Sopharma AD-Sofia (FRA:3JR) ROC % : 5.94% (As of Dec. 2023)

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What is Sopharma AD-Sofia 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 %. Sopharma AD-Sofia's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 5.94%.

As of today (2024-05-16), Sopharma AD-Sofia's WACC % is 8.57%. Sopharma AD-Sofia's ROC % is 7.82% (calculated using TTM income statement data). Sopharma AD-Sofia earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Sopharma AD-Sofia ROC % Historical Data

The historical data trend for Sopharma AD-Sofia'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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Sopharma AD-Sofia ROC % Chart

Sopharma AD-Sofia Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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6.30

4.37

6.85

7.43

8.16

Sopharma AD-Sofia Quarterly Data
	Dec18	Mar19	Jun19	Sep19	Dec19	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23
ROC %	Get a 7-Day Free Trial															3.86	11.12	10.27	3.89	5.94

Sopharma AD-Sofia ROC % Calculation

Sopharma AD-Sofia'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 )
=	48.758 * ( 1 - 10.18% )	/	( (544.804	+	528.91)	/ 2 )
=	43.7944356	/	536.857
=	8.16 %

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	))
=	650.498	-	95.435	-	( 10.259	-	max(0, 211.31	-	296.978	+	10.259	))
=	544.804

	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	))
=	785.467	-	189.747	-	( 66.81	-	max(0, 316.016	-	408.287	+	66.81	))
=	528.91

Sopharma AD-Sofia's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Sep. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	38.512 * ( 1 - 11.97% )	/	( (612.051	+	528.91)	/ 2 )
=	33.9021136	/	570.4805
=	5.94 %

where

	Invested Capital		(Q: Sep. 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	))
=	746.775	-	125.729	-	( 8.995	-	max(0, 298.434	-	378.421	+	8.995	))
=	612.051

	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	))
=	785.467	-	189.747	-	( 66.81	-	max(0, 316.016	-	408.287	+	66.81	))
=	528.91

Note: The Operating Income data used here is four times the quarterly (Dec. 2023) data.

Sopharma AD-Sofia (FRA:3JR) 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, Sopharma AD-Sofia's WACC % is 8.57%. Sopharma AD-Sofia's ROC % is 7.82% (calculated using TTM income statement data). Sopharma AD-Sofia 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.

Sopharma AD-Sofia ROC % Related Terms

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Sopharma AD-Sofia (FRA:3JR) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Distribution » Sopharma AD-Sofia (FRA:3JR) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

SPH:Poland SFA:Bulgaria

Address

5 Lachezar Stanchev Street, Sopharma Business Towers, Building A, Floor 11, Sofia, BGR, 1756

Website

https://www.sopharmagroup.com

Sopharma AD-Sofia is a company engaged in the production of pharmaceutical products. Its principal activities include the production and trade of medicinal substances and finished drug forms; and research and development as well as engineering and implementation activities in the field of medicinal products. It is also focused on the distribution of pharmaceuticals like medical supplies, sanitary materials, vitamins, food supplements, and cosmetics. The company's segments are organized based on the production of finished products which include Tablet dosage forms, Ampoule dosage forms, Medical products, Other forms, and Other revenue. Geographically company operates in Bulgaria and internationally.

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