Affinity Education Group (FRA:A0J) Operating Income : € Mil (TTM As of Jun. 2015)

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What is Affinity Education Group Operating Income?

Affinity Education Group's Operating Income for the six months ended in Jun. 2015 was €0.8 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Affinity Education Group's Operating Income for the six months ended in Jun. 2015 was €0.8 Mil. Affinity Education Group's Revenue for the six months ended in Jun. 2015 was €59.8 Mil. Therefore, Affinity Education Group's Operating Margin % for the quarter that ended in Jun. 2015 was 1.29%.

Affinity Education Group'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. Affinity Education Group's annualized ROC % for the quarter that ended in Jun. 2015 was 14.52%. Affinity Education Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2015 was 24.64%.

Affinity Education Group Operating Income Historical Data

The historical data trend for Affinity Education Group'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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Affinity Education Group Operating Income Chart

Affinity Education Group Annual Data

Trend

Dec14

Operating Income

-0.56

Affinity Education Group Semi-Annual Data
	Jun14	Dec14	Jun15
Operating Income	-3.19	2.54	0.77

Affinity Education Group 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.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2015 adds up the semi-annually data reported by the company within the most recent 12 months, which was € Mil.

Affinity Education Group (FRA:A0J) Operating Income Explanation

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

Affinity Education Group's annualized ROC % for the quarter that ended in Jun. 2015 is calculated as:

	ROC % (Q: Jun. 2015 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2014 )	+	Invested Capital (Q: Jun. 2015 ))	/ count )
=	1.544 * ( 1 - -1470% )	/	( (132.184	+	201.658)	/ 2 )
=	24.2408	/	166.921
=	14.52 %

where

	Invested Capital		(Q: Dec. 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	))
=	131.302	-	6.568	-	( 2.201	-	max(0, 14.929	-	7.479	+	2.201	))
=	132.184

	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	))
=	199.414	-	7.578	-	( 9.105	-	max(0, 21.901	-	12.079	+	9.105	))
=	201.658

Note: The Operating Income data used here is two times the semi-annual (Jun. 2015) data.

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

Affinity Education Group's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2015 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2015 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Dec. 2014		Q: Jun. 2015
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	1.6	/	( ( (4.769 + max(-12.177, 0))	+	(8.216 + max(-20.83, 0)) )	/	2 )
=	1.6	/	( ( 4.769	+	8.216 )	/	2 )
=	1.6	/	6.4925
=	24.64 %

where Working Capital is:

	Working Capital		(Q: Dec. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	2.296)	-	(6.568	+	2.329	+	5.576)
=	-12.177

	Working Capital		(Q: Jun. 2015 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(0	+	0	+	0.798)	-	(7.578	+	3.077	+	10.973)
=	-20.83

When net working capital is negative, 0 is used.

Note: The EBIT data used here is two times the semi-annual (Jun. 2015) EBIT data.

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

Affinity Education Group's Operating Margin % for the quarter that ended in Jun. 2015 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2015 )	/	Revenue (Q: Jun. 2015 )
	=	0.772	/	59.839
	=	1.29 %

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.

Affinity Education Group Operating Income Related Terms

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Affinity Education Group (FRA:A0J) Business Description

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Address

Website

http://investors.affinityeducation.com.au

Affinity Education Group Ltd was incorporated on 21st May, 2013. The Company provides education and care to children aged six weeks to 12 years. Provision of these services includes long day care, before and after school care and occasional care. Its segments include Long day care centers, Outside school-hours care, Family day care, and Occasional care. Long day care centers are set up to primarily offer care to below school age children with working parents. The care can be both full-and-part time. Outside school-hours care provides before and after school short-term care to children of primary school age. Vacation care is also considered part of this segment, providing child care services to parents during school holidays. Family day care is the only area of child care approved under the National Quality Framework that takes place outside of a center, with care provided in the home of an approved educator. This type of care can be all day, part time, occasional or outside school hours. Occasional care offers child care services for children on a casual basis. Centers offering occasional services are primarily set up to provide flexibility to parents with irregular working hours or short-term needs. As with family day care, occasional care is a capped program.

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