Royal Gold (MEX:RGLD) ROC % : 12.76% (As of Sep. 2024)

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What is Royal Gold 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 %. Royal Gold's annualized return on capital (ROC %) for the quarter that ended in Sep. 2024 was 12.76%.

As of today (2024-12-13), Royal Gold's WACC % is 8.00%. Royal Gold's ROC % is 9.23% (calculated using TTM income statement data). Royal Gold 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.

Royal Gold ROC % Historical Data

The historical data trend for Royal Gold'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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Royal Gold ROC % Chart

Royal Gold Annual Data

Trend

Jun14

Jun15

Jun16

Jun17

Jun18

Jun19

Jun20

Jun21

Dec22

Dec23

ROC %

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4.69

9.26

10.45

8.73

7.29

Royal Gold Quarterly Data
	Dec19	Mar20	Jun20	Sep20	Dec20	Mar21	Jun21	Sep21	Dec21	Mar22	Jun22	Sep22	Dec22	Mar23	Jun23	Sep23	Dec23	Mar24	Jun24	Sep24
ROC %	Get a 7-Day Free Trial															6.64	8.03	5.99	10.96	12.76

Royal Gold ROC % Calculation

Royal Gold'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 )
=	5146.626 * ( 1 - 14.89% )	/	( (65673.407	+	54534.236)	/ 2 )
=	4380.2933886	/	60103.8215
=	7.29 %

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	))
=	68909.041	-	923.681	-	( 2311.953	-	max(0, 1239.692	-	3623	+	2311.953	))
=	65673.407

	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	))
=	57051.415	-	904.558	-	( 1768.156	-	max(0, 1229.309	-	2841.93	+	1768.156	))
=	54534.236

Royal Gold's annualized Return on Capital (ROC %) for the quarter that ended in Sep. 2024 is calculated as:

	ROC % (Q: Sep. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Jun. 2024 )	+	Invested Capital (Q: Sep. 2024 ))	/ count )
=	9360.452 * ( 1 - 18.25% )	/	( (58629.129	+	61352.849)	/ 2 )
=	7652.16951	/	59990.989
=	12.76 %

where

	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	))
=	59888.801	-	1056.044	-	( 1359.938	-	max(0, 2242.069	-	2445.697	+	1359.938	))
=	58629.129

	Invested Capital		(Q: Sep. 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	))
=	65009.987	-	1377.356	-	( 2518.035	-	max(0, 1699.726	-	3979.508	+	2518.035	))
=	61352.849

Note: The Operating Income data used here is four times the quarterly (Sep. 2024) data.

Royal Gold (MEX:RGLD) 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, Royal Gold's WACC % is 8.00%. Royal Gold's ROC % is 9.23% (calculated using TTM income statement data). Royal Gold 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.

Royal Gold ROC % Related Terms

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Royal Gold Business Description

Industry

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Address

1144 15th Street, Suite 2500, Denver, CO, USA, 80202

Website

https://www.royalgold.com

Royal Gold Inc enquires and manages precious metal royalties and streams, with a focus on gold. The company operates by purchasing a percentage of the metal produced from a mineral property for an initial payment, without assuming responsibility of mining operations. Similarly, precious metal streams are purchase agreements with mine operators providing the right to purchase all or a portion of one or more metals produced from a mine, in exchange for an upfront deposit payment. Generally Royal Gold does not conduct any work on the properties in which it holds royalty and streaming assets. The company owns a portfolio of producing, development, evaluation, and exploration royalties and streams, and the majority of group revenue is generated from Canada, Mexico, Chile, and the United States.