The Convenience Shop Holding (MAL:CVS) ROC % : 8.48% (As of Dec. 2023)

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What is The Convenience Shop Holding 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 %. The Convenience Shop Holding's annualized return on capital (ROC %) for the quarter that ended in Dec. 2023 was 8.48%.

As of today (2024-06-18), The Convenience Shop Holding's WACC % is 8.08%. The Convenience Shop Holding's ROC % is 8.02% (calculated using TTM income statement data). The Convenience Shop Holding earns returns that do not match up to its cost of capital. It will destroy value as it grows.

The Convenience Shop Holding ROC % Historical Data

The historical data trend for The Convenience Shop Holding'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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The Convenience Shop Holding ROC % Chart

The Convenience Shop Holding Annual Data

Trend

Dec22

Dec23

ROC %

8.07

8.74

The Convenience Shop Holding Semi-Annual Data
	Jun22	Dec22	Jun23	Dec23
ROC %	-	11.35	6.62	8.48

The Convenience Shop Holding ROC % Calculation

The Convenience Shop Holding'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 )
=	3.036 * ( 1 - 15.18% )	/	( (27.928	+	30.981)	/ 2 )
=	2.5751352	/	29.4545
=	8.74 %

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	))
=	33.617	-	8.525	-	( 1.211	-	max(0, 10.573	-	7.737	+	1.211	))
=	27.928

	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	))
=	38.79	-	9.112	-	( 2.185	-	max(0, 11.546	-	10.243	+	2.185	))
=	30.981

The Convenience Shop Holding'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 )
=	2.972 * ( 1 - 2.44% )	/	( (37.383	+	30.981)	/ 2 )
=	2.8994832	/	34.182
=	8.48 %

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	))
=	36.542	-	0	-	( 0	-	max(0, 10.953	-	10.112	+	0	))
=	37.383

	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	))
=	38.79	-	9.112	-	( 2.185	-	max(0, 11.546	-	10.243	+	2.185	))
=	30.981

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

The Convenience Shop Holding (MAL:CVS) 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, The Convenience Shop Holding's WACC % is 8.08%. The Convenience Shop Holding's ROC % is 8.02% (calculated using TTM income statement data). The Convenience Shop Holding 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.

The Convenience Shop Holding ROC % Related Terms

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The Convenience Shop Holding (MAL:CVS) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Retail - Cyclical » The Convenience Shop Holding PLC (MAL:CVS) » Definitions » ROC %

Traded in Other Exchanges

N/A

Address

Mdina Road, Marant Food Products, Zebbug, MLT, 9017

Website

https://www.theconvenienceshop.com

The Convenience Shop Holding PLC operates and franchises grocery stores in the fast-moving consumer goods ('FMCG') industry. Through its subsidiaries, the Company manages a chain of retail outlets under The Convenience Shop brand in various locations across Malta. The Group currently operates approximately 40 shops of which 4 shops are owned by minority shareholders and 1 shop (The Convenience Shop for Puttinu Cares Ltd) is operated for charity.