Metal Storm Limited (ASX:MST) Operating Income : A$-7.90 Mil (TTM As of Dec. 2011)

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What is Metal Storm Limited Operating Income?

Metal Storm Limited's Operating Income for the six months ended in Dec. 2011 was A$-7.90 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Dec. 2011 was A$-7.90 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Metal Storm Limited's Operating Income for the six months ended in Dec. 2011 was A$-7.90 Mil. Metal Storm Limited's Revenue for the six months ended in Dec. 2011 was A$1.32 Mil. Therefore, Metal Storm Limited's Operating Margin % for the quarter that ended in Dec. 2011 was -599.47%.

Metal Storm Limited's 5-Year average Growth Rate for Operating Margin % was 0.00% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Metal Storm Limited's annualized ROC % for the quarter that ended in Dec. 2011 was -40.19%. Metal Storm Limited's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2011 was -1,038.41%.

Metal Storm Limited Operating Income Historical Data

The historical data trend for Metal Storm Limited's Operating Income 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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Metal Storm Limited Operating Income Chart

Metal Storm Limited Annual Data

Trend

Dec02

Dec03

Dec04

Dec05

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Operating Income

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-10.00

-7.58

-7.86

-5.04

-7.90

Metal Storm Limited Semi-Annual Data
	Dec00	Dec01	Dec02	Dec03	Dec04	Dec05	Dec06	Dec07	Dec08	Dec09	Dec10	Dec11
Operating Income	Get a 7-Day Free Trial							-10.00	-7.58	-7.86	-5.04	-7.90

Metal Storm Limited Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

For stock reported annually, GuruFocus uses latest annual data as the TTM data. Operating Income for the trailing twelve months (TTM) ended in Dec. 2011 was A$-7.90 Mil.

Metal Storm Limited (ASX:MST) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Metal Storm Limited's annualized ROC % for the quarter that ended in Dec. 2011 is calculated as:

	ROC % (Q: Dec. 2011 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2010 )	+	Invested Capital (Q: Dec. 2011 ))	/ count )
=	-7.901 * ( 1 - 0% )	/	( (19.873	+	19.447)	/ 2 )
=	-7.901	/	19.66
=	-40.19 %

where

	Invested Capital		(Q: Dec. 2010 )
=	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	))
=	2.147	-	1.187	-	( 1.167	-	max(0, 20.636	-	1.723	+	1.167	))
=	19.873

	Invested Capital		(Q: Dec. 2011 )
=	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	))
=	1.08	-	1.072	-	( 0.481	-	max(0, 20.157	-	0.718	+	0.481	))
=	19.447

Note: The Operating Income data used here is one times the annual (Dec. 2011) data.

2. Joel Greenblatt's definition of Return on Capital:

Metal Storm Limited's annualized ROC (Joel Greenblatt) % for the quarter that ended in Dec. 2011 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Dec. 2011 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Dec. 2010		Q: Dec. 2011
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-3.271	/	( ( (0.346 + max(-3.097, 0))	+	(0.284 + max(-1.091, 0)) )	/	2 )
=	-3.271	/	( ( 0.346	+	0.284 )	/	2 )
=	-3.271	/	0.315
=	-1,038.41 %

where Working Capital is:

	Working Capital		(Q: Dec. 2010 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	0)	-	(1.187	+	0	+	1.91)
=	-3.097

	Working Capital		(Q: Dec. 2011 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	0)	-	(1.072	+	0	+	0.019000000000002)
=	-1.091

When net working capital is negative, 0 is used.

Note: The EBIT data used here is one times the annual (Dec. 2011) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Metal Storm Limited's Operating Margin % for the quarter that ended in Dec. 2011 is calculated as:

Operating Margin %	=	Operating Income (Q: Dec. 2011 )	/	Revenue (Q: Dec. 2011 )
	=	-7.901	/	1.318
	=	-599.47 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Metal Storm Limited Operating Income Related Terms

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Metal Storm Limited (ASX:MST) Business Description

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Website

http://www.metalstorm.com

Metal Storm Ltd is incorporated under the laws of Australia on April 13, 1994. The company is a defence technology company engaged in the development of electronically initiated ballistics systems using its stacked round technology. Its technology is an electronically initiated, stacked projectile system which removes the mechanical steps required to fire a conventional weapon. Effectively, the only parts that move in Metal Storm's technology are the projectiles contained within the barrels. Multiple projectiles are stacked in a barrel, each separated by a propellant load. Its products include 3GL - 3 shot grenade launcher, FireStorm, MAUL, Redback, Munitions and Component weapon systems. The company also provides Research and Development as well as Consulting and Integration Services.