African Agriculture Holdings (African Agriculture Holdings) ROC % : -275.20% (As of Mar. 2024)

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What is African Agriculture Holdings ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. African Agriculture Holdings's annualized return on capital (ROC %) for the quarter that ended in Mar. 2024 was -275.20%.

As of today (2024-05-28), African Agriculture Holdings's WACC % is 8.88%. African Agriculture Holdings's ROC % is -191.14% (calculated using TTM income statement data). African Agriculture Holdings earns returns that do not match up to its cost of capital. It will destroy value as it grows.

African Agriculture Holdings ROC % Historical Data

The historical data trend for African Agriculture Holdings's ROC % 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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African Agriculture Holdings ROC % Chart

African Agriculture Holdings Annual Data

Trend

Dec21

Dec22

Dec23

ROC %

-36.42

-220.74

-258.38

African Agriculture Holdings Quarterly Data
	Dec21	Mar22	Jun22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24
ROC %	Get a 7-Day Free Trial				-269.20	-265.60	-245.12	-	-275.20

African Agriculture Holdings ROC % Calculation

African Agriculture Holdings's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	-40.962 * ( 1 - 0% )	/	( (13.609	+	18.098)	/ 2 )
=	-40.962	/	15.8535
=	-258.38 %

where

	Invested Capital		(A: Dec. 2022 )
=	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	))
=	10.879	-	5.659	-	( 0.01	-	max(0, 9.894	-	1.505	+	0.01	))
=	13.609

	Invested Capital		(A: Dec. 2023 )
=	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	))
=	18.382	-	26.897	-	( 2.788	-	max(0, 31.814	-	5.201	+	2.788	))
=	18.098

African Agriculture Holdings's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2024 is calculated as:

	ROC % (Q: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Mar. 2024 ))	/ count )
=	-50.464 * ( 1 - 0% )	/	( (18.098	+	18.576)	/ 2 )
=	-50.464	/	18.337
=	-275.20 %

where

	Invested Capital		(Q: Dec. 2023 )
=	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	))
=	18.382	-	26.897	-	( 2.788	-	max(0, 31.814	-	5.201	+	2.788	))
=	18.098

	Invested Capital		(Q: Mar. 2024 )
=	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	))
=	17.408	-	27.79	-	( 0.067	-	max(0, 32.635	-	3.677	+	0.067	))
=	18.576

Note: The Operating Income data used here is four times the quarterly (Mar. 2024) data.

African Agriculture Holdings (NAS:AAGR) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. 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 ROC % 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, African Agriculture Holdings's WACC % is 8.88%. African Agriculture Holdings's ROC % is -191.14% (calculated using TTM income statement data). African Agriculture Holdings 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.

African Agriculture Holdings ROC % Related Terms

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African Agriculture Holdings (African Agriculture Holdings) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » African Agriculture Holdings Inc (NAS:AAGR) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

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Address

445 Park Avenue, Ninth Floor, New York, NY, USA, 10022

Website

African Agriculture Holdings Inc is a holding company that operates principally through its wholly-owned subsidiary, which is developing the company's initial commercial farming business based in northern Senegal focusing on the production and sale of alfalfa for cattle feed and nutrition purposes. The company will sell alfalfa to owners and suppliers of cattle for feed and nutritional purposes, primarily in Senegal and the surrounding regions in Africa, the Economic Community of West African States (ECOWAS) region and the Middle East.