Centrais Eletricas Brasileiras (BSP:ELET3) ROC % : 5.85% (As of Sep. 2024)

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What is Centrais Eletricas Brasileiras 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 %. Centrais Eletricas Brasileiras's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was 5.85%.

As of today (2024-12-12), Centrais Eletricas Brasileiras's WACC % is 8.79%. Centrais Eletricas Brasileiras's ROC % is 5.58% (calculated using TTM income statement data). Centrais Eletricas Brasileiras earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Centrais Eletricas Brasileiras ROC % Historical Data

The historical data trend for Centrais Eletricas Brasileiras'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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Centrais Eletricas Brasileiras ROC % Chart

Centrais Eletricas Brasileiras Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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6.04

1.18

5.53

2.47

11.57

Centrais Eletricas Brasileiras 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															6.40	0.15	2.57	14.29	5.85

Centrais Eletricas Brasileiras ROC % Calculation

Centrais Eletricas Brasileiras's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2023 is calculated as:

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	10161.269 * ( 1 - -173.49% )	/	( (239252.611	+	241323.311)	/ 2 )
=	27790.0545881	/	240287.961
=	11.57 %

where

	Invested Capital		(A: Dec. 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	))
=	270217.462	-	8032.071	-	( 22932.78	-	max(0, 26440.876	-	49623.127	+	22932.78	))
=	239252.611

	Invested Capital		(A: 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	))
=	267057.654	-	6767.801	-	( 18966.542	-	max(0, 27159.791	-	47897.131	+	18966.542	))
=	241323.311

Centrais Eletricas Brasileiras'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 )
=	16815.608 * ( 1 - 14.15% )	/	( (245006.923	+	248714.926)	/ 2 )
=	14436.199468	/	246860.9245
=	5.85 %

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	))
=	273756.616	-	2582.476	-	( 26167.217	-	max(0, 23205.978	-	54645.749	+	26167.217	))
=	245006.923

	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	))
=	279800.195	-	2767.329	-	( 28378.431	-	max(0, 26759.974	-	55077.914	+	28378.431	))
=	248714.926

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

Centrais Eletricas Brasileiras (BSP:ELET3) 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, Centrais Eletricas Brasileiras's WACC % is 8.79%. Centrais Eletricas Brasileiras's ROC % is 5.58% (calculated using TTM income statement data). Centrais Eletricas Brasileiras 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.

Centrais Eletricas Brasileiras ROC % Related Terms

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Centrais Eletricas Brasileiras Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Utilities » Utilities - Independent Power Producers » Centrais Eletricas Brasileiras SA (BSP:ELET3) » Definitions » ROC %

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Traded in Other Exchanges

EBR.B:USA EBR:USA XELTO:Spain XELTB:Spain L3X:Germany ELET6:Brazil EBR:Argentina

Address

Rua da Quitanda 196, 9th floor, Centro, Rio de Janeiro, RJ, BRA, 20091-005

Website

https://www.eletrobras.com

Centrais Eletricas Brasileiras SA is engaged in the generation, transmission, and commercialization of electricity in Brazil. The company operates a portfolio of wind, thermal, hydro, and nuclear power plants located throughout the country. Its segments are Generation which consists of the generation of electric energy and the sale of energy to distribution companies and free consumers, and commercialization; Transmission which consists of the transmission of electric energy; and Administration activities mainly represent the Company's cash management, the management of the compulsory loan, and the management of business in SPEs, and others.

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