 Aug18 Aug19
ROIC % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 12.91 12.57 9.62 13.89 14.26

UniFirst Quarterly Data
Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17 Nov17 Feb18 May18 Aug18 Nov18 Feb19 May19 Aug19
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 11.33 12.11 14.95 14.71 14.15

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.


UniFirst ROIC % Distribution

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



UniFirst ROIC % Calculation

UniFirst's annualized Return on Invested Capital (ROIC) for the fiscal year that ended in Aug. 2019 is calculated as:

Return on Invested Capital(A: Aug. 2019 )
=NOPAT/Average Invested Capital
=Operating Income*(1-Tax Rate)/( (Invested Capital (A: Aug. 2018 ) + Invested Capital (A: Aug. 2019 ))/2)
=232.008 * ( 1 - 24.71% )/( (1194.455 + 1255.889)/2)
=174.6788232/1225.172
=14.26 %

where

Invested Capital(A: Aug. 2018 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation + Minority Interest + Total Stockholders Equity - Cash
=0 + 0 + 0 + 1464.967 - 270.512
=1194.455

Invested Capital(A: Aug. 2019 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation + Minority Interest + Total Stockholders Equity - Cash
=0 + 0 + 0 + 1641.23 - 385.341
=1255.889

UniFirst's annualized Return on Invested Capital (ROIC) for the quarter that ended in Aug. 2019 is calculated as:

Return on Invested Capital(Q: Aug. 2019 )
=NOPAT/Average Invested Capital
=Operating Income*(1-Tax Rate)/( (Invested Capital (Q: May. 2019 ) + Invested Capital (Q: Aug. 2019 ))/2)
=235.696 * ( 1 - 24.45% )/( (1260.286 + 1255.889)/2)
=178.068328/1258.0875
=14.15 %

where

Invested Capital(Q: May. 2019 )
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation + Minority Interest + Total Stockholders Equity - Cash
=0 + 0 + 0 + 1609.696 - 349.41
=1260.286

Invested Capital(Q: {Q1})
=Book Value of Debt + Book Value of Equity - Cash
=Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation + Minority Interest + Total Stockholders Equity - Cash
=0 + 0 + 0 + 1641.23 - 385.341
=1255.889

Note: The Operating Income data used here is four times the quarterly (Aug. 2019) data.

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


UniFirst  (NYSE:UNF) ROIC % Explanation

Return on Invested Capital 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 Return on Capital 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, UniFirst's WACC % is 7.42%. UniFirst's return on invested capital is 14.04% (calculated using TTM income statement data). UniFirst 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. UniFirst 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, ROC 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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