CFEIY (China Feihe) ROC % : 26.97% (As of Jun. 2024)

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What is China Feihe 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 %. China Feihe's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 26.97%.

As of today (2024-12-13), China Feihe's WACC % is 13.14%. China Feihe's ROC % is 25.81% (calculated using TTM income statement data). China Feihe generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

China Feihe ROC % Historical Data

The historical data trend for China Feihe'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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China Feihe ROC % Chart

China Feihe Annual Data

Trend

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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52.58

65.17

61.82

37.51

24.71

China Feihe Semi-Annual Data
	Dec16	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24
ROC %	Get a 7-Day Free Trial										35.39	39.99	25.34	24.44	26.97

China Feihe ROC % Calculation

China Feihe'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 )
=	723.461 * ( 1 - 32.16% )	/	( (1979.355	+	1993.323)	/ 2 )
=	490.7959424	/	1986.339
=	24.71 %

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	))
=	5094.277	-	996.358	-	( 2737.1	-	max(0, 1069.996	-	3188.56	+	2737.1	))
=	1979.355

	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	))
=	5069.141	-	950.942	-	( 2676.655	-	max(0, 1033.897	-	3158.773	+	2676.655	))
=	1993.323

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

	ROC % (Q: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	831.118 * ( 1 - 36.9% )	/	( (1993.323	+	1895.725)	/ 2 )
=	524.435458	/	1944.524
=	26.97 %

where

	Invested Capital		(Q: 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	))
=	5069.141	-	950.942	-	( 2676.655	-	max(0, 1033.897	-	3158.773	+	2676.655	))
=	1993.323

	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	))
=	4908.43	-	850.883	-	( 2629.058	-	max(0, 925.278	-	3087.1	+	2629.058	))
=	1895.725

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

China Feihe (OTCPK:CFEIY) 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, China Feihe's WACC % is 13.14%. China Feihe's ROC % is 25.81% (calculated using TTM income statement data). China Feihe generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

China Feihe ROC % Related Terms

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China Feihe Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Defensive » Consumer Packaged Goods » China Feihe Ltd (OTCPK:CFEIY) » Definitions » ROC %

Traded in Other Exchanges

CHFLF:USA 6186:Mexico 06186:Hong Kong

Address

10 Jiuxianqiao Road, Block C, 16th Floor, Star City International Building, Chaoyang District, Beijing, CHN, 100016

Website

https://www.feihe.com

China Feihe is the number one infant milk formula producer in China, with a premium market positioning among domestic and foreign competing brands. The company utilizes the flagship Astrobaby lineup to promote its "more suitable for Chinese babies" proposition. It has a nationwide distributor network covering maternity stores, supermarkets and traditional retailers, as well as a direct sales network in e-commerce.

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