PPHE Hotel Group (LSE:PPH) ROC % : 4.62% (As of Jun. 2024)

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What is PPHE Hotel Group 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 %. PPHE Hotel Group's annualized return on capital (ROC %) for the quarter that ended in Jun. 2024 was 4.62%.

As of today (2024-12-12), PPHE Hotel Group's WACC % is 3.68%. PPHE Hotel Group's ROC % is 4.39% (calculated using TTM income statement data). PPHE Hotel Group 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.

PPHE Hotel Group ROC % Historical Data

The historical data trend for PPHE Hotel Group'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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PPHE Hotel Group ROC % Chart

PPHE Hotel Group Annual Data

Trend

Dec14

Dec15

Dec16

Dec17

Dec18

Dec19

Dec20

Dec21

Dec22

Dec23

ROC %

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6.43

-3.78

-1.06

4.24

4.40

PPHE Hotel Group 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															-0.31	7.39	1.35	6.39	4.62

PPHE Hotel Group ROC % Calculation

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

	ROC % (A: Dec. 2023 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Dec. 2022 )	+	Invested Capital (A: Dec. 2023 ))	/ count )
=	83.108 * ( 1 - 5.82% )	/	( (1744.515	+	1816.9)	/ 2 )
=	78.2711144	/	1780.7075
=	4.40 %

where

	Invested Capital		(A: Dec. 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	))
=	1860.217	-	44.814	-	( 163.589	-	max(0, 141.51	-	212.398	+	163.589	))
=	1744.515

	Invested Capital		(A: 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	))
=	1923.765	-	46.907	-	( 150.416	-	max(0, 141.795	-	201.753	+	150.416	))
=	1816.9

PPHE Hotel Group'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 )
=	50.836 * ( 1 - -65.42% )	/	( (1816.9	+	1823.808)	/ 2 )
=	84.0929112	/	1820.354
=	4.62 %

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	))
=	1923.765	-	46.907	-	( 150.416	-	max(0, 141.795	-	201.753	+	150.416	))
=	1816.9

	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	))
=	1918.553	-	97.658	-	( 112.714	-	max(0, 177.225	-	174.312	+	112.714	))
=	1823.808

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

PPHE Hotel Group (LSE:PPH) 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, PPHE Hotel Group's WACC % is 3.68%. PPHE Hotel Group's ROC % is 4.39% (calculated using TTM income statement data). PPHE Hotel Group 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.

PPHE Hotel Group ROC % Related Terms

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PPHE Hotel Group Business Description

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PPHl:UK

Address

Radarweg 60, Motion Building, 9th Floor, Amsterdam, NH, NLD, 1043 NT

Website

http://www.pphe.com

PPHE Hotel Group Ltd engages in providing hospitality services. The company owns, manages and franchises hotels and resort properties in the United Kingdom, the Netherlands, Croatia, Germany, and Hungary. The group's activities are divided into two segments Owned Hotel Operations segment and the Management Central services segment. Owned Hotel Operations are further divided into five reportable segments which are the Netherlands, Germany, Croatia and the United Kingdom. Other includes individual hotels in Hungary, Serbia, Italy and Austria. PPHE generates most of its revenues across the United Kingdom through hotel operations, management fees derived from hotels managed by the group, and marketing fees.