ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Rubicon Water's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was -3.97%.
As of today (2024-05-01), Rubicon Water's WACC % is 11.19%. Rubicon Water's ROC % is -7.20% (calculated using TTM income statement data).
Rubicon Water earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Rubicon Water ROC % Historical Data
The historical data trend for Rubicon Water'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.
Note:
The Operating Income data used here is two times the semi-annual (Dec. 2023) 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.
Rubicon Water (ASX:RWL) 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, Rubicon Water's WACC % is 11.19%. Rubicon Water's ROC % is -7.20% (calculated using TTM income statement data).
Rubicon Water 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.
Rubicon Water ROC % Related Terms
Thank you for viewing the detailed overview of Rubicon Water's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.
Rubicon Water Ltd is engaged in the water technology solutions business that designs, manufactures, installs, and maintains irrigation automation software and hardware. It generates revenue through sales of hardware, software, and services, as well as from ongoing maintenance of the installed end-to-end solution base.
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