ReadSoft AB (LTS:0GQO) Operating Income : kr20.9 Mil (TTM As of Jun. 2014)

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What is ReadSoft AB Operating Income?

ReadSoft AB's Operating Income for the three months ended in Jun. 2014 was kr6.7 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2014 was kr20.9 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. ReadSoft AB's Operating Income for the three months ended in Jun. 2014 was kr6.7 Mil. ReadSoft AB's Revenue for the three months ended in Jun. 2014 was kr209.3 Mil. Therefore, ReadSoft AB's Operating Margin % for the quarter that ended in Jun. 2014 was 3.20%.

Good Sign:

ReadSoft AB operating margin is expanding. Margin expansion is usually a good sign.

ReadSoft AB's 5-Year average Growth Rate for Operating Margin % was 15.20% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. ReadSoft AB's annualized ROC % for the quarter that ended in Jun. 2014 was 2.29%. ReadSoft AB's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2014 was 168.55%.

ReadSoft AB Operating Income Historical Data

The historical data trend for ReadSoft AB'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.

* Premium members only.

ReadSoft AB Operating Income Chart

ReadSoft AB Annual Data

Trend

Dec04

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Dec13

Operating Income

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12.31

48.99

77.58

65.60

12.93

ReadSoft AB Quarterly Data
	Sep09	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14
Operating Income	Get a 7-Day Free Trial															1.90	-5.40	31.13	-11.50	6.70

ReadSoft AB 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. 2014 adds up the quarterly data reported by the company within the most recent 12 months, which was kr20.9 Mil.

ReadSoft AB (LTS:0GQO) Operating Income Explanation

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

ReadSoft AB's annualized ROC % for the quarter that ended in Jun. 2014 is calculated as:

	ROC % (Q: Jun. 2014 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2014 )	+	Invested Capital (Q: Jun. 2014 ))	/ count )
=	26.8 * ( 1 - 33.33% )	/	( (773.9	+	790)	/ 2 )
=	17.86756	/	781.95
=	2.29 %

where

	Invested Capital		(Q: 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	))
=	811	-	24.7	-	( 87.3	-	max(0, 399.7	-	412.1	+	87.3	))
=	773.9

	Invested Capital		(Q: Jun. 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	))
=	814.3	-	26.5	-	( 71.3	-	max(0, 417.1	-	414.9	+	71.3	))
=	790

Note: The Operating Income data used here is four times the quarterly (Jun. 2014) data.

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

ReadSoft AB's annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2014 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2014 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2014		Q: Jun. 2014
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	26.8	/	( ( (15.2 + max(-74.9, 0))	+	(16.6 + max(-73.5, 0)) )	/	2 )
=	26.8	/	( ( 15.2	+	16.6 )	/	2 )
=	26.8	/	15.9
=	168.55 %

where Working Capital is:

	Working Capital		(Q: Mar. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(235.4	+	0	+	89.4)	-	(24.7	+	0	+	375)
=	-74.9

	Working Capital		(Q: Jun. 2014 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(251.6	+	0	+	92)	-	(26.5	+	0	+	390.6)
=	-73.5

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2014) EBIT data.

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

ReadSoft AB's Operating Margin % for the quarter that ended in Jun. 2014 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2014 )	/	Revenue (Q: Jun. 2014 )
	=	6.7	/	209.3
	=	3.20 %

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.

ReadSoft AB Operating Income Related Terms

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ReadSoft AB (LTS:0GQO) Business Description

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ReadSoft AB is a Sweden-based company that creates and markets software and services for document automation, processes such as data entry, information verification, document workflows, and e-voicing. The company operates in over 16 countries worldwide, with partnerships in an additional 70. The company offers solutions primarily for industries such as banking, manufacturing, service bureaus, market research, insurance, government, and medical. Major customers include IKEA, Audi, Porsche, Yves Rocher, Swedish Tax, DaimlerChrysler, HSBS Bank, Avon, Bosch, London Underground, New York Transit, Toyota, Volvo, Monoprix, Ericsson, and ING. The company is headquartered in Helsingborg, Sweden. The company offers ReadSoft DOCUMENTS, a complete software platform for document automation. The product incorporates five Automation Areas: Capture, capturing the information in any format and making it ready for electronic processing; Understand, enabling the computer to read, sort, interpret, extract, and index documents electronically; Manage, providing customers with control of electronic documents, including the verification and quality control with archiving and monitoring capabilities; Integrate, integration with the business software; and Interchange, Electronic Data Interchange. Capabilities within each Automation Area are customized to the needs of the customer, and solutions can be expanded to include any required extra capabilities. Also, this software can be integrated with systems such as SAP and Oracle E-Business Suite, Intentia, and IFS. ReadSoft business solutions for specific areas include: ReadSoft Documents for Mailrooms, Documents for EDI, Documents for Invoices, and Documents for Forms. Additionally, the company offers Professional Services such as project management and customization, Solution Optimization, Training, and Technical Support.

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