Parkmead Group (The) (LSE:PMG) ROC % : 12.83% (As of Dec. 2023)

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What is Parkmead Group (The) 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 %. Parkmead Group (The)'s annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 12.83%.

As of today (2024-06-21), Parkmead Group (The)'s WACC % is 15.81%. Parkmead Group (The)'s ROC % is 9.67% (calculated using TTM income statement data). Parkmead Group (The) earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Parkmead Group (The) ROC % Historical Data

The historical data trend for Parkmead Group (The)'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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Parkmead Group (The) ROC % Chart

Parkmead Group (The) Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Jun22

Jun23

ROC %

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4.60

0.74

-2.41

-2.35

25.00

Parkmead Group (The) Semi-Annual Data
	Jun14	Dec14	Jun15	Dec15	Jun16	Dec16	Jun17	Dec17	Jun18	Dec18	Jun19	Dec19	Jun20	Dec20	Jun21	Dec21	Jun22	Dec22	Jun23	Dec23
ROC %	Get a 7-Day Free Trial															-2.56	-2.25	72.88	8.57	12.83

Parkmead Group (The) ROC % Calculation

Parkmead Group (The)'s annualized Return on Capital (ROC %) for the fiscal year that ended in Jun. 2023 is calculated as:

	ROC % (A: Jun. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Jun. 2022 )	+	Invested Capital (A: Jun. 2023 ))	/ count )
=	10.604 * ( 1 - -19.93% )	/	( (83.369	+	18.377)	/ 2 )
=	12.7173772	/	50.873
=	25.00 %

where

	Invested Capital		(A: 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	))
=	86.319	-	1.832	-	( 17.351	-	max(0, 24.205	-	25.323	+	17.351	))
=	83.369

	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	))
=	28.622	-	2.485	-	( 10.415	-	max(0, 7.709	-	15.469	+	10.415	))
=	18.377

Parkmead Group (The)'s annualized Return on Capital (ROC %) for the quarter that ended in Dec. 2023 is calculated as:

	ROC % (Q: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2023 )	+	Invested Capital (Q: Dec. 2023 ))	/ count )
=	2.496 * ( 1 - 17.89% )	/	( (18.377	+	13.579)	/ 2 )
=	2.0494656	/	15.978
=	12.83 %

where

	Invested Capital		(Q: 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	))
=	28.622	-	2.485	-	( 10.415	-	max(0, 7.709	-	15.469	+	10.415	))
=	18.377

	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	))
=	27.055	-	7.775	-	( 9.204	-	max(0, 7.775	-	13.476	+	9.204	))
=	13.579

Note: The Operating Income data used here is two times the semi-annual (Dec. 2023) data.

Parkmead Group (The) (LSE:PMG) 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, Parkmead Group (The)'s WACC % is 15.81%. Parkmead Group (The)'s ROC % is 9.67% (calculated using TTM income statement data). Parkmead Group (The) 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.

Parkmead Group (The) ROC % Related Terms

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Parkmead Group (The) (LSE:PMG) Business Description

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GURUFOCUS.COM » STOCK LIST » Energy » Oil & Gas » Parkmead Group (The) PLC (LSE:PMG) » Definitions » ROC %

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PMG.GB:UK

Address

4 Queen’s Terrace, Aberdeen, GBR, AB10 1XL

Website

https://www.parkmeadgroup.com

Parkmead Group (The) PLC is a UK-based independent oil and gas, exploration and production company. It produces natural gas from a portfolio of fields across the Netherlands. The firm has three segments namely Oil and gas exploration and production which invests in oil and gas exploration and production assets; the Energy economics segment that provides energy sector economics, valuation and benchmarking, advising on energy policies and fiscal matters, among others and the Renewables segment involves mixed farming activities as well as renewable energy opportunities. It generates a majority of its revenue from the oil and gas exploration and production segment.

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