Polynovo (FRA:MFJ) ROC % : 25.59% (As of Jun. 2024)

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What is Polynovo 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 %. Polynovo's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 25.59%.

As of today (2024-12-11), Polynovo's WACC % is 15.15%. Polynovo's ROC % is 8.78% (calculated using TTM income statement data). Polynovo earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Polynovo ROC % Historical Data

The historical data trend for Polynovo'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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Polynovo ROC % Chart

Polynovo Annual Data

Trend

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

Jun24

ROC %

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-22.48

-12.79

-1.10

-19.85

8.80

Polynovo Semi-Annual Data
	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24
ROC %	Get a 7-Day Free Trial															-15.73	-25.09	-15.22	-2.09	25.59

Polynovo ROC % Calculation

Polynovo's annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2024 is calculated as:

	ROC % (A: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2023 )	+	Invested Capital (A: Jun. 2024 ))	/ count )
=	0.717 * ( 1 - -207.58% )	/	( (22.665	+	27.452)	/ 2 )
=	2.2053486	/	25.0585
=	8.80 %

where

	Invested Capital		(A: Jun. 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	))
=	57.375	-	5.659	-	( 29.051	-	max(0, 7.847	-	41.723	+	29.051	))
=	22.665

	Invested Capital		(A: Jun. 2024 )
=	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	))
=	67.066	-	11.265	-	( 28.349	-	max(0, 14.34	-	48.914	+	28.349	))
=	27.452

Polynovo's annualized Return on Capital (ROC %) for the quarter that ended in Jun. 2024 is calculated as:

	ROC % (Q: Jun. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Dec. 2023 )	+	Invested Capital (Q: Jun. 2024 ))	/ count )
=	1.638 * ( 1 - -311.43% )	/	( (25.214	+	27.452)	/ 2 )
=	6.7392234	/	26.333
=	25.59 %

where

	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	))
=	59.665	-	6.444	-	( 28.007	-	max(0, 8.612	-	43.139	+	28.007	))
=	25.214

	Invested Capital		(Q: Jun. 2024 )
=	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	))
=	67.066	-	11.265	-	( 28.349	-	max(0, 14.34	-	48.914	+	28.349	))
=	27.452

Note: The Operating Income data used here is two times the semi-annual (Jun. 2024) data.

Polynovo (FRA:MFJ) 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, Polynovo's WACC % is 15.15%. Polynovo's ROC % is 8.78% (calculated using TTM income statement data). Polynovo 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.

Polynovo ROC % Related Terms

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Polynovo Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Polynovo Ltd (FRA:MFJ) » Definitions » ROC %

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CALZF:USA PNV:Australia

Address

320 Lorimer Street, Unit 2, Port Melbourne, VIC, AUS, 3207

Website

https://www.polynovo.com

Polynovo earns most of its revenue from US sales of its NovoSorb Biodegradable Temporizing Matrix, or NovoSorb BTM. The product is a patented biodegradable synthetic scaffold to support the regeneration of the dermis when lost through surgery, trauma, burns, or other causes of tissue loss. Once the product is applied to a wound, it takes a few weeks for the dermal layer to fully integrate within the polymer scaffold before a clinician can delaminate the outer layer. A small wound would then close either naturally or with a dressing, while a larger wound would close through a split-skin graft or alternative product such as Avita's RECELL. NovoSorb BTM then slowly degrades to harmless byproducts which are fully absorbed in roughly 18 months.

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