Rainbow Rare Earths (FRA:RR1) ROC % : -27.17% (As of Jun. 2024)

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What is Rainbow Rare Earths 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 %. Rainbow Rare Earths's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was -27.17%.

As of today (2024-12-14), Rainbow Rare Earths's WACC % is 11.28%. Rainbow Rare Earths's ROC % is -28.92% (calculated using TTM income statement data). Rainbow Rare Earths earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Rainbow Rare Earths ROC % Historical Data

The historical data trend for Rainbow Rare Earths'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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Rainbow Rare Earths ROC % Chart

Rainbow Rare Earths Annual Data

Trend

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

Jun24

ROC %

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-31.54

-23.23

-30.53

-37.98

-31.33

Rainbow Rare Earths Semi-Annual Data
	Jun14	Jun15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23	Jun24
ROC %	Get a 7-Day Free Trial														-28.28	-23.45	-41.80	-29.31	-27.17

Rainbow Rare Earths ROC % Calculation

Rainbow Rare Earths'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 )
=	-3.314 * ( 1 - 0% )	/	( (5.323	+	15.833)	/ 2 )
=	-3.314	/	10.578
=	-31.33 %

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	))
=	13.001	-	0.557	-	( 7.483	-	max(0, 1.361	-	8.482	+	7.483	))
=	5.323

	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	))
=	15.119	-	0.855	-	( 0.073	-	max(0, 1.991	-	0.422	+	0.073	))
=	15.833

Rainbow Rare Earths'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 )
=	-3.912 * ( 1 - 0% )	/	( (12.967	+	15.833)	/ 2 )
=	-3.912	/	14.4
=	-27.17 %

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	))
=	17.213	-	1.221	-	( 3.67	-	max(0, 1.821	-	4.846	+	3.67	))
=	12.967

	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	))
=	15.119	-	0.855	-	( 0.073	-	max(0, 1.991	-	0.422	+	0.073	))
=	15.833

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

Rainbow Rare Earths (FRA:RR1) 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, Rainbow Rare Earths's WACC % is 11.28%. Rainbow Rare Earths's ROC % is -28.92% (calculated using TTM income statement data). Rainbow Rare Earths 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.

Rainbow Rare Earths ROC % Related Terms

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Rainbow Rare Earths Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Basic Materials » Metals & Mining » Rainbow Rare Earths Ltd (FRA:RR1) » Definitions » ROC %

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Address

St Julian's Avenue, Connaught House, Saint Peter Port, GGY, GY1 3EL

Website

https://www.rainbowrareearths.com

Rainbow Rare Earths Ltd aims to be a forerunner in the establishment of an independent and ethical supply chain of the rare earth elements that are driving the green energy transition. It is doing this successfully via the identification and development of secondary rare earth deposits that can be brought into production quicker and at a lower cost than traditional hard rock mining projects, with a focus on the magnet rare earth elements neodymium & praseodymium, dysprosium & terbium. It is focused on the development of the Phalaborwa Project and the earlier stage Uberaba Project. Both projects entail the recovery of rare earths from phosphogypsum stacks that occur as the by-product of phosphoric acid production, with the original source rock for both deposits being a hardrock carbonatite.

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