LGCYP.PFD (Legacy Reserves) ROC % : -1.44% (As of Sep. 2019)

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What is Legacy Reserves 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 %. Legacy Reserves's annualized return on capital (ROC %) for the quarter that ended in Sep. 2019 was -1.44%.

As of today (2024-12-12), Legacy Reserves's WACC % is 0.00%. Legacy Reserves's ROC % is 0.22% (calculated using TTM income statement data). Legacy Reserves generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

Legacy Reserves ROC % Historical Data

The historical data trend for Legacy Reserves'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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Legacy Reserves ROC % Chart

Legacy Reserves Annual Data

Trend

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Dec16

Dec17

Dec18

ROC %

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5.15

-5.62

-5.31

4.32

4.67

Legacy Reserves Quarterly Data
	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16	Sep16	Dec16	Mar17	Jun17	Sep17	Dec17	Mar18	Jun18	Sep18	Dec18	Mar19	Jun19	Sep19
ROC %	Get a 7-Day Free Trial															6.10	3.59	1.03	-2.77	-1.44

Legacy Reserves ROC % Calculation

Legacy Reserves's annualized Return on Capital (ROC %) for the fiscal year that ended in Dec. 2018 is calculated as:

	ROC % (A: Dec. 2018 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2017 )	+	Invested Capital (A: Dec. 2018 ))	/ count )
=	92.007 * ( 1 - 6.34% )	/	( (1449.056	+	2239.603)	/ 2 )
=	86.1737562	/	1844.3295
=	4.67 %

where

	Invested Capital		(A: Dec. 2017 )
=	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	))
=	1493.082	-	76.232	-	( 1.246	-	max(0, 144.81	-	112.604	+	1.246	))
=	1449.056

	Invested Capital		(A: Dec. 2018 )
=	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	))
=	1474.931	-	68.886	-	( 1.098	-	max(0, 984.65	-	151.092	+	1.098	))
=	2239.603

Legacy Reserves's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2019 is calculated as:

	ROC % (Q: Sep. 2019 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2019 )	+	Invested Capital (Q: Sep. 2019 ))	/ count )
=	-26.676 * ( 1 - -0% )	/	( (1886.402	+	1810.751)	/ 2 )
=	-26.676	/	1848.5765
=	-1.44 %

where

	Invested Capital		(Q: Jun. 2019 )
=	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	))
=	1365.699	-	41.759	-	( 1.11	-	max(0, 643.638	-	81.176	+	1.11	))
=	1886.402

	Invested Capital		(Q: Sep. 2019 )
=	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	))
=	1281.197	-	63.312	-	( 13.121	-	max(0, 686.732	-	93.866	+	13.121	))
=	1810.751

Note: The Operating Income data used here is four times the quarterly (Sep. 2019) data.

Legacy Reserves (NAS:LGCYP.PFD) 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, Legacy Reserves's WACC % is 0.00%. Legacy Reserves's ROC % is 0.22% (calculated using TTM income statement data). Legacy Reserves generates higher returns on investment than it costs the company to raise the capital needed for that investment. It 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.

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.

Legacy Reserves ROC % Related Terms

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Legacy Reserves Business Description

Industry

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Address

303 West Wall Street, Suite 1800, Midland, TX, USA, 79701

Website

http://www.legacyreserves.com

Legacy Reserves LP is a limited partnership which focuses on the acquisition and development of oil and natural gas properties primarily located in the Permian Basin, East Texas, Rocky Mountain and Mid-Continent regions of the United States. The company owns an interest in producing oil and natural gas properties in the Permian Basin, East Texas, Piceance Basin of Colorado, Texas Panhandle, Wyoming, North Dakota, Montana, Oklahoma and several other states. The company operates through the segment being the Acquisition and development of oil and natural gas properties.