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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Advanced Disposal Services's annualized return on capital (ROC %) for the quarter that ended in Jun. 2020 was 2.54%.
As of today (2024-05-06), Advanced Disposal Services's WACC % is 5.42%. Advanced Disposal Services's ROC % is 0.52% (calculated using TTM income statement data). Advanced Disposal Services earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Advanced Disposal Services'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.
Advanced Disposal Services Annual Data | |||||||||||||||||
Trend | Dec12 | Dec13 | Dec14 | Dec15 | Dec16 | Dec17 | Dec18 | Dec19 | |||||||||
ROC % | Get a 7-Day Free Trial | 2.20 | 2.18 | -41.50 | 1.94 | 0.55 |
Advanced Disposal Services Quarterly Data | ||||||||||||||||||||
Sep15 | Dec15 | Mar16 | Jun16 | Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | Sep19 | Dec19 | Mar20 | Jun20 | |
ROC % | Get a 7-Day Free Trial | 0.05 | 2.57 | 1.91 | 1.21 | 2.54 |
Advanced Disposal Services's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2019 is calculated as:
ROC % (A: Dec. 2019 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2018 ) | + | Invested Capital (A: Dec. 2019 )) | / count ) |
= | 77.9 * ( 1 - 75.56% ) | / | ( (3478.6 | + | 3492.9) | / 2 ) |
= | 19.03876 | / | 3485.75 | |||
= | 0.55 % |
where
Invested Capital | (A: Dec. 2018 ) | |||||||||||
= | 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 | )) |
= | 3528.3 | - | 189.2 | - | ( 6.8 | - | max(0, 402.5 | - | 263 | + | 6.8 | )) |
= | 3478.6 |
Invested Capital | (A: Dec. 2019 ) | |||||||||||
= | 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 | )) |
= | 3543.5 | - | 206.4 | - | ( 12.5 | - | max(0, 420.6 | - | 264.8 | + | 12.5 | )) |
= | 3492.9 |
Advanced Disposal Services's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2020 is calculated as:
ROC % (Q: Jun. 2020 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Mar. 2020 ) | + | Invested Capital (Q: Jun. 2020 )) | / count ) |
= | 112.8 * ( 1 - 23.46% ) | / | ( (3427.2 | + | 3372.1) | / 2 ) |
= | 86.33712 | / | 3399.65 | |||
= | 2.54 % |
where
Invested Capital | (Q: Mar. 2020 ) | |||||||||||
= | 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 | )) |
= | 3522.3 | - | 225.2 | - | ( 31 | - | max(0, 396.9 | - | 266.8 | + | 31 | )) |
= | 3427.2 |
Invested Capital | (Q: Jun. 2020 ) | |||||||||||
= | 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 | )) |
= | 3502.9 | - | 231 | - | ( 31.4 | - | max(0, 360 | - | 259.8 | + | 31.4 | )) |
= | 3372.1 |
Note: The Operating Income data used here is four times the quarterly (Jun. 2020) data.
* 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.
Advanced Disposal Services (NYSE:ADSW) 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, Advanced Disposal Services's WACC % is 5.42%. Advanced Disposal Services's ROC % is 0.52% (calculated using TTM income statement data). Advanced Disposal Services 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.
Thank you for viewing the detailed overview of Advanced Disposal Services's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Tanuja M Dehne | director | C/O SILVER BAY REALTY TRUST CORP., 601 CARLSON PARKWAY, SUITE 250, MINNETONKA MN 55305 |
E Renae Conley | director | 414 SILVER AVE SW MS 1275, ALBUQUERQUE NM 87102-3289 |
B Clyde Preslar | director | 305 GREGSON DRIVE, CARY NC 27518 |
Melissa Westerman | officer: Chief Accounting Officer | 5950 HAZELTINE NATIONAL DRIVE, SUITE 650, ORLANDO FL 32822 |
Burke Richard L. Jr. | director, officer: Chief Exec. Officer & Director | 90 FORT WADE ROAD, PONTE VEDRA FL 32081 |
John S. Spegal | officer: Chief Operating Officer | 90 FORT WADE ROAD PONTE VEDRA FL 32081 |
Steven R. Carn | officer: Executive Vice President & CFO | 90 FORT WADE ROAD PONTE VEDRA FL 32081 |
Michael K Slattery | officer: Senior VP, Gen Coun, Secretary | 90 FORT WADE ROAD PONTE VEDRA FL 32081 |
Michael J Hoffman | director | 1400 WEST 94TH STREET, BLOOMINGTON MN 55431 |
Ernest J Mrozek | director | SERVICE MASTER, 2300 WARRENVILLE ROAD, DOWNERS GROVE IL 60515 |
Highstar Capital Lp | 10 percent owner | 277 PARK AVENUE, 45TH FLOOR, NEW YORK NY 10172 |
Star Atlantic Waste Holdings, L.p. | 10 percent owner | 277 PARK AVENUE, 45TH FLOOR NEW YORK NY 10172 |
Star Atlantic Gp, Inc. | 10 percent owner | 277 PARK AVENUE, 45TH FLOOR NEW YORK NY 10172 |
Matthew C. Gunnelson | officer: Chief Accounting Officer | 90 FORT WADE ROAD PONTE VEDRA FL 32081 |
William W. Westrate | officer: Chief Administrative Officer | 90 FORT WADE ROAD PONTE VEDRA FL 32081 |
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