Evoqua Water Technologies (FRA:E0W) ROC % : 4.17% (As of Mar. 2023)

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What is Evoqua Water Technologies 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 %. Evoqua Water Technologies's annualized return on capital (ROC %) for the quarter that ended in Mar. 2023 was 4.17%.

As of today (2024-05-25), Evoqua Water Technologies's WACC % is 11.64%. Evoqua Water Technologies's ROC % is 6.65% (calculated using TTM income statement data). Evoqua Water Technologies earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Evoqua Water Technologies ROC % Historical Data

The historical data trend for Evoqua Water Technologies'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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Evoqua Water Technologies ROC % Chart

Evoqua Water Technologies Annual Data

Trend

Sep15

Sep16

Sep17

Sep18

Sep19

Sep20

Sep21

Sep22

ROC %

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4.42

-33.20

10.78

5.80

7.32

Evoqua Water Technologies Quarterly Data
	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23
ROC %	Get a 7-Day Free Trial															3.81	5.67	13.04	3.57	4.17

Evoqua Water Technologies ROC % Calculation

Evoqua Water Technologies's annualized Return on Capital (ROC %) for the fiscal year that ended in Sep. 2022 is calculated as:

	ROC % (A: Sep. 2022 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Sep. 2021 )	+	Invested Capital (A: Sep. 2022 ))	/ count )
=	105.033 * ( 1 - -4.37% )	/	( (1240.962	+	1755.689)	/ 2 )
=	109.6229421	/	1498.3255
=	7.32 %

where

	Invested Capital		(A: Sep. 2021 )
=	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	))
=	1588.557	-	223.288	-	( 124.307	-	max(0, 345.091	-	576.689	+	124.307	))
=	1240.962

	Invested Capital		(A: Sep. 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	))
=	2212.772	-	321.738	-	( 135.345	-	max(0, 488.553	-	839.703	+	135.345	))
=	1755.689

Evoqua Water Technologies's annualized Return on Capital (ROC %) for the quarter that ended in Mar. 2023 is calculated as:

	ROC % (Q: Mar. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2022 )	+	Invested Capital (Q: Mar. 2023 ))	/ count )
=	87.636 * ( 1 - 19.18% )	/	( (1707.35	+	1691.79)	/ 2 )
=	70.8274152	/	1699.57
=	4.17 %

where

	Invested Capital		(Q: 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	))
=	2083.745	-	277.555	-	( 98.84	-	max(0, 459.574	-	800.814	+	98.84	))
=	1707.35

	Invested Capital		(Q: Mar. 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	))
=	2063.738	-	266.179	-	( 105.769	-	max(0, 443.175	-	788.708	+	105.769	))
=	1691.79

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

Evoqua Water Technologies (FRA:E0W) 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, Evoqua Water Technologies's WACC % is 11.64%. Evoqua Water Technologies's ROC % is 6.65% (calculated using TTM income statement data). Evoqua Water Technologies 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.

Evoqua Water Technologies ROC % Related Terms

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Evoqua Water Technologies (FRA:E0W) Business Description

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GURUFOCUS.COM » STOCK LIST » Industrials » Industrial Products » Evoqua Water Technologies Corp (FRA:E0W) » Definitions » ROC %

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Address

210 Sixth Avenue, Pittsburgh, PA, USA, 15222

Website

https://www.evoqua.com

Evoqua Water Technologies Corp is a provider of critical water treatment solutions, offering services, systems, and technologies to support its customers' full water lifecycle needs. The company operates two segments namely Integrated Solutions and Services and Applied Product Technologies. The Integrated Solutions and Services segment provides fully-integrated systems and service solutions that selectively utilize its portfolio of water treatment technologies to satisfy customers' water needs. It engages directly with end-users. Applied Product Technologies is focused on developing product platforms to be sold primarily through third-party channels. The company generates maximum revenue from the Integrated Solutions and Services segment.

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