Freedom Energy (FRA:B1H2) ROC % : -7.12% (As of Dec. 2018)

Freedom Energy ROC % Chart

Freedom Energy Annual Data
	Trend	Mar09	Mar10	Mar11	Mar12	Mar13	Mar14	Mar15	Mar16	Mar17	Mar18
ROC %		Get a 7-Day Free Trial					-302.74	-132.20	-71.84	-119.62	-115.99

Freedom Energy Quarterly Data
	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18
ROC %	Get a 7-Day Free Trial															-69.68	-115.28	-114.67	-51.38	-7.12

Freedom Energy ROC % Calculation

Freedom Energy's annualized Return on Capital (ROC %) for the fiscal year that ended in Mar. 2018 is calculated as:

where

Freedom Energy's annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2018 is calculated as:

where

Note: The Operating Income data used here is four times the quarterly (Dec. 2018) data.

* 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.

Freedom Energy  (FRA:B1H2) 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, Freedom Energy's WACC % is 13.22%. Freedom Energy's ROC % is 0.00% (calculated using TTM income statement data). Freedom Energy 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.

Freedom Energy ROC % Related Terms

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Freedom Energy (FRA:B1H2) Business Description