Earthworks Entertainment (Earthworks Entertainment) ROC % : -29.86% (As of Jun. 2006)

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What is Earthworks Entertainment 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 %. Earthworks Entertainment's annualized return on capital (ROC %) for the quarter that ended in Jun. 2006 was -29.86%.

As of today (2024-06-14), Earthworks Entertainment's WACC % is 0.00%. Earthworks Entertainment's ROC % is 0.00% (calculated using TTM income statement data). Earthworks Entertainment earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Earthworks Entertainment ROC % Historical Data

The historical data trend for Earthworks Entertainment'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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Earthworks Entertainment ROC % Chart

Earthworks Entertainment Annual Data

Trend

Sep96

Sep97

Sep98

Sep99

Sep00

Sep01

Sep02

Sep03

Sep04

Sep05

ROC %

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-67.26

-248.62

-129.97

-78.33

-54.95

Earthworks Entertainment Quarterly Data
	Sep01	Dec01	Mar02	Jun02	Sep02	Dec02	Mar03	Jun03	Sep03	Dec03	Mar04	Jun04	Sep04	Dec04	Mar05	Jun05	Sep05	Dec05	Mar06	Jun06
ROC %	Get a 7-Day Free Trial															-46.95	-86.57	-52.74	-44.71	-29.86

Earthworks Entertainment ROC % Calculation

Earthworks Entertainment's annualized Return on Capital (ROC %) for the fiscal year that ended in Sep. 2005 is calculated as:

	ROC % (A: Sep. 2005 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Sep. 2004 )	+	Invested Capital (A: Sep. 2005 ))	/ count )
=	-1.69 * ( 1 - 0% )	/	( (3.189	+	2.962)	/ 2 )
=	-1.69	/	3.0755
=	-54.95 %

where

	Invested Capital		(A: Sep. 2004 )
=	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	))
=	2.164	-	0.271	-	( 0.143	-	max(0, 1.439	-	0.143	+	0.143	))
=	3.189

	Invested Capital		(A: Sep. 2005 )
=	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	))
=	1.934	-	0.298	-	( 0.133	-	max(0, 1.637	-	0.311	+	0.133	))
=	2.962

Earthworks Entertainment's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2006 is calculated as:

	ROC % (Q: Jun. 2006 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2006 )	+	Invested Capital (Q: Jun. 2006 ))	/ count )
=	-0.988 * ( 1 - 0% )	/	( (3.282	+	3.336)	/ 2 )
=	-0.988	/	3.309
=	-29.86 %

where

	Invested Capital		(Q: Mar. 2006 )
=	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	))
=	1.794	-	0.761	-	( 0.003	-	max(0, 2.291	-	0.042	+	0.003	))
=	3.282

	Invested Capital		(Q: Jun. 2006 )
=	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	))
=	1.777	-	0.978	-	( 0.001	-	max(0, 2.562	-	0.025	+	0.001	))
=	3.336

Note: The Operating Income data used here is four times the quarterly (Jun. 2006) data.

Earthworks Entertainment (OTCPK:EWKS) 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, Earthworks Entertainment's WACC % is 0.00%. Earthworks Entertainment's ROC % is 0.00% (calculated using TTM income statement data). Earthworks Entertainment 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.

Earthworks Entertainment ROC % Related Terms

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Earthworks Entertainment (Earthworks Entertainment) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Communication Services » Media - Diversified » Earthworks Entertainment Inc (OTCPK:EWKS) » Definitions » ROC %

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Address

14001 North Dallas Parkway, Suite 1200, Dallas, TX, USA, 75420

Website

Earthworks Entertainment Inc is engaged in investments and acquisitions in entertainment segments including, animation, direct response marketing, radio networks and mixed martial arts social networks.

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