KK Shah Hospitals (BOM:544013) ROC % : -0.59% (As of Sep. 2024)

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What is KK Shah Hospitals 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 %. KK Shah Hospitals's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was -0.59%.

As of today (2024-12-14), KK Shah Hospitals's WACC % is 12.83%. KK Shah Hospitals's ROC % is 2.27% (calculated using TTM income statement data). KK Shah Hospitals earns returns that do not match up to its cost of capital. It will destroy value as it grows.

KK Shah Hospitals ROC % Historical Data

The historical data trend for KK Shah Hospitals'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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KK Shah Hospitals ROC % Chart

KK Shah Hospitals Annual Data

Trend

Mar23

Mar24

ROC %

5.91

2.27

KK Shah Hospitals Semi-Annual Data
	Mar23	Sep23	Mar24	Sep24
ROC %	-	8.58	0.35	-0.59

KK Shah Hospitals ROC % Calculation

KK Shah Hospitals's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2024 is calculated as:

	ROC % (A: Mar. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Mar. 2023 )	+	Invested Capital (A: Mar. 2024 ))	/ count )
=	2.201 * ( 1 - 12.9% )	/	( (34.198	+	135.006)	/ 2 )
=	1.917071	/	84.602
=	2.27 %

where

	Invested Capital		(A: Mar. 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	))
=	56.132	-	4.162	-	( 20.176	-	max(0, 5.194	-	22.966	+	20.176	))
=	34.198

	Invested Capital		(A: 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	))
=	146.312	-	3.255	-	( 8.051	-	max(0, 5.384	-	20.766	+	8.051	))
=	135.006

KK Shah Hospitals's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2024 is calculated as:

	ROC % (Q: Sep. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2024 )	+	Invested Capital (Q: Sep. 2024 ))	/ count )
=	-0.34 * ( 1 - -133.08% )	/	( (135.006	+	134.774)	/ 2 )
=	-0.792472	/	134.89
=	-0.59 %

where

	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	))
=	146.312	-	3.255	-	( 8.051	-	max(0, 5.384	-	20.766	+	8.051	))
=	135.006

	Invested Capital		(Q: Sep. 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	))
=	145.136	-	2.891	-	( 7.471	-	max(0, 3.879	-	13.529	+	7.471	))
=	134.774

Note: The Operating Income data used here is two times the semi-annual (Sep. 2024) data.

KK Shah Hospitals (BOM:544013) 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, KK Shah Hospitals's WACC % is 12.83%. KK Shah Hospitals's ROC % is 2.27% (calculated using TTM income statement data). KK Shah Hospitals 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.

KK Shah Hospitals ROC % Related Terms

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KK Shah Hospitals Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Healthcare Providers & Services » KK Shah Hospitals Ltd (BOM:544013) » Definitions » ROC %

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Traded in Other Exchanges

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Address

124, Katju Nagar, Swastik App., Ratlam, MP, IND, 457001

Website

http://www.shahhospitalratlam.com

KK Shah Hospitals Ltd is a company providing healthcare facilities which has sixty-five beds for in-patient treatment, their hospital is also equipped with diagnostic devices such as CT scan, DEXA scan, BMD, sonography, and X-Ray machines. The company is engaged in providing healthcare services which constitutes a single business segment.

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