Aritzia (Aritzia) ROC % : 8.24% (As of Feb. 2024)

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What is Aritzia 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 %. Aritzia's annualized return on capital (ROC %) for the quarter that ended in Feb. 2024 was 8.24%.

As of today (2024-05-31), Aritzia's WACC % is 11.02%. Aritzia's ROC % is 6.96% (calculated using TTM income statement data). Aritzia earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Aritzia ROC % Historical Data

The historical data trend for Aritzia'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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Aritzia ROC % Chart

Aritzia Annual Data

Trend

Feb15

Feb16

Feb17

Feb18

Feb19

Feb20

Feb21

Feb22

Feb23

Feb24

ROC %

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16.05

4.28

17.32

15.46

7.02

Aritzia Quarterly Data
	May19	Aug19	Nov19	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23	Feb24
ROC %	Get a 7-Day Free Trial															13.25	4.75	3.83	12.72	8.24

Aritzia ROC % Calculation

Aritzia's annualized Return on Capital (ROC %) for the fiscal year that ended in Feb. 2024 is calculated as:

	ROC % (A: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Feb. 2023 )	+	Invested Capital (A: Feb. 2024 ))	/ count )
=	117.344 * ( 1 - 31.26% )	/	( (1135.96	+	1162.152)	/ 2 )
=	80.6622656	/	1149.056
=	7.02 %

where

	Invested Capital		(A: Feb. 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	))
=	1365.054	-	164.793	-	( 64.301	-	max(0, 310.168	-	454.77	+	64.301	))
=	1135.96

	Invested Capital		(A: Feb. 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	))
=	1441.58	-	158.845	-	( 120.946	-	max(0, 298.839	-	419.422	+	120.946	))
=	1162.152

Aritzia's annualized Return on Capital (ROC %) for the quarter that ended in Feb. 2024 is calculated as:

	ROC % (Q: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Nov. 2023 )	+	Invested Capital (Q: Feb. 2024 ))	/ count )
=	145.352 * ( 1 - 34.76% )	/	( (1138.723	+	1162.152)	/ 2 )
=	94.8276448	/	1150.4375
=	8.24 %

where

	Invested Capital		(Q: Nov. 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	))
=	1422.705	-	181.258	-	( 102.724	-	max(0, 336.014	-	443.975	+	102.724	))
=	1138.723

	Invested Capital		(Q: Feb. 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	))
=	1441.58	-	158.845	-	( 120.946	-	max(0, 298.839	-	419.422	+	120.946	))
=	1162.152

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

Aritzia (OTCPK:ATZAF) 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, Aritzia's WACC % is 11.02%. Aritzia's ROC % is 6.96% (calculated using TTM income statement data). Aritzia 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.

Aritzia ROC % Related Terms

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Aritzia (Aritzia) Business Description

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GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » Aritzia Inc (OTCPK:ATZAF) » Definitions » ROC %

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Address

611 Alexander Street, Suite 118, Vancouver, BC, CAN, V6A 1E1

Website

https://www.aritzia.com

Aritzia Inc is an integrated design house of exclusive fashion brands. It designs apparel and accessories for its collection of exclusive brands and sells them under the Aritzia banner. The category of products offered by the firm is blouses, T-shirts, pants, dresses, sweaters, jackets and coats, skirts, shorts, jumpsuits, and accessories. The Company reports as a single segment and includes all sales channels accessed by the Company's clients, including sales through the Company's eCommerce website and sales at the Company's boutiques. Its geographical segments include Canada and the United States. The company generates the majority of its revenue from Retail, followed by eCommerce.