Richmond Vanadium Technology (ASX:RVT) ROC % : -8.91% (As of Dec. 2023)

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What is Richmond Vanadium Technology 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 %. Richmond Vanadium Technology's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was -8.91%.

As of today (2024-06-07), Richmond Vanadium Technology's WACC % is 10.27%. Richmond Vanadium Technology's ROC % is -9.19% (calculated using TTM income statement data). Richmond Vanadium Technology earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Richmond Vanadium Technology ROC % Historical Data

The historical data trend for Richmond Vanadium Technology'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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Richmond Vanadium Technology ROC % Chart

Richmond Vanadium Technology Annual Data

Trend

Jun22

Jun23

ROC %

-13.20

Richmond Vanadium Technology Semi-Annual Data
	Dec22	Jun23	Dec23
ROC %	-19.57	-9.43	-8.91

Richmond Vanadium Technology ROC % Calculation

Richmond Vanadium Technology's annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	-3.922 * ( 1 - 0% )	/	( (29.295	+	30.118)	/ 2 )
=	-3.922	/	29.7065
=	-13.20 %

where

	Invested Capital		(A: Jun. 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	))
=	50.694	-	1.375	-	( 20.898	-	max(0, 1.504	-	21.528	+	20.898	))
=	29.295

	Invested Capital		(A: Jun. 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	))
=	48.943	-	1.178	-	( 18.772	-	max(0, 1.351	-	18.998	+	18.772	))
=	30.118

Richmond Vanadium Technology's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	-2.792 * ( 1 - 0% )	/	( (30.118	+	32.587)	/ 2 )
=	-2.792	/	31.3525
=	-8.91 %

where

	Invested Capital		(Q: Jun. 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	))
=	48.943	-	1.178	-	( 18.772	-	max(0, 1.351	-	18.998	+	18.772	))
=	30.118

	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	))
=	48.431	-	1.487	-	( 15.613	-	max(0, 1.608	-	15.965	+	15.613	))
=	32.587

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Richmond Vanadium Technology (ASX:RVT) 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, Richmond Vanadium Technology's WACC % is 10.27%. Richmond Vanadium Technology's ROC % is -9.19% (calculated using TTM income statement data). Richmond Vanadium Technology 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.

Richmond Vanadium Technology ROC % Related Terms

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Richmond Vanadium Technology (ASX:RVT) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Richmond Vanadium Technology Ltd (ASX:RVT) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

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Address

251 Adelaide Terrace, Level 11, Perth, WA, AUS, 6000

Website

https://www.richmondvanadium.com.au

Richmond Vanadium Technology Ltd is an Australian minerals exploration company advancing its Richmond Vanadium Project in north Queensland. The Richmond-Julia Creek Vanadium Project is the non-titanomagnetite vanadium deposit of its kind (soft marine sediments) globally and can produce a supply of vanadium for the steel and emerging energy storage markets. The project involves the development of an open cut, free dig vanadium mining operation producing vanadium pentoxide (V2O5) concentrate from the ore reserve.