Solara Active Pharma Sciences (BOM:890202) ROC % : 6.26% (As of Sep. 2024)

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What is Solara Active Pharma Sciences 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 %. Solara Active Pharma Sciences's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was 6.26%.

As of today (2024-12-15), Solara Active Pharma Sciences's WACC % is 18.99%. Solara Active Pharma Sciences's ROC % is -0.87% (calculated using TTM income statement data). Solara Active Pharma Sciences earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Solara Active Pharma Sciences ROC % Historical Data

The historical data trend for Solara Active Pharma Sciences'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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Solara Active Pharma Sciences ROC % Chart

Solara Active Pharma Sciences Annual Data

Trend

Mar17

Mar18

Mar19

Mar20

Mar21

Mar22

Mar23

Mar24

ROC %

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9.26

13.83

-0.81

0.64

-9.13

Solara Active Pharma Sciences Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
ROC %	Get a 7-Day Free Trial															1.82	-8.84	-3.74	2.73	6.26

Solara Active Pharma Sciences ROC % Calculation

Solara Active Pharma Sciences'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 )
=	-1980.8 * ( 1 - -16.08% )	/	( (25705.4	+	24665.3)	/ 2 )
=	-2299.31264	/	25185.35
=	-9.13 %

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	))
=	28992.8	-	3200.1	-	( 87.3	-	max(0, 11011.3	-	11875.4	+	87.3	))
=	25705.4

	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	))
=	23509.6	-	3265.3	-	( 84.4	-	max(0, 12428.5	-	8007.5	+	84.4	))
=	24665.3

Solara Active Pharma Sciences'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: Jun. 2024 )	+	Invested Capital (Q: Sep. 2024 ))	/ count )
=	1438.8 * ( 1 - 0% )	/	( (0	+	22972.8)	/ 1 )
=	1438.8	/	22972.8
=	6.26 %

where

	Invested Capital		(Q: Jun. 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	))
=	0	-	0	-	( 0	-	max(0, 0	-	0	+	0	))
=	0

	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	))
=	22897.8	-	2812.7	-	( 180.7	-	max(0, 10483.3	-	7595.6	+	180.7	))
=	22972.8

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

Solara Active Pharma Sciences (BOM:890202) 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, Solara Active Pharma Sciences's WACC % is 18.99%. Solara Active Pharma Sciences's ROC % is -0.87% (calculated using TTM income statement data). Solara Active Pharma Sciences 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.

Solara Active Pharma Sciences ROC % Related Terms

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Solara Active Pharma Sciences Business Description

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GURUFOCUS.COM » STOCK LIST » Healthcare » Drug Manufacturers » Solara Active Pharma Sciences Ltd (BOM:890202) » Definitions » ROC %

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SOLARAPP:India SOLARA:India 541540:India

Address

27, Vandaloor Kelambakkam Road, 2nd Floor. Admin Block, Melakottaiyur (Post), Keelakottaiyur Village, Chennai, TN, IND, 600 127

Website

https://www.solara.co.in

Solara Active Pharma Sciences Ltd is engaged in Active Pharmaceutical Ingredients manufacturer (API) in India. It manufactures and develops APIs and offers services, including CRAMS and contract manufacturing for APIs. The company offers products and services, such as Anaesthetic, Analgesics, Antiviral, Retinod, Anti-emetic, Antimalarial, Diuretic, Muscle relaxant, Antiallergics, Antihypertensive, Calcimimetic agent, Anti-seizure, Antigout, Cardiovascular, Anti-infective, Cough suppressant and others. It also offers contract services including contract development and manufacturing, analytical services. The group has a business presence in the Asia Pacific, Europe, North America, South America, and other places, of which the majority of income is generated from the Asia Pacific countries.

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