China Power Equipment (China Power Equipment) ROC % : 41.56% (As of Sep. 2013)

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What is China Power Equipment 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 Power Equipment's annualized return on capital (ROC %) for the quarter that ended in Sep. 2013 was 41.56%.

As of today (2024-06-25), China Power Equipment's WACC % is 0.00%. China Power Equipment's ROC % is 0.00% (calculated using TTM income statement data). China Power Equipment earns returns that do not match up to its cost of capital. It will destroy value as it grows.

China Power Equipment ROC % Historical Data

The historical data trend for China Power Equipment'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 Power Equipment ROC % Chart

China Power Equipment Annual Data

Trend

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

ROC %

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18.45

48.62

55.39

51.58

40.05

China Power Equipment Quarterly Data
	Dec08	Mar09	Jun09	Sep09	Dec09	Mar10	Jun10	Sep10	Dec10	Mar11	Jun11	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13
ROC %	Get a 7-Day Free Trial															53.81	32.91	21.97	31.97	41.56

China Power Equipment ROC % Calculation

China Power Equipment's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2012 is calculated as:

	ROC % (A: Dec. 2012 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2011 )	+	Invested Capital (A: Dec. 2012 ))	/ count )
=	7.689 * ( 1 - 17.31% )	/	( (11.962	+	19.787)	/ 2 )
=	6.3580341	/	15.8745
=	40.05 %

where

	Invested Capital		(A: Dec. 2011 )
=	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	))
=	37.567	-	2.515	-	( 23.09	-	max(0, 2.58	-	26.475	+	23.09	))
=	11.962

	Invested Capital		(A: Dec. 2012 )
=	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	))
=	45.313	-	3.542	-	( 21.984	-	max(0, 3.609	-	35.238	+	21.984	))
=	19.787

China Power Equipment's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2013 is calculated as:

	ROC % (Q: Sep. 2013 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2013 )	+	Invested Capital (Q: Sep. 2013 ))	/ count )
=	7.788 * ( 1 - 17.03% )	/	( (15.868	+	15.231)	/ 2 )
=	6.4617036	/	15.5495
=	41.56 %

where

	Invested Capital		(Q: Jun. 2013 )
=	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	))
=	48.714	-	3.61	-	( 29.236	-	max(0, 3.678	-	39.024	+	29.236	))
=	15.868

	Invested Capital		(Q: Sep. 2013 )
=	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	))
=	51.332	-	4.346	-	( 31.755	-	max(0, 4.414	-	41.93	+	31.755	))
=	15.231

Note: The Operating Income data used here is four times the quarterly (Sep. 2013) data.

China Power Equipment (OTCPK:CPQQ) 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 Power Equipment's WACC % is 0.00%. China Power Equipment's ROC % is 0.00% (calculated using TTM income statement data). China Power Equipment 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.

China Power Equipment ROC % Related Terms

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China Power Equipment (China Power Equipment) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Technology » Hardware » China Power Equipment Inc (OTCPK:CPQQ) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

N/A

Address

Yongle Industry Zone, Jingyang Industry Concentration Area, Xi’an, Shaanxi, CHN, 713702

Website

http://www.chinapower-equipment.com

China Power Equipment Inc designs, manufactures, and distributes amorphous alloy transformer cores and amorphous alloy distribution transformers in the Peoples Republic of China. Its devices are used to step down voltage at the final phase of the distribution of electricity to consumers, businesses, and industries. The Company offers its products to electricity generators and suppliers, suppliers of electrical equipment, and other electric power transformers manufacturers.

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