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ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. Hudson Executive Investment II's annualized return on capital (ROC %) for the quarter that ended in Sep. 2022 was -0.28%.
As of today (2024-06-19), Hudson Executive Investment II's WACC % is 10.52%. Hudson Executive Investment II's ROC % is -0.33% (calculated using TTM income statement data). Hudson Executive Investment II earns returns that do not match up to its cost of capital. It will destroy value as it grows.
The historical data trend for Hudson Executive Investment II'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.
Hudson Executive Investment II Annual Data | |||||
Trend | Dec20 | Dec21 | |||
ROC % | - | -1.57 |
Hudson Executive Investment II Quarterly Data | ||||||||
Dec20 | Mar21 | Jun21 | Sep21 | Dec21 | Mar22 | Jun22 | Sep22 | |
ROC % | Get a 7-Day Free Trial | -0.60 | 0.17 | -0.76 | -0.41 | -0.28 |
Hudson Executive Investment II's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2021 is calculated as:
ROC % (A: Dec. 2021 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (A: Dec. 2020 ) | + | Invested Capital (A: Dec. 2021 )) | / count ) |
= | -1.966 * ( 1 - 0% ) | / | ( (0.421 | + | 250.087) | / 2 ) |
= | -1.966 | / | 125.254 | |||
= | -1.57 % |
where
Invested Capital | (A: Dec. 2020 ) | |||||||||||
= | 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 | )) |
= | 0.395 | - | 0.345 | - | ( 0 | - | max(0, 0.371 | - | 0 | + | 0 | )) |
= | 0.421 |
Invested Capital | (A: Dec. 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 | )) |
= | 250.958 | - | 0.859 | - | ( 0.83 | - | max(0, 0.859 | - | 0.871 | + | 0.83 | )) |
= | 250.087 |
Hudson Executive Investment II's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2022 is calculated as:
ROC % (Q: Sep. 2022 ) | ||||||
= | NOPAT | / | Average Invested Capital | |||
= | Operating Income * ( 1 - Tax Rate % ) | / | ( (Invested Capital (Q: Jun. 2022 ) | + | Invested Capital (Q: Sep. 2022 )) | / count ) |
= | -0.828 * ( 1 - 15.48% ) | / | ( (250.303 | + | 251.151) | / 2 ) |
= | -0.6998256 | / | 250.727 | |||
= | -0.28 % |
where
Invested Capital | (Q: Jun. 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 | )) |
= | 250.776 | - | 0.974 | - | ( 0.317 | - | max(0, 0.974 | - | 0.473 | + | 0.317 | )) |
= | 250.303 |
Invested Capital | (Q: 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 | )) |
= | 251.558 | - | 1.198 | - | ( 0.332 | - | max(0, 1.198 | - | 0.407 | + | 0.332 | )) |
= | 251.151 |
Note: The Operating Income data used here is four times the quarterly (Sep. 2022) 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.
Hudson Executive Investment II (NAS:HCIIU) 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, Hudson Executive Investment II's WACC % is 10.52%. Hudson Executive Investment II's ROC % is -0.33% (calculated using TTM income statement data). Hudson Executive Investment II 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.
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Doug Renert | director | 2145 SHARON ROAD, MENLO PARK CA 94025 |
Ira Mosberg | officer: Chief Financial Officer | C/O HUDSON EXECUTIVE INVESTMENT CORP. II, 570 LEXINGTON AVENUE, 35TH FLOOR, NEW YORK NY 10022 |
Paul A Ormond | director | MANOR CARE INC, 333 N SUMMIT STREET, TOLEDO OH 43604 |
Amy W Schulman | director | PFIZER INC. ATTN: CORPORATE SECRETARY, 235 EAST 42ND STREET, NEW YORK NY 10017 |
Douglas L Braunstein | director, other: President, Chairman | HUDSON EXECUTIVE CAPITAL LP, 570 LEXINGTON AVENUE, 35TH FLOOR, NEW YORK NY 10022 |
Douglas Bergeron | director, officer: Chief Executive Officer | 111 W. OCEAN BOULEVARD, LONG BEACH CA 90802 |
Jonathan Dobres | officer: Chief Financial Officer | 570 LEXINGTON AVENUE, 35TH FLOOR, NEW YORK NY 10022 |
Hec Sponsor Ii Llc | 10 percent owner | C/O HUDSON EXECUTIVE INVESTMENT CORP. II, 570 LEXINGTON AVENUE, 35TH FLOOR, NEW YORK NY 10022 |
From GuruFocus
By PRNewswire PRNewswire • 11-29-2022
By PRNewswire PRNewswire • 01-29-2021
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